IN THE HIGH COURT AT CALCUTTA

CIVIL APPELLATE JURISDICTION

APPELLATE SIDE

Present:

The Hon’ble Justice Prasenjit Biswas

F.M.A. 2883 of 2016

with

CAN/2/2016 (OLD CAN/458/2016)

CAN/3/2017 (OLD CAN/2819/2017)

National Insurance Co. Ltd.

-Versus-

Sabitri Maji & Ors.

For the Appellants/Insurance Co. : Mr. Saibalendu

Bhowmik.

For the Respondents/Claimants : Mr. Amit Ranjan Roy.

Hearing concluded on : 24.08.2026

Judgment on : 12.10.2026

Judgment uploaded on : 12.10.2026

Prasenjit Biswas, J:-

1. This appeal is directed against the judgment and award

dated 14

th

August, 2015 passed by the learned Additional District

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F.M.A. 2883 of 2016

& Sessions Judge cum Motor Accident Claims Tribunal in

connection with M.A.C. Case No. 48 of 2012 (M.A.C. No. 177 of

2011).

2. By passing the impugned judgment and award learned

Tribunal awarded compensation to the tune of Rs. 27,27,500/-

along with interest at the rate of 6% per annum from filing of the

application till the payment by the appellant (herein)/Insurance

Company Ltd.

3. The case of the claimants, as made out in the claim petition,

is that on 31.10.2011, the victim, Ashis Maji, was proceeding

towards Bankura from his residence along with his family

members in an Alto car bearing registration No. WB-38S/6843.

When the said vehicle reached Raha Lane on G.T. Road at

Asansol, it was hit from behind by a Scorpio car bearing

registration No. WB-20G/4458 (hereinafter referred to as the

“offending vehicle”). As a result of the impact, the Alto car struck

the road divider, causing injuries to the victim and the other

occupants of the vehicle. The victim, Ashis Maji, was thereafter

taken to the hospital, where he was declared dead.

4. In connection with the said incident, Asansol (South) Police

Station Case No. 371/11 dated 08.11.2011 was registered against

the driver of the offending vehicle under Sections 279, 337, 338,

427 and 304A of the Indian Penal Code. Upon completion of the

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F.M.A. 2883 of 2016

investigation, the investigating agency submitted a charge-sheet

against the driver of the offending Scorpio car under the aforesaid

provisions of law.

5. During the proceedings before the learned Tribunal, the

claimants adduced oral evidence and produced documentary

evidence in support of their claim, and the documents relied upon

by them were duly marked as exhibits. Upon receipt of the notice

issued by the learned Tribunal, the appellant-insurance company

entered appearance and contested the claim petition by filing its

written statement, wherein it denied the material allegations and

averments made in the claim petition.

6. Although notice was duly served upon the driver of the

offending vehicle, he did not enter appearance or contest the

proceedings. Consequently, the learned Tribunal proceeded ex

parte against him. The owner of the offending vehicle, despite

service of notice, also chose not to appear or contest the claim

proceedings.

7. Upon consideration and appreciation of the oral and

documentary evidence adduced on behalf of the claimants,

together with the materials available on record, the learned

Tribunal passed the impugned award fastening liability upon the

appellant-insurance company. Being aggrieved by and dissatisfied

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F.M.A. 2883 of 2016

with the said award, the appellant-insurance company has

preferred the instant appeal.

8. Mr. Saibalendu Bhowmik, learned Advocate appearing on

behalf of the appellant-insurance company, submits that the

driver of the offending Scorpio car did not possess a valid and

effective driving licence to drive the said vehicle on the date of the

accident, i.e., 31.10.2011. It is, therefore, contended that

respondent No. 4, being the owner of the offending vehicle,

committed a breach of the terms and conditions of the contract of

insurance by permitting a person who was not duly licensed to

drive the vehicle. According to the learned Advocate, in view of

such breach of the policy conditions, the appellant-insurance

company could not have been saddled with the liability to satisfy

the compensation awarded by the learned Tribunal.

9. In support of his contention, learned Advocate has drawn

the attention of this Court to the authorisation letter/document

relating to the driving licence of the driver of the offending

vehicle, which has been marked as Exhibit C. According to the

learned Advocate, the said document demonstrates that the

driving licence authorising the driver to drive a four-wheeler was

valid for the relevant period, except for the period commencing

from 08.04.2011 and ending on 24.03.2014. Since the accident

occurred on 31.10.2011, which falls within the aforesaid period, it

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F.M.A. 2883 of 2016

is argued that the driver did not possess a valid driving licence on

the date of the accident. On such premise, learned Advocate

contends that the owner of the offending vehicle violated the

terms of the insurance policy and that the learned Tribunal

committed an error in law in fastening liability upon the appellant-

insurance company without properly considering the legal

consequences flowing from such breach.

