Page 48 - Insurance Times November 2021

LEGAL

SC upholds 1700% hike in accident dam- the compensation to be paid by the insurance company as
1.85 crore.
ages
A Supreme Court bench of Justices R Subhash Reddy and HC sets aside insurer appointments by
Hrishikesh Roy has dismissed an appeal filed by the National
Insurance Company Limited against an order of the Madras BBB
HC that enhanced the compensation paid to the family of The Delhi high court has set aside appointments made by
an accident victim by 1,700% from 10.4 lakh to 1.85 crore the Bank Board Bureau (BBB) in public sector general in-
based on Form-16, salary slip and other tax papers filed by surance companies stating that the same is ultra vires of
the victim's family. the Banking Companies Act 1980. The order could have
implications for the board's role in the selection of senior
On October 14, 2013, Subash Babu, a 35-year-old manager management for the insurance industry.
of a private firm, was killed in an accident while driving a car
from Perumanallur to Erode. His wife and other family mem- The order was in a petition filed by a senior executive of
bers who were travelling with him escaped with injuries. His National Insurance Company on the ground that the BBB
wife, an eyewitness, told Tiruppur motor accident claims is not a body competent to make the selections. According
tribunal that a van which was going in front of their car to the petition, the BBB is a banking body established un-
turned right without showing any signal and their car der the Banking Companies (Acquisition and Transfer of
rammed against the van and her husband died in the impact. Undertakings) Act, 1980.

The tribunal, however, fixed 75% contributory negligence "The very jurisdiction of BBB to make the selections to PSU
on the victim based on police FIR, which blamed Babu for general insurance boards is questioned and selection and
negligent driving, and awarded Rs 10.4 lakh as compensa- appointments set aside. In my view, this should equally
tion by fixing Babu's monthly income at Rs 20,000 per apply to CMD selections by BBB," said K K Srinivasan, former
month. member of insurance regulator IRDAI. Recently, the BBB
had shortlisted candidates for the post of MD in the Life
Aggrieved by the order, the family moved the HC. In Au- Insurance Corporation of India (LIC) as well.
gust 2018, Justice N Kirubakaran and Justice Krishnan
Ramasamy of the Madras HC quashed the order of the tri- The petition also stated that the appointments committee
bunal and held that since there was no rebuttal witness of the Cabinet has no role in appointing an employee of a
provided by the insurance company, the accident happened public sector insurance company on the board as these
only due to the negligence of the van driver. Taking into appointments are made ex-officio. It also stated that the
consideration the victim's tax records and pay slip, the court board contains banking experts but none from the insur-
fixed the victim's annual income at 12.3 lakh and computed ance sector.

48 The Insurance Times, November 2021