Authority: High Court of Sikkim, Single Bench (Justice Bhaskar Raj Pradhan)

Order Date: 01.09.2026

Case Overview

  • Parties: Appellants – Rekha Chettri (wife of the deceased), her son Dishant Sunwar (minor), Bhakta Bahadur Sunwar and his wife Parbati Sunwar; Respondents – Tata AIG General Insurance Company, Rajendra Chettri (driver), Mani Kumar Chettri (owner of the accident vehicle).
  • Background: Deepen Mukhiya (also referred to as Deepen Mukhia) died in a motor vehicle accident on 12.11.2019. The claimants filed an application under Section 166 of the Motor Vehicles Act, 1988 seeking compensation of Rs 19,07,560, which was dismissed by the Motor Accident Claims Tribunal (MACT) on the ground that the accident was caused by brake failure and not by rash or negligent driving.
  • Procedural History: The appeal was filed under Section 173 of the Motor Vehicles Act (MAC App. No. 20 of 2024). The Tribunal had proceeded ex parte against Tata AIG as it failed to appear despite summons. Tata AIG later appeared in this appeal.
  • Insurance Policy Details: The vehicle was insured by Tata AIG under an “Auto Secure Commercial Vehicle Package Policy”. The policy’s limits of liability clause referred to “section II‑1(i) of policy (Death of or bodily injury)” without clear definition. The policy’s website was cited for detailed terms, which limited liability to amounts necessary to meet Motor Vehicles Act requirements and excluded coverage for employees, goods in trust, bridges, etc.
  • Legal Arguments: Appellants argued that despite the dismissal under Section 166, compensation could be granted under Section 140 (no‑fault liability). They contended the insurance policy covered the deceased fully. Respondent 1 (Tata AIG) argued that the deceased, being the tortfeasor, could not claim compensation.
  • Judicial Observations: The Court noted the ambiguity of the insurance certificate and emphasized the insurer’s duty to produce the full policy and its terms. It quoted Supreme Court in National Insurance Co. Ltd. vs. Jugal Kishore on the necessity for insurers to file policies to aid justice. The Court reiterated that Section 140 provides liability irrespective of driver negligence and that the insurer must indemnify the vehicle owner.
  • Relevant Precedents Cited: Eshwarappa Alias Maheshwarappa & Anr. vs. C.S. Gurushanthappa & Anr., Indra Devi & Ors. vs. Bagada Ram & Anr., Nishan Singh & Ors. vs. Oriental Insurance Co. Ltd., Ram Murti & Ors. vs. Punjab State Electricity Board, and Smt. Thungala (IRDA circular dated 16.10.2009) establishing insurer liability under comprehensive/package policies.
  • Statutory Provisions: Section 140 of the MV Act provides a fixed compensation of Rs 50,000 for death, but the Court applied the later provision of Section 164, which raises death compensation to Rs 5 lakhs.

Final Outcome

  • The Court allowed the appeal and directed Tata AIG General Insurance Company to pay Rs 5,00,000 as compensation to the appellants, with interest at 7% per annum calculated from the claim filing date (14.02.2023) until actual payment.
  • The appeal is disposed of to the above extent, and the trial court records are to be remitted to the Motor Accident Claims Tribunal, Gangtok, for further proceedings.

Topics: Compensation Law, Insurance Liability, Motor Vehicles Act