The Supreme Court of India has clarified that once an insurance company is made a party to a motor accident compensation case, it is entitled to challenge the claim on every available ground — including the amount of compensation — and not merely the limited defences under the statute.
A Bench comprising Justice Rajesh Bindal and Justice Vijay Bishnoi set aside a decision of the Bombay High Court that had declined to entertain the insurer’s arguments on the quantum awarded in a fatal accident claim.
The Court underscored that when an insurer is formally impleaded as a respondent, it steps into the arena with full rights to contest the claim — whether on negligence, liability, or the calculation of compensation. The judges observed that the statutory limitation under Section 149(2) of the Motor Vehicles Act applies only in specific circumstances and does not prevent an insurer, once impleaded, from raising broader objections.
The dispute arose from a tragic road accident involving a 54-year-old pedestrian who died after being struck by a speeding car. His family approached the Motor Accident Claims Tribunal seeking compensation from the driver, vehicle owner, and the insurer. In 2015, the Tribunal awarded ₹52.33 lakh along with 9% annual interest.
The insurer challenged the award before the High Court, but the appeal was dismissed as not maintainable. The Supreme Court disagreed, holding that the High Court should have allowed the insurer to argue the compensation aspect.
While reinforcing its reasoning, the Court referred to the precedent in United India Insurance Co. Ltd. v. Shila Datta, which recognized that an insurer impleaded as a respondent may contest claims without being confined to the statutory defences listed in Section 149(2).
Restoring the matter, the Court sent the case back to the High Court, directing it to reconsider the issue of compensation and to do so expeditiously.
