Neeta Trehan & Ors vs. Gopal Krishan & Ors

Neeta Trehan & Ors vs. Gopal Krishan & Ors
The High Court of Delhi
Appl. No.14645 of 2006
Neeta Trehan & Ors.
Gopal Krishan & Ors.
Date of Judgement
17 May 2010
Hon’ble Justice Shiv Narayan Dhingra


The plea of limited liability was in question in this case. In the appeal, the appellant claimed that the compensation which was received by the order of tribunal was unjust. The limited liability of the insurance company was also discussed in this case.

Statues and provisions involved:

Section 95(a) of the Motor Vehicles Act, 1939


The appellants have assailed an order dated 23rd September 1991 passed by Motor Accident Claims Tribunal. The principal that the remuneration granted by the Tribunal was not simply and reasonable, it was deficient and the other that the Tribunal wrongly held that the risk of the insurance agency was restricted uniquely to pay an aggregate of Rs.1,50,000/- and balance was to be recouped from the proprietor of the vehicle. Sh. Yogesh Trehan (appellant No.2) and his dad Sh. Yashpal Trehan was going on bike No.DLU-1675 being driven by Sh. Yogesh Trehan and they were hit by a truck bearing No.DHG-6383 with the outcome that both of them tumbled from the bike. While the son who was driving the bike fell on one side, the dad fell on the opposite side and the dad was run over by the truck. It was affirmed that the truck was being driven imprudently and carelessly by its driver. His dad kicked the bucket on the spot. The age of the expired at the hour of the mishap was 47 years. He was the administrator in Hindustan Petroleum Corporation, Shakur Basti, Delhi, and was getting a gross pay of Rs.2,697/- every month liberated from charge, according to prove delivered before the Tribunal. The educated Tribunal made a derivation of 1/third sum from this compensation towards his own costs and considered reliance @ Rs.1, 800/- every month as the perished had deserted widow and three kids. A multiplier of 16 was applied and remuneration of Rs.3, 45,600/- was granted. It was coordinated that the inquirers would be qualified for 12 percent enthusiasm over this sum from the date of recording of the request.


Whether this insurance insured by the guarantor was only limited to an obligation of Rs.1, 50,000/ – is the minimum liability for which a vehicle was required to be insured by the proprietor of this premium covered liability which is wider?·         Whether the contract is to be interpreted in the light of statutory provisions where obtaining of an insurance cover is made mandatory by the statute? 

Arguments Advanced:

Arguments Advanced by the Petitioner:

  • General insurance cases and insurance of risks other than motor vehicles, to enter into an insurance contract there is no legal liability and the insured to protect his own interest enter into a contract of insurance.
  • As a normal contract, the terms and conditions of the policy are to be interpreted. However, obtaining an insurance cover in the case of motor vehicles has been made compulsory by law. Until it is insured in terms of the Act, no owner can bring on the road and ply a vehicle. The owners must get insurance of their vehicles under section 95 of Motor Vehicles Act, 1939, to the extent provided in the provisions of the Act so as enable them to ply the vehicle on road.
  • The maximum amount limit of risk to be covered, the act did not provide. In case of accidental deaths and injuries to third parties, i.e., the injured and victims of the accident should not go without some minimum compensation that has to be paid by the insurance company. The limits of compensation that could be granted to the victims did not lay down by the insurance company.
  • The compensation has to be granted by the Tribunals measuring the gravity, seriousness, and consequences of the accident and the injuries incurred by the victims. The owner had to pay the balance compensation awarded by the Tribunal himself wherever minimum insurance cover was obtained by the owner in terms of the Act.

