Bombay High Court Allows Tata AIG Insurance's Appeal Against Compensation Award To Claimant With Income Exceeding ₹40,000

The Bombay High Court has held that an application for compensation under Section 163A of the Motor Vehicles Act, 1988, cannot be entertained without verifying that the annual income of the claimant does not exceed Rs. 40,000. The Court observed that the benefit of the structured formula under Section 163A is restricted to a specific class of victims and cannot be claimed by persons whose income exceeds the statutory limit.

Justice Pravin S. Patil was hearing an appeal filed by Tata AIG General Insurance Company Ltd. challenging the award of compensation granted by the Motor Accident Claims Tribunal to the claimant under Section 163A of the Act. The insurer contended that the Tribunal erred in entertaining the claim when the claimant's annual income was above Rs. 40,000, contrary to the provisions of the Act and the law laid down by the Supreme Court. It was also argued that the claimant, being the owner and driver of the motorcycle involved in the accident, was not entitled to compensation under Section 163A.

The Court noted that the application under Section 163A is tenable if the annual income of the deceased does not go beyond the limit of annual income of Rs 40,000/-. The Court observed that the claimant had himself stated that his monthly income was Rs. 6,000, amounting to Rs. 72,000 annually, well beyond the statutory threshold. Even on the Tribunal's own assessment of Rs. 4,000 per month, the annual income would still exceed Rs. 40,000, rendering the claim untenable.

The Court further held that the Tribunal had erroneously assumed that the vehicle insured with Tata AIG was the motorcycle, whereas the insurance cover pertained to the auto-rickshaw involved in the accident, resulting in perverse findings.

“… under Section 163A of the MV Act, the owner of the vehicle, who was involved in the accident and criminal case being registered against him, cannot file the proceedings before the Tribunal against the Insurance Company to which his vehicle is registered. However, the learned Tribunal by recording perverse findings that instead of a motorcycle, the auto-rickshaw involved in the accident, was insured with the appellant Insurance Company, decided the claim petition,” the Court observed.

The Court held that the Tribunal committed an error by entertaining the application under Section 163A of the MV Act without considering the income of respondent no.1.

Accordingly, the Court quashed and set aside the Tribunal's award, holding that the claim under Section 163A was not maintainable. The insurer was permitted to withdraw the entire amount deposited with the Court, along with accrued interest.

Case Title: Tata AIG General Insurance Company Ltd. v. Ashish Gopal Yadao & Ors. [First Appeal No. 672 of 2018]

Click Here To Read/Download Order