High Court Raps Insurance Company, Enhances Compensation After Failing to Prove Policy Breach

In a combined ruling covering four separate appeals, the High Court of Chhattisgarh at Bilaspur has delivered a stern message to insurance firms attempting to avoid liability through unsubstantiated claims of policy violations. Hon’ble Shri Justice Sachin Singh Rajput dismissed the appeals filed by National Insurance Company Ltd. and partially allowed the appeal of an accident victim, emphasizing the necessity of “just compensation” in permanent disability cases.

The Collision and the Dispute

The litigation originated from a motor vehicle accident on March 7, 2020, involving a truck (bearing registration No. CG-04/CZ-2577). The accident led to claims for personal injuries by Ram Singh Kashyap and death claims for Kalawati and Premwati. While the I Additional Motor Accident Claims Tribunal in Jagdalpur initially awarded compensation to the victims, the Insurance Company challenged the awards, alleging that the driver was intoxicated and lacked a valid driving license, thereby violating the terms of the insurance policy.

The Burden of Proof

The Insurance Company’s defense rested on two pillars: the alleged lack of a valid driving license and the driver being under the influence of alcohol.

However, Justice Rajput noted a lack of evidentiary support for these claims. Regarding the driving license, the court observed that the insurance firm failed to examine any official from the RTO to prove that the license had been revoked or was invalid at the time of the accident. Similarly, on the issue of intoxication, the court found no scientific evidence. Justice Rajput noted, “Despite advice, no blood or urine examination of the driver of the offending vehicle was conducted, nor was any breath analyzing test carried out.”

Enhancing Justice for the Victim

Beyond the insurance dispute, the High Court addressed the inadequate compensation awarded by the Tribunal to Ram Singh Kashyap, who suffered 40% physical disability. The Tribunal had previously pegged his functional disability at a mere 13%.

Citing the Supreme Court’s landmark judgment in Raj Kumar Vs. Ajay Kumar and Another , the High Court held that the assessment of functional disability must align with the claimant’s profession. As a laborer/coolie, the claimant’s shoulder disability significantly hindered his earning capacity. Consequently, the High Court reassessed the functional disability at 30% and increased the total compensation package significantly.

Key Observations

Highlighting the gravity of judicial responsibility in compensation matters, the Court stated:

• “The insurance company could not prove the violation of terms and condition of the Insurance Policy by driver of the offending vehicle of not holding valid and effective driving license.”
• “Mere smell of liquor would not determine that the appellant was under such an intoxication that he was not in a position to control the vehicle.”
• “The assessment of functional disability to the tune of 13% by the learned Tribunal does not appear to be correct and proper looking to the evidence on record.”
• “Courts should be mindful that a serious injury not only permanently imposes physical limitations and disabilities but too often inflicts deep mental and emotional scars upon the victim.”

Final Ruling and Future Implications

The High Court ordered the National Insurance Company to deposit the additional compensation of ₹4,45,920 within 60 days, with 6% interest applicable from the date of the appeal.

This judgment serves as a vital reminder to insurance providers that the "burden of proof" for policy exclusion rests firmly on the insurer. Furthermore, it reinforces that when determining compensation, tribunals must move beyond mechanical percentages and instead consider the real-world impact of injuries on a victim's livelihood, ensuring that dignity remains at the center of the judicial process.