Supreme Court Reiterates Monetary Compensation As The Extent Of Insurer’s Liability Under Motor Vehicles Act

Posted On - 30 May, 2025 • By - King Stubb & Kasiva

Summary:

[1]The Supreme Court allowed an appeal filed by the insurer, Tata AIG General Insurance Co. Ltd., challenging a direction of the High Court which required it to provide prosthetic limbs, a motorized wheelchair, and periodic aftercare to a road accident victim. The Court held that the liability of an insurer is limited to pecuniary compensation and cannot extend to future monitoring or wellbeing services. However, considering the specific needs of the victim, it quantified the future requirements into a consolidated compensation amount of ₹12 lakhs, with 6% interest.

Facts:

  • The respondent (Suraj Kumar), aged 22 at the time of the accident, suffered severe injuries resulting in 90% impairment in both lower limbs—one being amputated—while working as a cleaner in a tempo. The Motor Accident Claims Tribunal awarded ₹16,34,400/- as compensation, which was accepted by the insurer. However, the claimant appealed for enhancement.
  • The High Court, instead of enhancing compensation monetarily, directed the insurer to provide a prosthetic limb, a motorized wheelchair, pay for the claimant’s travel for fittings, and ensure biannual maintenance and replacements.

Issues:

Whether the High Court was justified in directing the insurer to undertake non-monetary obligations (such as continuous care and equipment provision) in addition to paying awarded compensation under the Motor Vehicles Act?

Held:

The Supreme Court held that:

  1. The role of an insurer is to indemnify loss in monetary terms; future wellbeing and monitoring cannot be imposed on it as an ongoing obligation.
  2. The High Court’s direction, though well-meaning, was not legally sustainable.
  3. The future medical requirements of the victim, including five replacements of prosthetic limbs (₹10 lakhs) and periodic wheelchairs (₹2 lakhs), can be quantified and awarded as compensation.
  4. Directed the insurer to pay an additional ₹12 lakhs with 6% simple interest within two months.
  5. The Court emphasized that it was not enhancing the compensation, but merely converting the non-monetary obligations into a quantified form of just compensation.

Analysis:

The judgment reaffirms the fundamental principle under motor vehicle insurance jurisprudence: insurers are liable for monetary compensation, not personal rehabilitation services. By converting future needs into a lump-sum amount, the Court balanced legal principle with practical justice. The decision maintains doctrinal clarity while safeguarding victim interests.

[1] BEFORE THE HON’BLE SUPREME COURT OF INDIA

TATA AIG GENERAL INSURANCE CO. LTD. vs. SURAJ KUMAR & ORS.

Civil Appeal No.________ of 2025 (@SLP (C) No. 3484 of 2020)

Judgment Date: May 15, 2025