Nice one! GhostOne's solution was what I had been looking for.
In my situation the custom post type was 'minining_accidents' and custom taxonomies associated with this was 'accident-types' which had multiple terms under it. My idea was to create a custom widget to show list of posts under terms in this custom taxonomies. In my trial run it got what I wanted. Rest was spruce up. Here is my code:
$custom_terms = get_terms($custom_taxonomy);
foreach($custom_terms as $custom_term)
$args = array(
'post_type' => 'minining_accidents',
'tax_query' => array(
'taxonomy' => $custom_taxonomy,
'field' => 'slug',
'terms' => $custom_term->slug,
$loop = new WP_Query($args);
while($loop->have_posts()) : $loop->the_post();
$str_return.='<li><a href="'.get_permalink().'">'.get_the_title().'</a></li> ';
Yes! There always is an option to further improve the code.