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Judgment
G.P. Mittal, J.—The Appellant Reliance General Insurance Company Limited impugns the judgment dated 05.01.2012 whereby compensation of Rs. 8,83,368/- was granted in favour of Respondents no. 1 to 3 for the death of Budhmeshwar Singh, who suffered fatal injuries in a motor vehicular accident which occurred on 01.04.2010.
It is urged by the learned counsel for the Appellant that although the Claims Tribunal rightly took minimum wages of an unskilled worker to award loss of dependency but it erred in adding 50% to the same towards inflation which is against the report of the Supreme Court in Reshma Kumari and Others Vs. Madan Mohan and Another, (2013) 2 ACC 907 : (2013) ACJ 1253 : (2013) 4 AD 516 : (2013) 2 CTC 680 : (2013) 4 JT 362 : (2013) 2 PLR 750 : (2013) 2 RCR(Civil) 660 : (2013) 5 SCALE 160 : (2013) 9 SCC 65 .
It is further contended that in case of a bachelor, deduction towards personal and living expenses ought to have been 50% instead of 1/3 taken by the Claims Tribunal.
It is also urged that in the Claim Petition, the Appellant successfully proved the breach of terms and conditions of the insurance policy, yet the Appellant was made liable to pay the compensation with a right to recover the same from the owner and the driver. It is stated that since the Appellant proved breach of the terms and conditions of the insurance policy, it was liable to be exonerated of its liability.
INCOME and COMPENSATION
I have the Trial court record before me. In the Claim Petition filed by Respondents no. 1 to 3, it was stated that deceased Budhmeshwar Singh was working on the shop of Surender Kumar Book Mart, Sector 2, Vaishali, Ghaziabad, U.P. and was earning Rs. 6,000/- per month. However, Respondents no. 1 to 3 failed to produce any cogent evidence with regard to the deceased''s income. The Claims Tribunal therefore, proceeded to award compensation on the basis of the minimum wages of an unskilled worker.
It may be noted that no evidence except for the bald statement of Respondent no. 1 that the deceased was earning Rs. 6,000/- per month was produced to prove the deceased''s income. In view of this, income of Rs. 6,000/- per month was not established. The Claims Tribunal, therefore, rightly took the minimum wages to compute the loss of dependency.
As far as addition towards inflation/future prospects is concerned, the decision in Smt. Sarla Verma and Others Vs. Delhi Transport Corporation and Another, (2009) ACJ 1298 : AIR 2009 SC 3104 : (2009) CLT 1055 : (2009) 6 JT 495 : (2009) 6 SCALE 129 : (2009) 6 SCC 121 : (2009) 5 SCR 1098 : (2009) 5 UJ 2280 : (2009) AIRSCW 4992 : (2009) 3 Supreme 487 with regard to grant of future prospects was approved by three Judge Bench decision in Reshma Kumari and Others Vs. Madan Mohan and Another, (2013) 2 ACC 907 : (2013) ACJ 1253 : (2013) 4 AD 516 : (2013) 2 CTC 680 : (2013) 4 JT 362 : (2013) 2 PLR 750 : (2013) 2 RCR(Civil) 660 : (2013) 5 SCALE 160 : (2013) 9 SCC 65 and it was laid down that addition towards future prospects is permissible only when there is specific evidence with regard to good future prospects.
The question was also dealt with at great length by this Court in HDFC ERGO General Insurance Co. Ltd. v. Smt. Lalta Devi and Ors., MAC. APP. 189/2014 decided on 12.01.2015, wherein after analysing the entire case law including the judgments in Reshma Kumari (supra) and Rajesh and Others Vs. Rajbir Singh and Others, (2013) 2 ACC 841 : (2013) ACJ 1403 : (2013) 3 CTC 883 : (2013) 8 JT 288 : (2014) 173 PLR 779 : (2013) 3 RCR(Civil) 170 : (2013) 6 SCALE 563 : (2013) 9 SCC 54 : (2014) 1 SCC(L&S) 149 , it was held that the judgment in Reshma Kumari (supra) shall be taken as a binding precedent.
Thus, in the absence of any evidence with regard to good future prospects, addition of 50% towards inflation was not permissible.
Deceased Budhmeshwar Singh was survived by his widowed mother and two minor siblings. Deduction of 1/3 towards personal and living expenses is hence, in consonance with Sarla Verma (supra). The loss of dependency thus comes to Rs. 5,48,911/- (5,278/- x 2/3 x 12 x 13).
