HC slams insurer for piecemeal settlement, says Lok Adalat compromise can't bar widow's claim

The Punjab and Haryana High Court has held that a Lok Adalat settlement entered into by the parents of a deceased accident victim cannot foreclose the widow's right to seek just compensation under the Motor Vehicles Act.

Justice Sudeep­ti Sharma described the insurance company’s attempt to use such a compromise to defeat the widow’s appeal as a “breach of duty of candour before a court of law” and a course that would amount to a “travesty of justice.”

Overruling the insurer’s preliminary objection, Justice Sharma observed that “a compromise binds the parties who enter into it; it does not extinguish the independent statutory right of another claimant prosecuting a separate appeal, particularly under a beneficial legislation that mandates award of just compensation.”

The court observed that the widow had already filed her appeal for enhancement well before the parents settled their connected appeal before the Lok Adalat in 2004, and she was only a proforma respondent in those proceedings.

Justice Sharma came down sharply on the conduct of the insurance company, which was represented by the same counsel in both appeals. The court found that despite being aware of the pending appeal by the widow, the insurer chose to “pursue a piecemeal settlement” in the parents’ appeal without disclosure of the connected matter.

“A litigant cannot be permitted to take advantage of its own omission (nullus commodum capere potest de injuria sua propria),” Justice Sharma asserted, adding that entertaining such an objection would legitimise settlements “designed to foreclose pending connected claims.”

Turning to the computation of compensation, Justice Sharma found that the Motor Accidents Claims Tribunal had gravely erred by excluding future prospects, loss of consortium, loss of estate and adequate funeral expenses.

Citing Supreme Court rulings in Sarla Verma, Pranay Sethi and Magma Insurance, the High Court recalculated the compensation at Rs 8.9 lakh as against the Rs 33,666 originally awarded.

After adjusting Rs 60,000 already paid to the parents in terms of the Lok Adalat order, the widow was found entitled to an enhanced sum of Rs 7.96 lakh, with 9 per cent annual interest from the date of claim.

Justice Sharma asserted that the Motor Vehicles Act was a beneficial legislation, and any restrictive reading of claimants’ rights would be contrary to its mandate of “just compensation.”

The court directed the insurer to deposit the enhanced amount with interest within two months, and admonished it for adopting a fragmented approach that sought to defeat genuine claims.