National Insurance Co. Appeal Upheld, Rs2.5L Confirmed

Authority: High Court at Calcutta, Civil Appellate Jurisdiction (Appellate Side)

Order Date: 19 August 2026

Parties: Appellant – National Insurance Company Ltd (OP No‑2); Respondents – Bhaskar Purkait & Anr (claimant) and Amit Kumar Sardar (vehicle owner, respondent No‑2).
Background: On 28 January 2022, a Maruti Alto (registration WB‑20Z‑3493) collided with a standing bus on E.M. Bye‑pass, injuring passenger Bhaskar Purkait (fracture and dislocation of right hip joint, among other injuries). The claimant was hospitalized at Calcutta National Medical College and Hospital.
Initial Proceedings: The Additional District Judge, 4th Court Alipore, in Motor Accident Claim (MAC) Case No‑441 of 2022 under Section 164 of the Motor Vehicles Act, 1988, awarded the claimant Rs 2,50,000 with interest at 7% per annum from 11‑04‑2022, payable by the insurer (National Insurance Co.). The vehicle had been transferred to Amit Kumar Sardar on 8 August 2021 and was covered by a “Private Car Liability Only” policy.
Appeal Grounds: The insurer contended that (i) the liability‑only policy did not cover passengers, thus no compensation was payable, and (ii) the awarded amount was excessive.
Legal Precedent Cited: The Supreme Court judgment in Sunita and others VS United India Insurance Co. Ltd. and ors. (2025 SCC Online S.C. 1464) which held that even under a liability‑only policy, the insurer must pay compensation to a gratuitous passenger and may recover the amount from the vehicle owner under the “pay and recover” principle.

The Court noted the lack of evidence supporting the vehicle‑owner’s claim of prior transfer, thereby maintaining his liability.
Accepting the Supreme Court precedent, the Court affirmed that a liability‑only policy does not exempt the insurer from paying compensation to passengers; however, the insurer is entitled to recover that amount from the vehicle owner.
The Court expressed concern over vehicle owners’ misunderstanding of policy coverage and recommended broader awareness and possible regulatory action by the Insurance Regulatory Development Authority (IRDAI) and the West Bengal State Legal Service Authority.

The original award of Rs 2,50,000 to the claimant is confirmed.
The interest rate is reduced to 6% per annum (from the originally awarded 7%).
The insurer (National Insurance Co.) is authorized to recover the compensation from vehicle owner Amit Kumar Sardar if he fails to pay within one year, through twelve equal monthly installments. The installment schedule is to be mutually agreed upon; failing agreement, the insurer may seek appropriate directions from the trial court.
The claimant may withdraw the deposited compensation upon completion of required formalities; any surplus, if existent, shall be returned to the insurer.
The Court directed that a copy of this order be sent to the Registrar General, High Court Calcutta, and communicated to the Secretary, West Bengal State Legal Service Authority, and the IRDAI for necessary action.
An urgent certified copy of the order shall be provided to parties upon compliance with formalities.

Topics: Motor Accident Compensation, Insurance Liability