10. In support of the aforesaid submission, learned Advocate

places reliance upon the decision of the Hon’ble Supreme Court in

New India Assurance Co. Ltd. v. Suresh Chandra Aggarwal ,

reported in AIR 2009 SC 2987 . Relying upon the said decision, it

is contended that where the driver of the offending vehicle did not

possess a valid and effective driving licence on the date of the

accident, the insurer cannot be compelled to indemnify the

insured in disregard of the applicable terms and conditions of the

insurance policy. It is, accordingly, argued that the learned

Tribunal failed to appreciate the legal implications of the absence

of a valid driving licence and erroneously imposed liability upon

the appellant.

11. Learned Advocate further submits that the learned Tribunal

did not correctly ascertain the actual income of the deceased

while computing the loss of dependency. In this connection,

reference has been made to Exhibit 8 series, which, according to

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F.M.A. 2883 of 2016

the learned Advocate, contains the relevant materials concerning

the salary and income of the deceased. It is argued that the

learned Tribunal failed to undertake a proper assessment of the

income actually available to the deceased after taking into

consideration the admissible deductions, including income tax and

other permissible deductions from the salary. Consequently, the

determination of the multiplicand for the purpose of calculating

the loss of dependency is assailed as being erroneous and not

founded upon a proper appreciation of the documentary evidence

on record.

12. It is further contended that the learned Tribunal awarded

general damages without adhering to the applicable principles of

law governing the assessment of compensation in motor accident

claim cases. According to the learned Advocate, the amounts

awarded under the relevant conventional heads are not in

conformity with the governing legal principles and the decisions of

the Hon’ble Supreme Court. The award is, therefore, challenged

not only on the ground of the alleged breach of the insurance

policy but also on the ground that the quantum of compensation

has not been determined in accordance with law.

13. In conclusion, learned Advocate for the appellant submits

that the absence of a valid driving licence on the date of the

accident, as allegedly established by Exhibit C, constitutes a

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F.M.A. 2883 of 2016

breach of the conditions of the insurance policy attributable to the

owner of the offending vehicle. It is argued that the learned

Tribunal failed to consider the legal effect of such breach, as well

as the alleged errors in determining the loss of dependency and

awarding general damages. On these grounds, learned Advocate

prays that the instant appeal be allowed and that the impugned

award be set aside.

14. Per contra, learned Advocate for the claimants said that

there are no illegality or material irregularity in the impugned

award passed by the tribunal. No material has been brought in the

record for which the decision of the tribunal is required to be

interfered with.

15. Having heard the learned Advocates for the respective

parties following points have been fallen for consideration.

1. Whether the learned Tribunal committed error at the time of

calculation of the income of the deceased?

2. Whether the learned Tribunal committed error by giving

direction upon the insurance company to pay the awarded

compensation to the claimants when it appears that at the

time of accident the driver of the offending vehicle did not

posses any valid license?

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F.M.A. 2883 of 2016

3. Whether the learned Tribunal committed any wrong in

respect of computation of general damages at the time of

awarding compensation to the claimants?

16. At the time of calculating the monthly income of the

deceased only the net income was taken into consideration by the

Tribunal. As per submission of the learned Advocate for the

appellant in computing the income of the deceased only the

component of income tax should be deducted from gross income.

In view of the decision rendered by the Hon’ble Apex Court in case

of National Insurance Co. Ltd.-vs- Indira Srivastava and

Ors. reported in (2008) 2 SCC 763 the actual salary of the

victim should be read as actual salary less tax.

17. In this context, it would be apposite to refer to the

observations made by the Hon’ble Supreme Court in the judgment

cited hereinabove, which are reproduced below for ready

reference:—

“14. The question came for consideration before a

learned Single Judge of the Madras High Court in National

Insurance Co. Ltd. v. Padmavathy [ CMA No. 114 of 2006

decided on 29-1-2007 : 2007 AIHC 1921] wherein it was

held: (AIHC pp. 1927-28, para 7)

“7. … Income tax, professional tax which are

deducted from the salaried person goes to the coffers of

the Government under specific head and there is no return.

