Susairaj vs Guruprasad and Another

S. Manikumar, J.—In an accident, which occurred on 26.6.2010, a third party victim sustained injuries. A criminal case has been registered in Crime No. 294 of 2010, against the driver of the two-wheeler, viz., Hero Shine bearing registration No. TN 25-M 5166, under sections 279 and 337, Indian Penal Code on the file of Vettavalam Police Station. For injuries, disablement, treatment, medical expenses incurred and under other heads, he claimed compensation of Rs. 5,00,000 against the owner of the vehicle and his insurer, Oriental Insurance Co. Ltd., Sathuvachari, Vellore, respondent Nos. 1 and 2 herein, respectively. The insurance company has disputed the manner of accident and its liability to pay compensation to the third party victim on the ground that the driver of the offending vehicle did not possess a valid and effective driving licence at the time of the accident and when there is a breach of policy conditions, liability cannot be fastened on them.

Before the Claims Tribunal, the appellant examined himself as PW 1 and reiterated the manner of accident. To prove that he suffered disability, he has examined PW 2, doctor. Exh. P1, F.I.R., Exh. P2, accident register, Exh. P3, discharge summary, Exh. P4, disability certificate and Exh. P5, X-ray have been marked on the side of the appellant. To prove that the driver of the vehicle bearing registration No. TN 25-M 5166, insured with the respondent No. 2, did not possess a valid and effective driving licence, the insurance company has examined a Junior Assistant from the office of the Regional Transport Office, Tiruvannamalai, as RW 1. He has deposed that from 2.12.2009 to 1.6.2010, the driver was issued only with a learner''s licence. RW 2, Assistant Manager in the insurance company, has also reiterated the same. Exh. R1, letter issued by the Assistant Licensing Authority to the insurance company, Exh. R2, policy pertaining to the two-wheeler, Exh. R3, Investigating Officer''s report and Exh. R4, the charge-sheet, have been filed on the side of the insurance company.

On perusal of the charge-sheet, the Claims Tribunal has observed that driver was charged u/s 3 read with section 181 of the Motor Vehicles Act, 1988. Upon consideration of oral and documentary evidence let in by both parties, the Claims Tribunal came to the conclusion that the driver of the two-wheeler did not possess a valid and effective driving licence on 26.6.2010, the date of accident. However, while considering as to whether liability should be fastened on the insurance company to pay compensation or whether the owner should be directed to pay the compensation to the third party victim, the Claims Tribunal placing reliance on Bhuwan Singh Vs. Oriental Insurance Company Ltd. and Another, and Jawahar Singh Vs. Bala Jain and Others, , held that the insurance company is not liable to pay compensation and consequently, directed the owner to pay compensation.

Taking into consideration the nature of injuries, period of treatment, expenses incurred and following a judgment of this court in J. Sai Manohar Vs. Prem Shanker Shukla and another, , quantified the damages at Rs. 92,000 with interest at the rate of 7.5 per cent per annum to be paid by the insured.

Being aggrieved by the liability fastened on the owner of the vehicle, Mr. Terry Chellaraja, learned counsel for the appellant-claimant, submitted that Claims Tribunal has erred in directing the insured to pay the compensation to the third party accident victim. According to him, the Claims Tribunal has failed to consider the decision of the Supreme Court in Jawahar Singh Vs. Bala Jain and Others, , in proper perspective and even in the above said judgment, the Apex Court directed the insurance company to pay the compensation and then to recover from the owner of the vehicle. According to him, as per section 149(4) and (5) of the Motor Vehicles Act, 1988, the insurer cannot escape from its liability to pay compensation to a third party victim and at best, he can seek for right of recovery from the owner after making payment.

Reliance has been placed on the Division Bench judgment of this court in The United India Insurance Co. Ltd. Vs. S. Saravanan (Infirmity) rep. by his wife, NF.S. Lalitha and Ravi, ; United India Insurance Co. Ltd. Vs. V. Vijayakumar and others, and Bajaj Allianz General Insurance Co. Ltd. Vs. P. Manimozhi and Others, . In the light of the above decisions, he submitted that the award fastening liability on the insured to pay compensation has to be modified and that the insurer be directed to pay the compensation amount and then recover from the owner.

Opposing the relief sought for, Mr. R. Sivakumar, learned counsel appearing for Oriental Insurance Co. Ltd., submitted that there is an award against the insured to pay compensation. If there is any manifest illegality in the award directing the owner of offending vehicle to pay compensation to a third party accident victim, according to him, the person aggrieved is only the insured and not the third party victim. He further submitted that there are no averments in the memorandum of grounds that the insured has not satisfied the award and in such circumstances, there is no cause of action for the third party victim to prefer an appeal. According to him, if the insured has already satisfied the award, any direction to be granted in this appeal against the insurer to pay compensation and then to recover the said amount from the insured, will amount to double compensation. For the above said reasons, he prayed for dismissal of the appeal.

