1

REPORTABLE
2025 INSC 625

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2025

[@ SPECIAL LEAVE PETITION (CIVIL) NO.2135 OF 2023]

THE ROYAL SUNDARAM ALLIANCE INSURANCE COMPANY

LIMITED …APPELLANT

VERSUS

SMT. HONNAMMA & ORS. …RESPONDENTS

R1: SMT. HONNAMMA
R2: KUM. BHAGYA
R3: KUM. RAMYA
R4: SRI H. NAGARAJ

J U D G M E N T

AHSANUDDIN AMANULLAH, J.

Leave granted.

Signature Not Verified

Digitally signed by
SAPNA BISHT
Date: 2025.05.05
16:58:29 IST
Reason: 2. The present appeal mounts a challenge against the Final

Judgment and Order dated 25.11.2022 in MFA No.3659/2014 (MV-

 2

D) (hereinafter referred to as the ‘Impugned Order’) passed by a

learned Single Judge of the High Court of Karnataka at Bengaluru

(hereinafter referred to as the ‘High Court’), whereby the appeal filed

by the Respondents No.1 to 3 (herein) was partly allowed and the

compensation awarded vide Award dated 02.04.2014 passed by the

learned Senior Civil Judge & Member, Additional Motor Accident

Claims Tribunal, Harihar (hereinafter referred to as the ‘MACT’) was

enhanced from Rs.9,50,000/- (Rupees Nine Lakhs Fifty Thousand)

to Rs.13,28,940/- (Rupees Thirteen Lakhs Twenty-Eight Thousand

Nine Hundred and Forty) keeping the interest component intact i.e.,

6% per annum and liability was fastened on the Appellant (herein) to

pay such compensation.

BRIEF FACTS:

3. On 29.02.2012, the deceased-Nagarajappa was travelling in

a tractor and trailer as a coolie in order to unload the soil, which was

loaded thereon. Due to the rash and negligent driving of the

Respondent No.5 (herein), the tractor and trailer toppled causing

injuries to the deceased-Nagarajappa, ultimately leading to his

death. The wife and two minor daughters (Respondents No.1, 2 and
 3

3 herein) of the deceased filed M.V.C. No.121/2012 before the

MACT claiming a compensation of Rs.10,00,000/- (Rupees Ten

Lakhs). The claimants in support of their case examined

Respondent no.1, the wife of the deceased, as PW1 and got marked

the documents as Exs.P1 to P10. On the other hand, the Appellant

examined two witnesses as RW1 and RW2 and got marked the

documents as Exs.R1 to R7 i.e., authority letter, policy schedule,

charge-sheet, notice, agreement and RC books. The MACT after

considering the evidence on record, partly allowed the claim vide

Award dated 02.04.2014 and awarded a compensation of

Rs.9,50,000/- (Rupees Nine Lakhs Fifty Thousand) with interest at

6% per annum from the date of filing of the petition till its realization.

The MACT held that the risk of employee of the tractor and trailer

was not statutorily covered under Section 147(1)(b) of the Motor

Vehicles Act, 1988 (hereinafter referred to as the ‘MV Act’) and

fastened the liability to satisfy the award on the owner (Respondent

No.4 herein) and the driver.

4. The claimants filed appeal bearing MFA No.3659 of 2014

(MV-D) before the High Court seeking enhancement of the

compensation. On due consideration of the material before it, the

High Court vide the Impugned Order partly allowed the appeal and
 4

enhanced the compensation to Rs.13,28,940/- (Rupees Thirteen

Lakhs Twenty-Eight Thousand Nine Hundred and Forty) payable

with 6% per annum interest from the date of petition till deposit.

While doing so, the High Court fastened the liability of compensation

on the Appellant-insurance company. Aggrieved thereby, the

Appellant has filed the present appeal.

5. The appeal qua Respondent No.5-driver stands dismissed in

terms of Order dated 20.02.2024 passed by the learned Judge-in-

Chambers. Despite due service of notice to Respondents No.1, 2, 3

and 4, none appeared to represent them.

