Ramkhiladi And Another V. United India Assurance Company And Another, (2020) 2 Scc 550


On October 2, 2006, Chotelal alias Shivram who was driving a motorcycle with Registration Number RJ 02 SA 7811 [“first motorcycle“], died due to a vehicular accident involving the driver of another motorcycle bearing Registration Number RJ 29 2M 9223 [“second motorcycle”]. As per the Appellants of the present appeal, the legal heirs of the deceased, the rash and negligent driving of the second motorcycle had caused the accident leading to Chotelal’s death.

At the Motor Accidents Claims Tribunal in Laxmangarh (Alwar), Rajasthan, the Appellants filed a claim petition against the owner of the first motorcycle and its insurance provider without joining the second motorcycle’s rider, owner, and insurance provider as opponents. The Tribunal awarded a total of ₹3,67,000 as compensation, with interest accruing at a rate of 6% per annum from the day the petition was filed to the date the actual payment was made, despite the Respondent-insurance company’s preliminary objection to the petition’s dismissal for the latter’s exclusion. The Respondents filed an appeal with the High Court of Judicature for Rajasthan, Jaipur [“HC”], which upheld the claim of the informant who lodged the First Information Report [“FIR”], Vikram Singh, that the rash and negligent driving of the second motorcycle was to blame for the accident. They concluded that the owner of the second motorcycle should have been the petition’s target to seek compensation. The Appellants feeling aggrieved and dissatisfied with the HC’s decision,[i] therefore, filed the current appeal with the Supreme Court of India [“SC”].


The core issues that the SC considered in this appeal had been framed by the Tribunal as follows:

  • Whether the accident on October 2, 2006, was caused by the driver Chotelal driving the first motorcycle rashly and negligently?
  • Was the driver driving the vehicle employed by the owner, Opposite Party 1 Bhagwan Sahay, in his interest or with his permission/knowledge?
  • Consequent to the driver’s death, what amount, in what manner, and from which opposite party could the Appellants seek to get?
  • Whether the objections raised in the preliminary/specific statements are significant? If yes, then what are its effects?



The present case deals with the provision of Section 167A of the Motor Vehicles Act, 1988 and its interpretation. Section 147 of the Act is also discussed and argued by the respondents in brief which provides that there is no requirement of an insurer to bear the risk of death or bodily injury to the vehicle’s owner. Whereas, Section 167 of the Act provides that the person seeking compensation can only apply under one head- either under the Workers’ Compensation Act 1923 or the Motor Vehicles Act 1988. That is, a petition for compensation cannot be availed of under both the Acts.


The Supreme Court made it clear that compensation cannot be claimed by an owner cum drier for his own fault where no other vehicles was involved. That is, the owner cannot himself  or herself be the claimant and the defendant at the same time. The Court finally concluded that the vehicle’s owner was liable under Section 163A of the Act since a person cannot be both a claimant and a recipient, and as a result, the owner’s heirs could not have maintained the claim.



Arguments of the Appellants

The Appellants contended that the HC materially erred in dismissing the claim petition solely because they had not filed it against the owner of the second motorcycle. They submitted that a petition under Section 163A of the Motor Vehicles Act, 1988 [“the Act”] did not require the claimant to establish that the death in respect of which the petition was preferred was due to any wrongful act or neglect or default of the concerned vehicle owner. If they so wished, the Appellants could have filed against the owner or insurer of the second motorcycle under Section 166, read with Section 140 of the Act. This claim based on the principle of no-fault liability was perfectly just and maintainable since the Appellants elected to do the former. The deceased was also not the owner of the first motorcycle but a third party in the actual owner’s employment. Irrespective of the owner’s fault, the claimants were only required to establish that the death had occurred because of the use of the motorcycle, and Section 163A, which was a social security measure, covered those whom themselves drove the motorcycle. The registered owner under Section 2(30) of the Act, and therefore, the insurance company was liable to pay compensation. So, the Appellants prayed that the SC might grant the appeal, quash and set aside the HC’s judgment and order, and increase the awardable compensation to ₹5,00,000, with interest, as per the 2018 Amendment to the Second Schedule of the Act.

