The New India Assurance Co. Ltd. vs Sri. Vinayak Atmaram Date and Others

U.L. Bhat, J.—The 4th Respondent, insurer, of one of the vehicles in an accident has filed this appeal against the award of the Motor Accident Claims Tribunal, Palghat in M.A.C. No. 34 of 1981.

The first Respondent along with a friend was on tour of Kerala. They boarded bus, TMN 3107 belonging to the 4th Respondent herein from Palghat and proceeded towards Coimbatore. The first Respondent sat in the right side of the bus and his friend next to him on the left side. His right hand was kept on the railings inside the bus. At Kanjikode, the bus proceeded along a narrow strip of land where some repairs were being carried on the other side of the road. Lorry No. MDR 5296 belonging to the second Respondent and driven by the third Respondent came from the opposite side and hit against the side of the bus, as a result of which the hand of the first Respondent was injured. According to the first Respondent the occurrence took place due to the rash and negligent driving of both the vehicles. His hand was amputated below the shoulder. He underwent long and tortuous treatment at District Hospital, Palghat and hospitals at Bombay. He claimed compensation of Rs. 1,00,000 for pain and suffering, loss of amenities, loss of further earnings etc. Respondents 2 and 3 herein filed joint statement denying the rash and negligent driving on the part of the third Respondent and putting the entire blame on the driver of the bus and the first Respondent�s conduct. The Appellant herein filed written statement denying the case put forward by the first Respondent and contending that as per the policy and provisions of the statute, the maximum liability of the insurer is Rs. 50,000.

The Tribunal held that the accident leading to injury to the first Respondent occurred on account of the negligent driving of the vehicles of both the drivers, Respondents 1 to 3 are jointly and severally liable to pay damages and consequently the owners of the two vehicles and the insurer of the lorry were also held liable. The bus, which belongs to State undertaking did not have separate insurance. The Tribunal assessed the total damages payable at Rs. 70,000 and passed an award for the said amount with interest at 6 percent per annum from the date of the petition with costs to be realised from Respondents 1 to 4. The Appellant was further directed to pay Rs. 50,000 together with interest and proportionate costs. The Appellant, insurer of the lorry, had preferred this appeal.

The only contention urged at the bar on behalf of the Appellant is that the liability for damages could not be joint and several and should have been apportioned between the drivers of the two vehicles. According to him, it would have been fair to apportion at half and half, in which case the Appellant-insurer would be liable to pay only Rs. 35,000. In other words, what is objected to is the direction that the Appellant is liable to pay Rs. 50,000 being the maximum limit of insurance. This contention is rebutted by learned Counsel for the first Respondent, who would contend that this is not a case of apportionment at all but one of joint and several liability and therefore the Appellant is liable to pay up to the maximum limit of insurance. Learned Counsel also contended that this is not a contention open to the insurer at all.

The key to the resolution of the contention rests on the provisions of Section 96(2) of the Motor Vehicles Act, for short ''the Act''. Sub-section (1) states inter alia that where judgment in respect of any such liability as is required to be covered by a policy u/s 95(2)(b) is obtained against an insurer, subject to the provisions of section, the insurer shall pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable as if he were the judgment-debtor together with amount payable in respect of costs and interest. Sub-section (2) states inter alia that no sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless the insurer had notice through the Court of the bringing of the proceedings and that a notice is so given shall be entitled to be made a party thereto and to defend the action on any one of the grounds mentioned in Sub-clauses (a) to (c). The enumerated grounds are the cancellation of the policy by mutual consent or by the provisions contained in the policy, surrender of policy, loss or destruction of the same as indicated in the clause, breach of specified condition of policy enumerated in Clause (b), that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular. The proviso to Sub-section (3) states that the sum paid by the insurer in or towards the discharge of any liability shall be recoverable by the insurer from the person insured. According to Sub-section (4) if the amount which an insurer becomes liable to pay exceeds the amount for which the insurer would be liable under the policy, the insurer shall be entitled to recover the excess from the insured. Sub-section (6) states that no insurer to whom notice referred to in Sub-section (2) or (2A) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment otherwise than in the manner provided for in Sub-section (2).

The above provisions have been authoritatively interpreted by the Supreme Court in British India General Insurance Co. Ltd. Vs. Captain Itbar Singh and Others, . The Supreme Court observed:

Sub-section (2) clearly provides that an insurer made a Defendant to the action is not entitled to take any defence which is not specified in it. When the grounds of defence have been specified, they cannot be added to. The only manner of avoiding liability provided for in Sub-section (2) is through the defences therein mentioned. Therefore when Sub-section (6) talks of avoiding liability in the manner provided in Sub-section (2), it necessarily refers to these defences.

There are recognised exceptions to the above rule. It is open to the insurer to raise defences in the place of the insured. Sub-section 110(c)2A provides that the Tribunal if satisfied that there is collusion between the person making the claim and the person against whom the claim is made, or the person'' against whom the claim is made has failed to contest the claim, for reasons to be recorded by it in writing, can direct that the insurer who may be liable in respect of such claim, shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made. Subject to these two exceptions the defences open to the insurer are those enumerated in Section 96(2) of the Act. This Court has in several reported cases followed the dictum laid down by the Supreme Court. See United India Fire and Gen. Ins. Ltd. v. Kalyani 1982 KLT 559, New India Assurance Co. Ltd. v. Radhakrishnan 1983 KLT 47 and Krishnan Nair v. Karunakaran Nair 1985 KLT 683.

The contention that compensation awarded must be apportioned between the drivers of the two vehicles involved in the accident and therefore the liability of the particular insurer must be reduced is a defence or a contention not available to the insurer u/s 96(2). There is no case of collusion put forward. There is no case that the insurer has reserved in the policy the right to take up the defence available to the insured. We therefore hold that the only contention urged before us, viz., that the Tribunal should have apportioned the compensation between the two drivers and restricted the liability of the insurer to one half of the compensation amount is not available to the Appellant. It is therefore unnecessary for us to consider the contention on the merits.

We accordingly dismiss the appeal with costs of the first Respondent. The other parties will bear their costs in the appeal.