APPELLANT’S SUBMISSIONS:

6. At the outset, learned counsel for the appellant argued that

the MACT had holistically appreciated the facts and circumstances

of the case and had exempted the appellant from incurring any

liability of compensation, which aspect has been erroneously

reversed by the High Court in the Impugned Order on unsustainable

grounds. It was submitted that the insurance policy did not extend

any coverage, either to the trailer or employees of the owner or any

passenger travelling on the trailer. Despite categorical options for

 5

risk-coverage of these categories of persons/trailer(s), it was not

subscribed to by the Respondent No.4-owner/policy-holder.

7. It was argued that the High Court took a very naive and

simplistic view of the matter ignoring the concerned respondent’s

categorical admission regarding rash driving. Further, the High Court

ignored that the Respondents No.4 and 5 had accepted the order of

the MACT dated 02.04.2014 as they had not challenged the

decision. It was argued that the High Court by awarding a sum of

Rs. 13,28,940/- (Rupees Thirteen Lakhs Twenty-Eight Thousand

Nine Hundred and Forty) exceeded the originally prayed for

compensation in the claim petition. Moreover, it was urged that the

Award was not in accordance with the decision of this Court in Sarla

Verma v Delhi Transport Corporation, (2009) 6 SCC 121.

8. Lastly, learned counsel relied on the decisions rendered in

New India Assurance Co. Ltd. v C M Jaya, (2002) 2 SCC 278 to

state that compensation could not exceed the limits of the insurance

policy and on Dhondubai v Hanmantappa Bandappa Gandigude

Since Deceased Through His LRs & Ors., Civil Appeals

No.5459-5460/2023, to argue that liability cannot be fastened on the

 6

insurance company, when the deceased was travelling in an

uninsured trailer.

ANALYSIS, REASONING AND CONCLUSION:

9. Heard the learned counsel for the appellant and perused the

material/evidence on record. We have given serious consideration to

the issue as it raises a mixed question of fact and law where both

have to be harmoniously balanced.

10. In the present case, the admitted fact is that the incident

occurred while a tractor which was insured with the Appellant was

attached to a trailer and on the trailer a person was present who due

to an unfortunate accident, fell off the trailer which was being pulled

by/driven by/attached to the tractor, resulting in the death of such

person.

11. Therefore, the undisputed position is that the trailer was

being pulled by/attached to the tractor and then the trailer on which

the deceased was present, turned turtle/upturned, resulting in his

death. From the above, it is clear that the tractor which was insured

was the reason for the accident. It is not the case that only because
 7

of some fault on the part of the trailer stand-alone, the accident

happened. To explain, we may give an example: that had the trailer

been stationary at a place and due to some reason, it overturned or

a mishap happened, then without the trailer being specifically

insured the Appellant would not be liable to pay, but here the main

cause of the accident was the tractor which was

pulling/driving/moving the trailer and in such sequence of events, the

trailer upturned. Thus, the accident was caused by the tractor, as

during the course of being driven/pulled by the tractor, the accident

occurred.

12. Thus, the liability of the tractor/its insurer extended to the

accident caused by the tractor resulting in the death of the

deceased, through the trailer. This being the position in the present

case, the principles emanating from the decisions where the Courts

have held that the trailer has to be separately registered with the

insurance company to make it liable, would not be applicable. To

that extent, the facts in the present case are clearly distinguishable

from the ones cited by learned counsel for the appellant. The

legislation i.e., the MV Act, being beneficial and welfare-oriented in

nature [Ningamma v United India Insurance Co. Ltd., (2009) 13

SCC 710; K Ramya v National Insurance Co. Ltd., 2022 SCC

 8

OnLine SC 1338, and; Shivaleela v Divisional Manager, United

India Insurance Co. Ltd., 2025 SCC OnLine SC 563] and

ultimately the root cause of the accident being the tractor, which was

insured, this crucial fact cannot be lost sight of. For further

clarification, we might illustrate: if an insured vehicle hits another

vehicle which in turn hits a third vehicle, then for the entire chain of

accidents, the liability would pass on to the vehicle which was the

root cause of the accident because it is the result of the action in the

same chain of events which cannot be segregated or

compartmentalized. Moreover, this Court is duty-bound to be mindful

of the ground realities of our nation and cannot let practicality be

overshadowed by technicality.