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F.M.A. 2883 of 2016

Whereas, the general provident fund, special provident

fund, LIC contribution are amounts paid under specific

heads and the contribution is always repayable to an

employee at the time of voluntary retirement, death or for

any other reason. Such contribution made by the salaried

person are deferred payments and they are savings. The

Supreme Court as well as various High Courts have held

that the compensation payable under the Motor Vehicles

Act is statutory and that the deferred payments made to

the employee are contractual. Courts have held that there

cannot be any deductions in the statutory compensation, if

the legal representatives are entitled to lump sum payment

under the contractual liability. If the contributions made by

the employee which are otherwise savings from the salary

are deducted from the gross income and only the net

income is taken for computing the dependency

compensation, then the legal representatives of the victim

would lose considerable portion of the income. In view of

the settled proposition of law, I am of the view, the

Tribunal can make only statutory deductions such as

income tax and professional tax and any other contribution,

which is not repayable by the employer, from the salary of

the deceased person while determining the monthly income

for computing the dependency compensation. Any

contributions made by the employee during his lifetime,

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F.M.A. 2883 of 2016

form part of the salary and they should be included in the

monthly income, while computing the dependency

compensation.”

18. It appears from the salary slip of the deceased Ashis Maji

(exhibit 8 series) that the average annual gross salary of the

deceased less Income Tax and P. Tax (to the tune of Rs. 20,405/-

) was Rs.3 lakh (approximate). In view of the above decision, I

find that the learned Tribunal did not commit any wrong in

calculation of the actual salary after deducting professional tax

and income tax from it.

19. It is the specific contention of Mr. Bhowmik, learned

Advocate appearing on behalf of the appellant-insurance

company, that the driver of the offending vehicle did not possess

a valid and effective driving licence on the date of the accident,

i.e., 31.10.2011. According to the learned Advocate, such absence

of a valid driving licence constituted a breach of the terms and

conditions of the insurance policy and, consequently, the

appellant-insurance company ought not to have been saddled with

the ultimate liability to satisfy the award passed by the learned

Tribunal. It is further submitted that the materials available on

record, particularly Exhibit C, establish the aforesaid breach and

that the owner of the offending vehicle cannot escape the

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F.M.A. 2883 of 2016

consequences of having permitted a person without a valid and

effective driving licence to drive the vehicle.

20. The aforesaid submission, however, requires consideration

in the light of the settled principles governing the liability of an

insurer towards third-party claimants, particularly the distinction

between the obligation to satisfy an award in the first instance

and the ultimate liability to bear the compensation.

21. In this connection, reliance may profitably be placed upon

the decision of the Hon’ble Supreme Court in Sadhana Tomar &

Ors. v. Ashok Kushwaha & Ors., Civil Appeal No. 3763 of

2025, arising out of SLP (C) No. 6986 of 2023 . In the said

decision, the Hon’ble Supreme Court considered a case in which

the driver did not possess an effective driving licence and upheld

the direction requiring the insurance company to pay the

compensation awarded to the claimants in the first instance, with

liberty to recover the amount from the driver and the owner, who

were held jointly and severally liable.

22. The relevant observations of the Hon’ble Supreme Court, as

contained in paragraph 16 of the said decision, are reproduced

below:

“16. In the present case, it is necessary to

note, as observed by the Tribunal are liable to pay

compensation, as the driver did not possess an

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F.M.A. 2883 of 2016

effective driving license. On these facts, the High

Court directed Respondent No. 3 – the Insurance

Company, to first pay the compensation awarded to

the appellants and then, recover the same from

respondent Nos. 1 the driver and respondent No. 2,

the owner, who are jointly and severally liable to pay

the same. On this aspect, we are not inclined to

interfere with the impugned order.”

23. The aforesaid pronouncement reinforces the principle that

the absence of an effective driving licence, though relevant to

determining the insurer’s liability under the policy, does not

necessarily justify denying immediate relief to third-party victims

or their dependants. The Court may, in an appropriate case, direct

the insurer to satisfy the award in the first instance while

preserving its right to recover the amount from the persons

ultimately liable.

24. The legal position has further been elucidated by the

Hon’ble Supreme Court in Reliance General Insurance

Company Ltd. v. Om Parkash & Ors ., 2026 INSC 767 ,

decided on 30.07.2026. In that case, the Hon’ble Supreme Court

examined the consequences of the driver not possessing a valid

driving licence on the date of the accident and the circumstances

in which the ultimate burden of satisfying the award would rest

upon the driver and the owner rather than the insurer. The Court

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F.M.A. 2883 of 2016

held that the insurer could not be held liable to bear the award in

the circumstances established in that case, while nevertheless

applying the principle of “pay and recover” to ensure that the

compensation was released to the claimants. The insurer was left

at liberty to take appropriate steps in accordance with law for

recovery of the amount.