In addition, in view of the three Judge Bench decision of the Supreme Court in Rajesh and Others Vs. Rajbir Singh and Others, (2013) 2 ACC 841 : (2013) ACJ 1403 : (2013) 3 CTC 883 : (2013) 8 JT 288 : (2014) 173 PLR 779 : (2013) 3 RCR(Civil) 170 : (2013) 6 SCALE 563 : (2013) 9 SCC 54 : (2014) 1 SCC(L&S) 149 , Respondents no. 1 to 3 are entitled to a sum of Rs. 1,00,000/- towards loss of love and affection, Rs. 25,000/- towards funeral expenses and Rs. 10,000/- towards loss of estate.
The overall compensation thus, comes to Rs. 6,83,911/-
The excess amount of Rs. 1,99,457/- along with proportionate interest shall be refunded to the Appellant Insurance Company.
The compensation held payable shall be disbursed in favour of Respondents no. 1 to 3.
LIABILITY
With regard to liability, the Claims Tribunal held that there was willful breach of the terms and conditions of the insurance policy as the driver did not possess a valid driving licence on the date of the accident. That finding has not been challenged by the owner and driver (Respondents no. 4 and 5 herein). It is urged by the learned counsel for the Appellant that since breach on the part of the insured was established, the Appellant should not have been made liable to pay the compensation at all.
I am not inclined to agree with the learned counsel for the Appellant.
The question of statutory liability to pay the compensation was discussed in detail by a two Judge Bench of the Supreme Court in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan and Others, (1987) 1 ACC 413 : (1987) ACJ 411 : (1987) 62 CompCas 138 : (1987) 2 JT 43 : (1987) 1 SCALE 648 : (1987) 2 SCC 654 : (1987) 2 SCR 752 wherein it was held that an exclusion clause in the contract of Insurance must be read down being in conflict with the main statutory provision enacted for protection of the victims of accidents. It was laid down that the victim would be entitled to recover compensation from the insurer irrespective of the breach of any condition of policy. Thereafter the three Judge Bench of the Supreme Court in Sohan Lal Passi Vs. P. Sesh Reddy and others, (1996) 2 ACC 617 : (1996) ACJ 1044 : AIR 1996 SC 2627 : (1998) 91 CompCas 526 : (1996) 5 JT 728 : (1996) 114 PLR 311 : (1996) 5 SCALE 388 : (1996) 5 SCC 21 : (1996) 3 SCR 647 Supp : (1996) 2 UJ 525 analysed the corresponding provisions under the Motor Vehicles Act, 1939 and the Motor Vehicles Act, 1988 and approved the decision in Skandia (supra). In New India Assurance Co., Shimla Vs. Kamla and Others etc. etc., (2001) ACJ 843 : AIR 2001 SC 1419 : (2001) 105 CompCas 398 : (2011) 1 CPJ 10 : (2001) 4 JT 235 : (2001) 3 SCALE 18 : (2001) 4 SCC 342 : (2001) 2 SCR 797 : (2001) 2 UJ 1121 : (2001) AIRSCW 1340 : (2001) 3 Supreme 84 , the Supreme Court referred to the decision of the two Judge Bench in Skandia(supra) as well as the three Judge Bench decision in Sohan Lal Passi(supra) and held that the insurer who has been made liable to pay the compensation to third parties on account of certificate of insurance issued shall be entitled to recover the same if there was any breach of the policy condition on account of the vehicle being driven without a valid driving licence. The relevant portion of the report is extracted hereunder:
"21. A reading of the proviso to sub-section (4) as well as the language employed in sub-section (5) would indicate that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This means, the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but the insurer is entitled to recover any such sum from the insured if the insurer were not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy.
To repeat, the effect of the above provisions is this: when a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to the third parties, whether or not there has been any breach or violation of the policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured.
It is advantageous to refer to a two-Judge Bench of this Court in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan and Others, (1987) 1 ACC 413 : (1987) ACJ 411 : (1987) 62 CompCas 138 : (1987) 2 JT 43 : (1987) 1 SCALE 648 : (1987) 2 SCC 654 : (1987) 2 SCR 752 . Though the said decision related to the corresponding provisions of the predecessor Act (Motor Vehicles Act, 1939) the observations made in the judgment are quite germane now as the corresponding provisions are materially the same as in the Act. Learned Judge pointed out that the insistence of the legislature that a motor vehicle can be used in a public place only if that vehicle is covered by a policy of insurance is not for the purpose of promoting the business of the insurance company but to protect the members of the community who become suffers on account of accidents arising from the use of motor vehicles. It is pointed out in the decision that such protection would have remained only a paper protection if the compensation awarded by the courts were not recoverable by the victims (or dependants of the victims) of the accident. This is the raison d''etre for the legislature making it prohibitory for motor vehicles being used in public places without covering third-party risks by a policy of insurance.