13. In Dhondubai (supra), the Court stated:

‘5. In a matter of the present nature, the law is well settled

that when a tractor and trailer are involved, both the tractor
as well as the trailer are required to be insured. Therefore,
in a normal circumstance, when the appellant/claimant
was travelling in the trailer which was not insured, the
liability on the Insurance Company cannot be fastened and
to that extent the High Court was justified.’
(emphasis supplied)

14. To our mind, the learned Judges in Dhondubhai (supra) did

not lay down an absolute principle of law, but taking note of Oriental

Insurance Co. Limited v Brij Mohan, (2007) 7 SCC 56, it was

 9

ordered that the ‘respondent-Insurance Company shall pay the

amount awarded by the High Court as compensation with the

accrued interest and recover the same from the owner of the

vehicle.’ A decision by a Division Bench of the Andhra Pradesh High

Court in United India Insurance Co. Ltd., Kadapa District v

Koduru Bhagyamma, 2007 SCC OnLine AP 830 is relevant:

‘1. This case has come before this Court on a reference

made by a learned Single Judge of this Court as it was
contended before the learned Single Judge by the
appellant that as the trailer in which the deceased was
travelling was not insured, although it was attached to
the tractor which was insured, therefore no liability
could be fastened upon the insurer.

xxx

13. Now on analysis of these judgments and the provisions

of law which have been quoted above, we feel that the
law has been correctly appreciated by a learned Single
Judge of this Court in Gunti Devaiah v. Vaka Peddi
Reddy (supra) and the reasons given by him are
sufficient to hold that under the Motor Vehicles Act no
separate insurance is contemplated for a trailer and
when the trailer is attached to the tractor which is
insured, it becomes the part of the tractor. We
reproduce the Para 26 of the said judgment as under:
“The word “vehicle” mentioned in Section 147
is co-relatable to the word motor vehicles,
which is stipulated in Section 146. Therefore,
the expression vehicle wherever appearing in
Chapter X(XI) has to be only read as motor
vehicle. The principle of claim for
compensation in accidents arising out of the
use of the motor vehicle is based on tortuous
liability and the negligence of the driver of the
motor vehicle is a sine quo non for
maintaining a claim under the provisions of
 10

the Act. Inasmuch as the trailer by itself

cannot be driven and it has to be carried or
towed with a motor vehicle namely a tractor or
a like self-propelled vehicles. Therefore, the
question of driving the trailer in a rash and
negligent manner would not arise. It is only
the prime mover or the motor vehicle which
controls movement of the tractor and in case
of the negligence driving of the trailer or the
motor vehicle, the owner of the vehicle and its
insurer alone will be made liable for payment
of compensation. But, since the trailer is
attached can it be said that trailer should also
be independently insured so as to avoid the
liability of compensation in case of rash and
negligent driving by the driver. That
contingency would not arise, as it is only a
vehicle and not a motor vehicle. It may be for
tax purposes, it is treated as a goods vehicle.
But, under the provisions of the Motor
Vehicles Act, no separate insurance is
contemplated. When the trailer is attached to
the tractor it becomes a tractor-trailer. There is
no provision requiring the trailer to be
separately insured to cover the third party
risk. The reasons are obvious that it cannot be
driven by the driver as in the case of motor
vehicles or tractors. Thus, a separate
distinction has been drawn between the motor
vehicle and a vehicle i.e., visible in all the
definitions and more especially in Chapter XI.
The same situation also persists in Chapter X
in case of no fault liability wherein it has been
stated that whether a death or a permanent
disability of any person has been resulted
from an accident arising out of the use of
a motor vehicle or motor vehicles and there is
no reference to vehicle as such. This aspect
was never considered in any of the decisions
relied on by the learned Standing Counsel for
the Insurance Company and also for other
side.”’
 11

(underlined in original; emphasis supplied by us through

the bold highlight)

15. Insofar as the Appellant’s reliance on C M Jaya (supra) is

concerned, we may first set out Section 147 of the MV Act, as it

currently stands:

‘147. Requirement of policies and limits of liability.—(1)