The issue as to whether a third party victim is entitled to seek for compensation from the insurer, is no longer res integra in view of the Division Bench decisions of this court in The United India Insurance Co. Ltd. Vs. S. Saravanan (Infirmity) rep. by his wife, NF.S. Lalitha and Ravi, ; United India Insurance Co. Ltd. Vs. V. Vijayakumar and others, and Bajaj Allianz General Insurance Co. Ltd. Vs. P. Manimozhi and Others, .

Perusal of the award discloses that the driver of offending vehicle, two-wheeler, bearing registration No. TN 25-M 5166, insured with the respondent No. 2 insurance company had a learner''s licence from 2.12.2009 to 1.6.2010. Evidence adduced on behalf of the insurance company shows that on the date of accident, i.e., 26.6.2010, the driver did not possess a valid and effective driving licence. The question as to whether it is open to the insurer to seek for total exoneration from payment of compensation to a third party victim or whether it has only a right of recovery, section 149(4) and (5) of the Motor Vehicles Act, has been extensively considered in ICICI Lombard General Ins. Co. Ltd. v. Annakkili, 2012 (1) TN MAC 226, wherein this court following the principles of law laid down by the Apex Court and the Division Bench judgments that payment of compensation to a third party victim or legal representatives of the deceased, as the case may be, being statutory and considering the interpretation given by the Supreme Court to sections 147, 149(4) and (5) vis-a-vis the defences open to the insurance company u/s 149(2)(a)(ii) of the Motor Vehicles Act and by holding that the very introduction of the words, ''pay compensation to the third party and recover the same from the insured'', in section 149(4) and (5) of the Act, would reflect the divine intention of the legislature to protect the interest of the third parties, vis-a-vis inter se disputes between the insured and insurer, held that the insurer cannot avoid its liability to pay compensation to a third party, but such avoidance can be made only, if willful breach of terms and conditions of the policy by the insured, by consciously and recklessly allowing the driver, who did not possess a valid and effective driving licence, to drive the vehicle and even if such breach is proved, payment of compensation to the third party victim cannot, at any stretch of imagination, be avoided by the insurance company and that the only remedy open to the insurer in law is to pay the compensation to the third party victims and recover from the insured. In view of the above, the insurer cannot be totally exonerated from payment of compensation to third party, but it can avoid its liability only to the insured.

In the light of the above, this court is of the view that the Tribunal has committed a manifest illegality in exonerating the insurance company from payment of compensation to a third party victim. The contention that the insured alone is aggrieved over the finding and not the third party victim cannot be countenanced, for the reason that the third party victim has a right of receiving the compensation from an insurer, when a vehicle is under the contract of insurance.

The further contention of the learned counsel for the insurance company that had the owner satisfied the award then, it would amount to double compensation, also cannot be sustained for the reason that had the amount been deposited as ordered by the Claims Tribunal, then there is no need for the third party victim/appellant to prefer this appeal. If a third party victim has a right to seek for compensation against an insurer as envisaged u/s 149 of the Motor Vehicles Act, then he can always prefer an appeal over an erroneous decision of the Claims Tribunal saddling liability on the owner of the vehicle alone to pay compensation and these issues have been extensively considered in ICICI Lombard General Ins. Co. Ltd, v. Annakkili, 2012 (1) TN MAC 226.

Further, in Ningamma and Another Vs. United India Insurance Co. Ltd., , the Supreme Court held that even if there is no pleading by the claimant, it is the duty of the courts and Tribunals to consider the claim on the angle of beneficial legislation of the Motor Vehicles Act, 1988 and award a just and reasonable compensation. In the light of the decision of the Supreme Court cited supra, the contention of the learned counsel for the respondent No. 2 cannot be sustained. Merely because the insured has not preferred any appeal against the liability fastened on him, the insurer cannot extricate itself from payment of compensation to a third party victim, in an accident, which occurred due to driving, by an unlicensed person. He can only seek for indemnification against the insured and not the victim.

In view of the above, the contention of the insurance company is rejected. In as much as the Vehicle is insured, both the insured and the insurance company are liable to pay compensation and that the insurance company can recover the compensation from the owner in the same proceedings as held in Oriental Insurance Co. Ltd. Vs. Shri Nanjappan and Others, .

In the light of the above, the finding of the Claims Tribunal is modified to the extent that Oriental Insurance Co. Ltd., Sathuvachari, Vellore, the respondent No. 2, is directed to pay compensation to the appellant/third party accident victim and to recover the same from the owner as indicated above. The civil miscellaneous appeal is allowed. No costs. Though the appellant has sought for enhancement of compensation, considering the nature of injuries, the period of treatment, this court is of the view that the quantum of compensation awarded by the Claims Tribunal is adequate. Hence, the award is sustained insofar as the quantum of compensation is concerned. Oriental Insurance Co. Ltd., Sathuvachery, Vellore, the respondent No. 2, is directed to deposit the entire award amount with proportionate accrued interest and costs to the credit of M.C.O.P. No. 411 of 2010 on the file of the Motor Accidents Claims Tribunal, Sub-Judge, Tiruvannamalai, within a period of four weeks from the date of receipt of a copy of this order. On such deposit, the appellant-claimant is permitted to withdraw the award amount with proportionate accrued interest and costs, by making necessary applications.