Arguments of the Respondents


The Respondent-insurance company contended that the Tribunal had improperly concluded without evidence that the first motorcycle’s owner employed the deceased. He was a third party concerning the second motorcycle, not the first since he had borrowed the latter. The Act allowed only for the payment of third-party claims. When borrowing a vehicle, the borrower assumes the owner’s role and is thus not entitled to seek third-party compensation from the insurer. Further, an FIR had been lodged against the second motorcycle’s owner, whose rashness and negligence had caused the collision and the death of the deceased. There was no negligence by the driver of the first motorcycle. Section 147 of the Act also does not require an insurer to bear the risk of death or bodily injury to the vehicle’s owner. A person cannot be both a claimant and a recipient under Section 163A of the Act as liability rests on the vehicle’s owner. They further submitted that the enhanced compensation was not payable since the amended legislation had no retrospective application. The HC was thus correct in granting the insurer’s appeal as the legal heirs of the deceased should have filed the petition against the second motorcycle’s owner for seeking compensation. They prayed for dismissing the present appeal. If it was to be allowed partly, the borrower in the owner’s shoes was entitled to a compensation of only ₹1,00,000 per their specific insurance contract terms.


It was held an insurance policy covers the insured’s liability regarding death or bodily injury to any person carried in the vehicle or damage to any third-party property caused by or arising out of the use of the vehicle. It was further stated in the case of Ashalata Bhowmik that the terms and conditions of the insurance contract should govern the parties. There could thus not have been any doubt that the insurance company’s liability would be as per the terms and conditions of the contract of insurance. The Court, therefore, held that the insurance contract between the parties, which limits the insurance company’s obligation to third parties alone, governs their relationship. The deceased was not a third party since he had stepped into the owner’s shoes, having borrowed the first motorcycle. The Court held that the petition should not be maintainable since the claim under Section 163A of the Act was only made against the owner and insurance provider of the first motorcycle. The Court did so by applying the law laid down in Ningamma, as the HC did. The claimants should have included the second motorcycle’s driver, owner, and insurance provider. The Court also rejected the Appellants’ arguments that a claim under Section 163A of the Act would be viable even though the compensation sought by the heirs of the first motorcycle’s owner and that mere usage of the vehicle is sufficient for such a claim. The Court cited the Rajni Devi case in this instance, where it was clearly stated and decided that an accident involving the owner of the motor vehicle himself did not fall under the purview of Section 163A of the Act. The claimants were also ineligible to benefit from the increased compensation of ₹5,00,000 because the accident occurred in 2006, the Tribunal rendered its judgment and award in 2009, and the HC issued the impugned judgment and order in 2018, all before the Act’s Second Schedule was amended. However, because the deceased was in the owner’s shoes, his heirs qualified for ₹1,00,000 compensation under the insurance contract. The SC partially granted the current appeal for the abovementioned reasons, deciding that the claimants were entitled to ₹1,00,000 with interest at an annual rate of 7.5% from the petition date till its realisation.


Sound legal interpretations of legislative provisions and reliance on pertinent judgments support both the HC and SC rulings. The insurance company must not have been liable for compensating the deceased, who was only allegedly working for the owner when he had merely borrowed the motorcycle without being employed in any capacity. Hence, the Tribunal’s decision based on insufficient factual evidence had to be correctly overturned. The findings in the cited case laws and legal provisions like Section 147 of the Act, which emphasises the necessity of policy and delimits the scope of the owner’s and the insurer’s liability, further support the HC’s overturning of the Tribunal’s judgment and the SC’s upholding the HC’s decision. It would have been preferable for the original claimants to file the petition against the owner of the second motorcycle or to file the petition under Section 163A of the Act jointly against the owner and the insurance company of the second motorcycle as opposed to just the owner of the first motorcycle

[i] United India Insurance Co. Ltd. v. Ramkhiladi, 2018 SCC OnLine Raj 3264.

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