25. The relevant observation contained in paragraph 18 of the

said judgment is reproduced below:

“18. Following the dictum above, the appeal is

allowed. The appellant insurer cannot be held liable to

make good the award. The final burden shall be on both

the employer and the driver. In the order issuing notice,

we had directed that the amount as computed be released

in favour of the claimants. In view of the above discussion,

we hold the principle of ‘pay and recover’ to be applicable

in this case. The appellant-insurer shall therefore be at

liberty to take steps in accordance with law.”

26. The aforesaid decision makes it clear that the question of

the insurer’s ultimate liability must be distinguished from the

obligation to ensure payment of compensation to third-party

victims. Where the insurer establishes a breach of the policy

condition on account of the driver not possessing a valid and

effective driving licence, the insurer may be exonerated from the

ultimate financial burden. Nevertheless, having regard to the

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protective object of the Motor Vehicles Act, 1988, the principle of

“pay and recover” may be applied so that the claimants are not

compelled to pursue the owner and the driver in the first instance

to realise the compensation awarded to them.

27. Applying the aforesaid principles to the facts of the present

case, it appears from Exhibit C, as relied upon by the appellant-

insurance company that the driving licence in question was not

valid for the relevant period extending from 08.04.2011 to

24.03.2014. The accident having occurred on 31.10.2011, the

same falls within the aforesaid period. If Exhibit C is accepted as

reliable and sufficient proof of the absence of a valid and effective

driving licence, and the insurer has otherwise discharged its

burden of establishing the relevant breach of the policy condition,

the appellant-insurance company would be entitled to seek

exoneration from the ultimate liability to bear the compensation.

The mere absence of a valid driving licence, however, does not,

by itself, dispense with the need to determine the insurer’s

statutory obligations towards third-party claimants in accordance

with the governing legal principles.

28. In view of the decisions in Sadhana Tomar (supra), the

appropriate course in the present case would, therefore, be to

direct the appellant-insurance company to deposit and satisfy the

compensation awarded by the learned Tribunal, together with the

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F.M.A. 2883 of 2016

applicable interest, in favour of the claimants in the first instance,

with liberty to recover the amount so paid from the owner and the

driver of the offending Scorpio car bearing registration No. WB-

20G/4458, in accordance with law. Such a direction would

preserve the right of the insurer arising from the established

breach of the insurance policy while ensuring that the claimants

are not deprived of the compensation awarded to them merely

because the driver did not possess a valid and effective driving

licence at the time of the accident.

29. Accordingly, the appeal, insofar as it challenges the

fastening of the ultimate liability upon the appellant-insurance

company, may be allowed to the limited extent of granting the

insurer the right of recovery against the owner and the driver,

while maintaining the direction for payment of the awarded

compensation to the claimants in the first instance. The owner

and the driver would remain responsible for the ultimate burden

of satisfying the award, subject to the recovery proceedings

undertaken by the insurer in accordance with law.

30. At the very outset, Mr. Bhowmik, learned Advocate

appearing on behalf of the appellant-insurance company, submits

that the learned Tribunal erred in law in awarding compensation

under the conventional heads of general damages in a manner

inconsistent with the principles laid down by the Constitution

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F.M.A. 2883 of 2016

Bench of the Hon’ble Supreme Court in case of National

Insurance Co. Ltd. v. Pranay Sethi, reported in (2017) 16

SCC 680.

31. In above referred case the Hon’ble Supreme Court

authoritatively settled the principles governing the award of

compensation under conventional heads in motor accident claim

cases involving death. The Constitution Bench held that

compensation under the conventional heads should ordinarily be

confined to loss of estate, loss of consortium and funeral

expenses, and that the amounts awarded under such heads must

conform to the guidelines laid down therein, subject to the

applicable enhancement in terms of the judgment.

32. Upon examination of the impugned award, it appears that

the learned Tribunal awarded a sum of Rs. 25,000/- towards

funeral expenses, Rs. 1,00,000/- towards loss of consortium and

Rs. 2,500/- towards loss of estate. The aggregate amount

awarded under the aforesaid conventional heads was, therefore,

Rs. 1,27,500/-.