The principle laid down in the said decision has been followed by a three-Judge Bench of this Court with approval in Sohan Lal Passi Vs. P. Sesh Reddy and others, (1996) 2 ACC 617 : (1996) ACJ 1044 : AIR 1996 SC 2627 : (1998) 91 CompCas 526 : (1996) 5 JT 728 : (1996) 114 PLR 311 : (1996) 5 SCALE 388 : (1996) 5 SCC 21 : (1996) 3 SCR 647 Supp : (1996) 2 UJ 525 .
The position can be summed up thus:
The insurer and the insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence..."
Again in United India Insurance Company Ltd. Vs. Lehru and Others, (2003) 1 ACC 611 : (2003) ACJ 611 : AIR 2003 SC 1292 : (2003) 2 JT 595 : (2003) 3 SCALE 181 : (2003) 3 SCC 338 : (2003) 2 SCR 495 : (2003) 1 UJ 679 : (2003) AIRSCW 1695 : (2003) 2 Supreme 768 of the report, the Supreme Court referred to the decisions in Skandia(supra), Sohan Lal Passi (supra) and Kamla(supra) and held that even where it is proved that there was a conscious or willful breach as provided under Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988 the Insurance Company would still remain liable to the innocent third party but it may recover the compensation paid from the insured. The relevant portion of the report is extracted hereunder:
"18. Now let us consider Section 149(2). Reliance has been placed on Section 149(2)(a)(ii). As seen, in order to avoid liability under this provision it must be shown that there is a "breach". As held in Skandia and Sohan Lal Passi cases the breach must be on the part of the insured. We are in full agreement with that. To hold otherwise would lead to absurd results. Just to take an example, suppose a vehicle is stolen. Whilst it is being driven by the thief there is an accident. The thief is caught and it is ascertained that he had no licence. Can the insurance company disown liability? The answer has to be an emphatic "No". To hold otherwise would be to negate the very purpose of compulsory insurance..."
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...If it ultimately turns out that the licence was fake, the insurance company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly, even in such a case the insurance company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the law which has been laid down in Skandia, Sohan Lal Passi and Kamla cases. We are in full agreement with the views expressed therein and see no reason to take a different view."
The three Judge Bench of the Supreme Court in National Insurance Co. Ltd. Vs. Swaran Singh and Others, (2004) 1 ACC 1 : (2004) ACJ 1 : AIR 2004 SC 1531 : (2004) 118 CompCas 396 : (2004) 1 JT 109 : (2004) 136 PLR 510 : (2004) 1 SCALE 180 : (2004) 3 SCC 297 : (2004) 1 SCR 180 : (2004) AIRSCW 663 : (2004) 1 Supreme 243 again emphasised that the liability of the insurer to satisfy the decree passed in favour of the third party was statutory. It approved the decisions in Sohan Lal Passi (supra), Kamla (supra) and Lehru (supra). Para 73 and 105 of the report are extracted hereunder:
"73. The liability of the insurer is a statutory one. The liability of the insurer to satisfy the decree passed in favour of a third party is also statutory.
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Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle."
This Court in MAC APP. No. 329/2010 Oriental Insurance Company Limited v. Rakesh Kumar and Others and other Appeals decided by a common judgment dated 29.02.2012, noticed some divergence of opinion in Malla Prakasarao Vs. Malla Janaki and Others, (2006) 1 ACC 300 : (2004) 3 SCC 343 ; National Insurance Co. Ltd. Vs. Kusum Rai and Others, (2006) 2 ACC 19 : (2006) ACJ 1336 : AIR 2006 SC 3440 : (2006) 131 CompCas 391 : (2006) 2 CPJ 8 : (2006) 2 CTC 347 : (2006) 4 JT 9 : (2006) 143 PLR 246 : (2006) 3 SCALE 519 : (2006) 4 SCC 250 : (2006) AIRSCW 1649 : (2006) 3 Supreme 272 ; National Insurance Co. Ltd. Vs. Vidhyadhar Mahariwala and Others, (2008) ACJ 2860 : AIR 2009 SC 208 : (2008) 152 PLR 746 : (2008) 12 SCALE 577 : (2008) 12 SCC 701 ; Ishwar Chandra and Others Vs. The Oriental Insurance Co. Ltd. and Others, (2007) 2 ACC 63 : AIR 2007 SC 1445 : (2007) 4 SCALE 292 : (2007) 10 SCC 650 : (2007) 3 SCR 