[Motor Accidents] Insurance Companies Liable To Pay Amount Awarded Under 'Future Prospects' Along With Interest: Karnataka HC

The Karnataka High Court has held that in case of motor accidents, insurance companies are liable to pay the awarded amount under the head of future prospects, together with the banking rate of interest which is prevalent during the relevant time.

A division bench of Justice K Somashekar and Justice Dr Chillakur Sumalatha held thus while deciding the appeal filed by the Reliance General Insurance Company Limited, challenging the order of the Motor Accidents Claim Tribunal, which allowed the claim petition filed by the legal heirs of the deceased Supreet. The tribunal had awarded interest over the amount that was fixed toward the loss of future prospects.

The counsel for the insurance company contended that the amount awarded under the head loss of future prospects is the amount which the claimants would derive at a future point of time, but not immediately even in case the deceased was alive and thus, awarding of interest on future prospects was unjustifiable.

Counsel for claimants argued that the accident occurred in the year 2014 and this appeal was being heard in the year 2024, after ten years. It was stated that for all this period, the insurance company was enjoying the fruits of the amount to which the claimants were legally entitled and thus denial of interest was unjustifiable.

The bench noted it is abundantly clear that the person who withholds someone else's funds would be liable to make good the same along with interest which the person who had used those funds would have earned by investing the said fund.

Referring to Section 149 of the Motor Vehicles Act, the court said “It is incumbent on part of the insurance companies to settle the claims relating to the accidents as soon as possible. Also the insurance companies are directed to settle the claims by designating an Officer for processing the settlement of claims of compensation.”

“If the dependents are denied with the interest over the amount awarded under the head 'loss of future prospects', it would be most unjustifiable,” it added.

It held that when the insurance companies are enjoying the fruits of the said amount and the accrued interest for many years, they cannot take a plea that they are not liable to pay interest to the claimants over the amount for which they are liable.

It added “In the case on hand, the accident occurred in the year 2014 and the claim is not settled till this day. Thus, the amount which the claimants are legally entitled to is being enjoyed by the insurance company for a long period of ten years.”

Court stated that in all cases the amount which the claimants would get for their livelihood through the deceased would be many times more than the actual amount awarded through insurance

It was also stated that the insurance companies were depositing the compensation years after the date of the accident which was in clear violation of Section 149 of the Motor Vehicles Act, 1988.

The court said, “We hold that the insurance company cannot escape from the liability to pay interest on the future prospects.” It directed that the amount awarded as compensation is enhanced by Rs.40,000. The enhanced amount shall carry interest at the rate of 6% per annum from the date of petition till the date of deposit.

Contributory Negligence if Vehicle Driver Does Not Maintain Safe Distance between two vehicles

In the case at hand, deceased Supreeth S was travelling in a car along with his friends. When the car reached Chinnur Sangeetha Dhaba Hotel, Hosur Road, a lorry which was proceeding in front of the car suddenly turned to the right side in a rash and negligent manner. No signal or indication was given by the driver of the lorry. Due to such a sudden turning, the car dashed against the lorry.

The insurance company questioned the tribunal order by which it had fixed to the extent of 95% liability on the insurance company of the truck and contributory negligence of 5 percent liability on the deceased.

The company claimed that in case the driver of the car maintained sufficient and proper distance between his vehicle and the lorry, which was proceeding ahead, the accident might not have occurred and thus, entire negligence lies on the part of the driver of the car.

The bench relied on the spot mahazar, IMV reports and further recording the statements of the witnesses including ocular witnesses and charge sheet filed by the police. It held “The insurance company has not adduced any cogent and convincing evidence to show that the driver of the car was solely negligent and that his negligence is the only cause for the accident to occur.”

“Undoubtedly, the vehicle moving behind another vehicle is at a liability to maintain safe distance from the vehicle moving ahead. In this case, it appears that the driver of the car did not maintain such safe distance. However, at the same time, one cannot expect that the vehicle moving ahead on the left side of the road would suddenly turn to its right, that too without any signal or indicator,” it added.

The court thus upheld the order of the tribunal and said that the Tribunal had rightly fastened liability of 95% against the insurer and insured of the lorry and 5% against the insurer and insured of the car.

Appearance: Advocate Ashok N Patil for Appellant.

Advocate G M Srinivasa Reddy FOR R1-R3.

Advocate B A Ramakrishna for R6.

Citation No: 2024 LiveLaw (Kar) 354

Case Title: THE RELIANCE GENERAL INSURANCE COMPANY LIMITED AND SUPREETH S. @ SUPREETH & Others

Case No: M.F.A. NO. 511 OF 2020 (MV-D) C/W M.F.A. CROB. NO. 40 OF 2022.

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