The Bombay High Court has clarified that an insurance company cannot evade liability under a Farmers’ Package Insurance Policy merely by alleging breach of policy conditions - such as commercial use of a tractor or driving by an unlicensed operator - without concrete documentary evidence. The judgment reinforces the principle that allegations alone, unsupported by proof, cannot override statutory obligations under the Motor Vehicles Act.
Background & Facts
The Dispute
This appeal arises from a motor accident claim filed by the parents of Sonali, a deceased victim, following a road accident on 11.06.2009. The accident occurred when a tractor, bearing registration number MH-25-H-1398, allegedly collided with the victim. The tractor was owned by Subhash Ramchandra Pawar (Respondent No.3), who was also the driver at the time of the incident. The claim was filed before the Motor Accident Claims Tribunal, Osmanabad, in M.A.C.P. No. 238 of 2009, naming the tractor owner and United India Insurance Co. Ltd. (Appellant) as respondents.
Key Facts
- The tractor was insured under a Farmers’ Package Insurance Policy issued by the appellant, which explicitly restricted use to agricultural purposes only.
- The claimants alleged that the tractor was being used to transport sand at the time of the accident, constituting commercial use.
- The driver, Raju Motiram Rathod, was alleged to be unlicensed for operating a tractor.
- The appellant filed a written statement (Exh.20) contesting liability on two grounds: (i) breach of policy condition due to commercial use, and (ii) driving by an unlicensed person.
- No police report, FIR, or independent documentary evidence regarding the nature of the tractor’s use was produced in the proceedings.
- The Regional Transport Office (RTO) records, as testified by DW1 Vasant Bhise, showed that the driver held a valid LMV/Transport licence, issued and renewed for such category.
Procedural History
- 11.06.2009: Road accident resulting in death of Sonali.
- 2009: M.A.C.P. No. 238 of 2009 filed before Motor Accident Claims Tribunal, Osmanabad.
- 29.10.2010: Tribunal awarded compensation jointly and severally against the tractor owner and insurer.
- 2011: First Appeal No. 243 of 2011 filed before the Bombay High Court, Aurangabad Bench, challenging the Tribunal’s award.
- 25.03.2026: Appeal reserved for judgment.
- 06.04.2026: Judgment pronounced by the High Court.
Relief Sought
The appellant sought to set aside the Tribunal’s award, specifically the direction to pay compensation jointly and severally, on the grounds of breach of policy conditions. The respondents sought dismissal of the appeal and confirmation of the award.
The Legal Issue
The central questions were: (1) Whether the use of a tractor for transporting sand constitutes a breach of a Farmers’ Package Insurance Policy, and (2) Whether a holder of an LMV/Transport licence is legally qualified to drive a tractor, thereby negating any breach of the policy condition regarding licensing.
Arguments Presented
For the Appellant
The appellant contended that the tractor was being used for commercial transportation of sand, which fell outside the scope of the Farmers’ Package Insurance Policy, which covered only agricultural use. It further argued that the driver did not hold a valid tractor driving licence, and that under the policy terms, use by an unlicensed driver voided coverage. Reliance was placed on policy clauses restricting use and on general principles of insurance law that breach of material terms absolves the insurer.
For the Respondent
The respondents argued that the insurer failed to discharge the burden of proving either commercial use or unlicensed driving. They relied on RTO records showing the driver held a valid LMV/Transport licence, and emphasized that the Tribunal had correctly applied the Supreme Court’s rulings in National Insurance Co. Ltd. v. Swaransingh and Mukund Dewangan v. Oriental Insurance Co. Ltd., which held that an LMV licence suffices for driving a tractor. They further pointed out the absence of any documentary or oral evidence supporting the insurer’s allegations.
The Court's Analysis
The Court undertook a two-pronged analysis. First, regarding the driver’s licence, it examined the precedent set by the Supreme Court in Mukund Dewangan v. Oriental Insurance Co. Ltd. (2017) 14 SCC 663, which unequivocally held that a person holding a licence for Light Motor Vehicle (LMV) is competent to drive a tractor. The Court noted that the RTO records, as deposed by DW1, confirmed the driver held a valid LMV/Transport licence. The Tribunal’s reliance on this precedent was therefore justified.
"The Court is of the view that the driver of the tractor was holding valid and effective LMV/Transport licence on the day of accident, and as such, there was no breach of condition of policy."
Second, on the issue of commercial use, the Court found that the appellant’s contention rested entirely on pleadings and assertions, with no supporting evidence. The police papers were not part of the record, and no witness testified to the nature of the cargo or the purpose of the journey. The Tribunal had correctly observed that mere allegations, without corroboration, cannot form the basis for denying liability.
The Court emphasized that the burden of proving breach of policy conditions lies squarely on the insurer. In the absence of any material - whether documentary, testimonial, or circumstantial - the insurer could not succeed. The Court further noted that the Tribunal had not made any finding on this point, but had merely recorded the pleadings, which was insufficient to uphold the insurer’s defence.
The Verdict
The appeal was dismissed. The High Court upheld the Motor Accident Claims Tribunal’s award dated 29.10.2010, confirming that the appellant insurer is jointly and severally liable to pay compensation to the claimants. The Court permitted the respondents to withdraw the remaining amount lying in court. No costs were awarded.
What This Means For Similar Cases
Insurance Burden of Proof Is Strict
- Insurers must produce concrete evidence - such as police reports, witness statements, or transport manifests - to prove breach of policy conditions like commercial use.
- Mere allegations in written statements or oral submissions are insufficient to discharge the burden of proof.
LMV Licence Suffices for Tractor Operation
- Practitioners can now confidently cite Mukund Dewangan to argue that an LMV/Transport licence is legally adequate for driving a tractor in accident claims.
- Claims challenging liability on grounds of invalid licence for tractors must be rebutted with RTO records and Supreme Court precedent.
No Evidence = No Avoidance of Liability
- In motor accident claims, insurers cannot escape liability by raising speculative defences.
- Courts will not entertain policy exclusions unless the insurer demonstrates actual breach with admissible evidence.
