Even after rejection under Section 166 for rash driving, compensation under Section 140 granted; Tata AIG directed to pay Rs. 5 lakhs with interest to deceased's heirs
In a significant judgment delivered on September 1, 2026, the Sikkim High Court has allowed an appeal filed by the heirs of the late Deepen Mukhia, who died in a motor vehicle accident on November 12, 2019. The High Court overturned the Motor Accident Claims Tribunal's earlier dismissal of the claim under Section 166 of the Motor Vehicles Act, 1988, which had rejected compensation on the ground that the accident was caused by brake failure and not rash or negligent driving.
The Court emphasized the principle of no-fault liability under Section 140 of the Motor Vehicles Act, which mandates compensation irrespective of negligence. The insurance company, Tata AIG General Insurance Company, which had issued a comprehensive "Auto Secure Commercial Vehicle Package Policy" for the accident vehicle, was held liable to indemnify the owner for compensation payable to the victim's heirs.
The original claim for Rs. 19,07,560 filed by the deceased's wife, son, father, and mother was dismissed by the Tribunal due to absence of rash driving. However, the High Court noted that Section 140 provides for fixed sum compensation (originally Rs. 50,000, now enhanced to Rs. 5 lakhs under Section 164) payable to victims or their heirs without the need to establish fault.
The Court also highlighted the obligations of insurance companies to provide clear, comprehensive policy terms to the insured and to file the insurance policy before the Tribunal to avoid ambiguity. Tata AIG was directed to pay Rs. 5 lakhs along with 7% interest from the date of the claim (February 14, 2023) till actual payment.
This ruling aligns with precedent Supreme Court judgments which have upheld the no-fault liability principle and clarified that the liability of insurers under comprehensive package policies extends to occupants of insured vehicles, even if they are tortfeasors.
The judgment reinforces the protective intent of motor vehicle laws to ensure timely compensation to victims and their families and underlines the duty of insurance companies to act fairly and transparently in claims proceedings.
Bottom Line:
Motor Vehicles Act, 1988 - Even if a claim under Section 166 is rejected, compensation under Section 140 can still be granted on the principle of no-fault liability. Insurance company liable to indemnify the owner under a valid comprehensive/package policy covering third-party liability.
Statutory provision(s):
Motor Vehicles Act, 1988 Sections 140, 164, 166; Indian Penal Code Sections 279, 337, 304A
Rekha Chettri v. Tata AIG General Insurance Company, (Sikkim) : Law Finder Doc Id # 2973582