In order to comply with the requirements of this Chapter, a
policy of insurance must be a policy which—
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in
the policy to the extent specified in sub-section (2)—
(i) against any liability which may be incurred by
him in respect of the death of or bodily injury to
any person including owner of the goods or his
authorised representative carried in the motor
vehicle or damage to any property of a third party
caused by or arising out of the use of the motor
vehicle in a public place;
(ii) against the death of or bodily injury to any
passenger of a transport vehicle, except
gratuitous passengers of a goods vehicle, caused
by or arising out of the use of the motor vehicle in
a public place.
Explanation.—For the removal of doubts, it is hereby
clarified that the death of or bodily injury to any person or
damage to any property of a third party shall be deemed to
have been caused by or to have arisen out of, the use of a
vehicle in a public place, notwithstanding that the person
who is dead or injured or the property which is damaged
was not in a public place at the time of the accident, if the
act or omission which led to the accident occurred in a
public place.
(2) Notwithstanding anything contained under any other
law for the time being in force, for the purposes of third
party insurance related to either death of a person or
grievous hurt to a person, the Central Government shall
prescribe a base premium and the liability of an insurer in
relation to such premium for an insurance policy under sub-
 12

section (1) in consultation with the Insurance Regulatory

and Development Authority.
(3) A policy shall be of no effect for the purposes of this
Chapter unless and until there is issued by the insurer in
favour of the person by whom the policy is effected, a
certificate of insurance in the prescribed form and
containing the prescribed particulars of any condition
subject to which the policy is issued and of any other
prescribed matters; and different forms, particulars and
matters may be prescribed in different cases.
(4) Notwithstanding anything contained in this Act, a policy
of Insurance issued before the commencement of
the Motor Vehicles (Amendment) Act, 2019 shall be
continued on the existing terms under the contract and the
provisions of this Act shall apply as if this Act had not been
amended by the said Act.
(5) Where a cover note issued by the insurer under the
provisions of this Chapter or the rules or regulations made
thereunder is not followed by a policy of insurance within
the specified time, the insurer shall, within seven days of
the expiry of the period of the validity of the cover note,
notify the fact to the registering authority or to such other
authority as the State Government may prescribe.
(6) Notwithstanding anything contained in any other law for
the time being in force, an insurer issuing a policy of
insurance under this section shall be liable to indemnify the
person or classes of persons specified in the policy in
respect of any liability which the policy purports to cover in
the case of that person or those classes of persons.’

16. The provision supra is identical to Section 95 of the Motor

Vehicles Act, 1939, which was looked at in C M Jaya (supra),

wherein a 5-Judge Bench harmonised the decisions of the 3-Judge

Benches in New India Assurance Co. Ltd. v Shantibai, (1995) 2

SCC 539 and Amrit Lal Sood v Kaushalya Thapar, (1998) 3 SCC
 13

744 on the extent of liability that could be fastened on the insurer.

The Bench of 5 learned Judges held:

‘8. Thus, a careful reading of these decisions clearly shows

that the liability of the insurer is limited, as indicated in
Section 95 of the Act, but it is open to the insured to
make payment of additional higher premium and get
higher risk covered in respect of third party also. But
in the absence of any such clause in the insurance
policy the liability of the insurer cannot be unlimited in
respect of third party and it is limited only to the
statutory liability. This view has been consistently
taken in the other decisions of this Court.

9. In Shanti Bai case [(1995) 2 SCC 539] a Bench of three

learned Judges of this Court, following the case of Jugal
Kishore [(1988) 1 SCC 626: 1988 SCC (Cri) 222] has held
that:
(i) a comprehensive policy which has been
issued on the basis of the estimated value of
the vehicle does not automatically result in
covering the liability with regard to third-party
risk for an amount higher than the statutory
limit,
(ii) that even though it is not permissible to use
a vehicle unless it is covered at least under an
“Act only” policy, it is not obligatory for the
owner of a vehicle to get it comprehensively
insured, and
(iii) that the limit of liability with regard to third-
party risk does not become unlimited or
higher than the statutory liability in the
absence of specific agreement to make the
insurer's liability unlimited or higher than the
statutory liability.

10. On a careful reading and analysis of the decision

in Amrit Lal Sood [(1998) 3 SCC 744] it is clear that the
view taken by the Court is no different. In this decision also,
the case of Jugal Kishore [(1988) 1 SCC 626: 1988 SCC
(Cri) 222] is referred to. It is held:
 14

