Supreme Court Allows Insurer to Contest Quantum of Motor Accident Claim – National Insurance Co. v. Gauri Gurudas Gaonkar

The Supreme Court recently allowed an Insurance Company's plea against a Bombay High Court decision preventing it from raising submissions on the quantum of motor accident claim compensation.The Court observed that when an Insurance Company is impleaded as a party-respondent to a motor accident claim compensation case, it has a right to contest the claim on all available grounds. That is, there is no restriction to raise only the grounds contained in Section 149(2) of the Motor Vehicles Act (such as, breach of policy condition, non-disclosure of material fact, etc.)"the Insurance Company, when impleaded as a respondent in the claim petition, has the right to contest the claim on all available grounds, without any restriction to grounds available under Section 149(2) of the 1988 Act", a bench of Justices Rajesh Bindal and Vijay Bishnoi observed.As per Section 149(2) MV Act, the insurer can only raise the ground of breach of policy. However, if it is added as a respondent, then it can raise all grounds, including dispute on negigence as well as quantum of compensation.The case pertained to a 54 year old man, who was hit by a high-speed car while he was walking in a street. As a result of the accident, the man died on the spot. Later, his wife and children filed a claim petition before the Motor Accident Claims Tribunal against the Insurance Company, the car driver and the car owner.In 2015, the MACT allowed their claim, awarding Rs. 52,33,440/- with simple interest at 9% per annum. Against the award, the Insurance Company filed an appeal before the High Court, but the same was rejected as non-maintainable.After considering the material, the Supreme Court held that the High Court erred in not allowing the Insurance Company to address the Court on the quantum of compensation. It referred to the decision in United India Insurance Co. Ltd. v. Shila Datta, where it was observed thus,"Therefore, where the insurer is a party-respondent, either on account of being impleaded as a party by the Tribunal under Section 170 or being impleaded as a party-respondent by the claimants in the claim petition voluntarily, it will be entitled to contest the matter by raising all grounds, without being restricted to the grounds available under Section 149(2) of the Act. The claim petition is maintainable against the owner and driver without impleading the insurer as a party.”Ultimately, the Court relegated the matter back to the High Court to decide the issue of quantum of compensation, with a request that the hearing be expedited.Appearance:For Appellant: Advocates Abhishek Kumar Gola, Anshul Mehral, Arun Kumar Nagar, Manohar Naagar and Rajshree Singh, AoR Sudhir NaagarFor Respondent(s) : AoR Salvador Santosh Rebello, Advocates Servesh Malyankar, Raghav Sharma, Moulishree Pathak and Jaskirat Pal SinghCase Title: NATIONAL INSURANCE COMPANY LTD. v. GAURI GURUDAS GAONKAR, SLP (C) No. 11439 of 2023Citation : 2026 LiveLaw (SC) 348Click here to read the order