33. However, having regard to the principles laid down by the

Hon’ble Supreme Court in Pranay Sethi (supra), the amounts

awarded under the conventional heads require reconsideration. In

terms of the figures prescribed in the said decision, the claimants

would ordinarily be entitled to Rs. 15,000/- towards loss of estate,

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F.M.A. 2883 of 2016

Rs. 40,000/- towards loss of consortium and Rs. 15,000/- towards

funeral expenses, subject to the applicability of the prescribed

enhancement and the relevant facts of the case.

34. Accordingly, the compensation under the aforesaid

conventional heads is required to be reassessed in conformity with

the governing principles laid down by the Hon’ble Supreme Court.

The amount awarded by the learned Tribunal towards funeral

expenses and loss of consortium exceeds the original figures

prescribed in Pranay Sethi, whereas the amount awarded towards

loss of estate falls short of the figure prescribed therein. The

impugned award, to this extent, therefore, calls for appropriate

modification so as to bring the compensation under the

conventional heads in conformity with the applicable legal

principles.

35. In view of the above discussion, the calculation of

compensation is made hereunder:

HEADS OF COMPENSATION AMOUNT IN INR

Yearly Income (After Deduction

of Income Tax and P.Tax)

3,00,000/-

Deduction 1/3 -1,00,000/-

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2,00,000/-

Multiplier to be “13” 26,00,000/-

Add: General damages

Loss of estate: Rs. 15,000/-

Loss of consortium Rs.

40,000/-

Funeral Expenses: Rs. 15,000/-

70,000/-

Total 26,70,000/- (Rupees

Twenty six lakh and

seventy thousand)

36. In view of the foregoing discussion and having regard to the

materials available on record, it appears that the driver of the

offending Scorpio Car bearing registration No. WB-20G/4458 did

not possess a valid and effective driving licence on the date of the

accident. The absence of such a licence, as established by the

relevant evidence, constitutes a breach of the applicable condition

of the insurance policy. Consequently, the ultimate liability to

satisfy the award shall rest upon the owner and the driver of the

offending vehicle, who shall be jointly and severally liable for

payment of the compensation awarded to the claimants.

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37. However, in view of the principles laid down by the Hon’ble

Supreme Court governing the doctrine of pay and recover, the

appellant-insurance company cannot, on that ground alone, be

permitted to avoid the immediate payment of compensation to the

third-party claimants. Accordingly, the appellant-insurance

company, namely, National Insurance Company Limited, is

directed to pay the compensation awarded to the claimants in the

first instance, with liberty to recover the amount so paid from the

owner and the driver of the offending vehicle, who shall be jointly

and severally liable for the same, in accordance with law.

38. The appellant-National Insurance Company Limited is

directed to deposit the compensation amount, as determined upon

modification of the impugned award, together with interest at the

rate of 6% per annum on the said amount from the date of filing

of the claim application until the date of deposit, after giving

credit to any amount already paid or deposited, if applicable.

39. The appellant-National Insurance Company Limited shall

deposit the aforesaid compensation amount, together with the

accrued interest thereon, by account-payee cheques drawn in

favour of the claimants before the office of the learned Registrar

General, High Court at Calcutta, within one month from the date

of this judgment.

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40. Upon receipt of the deposited amount and upon due

verification of the identities of the claimants, the learned Registrar

General, High Court at Calcutta, shall release the compensation

amount, together with the accrued interest thereon, in favour of

the claimants in equal shares, subject to the adjustment i.e. a

sum of Rs. 40,000/- shall be paid to respondent No. 1, being the

widow of the deceased, towards spousal consortium, in

accordance with the applicable principles governing compensation

under conventional heads. The balance amount shall be

distributed equally among the claimants.

41. The learned Registrar General shall ensure that the amount

is released only upon due satisfaction regarding the identity and

entitlement of the respective claimants and after making the

aforesaid adjustment.

42. Accordingly, the judgment and award dated 14th August,

2015, passed by the learned Additional District and Sessions

Judge-cum-Motor Accident Claims Tribunal in M.A.C. Case No. 48

of 2012 (M.A.C. No. 177 of 2011), stand modified to the extent

indicated hereinabove. The direction requiring the appellant-

insurance company to satisfy the award in the first instance shall

remain subject to its right to recover the amount paid from the

owner and the driver of the offending vehicle in accordance with

law.

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43. With the aforesaid observations and directions, the appeal

stands disposed of.

44. There shall be no order as to costs.

45. Consequently, any application filed in connection with this

appeal is also disposed of.

46. Let a copy of the judgment along with Tribunal Record be

sent down to the Tribunal immediately.

47. Urgent Photostat certified copy of this order, if applied for,

be given to the parties on payment of requisite fees.

(Prasenjit Biswas, J.)