1. This appeal is preferred by the appellants/claimants challenging the order and decree dated 15.03.2012 passed in O.P.No.437 of 2009 by the Chairman, Motor Accidents Claims Tribunal-cum-I Additional District Judge, at Mahabubnagar (for short “the Tribunal”), whereby the Tribunal granted compensation of Rs.3,40,500/- with interest @ 7.5% per annum from the date of petition till date of realization as against the claim of Rs.5,00,000/- for the death of deceased-Mohammed Iqbal (hereinafter referred as “the deceased”) in a motor vehicle accident, while the claim against the Respondent Nos.1 and 3 was dismissed and the liability was fastened exclusively upon the Respondent No.2.

2. Heard the submissions of learned counsel for both sides and perused the record.

3. The learned counsel for the appellants/claimants contended that the Tribunal erred in fixing the monthly income of the deceased at a meagre Rs.3,000/-. It is further contended that the Tribunal erred in exonerating the respondent No.3-Insurance Company from its liability, especially when the policy was in force and the deceased was a third party. It is also contended that since there are five dependents, the Tribunal ought to have deducted 1/4th towards personal and living expenses instead of 1/3rd. It is submitted that the compensation awarded under the conventional heads, such as loss of consortium, loss of estate, and funeral expenses, is meagre and not in accordance with the decision of the Hon’ble Apex Court in National Insurance Co. Ltd. vs. Pranay Sethi ((2017) 16 SCC 680). On these grounds, the learned counsel prayed for enhancement of the compensation and to fasten the liability on the Insurance Company.

4. On the other hand, the learned Standing Counsel for the respondent No.3/Insurance Company contended that the Tribunal has already awarded just compensation and that the findings regarding the breach of policy conditions and the exoneration of the Insurance Company from liability are based on proper appreciation of evidence on record.

5. As seen from the material placed on record, the accident occurred on 28.06.2009 at about 11:30 PM while the deceased was travelling in a Tata Ace Auto bearing No. AP-22-W-9804. The case of the claimants is that a Tata Indica Car bearing No. AP-29-BB-3799, driven in a rash and negligent manner, dashed the auto, resulting in fatal injuries to the deceased. The Police registered a case in Cr.No.223 of 2009 and, after investigation, filed a charge sheet against the driver of the auto. The Tribunal, after evaluating the oral and documentary evidence, particularly the contents of Ex.A.1-First Information Report, Ex.A.2-Inquest Report, and Ex.A.4-Charge Sheet, held that the accident occurred due to the rash and negligent driving by the driver of the Tata Ace Auto bearing No. AP-22-W-9804, who drove the vehicle in a rash manner. The Tribunal further held that the deceased died due to the injuries sustained in the said accident.

6. Regarding the aspect of liability, it is not in dispute that the offending vehicle was covered by a valid insurance policy as on the date of the accident. The evidence on record establishes that there was a breach of the terms and conditions of the policy, as the deceased was found to be an unauthorized passenger in a goods carrying commercial vehicle. On that basis, the Tribunal exonerated the Insurance Company and fastened liability exclusively on the respondent No.2. It is well settled that once the policy covers third-party risk, the rights of third-party claimants cannot be defeated on account of inter se breaches between the insured and the insurer. The deceased was a third party and the claim arises out of statutory liability. In Kusum Lata & Others v. Satbir & Others (AIR 2011 SC 1234), the Hon’ble Supreme Court held that even in cases of breach of licence conditions, the insurer is required to satisfy the award at the first instance and thereafter recover the same from the owner. Similarly, in Rama Bai vs. M./s.Amit Minerals through Incharge Officer/Competent Officer and another (2025 SCC Online SC 2067), the Hon’ble Supreme Court reiterated the principle of “pay and recover”, directing the insurer to satisfy the award and recover the amount from the insured.

7. In view of the settled legal position, this Court is of the considered opinion that the Tribunal erred in fastening absolute liability on the respondent No.2-owner of the offending vehicle instead of directing the respondent No.3-insurance company to satisfy the award at the first instance and thereafter recover the same from the respondent No.2. Accordingly, the respondent No.3–Insurance Company is directed to pay the compensation amount to the claimants at the first instance and thereafter recover the same from the owner of the offending vehicle, in accordance with law.

8. So far as quantum of compensation is concerned, the deceased was aged 45 years and worked as a butcher. The Tribunal assessed his monthly income at Rs.3,000/-. The claimants pleaded that the deceased used to earn Rs.3,300/- per month at the time of accident. Considering the avocation of the deceased and cost of living during the relevant period, this Court enhances the monthly income to Rs.3,300/-. As there are five dependants (four sons and one daughter), 1/4th shall be deducted towards personal and living expenses. The annual contribution to the family is Rs.29,700/- (Rs.3,300 x 12 x 3/4th). Applying the multiplier of '14' as per the age of the deceased, the loss of dependency is re-calculated at Rs.4,15,800/-. As far as amounts awarded by the Tribunal under the conventional heads are concerned, as per the principles laid down by the Hon’ble Apex Court in Pranay Sethi’s case (supra), the appellants/claimants are entitled to Rs.91,000/- (Rs.70,000/- + 10% enhancement for every three years). The amount of Rs.5,000/- awarded under the head transportation can be maintained. Thus, the total compensation payable to the appellant-claimant is re-assessed at Rs.5,11,800/- (Rs.4,15,800 + Rs.91,000 + Rs.5,000).

9. At this stage, the learned Standing Counsel for the Insurance Company contended that the compensation cannot exceed the claimed amount of Rs.5,00,000/-. However, in view of the judgments of the Hon’ble Supreme Court in Laxman @ Laxman Mourya vs. Divisional Manager, Oriental Insurance Company Limited and another ((2011) 10 SCC 756) and Nagappa vs. Gurudayal Singh (2003 ACJ 12 (SC)) and considering that the Motor Vehicles Act is a beneficial legislation intended to award just compensation, the said contention cannot be accepted. The Courts are empowered to award compensation exceeding the claimed amount.

10. In the result, this appeal is allowed and the compensation awarded by the Tribunal is enhanced from Rs.3,40,500/- to Rs.5,11,800/- with interest at 7.5% per annum from the date of petition till the date of realization. The appellants/claimants shall pay the deficit Court fee on the enhanced amount. Respondent No.3–Insurance Company is directed to deposit the enhanced compensation at the first instance and is entitled to recover the same from the respondent No.2. The remaining terms and conditions imposed by the Tribunal shall stand unaltered. There shall be no order as to costs.

As a sequel, miscellaneous petitions, if any, pending in this appeal shall stand closed.