(i) that the liability of the insurer depends on

the terms of the contract between the insured
and the insurer contained in the policy;
(ii) there is no prohibition for an insured from
entering into a contract of insurance covering
a risk wider than the minimum requirement of
the statute whereby risk to the gratuitous
passenger could also be covered; and
(iii) in such cases where the policy is not
merely statutory policy, the terms of the policy
have to be considered to determine the
liability of the insurer.
Hence, the Court after noticing the relevant clauses in
the policy, on facts found that under Section II(1)(a) of
the policy, the insurer has agreed to indemnify the
insured against all sums which the insured shall
become legally liable to pay in respect of death of or
bodily injury to “any person”. The expression “any
person” would undoubtedly include an occupant of the
car who is gratuitously travelling in it. Further, referring
to the case of Pushpabai Purshottam Udeshi [(1977) 2
SCC 745] it was observed that the said decision was based
upon the relevant clause in the insurance policy in that
case which restricted the legal liability of the insurer to the
statutory requirement under Section 95 of the Act. As such,
that decision had no bearing on Amrit Lal Sood
case [(1998) 3 SCC 744] as the terms of the policy were
wide enough to cover a gratuitous occupant of the vehicle.
Thus, it is clear that the specific clause in the policy being
wider, covering higher risk, made all the difference in Amrit
Lal Sood case [(1998) 3 SCC 744] as to unlimited or higher
liability. The Court decided that case in the light of the
specific clause contained in the policy. The said decision
cannot be read as laying down that even though the liability
of the Insurance Company is limited to the statutory
requirement, an unlimited or higher liability can be imposed
on it. The liability could be statutory or contractual. A
statutory liability cannot be more than what is required
under the statute itself. However, there is nothing in
Section 95 of the Act prohibiting the parties from
contracting to create unlimited or higher liability to
cover wider risk. In such an event, the insurer is bound
by the terms of the contract as specified in the policy
 15

in regard to unlimited or higher liability as the case

may be. In the absence of such a term or clause in the
policy, pursuant to the contract of insurance, a limited
statutory liability cannot be expanded to make it
unlimited or higher. If it is so done, it amounts to
rewriting the statute or the contract of insurance which
is not permissible.

xxx

14. In the premise, we hold that the view expressed by the

Bench of three learned Judges in the case of Shanti
Bai [(1995) 2 SCC 539] is correct and answer the question
set out in the order of reference in the beginning as under:
In the case of the Insurance Company not taking any
higher liability by accepting a higher premium for
payment of compensation to a third party, the insurer
would be liable to the extent limited under Section
95(2) of the Act and would not be liable to pay the
entire amount.’
(emphasis supplied)

17. In this light, let us examine the insurance policy, holistically.

Relevant clauses read as under:

‘The Policy does not cover:

a) Use for Racing, Pace Making, Reliability trails or Speed
Testing
b) Use for the Carriage of passengers for hire or reward.
c) Use whilst drawing a greater number of trailers in all
than is permitted under law.

xxx

LIMITS OF LIABILITY:
Under Section 11-1 (i) of the Policy - Death of or bodily
injury - Such amount as is necessary to meet the
requirements of the Motor Vehicles Act, 1988.

xxx
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B - LIABILITY
3. Trailers (IMT 48) 0.001

xxx
Legal Liability:
9. To Coolies (IMT 39) 3 0.002’
(emphasis supplied)

18. What emerges is that the Appellant ought not to be saddled

with payment of compensation exceeding what the insurance policy

provides for or the limit, if any, set under any law for the time being

in force, whichever be the higher amount of the two, in the

underlying factual scenario. The amount exclusively payable by the

Appellant, however, shall in no case be less than Rs.9,50,000/-

(Rupees Nine Lakhs Fifty Thousand).

19. For the reasons aforesaid, we do not find any infirmity in the

Impugned Order, either with regard to the quantum of compensation

awarded or fixation of liability on the insurer-Appellant for the

accident. The same shall be paid within two months from today after

adjusting whatever has been paid earlier, in terms of Order dated

06.02.2023 passed in the present case. However, liberty is granted

to the Appellant to recover the differential amount (if any), in terms of

Paragraph 18 supra i.e., total compensation awarded less the

1
0.00 refers to the ‘Premium in Rs’.
2
Ibid.
 17

maximum amount payable, contractually or as per law (whichever

be the higher amount), by the Appellant, from the Respondent No.4-

owner.

20. Accordingly, subject to the above observations and directions,

the appeal is dismissed. No order as to costs.

……………………....................J.
[SUDHANSHU DHULIA]

…………………...................…..J.
[AHSANUDDIN AMANULLAH]
NEW DELHI
MAY 05, 2025