Insurance Company Cannot Recover Compensation Without Hearing Vehicle Owner On Alleged Policy Violation: Calcutta High Court

The Calcutta High Court recently ruled that a motor insurance company cannot recover compensation from a vehicle owner without giving them an opportunity to be heard regarding alleged violations of the insurance policy. The judgment was delivered by Justice Biswaroop Chowdhury on February 4, 2026, in F.M.A. 1003 of 2025, involving National Insurance Co. Ltd. vs. Lirasa Bibi & Anr.The case arose from a motor accident on March 29, 2015, in Nabagram, Murshidabad, where the victim, Saidul Mondal, died after a truck collided with his bicycle. The offending vehicle, bearing registration WB-25F/3903, was insured with National Insurance Co. Ltd. The claimant filed a compensation claim under Section 163A of the Motor Vehicles Act, 1988. The Learned Additional District Judge, Berhampore, awarded Rs. 4,70,000 as compensation along with interest at 6% per annum from the date of filing the claim.The insurance company challenged the award, arguing that the truck driver was driving without a valid transport vehicle license, thereby violating policy conditions. They sought to recover the compensation amount from the vehicle owner on this ground. The Court, however, had to consider whether such recovery could be initiated without giving the insured an opportunity to respond to the alleged violation.The Court observed that motor insurance claims are beneficial legislation designed to protect accident victims and ensure timely compensation. Insurance companies have a duty to settle genuine claims without unnecessarily harassing vehicle owners. Before seeking recovery from the insured, the insurer must conduct a proper enquiry to determine whether the alleged policy violation was intentional, bona fide, or inadvertent.The Court emphasized that the vehicle owner must be given notice and an opportunity to be heard before any recovery proceedings are initiated. Simply alleging a policy breach at the appellate stage, without prior enquiry or supporting evidence, is insufficient to justify recovery. The Court relied on earlier precedents, including Reliance General Insurance Co. Ltd. v. Niyati Kumar, which require insurers to record findings and adduce evidence regarding policy violations before approaching the Court for recovery.In the present case, the Court held that the insurance company could not proceed against the vehicle owner without first complying with the above procedure. The appeal was disposed of, and the trial court's award was modified to enhance the compensation to Rs. 5,00,000 from Rs. 4,70,000, with interest at 6% per annum from the date of filing the claim. The insurance company was granted liberty to pursue recovery from the insured only after giving them proper notice and hearing.The Court also directed that a copy of this order be circulated to all Motor Vehicle Claim Tribunals and District Judges in West Bengal and the Andaman & Nicobar Islands to guide similar cases in the future. The judgment reinforces that insurance companies cannot bypass procedural fairness, and vehicle owners must be heard before any recovery is sought. Motor accident claim legislation remains welfare-oriented, and insurers have a public duty to ensure genuine claims are settled promptly.Case: National Insurance Co. Ltd. VERSUS Lirasa Bibi And Anr Case No: F.M.A. 1003 of 2025Click here to read order

Insurance Company Cannot Recover Compensation Without Hearing Vehicle Owner On Alleged Policy Violation: Calcutta High Court

Srinjoy Das

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