'Brake Failure, No Rash Driving': Sikkim High Court Awards ₹5 Lakh No-Fault Compensation To Deceased's Family In Accident Case
The Sikkim High Court has held that a Motor Accident Claims Tribunal can award no-fault compensation under Section 140 of the Motor Vehicles Act, 1988, even after rejecting a claim under Section 166 on the ground that the accident was not caused by rash or negligent driving.
The Court further stated that the insurer was liable to indemnify the vehicle owner under the applicable package policy, observing that the deceased being the alleged tortfeasor did not bar his legal heirs from claiming compensation under the no-fault liability provision.
Justice Bhaskar Raj Pradhan remarked that: “The learned Tribunal could have granted compensation under section 140 of the MV Act even though it had rejected the claim under section 166 of the MV Act… Consequently, the insurer i.e. the respondent no.1 is liable to indemnify the owner.”
Background:
Late Deepen Mukhia died in a motor vehicle accident on November 12, 2019. His wife, minor son, father and mother filed a claim under Section 166 of the Motor Vehicles Act, 1988, seeking ₹19,07,560 as compensation for his accidental death.
The Motor Accident Claims Tribunal, Gangtok, dismissed the claim, holding that the accident was caused by brake failure and not due to rash or negligent driving. The claimants thereafter approached the Sikkim High Court, contending that even if their Section 166 claim was rejected, they were still entitled to no-fault compensation under Section 140 of the MV Act.
The Sikkim High Court allowed the appeal, holding that the Tribunal could have awarded no-fault compensation under Section 140 of the Motor Vehicles Act even after rejecting the claim under Section 166 on the ground that there was no rash or negligent driving.
The Court also rejected the insurer's contention that the deceased's heirs were not entitled to compensation because the deceased was the tortfeasor. In view of Section 140(4), a claim cannot be defeated merely because of the wrongful act, neglect or default of the person whose death is the subject of the claim.
The Court further held that, since the vehicle was covered by a package policy, the insurer was liable to indemnify the owner for the Section 140 liability. It observed that the Tribunal was therefore entitled to grant compensation to the deceased's heirs despite rejecting their Section 166 claim.
On the quantum, although the then-applicable Section 140 prescribed ₹50,000 for death, the High Court, considering that the matter was being decided in 2026 for a death that occurred in 2019, awarded ₹5 lakh to the appellants. The insurer was directed to pay the amount with 7% interest from February 14, 2023, until actual payment.
The Court also made important observations on insurers' obligations, stating that insurance companies should place the complete policy and its terms before the Claims Tribunal and clearly disclose the extent of coverage and indemnification, rather than leaving claimants and the Tribunal to decipher policy terms from the insurer's website.
Case Name: Rekha Chhetri v/s Tata AIG General Insurance Company
Case No.: MAC App. No.20 of 2024
Date of Decision: 01.09.2026