720 : (2007) AIRSCW 1889 : (2007) 3 Supreme 65 and Premkumari and Others Vs. Prahlad Dev and Others, (2008) ACJ 776 : AIR 2008 SC 1073 : (2008) 1 CLT 246 : (2008) 149 PLR 241 : (2008) 1 SCALE 531 : (2008) 3 SCC 193 : (2008) AIRSCW 682 on the one hand and Sohan Lal Passi Vs. P. Sesh Reddy and others, (1996) 2 ACC 617 : (1996) ACJ 1044 : AIR 1996 SC 2627 : (1998) 91 CompCas 526 : (1996) 5 JT 728 : (1996) 114 PLR 311 : (1996) 5 SCALE 388 : (1996) 5 SCC 21 : (1996) 3 SCR 647 Supp : (1996) 2 UJ 525 ; New India Assurance Co., Shimla Vs. Kamla and Others etc. etc., (2001) ACJ 843 : AIR 2001 SC 1419 : (2001) 105 CompCas 398 : (2011) 1 CPJ 10 : (2001) 4 JT 235 : (2001) 3 SCALE 18 : (2001) 4 SCC 342 : (2001) 2 SCR 797 : (2001) 2 UJ 1121 : (2001) AIRSCW 1340 : (2001) 3 Supreme 84 ; United India Insurance Company Ltd. Vs. Lehru and Others, (2003) 1 ACC 611 : (2003) ACJ 611 : AIR 2003 SC 1292 : (2003) 2 JT 595 : (2003) 3 SCALE 181 : (2003) 3 SCC 338 : (2003) 2 SCR 495 : (2003) 1 UJ 679 : (2003) AIRSCW 1695 : (2003) 2 Supreme 768 ; National Insurance Co. Ltd. Vs. Swaran Singh and Others, (2004) 1 ACC 1 : (2004) ACJ 1 : AIR 2004 SC 1531 : (2004) 118 CompCas 396 : (2004) 1 JT 109 : (2004) 136 PLR 510 : (2004) 1 SCALE 180 : (2004) 3 SCC 297 : (2004) 1 SCR 180 : (2004) AIRSCW 663 : (2004) 1 Supreme 243 ; Oriental Insurance Co. Ltd. Vs. Zaharulnisha and Others, (2008) ACJ 1928 : AIR 2008 SC 2218 : (2008) 151 PLR 252 : (2008) 7 SCALE 310 : (2008) 12 SCC 385 : (2008) AIRSCW 3251 ; National Insurance Co. Ltd. Vs. Geeta Bhat and Others, (2008) ACJ 1498 : AIR 2008 SC 1837 : (2008) CLT 935 : (2008) 4 JT 425 : (2008) 150 PLR 784 : (2008) 4 SCALE 757 : (2008) 12 SCC 426 : (2008) AIRSCW 2534 and National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, (2007) 2 ACC 28 : (2007) ACJ 721 : AIR 2007 SC 1414 : (2007) 136 CompCas 678 : (2007) 4 JT 169 : (2007) 146 PLR 510 : (2007) 4 SCALE 36 : (2007) 3 SCC 700 : (2007) 3 SCR 579 : (2007) AIRSCW 1782 : (2007) 2 Supreme 800 on the other hand and held that in view of the three Judge Bench decisions in Sohan Lal Passi(supra) and Swaran Singh(supra), the liability of the Insurance Company vis-A -vis the third party is statutory. If the Insurance Company successfully proves the conscious breach of the terms of the policy, it would be entitled to recovery rights against the owner or the driver, as the case may be.
In this view of the matter, the Appellant Insurance Company was rightly made liable to pay the compensation and to recover the same from the insured. It is therefore, clarified that the Appellant will be entitled to recover the compensation from the insured Respondent no. 5 (Arvind Kumar Nagar) in execution of this very judgment without having recourse to independent civil proceedings for recovery.
By an order dated 10.04.2012, on deposit of the entire award amount, execution of the award was ordered to be stayed. By a subsequent order dated 23.11.2012, 75% of the award amount was ordered to be released/held in fixed deposit in terms of the order passed by the Claims Tribunal.
While apportioning the compensation, the Claims Tribunal in para 47 of the impugned judgment observed as under:-
"47. Out of this amount 50% is awarded to Smt. Prem Lata mother of deceased and remaining 50% be awarded to petitioner no. 2 and 3 in equal proportion. Since the petition no. 2 and 3 both are minor, therefore the entire amount of share of petition nos. 2 and 3 be kept in FDR till they attain the age of majority or till five years whichever is later. The 50% of total share of petition no. 1 (mother of deceased) be released to her and 50% be kept in FDR for a period of 5 years with release of periodically interest."
It was observed and directed by the Claims Tribunal that 50% of the award amount shall go to Respondent no. 1, rest 25% each shall go to Respondents no. 2 and 3.
The amount shall be released/held in fixed deposit in terms of para 47 of the impugned judgment, which has been extracted above.
The appeal is disposed of accordingly.
Pending applications also stand disposed of.
Statutory amount, if any, deposited shall be refunded to the Appellant Insurance Company.