Arguments Advanced by Respondent:

  • It was not the dispute whether the vehicle was insured with the insurance company or not. It was argued by the insurance company that its liability was limited only to Rs.1, 50,000/-.
  • The underlying approach was demonstrated as Representation and Warranties (hereinafter referred to as RW) 1/1 and its renewal for the period from fourth April 1982 to third April 1983 was demonstrated as Ex. RW 1/3. The Tribunal thought that the insurance agency has put on record tax rates and the obligation and liability of the insurance agency can’t be said to be boundless in perspective on the measure of premium paid.
  • Along these lines, the insurance agency was having restricted liability to the degree of Rs.1,50,000/ – as per the amendment of Section 95 of Motor Vehicles Act (hereinafter alluded to as the Act) whereby the minimum risk was transformed from the measure of Rs.50,000/ – to Rs.1,50,000/. Along these lines, the Tribunal held that out of the pay of Rs.3, 45,600/ -, the insurance agency would pay Rs.1, 50,000/ – to victims and remaining Rs.1, 95,600/ – would be paid by the proprietor Sh. Arjan Dass (respondent No.2 thus) to petitioners.


Ratio Decidendi:

  • It is settled law that while surveying pay, the court ought to be alive to the way that the remuneration granted in the event of the death of only bread earner from a family or if there should be an occurrence of disablement permanently ought to be simple and reasonable, in spite of the fact that it ought not to be in the idea of a fortune.
  • In Sarla Varma’s case[i], the Hon’ble Supreme Court contemplating the way that various Tribunals and High Courts were embracing various criteria for figuring remuneration in such cases set out a kind of thumb rule for ascertaining pay. It has been set somewhere near Supreme Court that where the wards were 4 to 6, 1/fourth conclusion ought to be made towards individual costs of the perished and where the time of expired was somewhere in the range of 46 and 50, a multiplier of 13 ought to be utilized and if the expired was having a lasting activity and was matured between 40-50 years, 30 percent ought to be included towards future possibilities.
  • Since the perished abandoned widow and three kids of 9, 16, and 18 years, 1/fourth would be the fitting finding toward individual costs. In this way, Rs.875/ – be deducted from Rs.3,500/ – for individual costs. So his compensation would be Rs.2,625/ -. Since the perished was matured somewhere in the range of 46 and 50, the proper multiplier according to Sarla Varma’s case[ii] and according to II Schedule would be 13. In this way, the perished would be qualified for a remuneration of Rs.4, 09,500/ – [(Rs.2625/ – x 12) x 13]. According to the standard set down in Sarla Varma’s case[iii], the perished would likewise be qualified for Rs.5,000/- towards loss of home and Rs.5,000/- towards loss of consortium and Rs.5,000/- towards memorial service costs and so on. In this manner, the complete remuneration to which the appellants would be entitled would be Rs.4, 24,500/ – [Rs.4, 09,500/- + Rs.15,000/-].
  • It is the insurance agent who needs to pay the whole sum in view of boundless risk brought about and the insurance agency has paid just Rs.1,50,000/ – to the appellants, the equalization sum (Rs.2,74,500/-) be paid by the insurance agency with intrigue @ 8 percent for each annum from the date of grant till installment.

Obiter Dicta:

  • The topic of minimum liability is chosen to depend upon Exh.127 and Section 95(2)(b)(i) of the insurance policy.
  • Section 95(a) of the Motor Vehicles Act manage statutory strategy implies act approach however not manage complete policy having a different understanding or separate premium being extra premium acknowledged by the insurance agency. In this way, extra premium acknowledged by an insurance agency far beyond acting policy which itself covers that the risk obtained by the third party is unlimited.


The insurer where underinsured is indemnified by the insurer against the damages by virtue of the insurance policy which acts as a contract in between the insurer and the insured. The insurance company pays damages or loss for property or other risks after the insurance policy is obtained. The liability of the insurance company has to be determined as per the insurance contract.

Edited by Parul Soni

Approved & Published – Sakshi Raje


[i] Sarla Varma & Ors v. Delhi Transport Corporation & Anr, (2009) 6 SCC 121.

[ii] Id.

[iii] Id.

Adya Samal
I’m Adya Aditi Samal, pursuing B.A. LL.B in Xavier Law School. I’m a self-motivated law student who believes in the idea that “there is always someone better than you”, and this makes me keep going. I love to learn new things because I feel learning refine you, redefines you. I’ve been an ardent admirer of world history, psychology and mythology all through my life. Finally, my heart found solace when I fell in love with criminal law and human rights law. The intrinsically intimate thread between society and law mesmerizes me every time. In my leisure, I write poems and short stories in Odia. And finally; I don’t eat to live but rather live to eat.