Summary of the Judgment The New India Assurance Co. Ltd. & Anr. vs. Usha Devi & Ors

Case Name: The New India Assurance Co. Ltd. & Anr. vs. Usha Devi & Ors.

Citation:
2025 INSC 836

Judges:

• J.K. Maheshwari

• Aravind Kumar

Date of Judgment:
July 14, 2025

Related Law:
Motor Vehicles Act, 1988 (Sections 163A and 166) – Pertaining to no-fault liability compensation claims in motor accident cases.

Background and Issue

The Supreme Court addressed appeals by two insurance companies challenging the Punjab & Haryana High Court’s decision to award Rs. 15 lakhs as compensation to the dependents of Surender Singh, who died in a collision between his truck and a dumper. The key issues were:

1. Whether the High Court erred in awarding lump-sum compensation under Section 163A of the MV Act, bypassing the structured formula under the Second Schedule.

2. Whether the deceased (driver of one vehicle) could be treated as a "third party" vis-à-vis the other vehicle for insurer liability.

Key Facts

1. Accident Details:
   On 15.11.2006, Surender Singh (deceased) driving a truck (HR-38L/6727) collided with a dumper (HR-38H-9100) in Ballabgarh.
   He succumbed to injuries on 22.11.2006. An FIR was registered against the dumper driver under Sections 279/337/304A IPC.

2. Claims Tribunal’s Decision (2011):
   Dismissed the claim, citing lack of proof of negligence by the dumper driver.

3. High Court’s Decision (2020):
   Set aside the Tribunal’s order, awarding Rs. 15 lakhs under Section 163A (no-fault liability) and held both insurers jointly liable.

Supreme Court’s Analysis

1. Applicability of Section 163A:
   The Court reiterated that Section 163A (no-fault liability) overrides other provisions and does not require proof of negligence.
   Cited precedents:
   United India Insurance Co. v. Sunil Kumar (2019): Compensation under Section 163A is based on a structured formula (Second Schedule).
   National Insurance Co. v. Sinitha (2012): Section 163A has an overriding effect over other MV Act provisions.

2. Compensation Calculation:
   Income: The deceased’s annual income was Rs. 40,000 (as per Second Schedule, not Rs. 36,000 claimed).
   Deduction: 1/3 for personal expenses → Rs. 26,667/year.
   Multiplier: 17 (age 35) → Rs. 4,53,339 for loss of dependency.
   General Damages:
   Loss of consortium: Rs. 2,000
   Funeral expenses: Rs. 5,000
   Loss of estate: Rs. 2,500
   Medical expenses: Rs. 15,000 (capped as per Schedule).
   Total: Rs. 4,77,839 with 8% interest (reduced from High Court’s Rs. 15 lakhs).

3. Insurer Liability:
   The deceased was a "third party" for the dumper’s insurer (National Insurance Co.), making it liable.
   New India Assurance (deceased’s truck insurer) was exonerated as the deceased was the driver (not a third party).

Conclusion

1. Compensation Reduced: From Rs. 15 lakhs to Rs. 4,77,839 (as per Second Schedule).

2. Liability: Only National Insurance Co. (dumper’s insurer) held liable.

3. Apportionment:
   50% to widow (Usha Devi), 10% each to four children, and 10% to the deceased’s mother (if alive).

Final Order:

• Appeals partly allowed.

• High Court’s award modified as above.