United India Insurance Co. Ltd. vs Smt. Manisha Mahesh Harmalkar and Others

F.M. Reis, J.—The above appeal challenges the judgment and award passed in claim petition No. 16/2002, by the learned Presiding Officer of the Motor Accident Claims Tribunal, Mapusa dated 22nd September, 2005.

The claim petition came to be filed by the respondent No. 1 being the sole dependent of her husband Mahesh, who expired at the age of 33 years, in an accident while travelling from Pernem to Dhargal with fertilizer bags on 22nd June, 2001 in a luggage rickshaw bearing registration No. GA-01/V-1931 and driven by the respondent No. 3. It was her case that on the said day, the respondent No. 2 was driving the tempo on the National Highway and coming from Mapusa side in a fast speed and in a rash and negligent manner and dashed against the luggage rickshaw in which the deceased was travelling. The respondent No. 3 was overtaking the Mahindra Jeep from the right side of the road as a result of which the accident took place. It is further her case that both the drivers, respondents Nos. 2 & 3 of their respective vehicles were responsible for the said accident. Accordingly, the claim petition came to be filed claiming an amount of Rs. 2,50,000/- as compensation. By the impugned judgment and award dated 22nd August, 2005, the learned Presiding Officer awarded a sum of Rs. 1,57,000/- alongwith interest at the rate of 7.5% per annum as compensation to the respondent No. 1. Being aggrieved by the said judgment, the appellant, respondent No. 6 to the claim petition/ United India Insurance Company Ltd. filed the present appeal.

Shri Netravalkar, the learned Counsel appearing for the appellant has assailed the impugned judgment essentially on only two grounds. It is his contention that the learned Tribunal was not justified in directing that the amount of compensation is to be paid by the appellant/Insurance Company and recover the same from respondent No. 4, as according to him there was a breach of the terms of the policy and as such the appellant was totally exonerated from effecting any payment of compensation. The next contention of the learned Counsel was that the deceased was travelling in a goods vehicle as a gratuitous passenger and, as such, the Insurance Company was exonerated from effecting any payment of compensation to the respondent No. 1, herein. The learned Counsel, as such, submitted that the impugned judgment deserves to be modified as against the appellant. In support of his submissions he has relied upon the judgment of the Apex Court reported in United India Insurance Co. Ltd., Shimla Vs. Tilak Singh and Others, .; 2007 A.C.J. 1043 : 2007 (2) T.A.C. 8 (S.C.) in the case of New India Assurance Co. Ltd. v. Vedwati & Ors.; 2005 A.C.J. 1801 : 2005 (2) T.A.C. 5 in the case of Branch Manager, United India Insurance Co. Ltd. Vs. Nagammal, Unnamalai and V.B. Krishnan, .

The respondents Nos. 1 to 5 though served failed to remain present. Shri Afosno, appeared for respondent No. 6/Insurance Company.

Having heard the learned Counsel and on perusal of the record the following two points for determination arise in the present appeal:

POINT FOR DETERMINATION :

Whether the learned Presiding Officer was justified in directing the payment of compensation by the appellant and recover the same from the respondent No. 5.

As far as the above point for determination is concerned, this Court in judgment reported in 2010 (4) Bom.C.R. 325 : 2010 (3) T.A.C. 39 (Bom.) in the case of United India Insurance Co. Ltd. v. Sindhubai Kondiram Darwante & Ors., has held at para 17, 18, 19, 20, 21, 23, 24, 25, 26, 27, thus :

Thus, the Apex Court held that whenever the Tribunal passes an order of directing the insurer to pay compensation amount and thereafter to recover the same from the insured, the Tribunal exercises inherent power. At this stage, it will be necessary to consider a decision of the Apex Court in the case of Oriental Insurance Co. Ltd. Vs. Smt. Raj Kumari and Others, . This was a case where the Tribunal allowed the claim application by granting compensation of Rs. 1,40,000/- but restricted the liability of the insurer to Rs. 50,000/-. An appeal was preferred against the said award before the High Court. The High Court held that the entire amount will have to be paid by the insurer and the amount paid in excess of Rs. 50,000/- by the insurer will have to be recovered from the insured. The said award was challenged by the Insurer before the Apex Court. The Apex Court discussed the law relating to precedents and in Paragraph 16, the Apex Court held thus :

In the instant case the insurer was a private limited company doing transport business. There was no material placed before the High Court to show that the claimants would have any difficulty in recovering the awarded amount from it. That being so, the High Court''s order is modified to the extent that the insurer shall pay an amount of Rs. 50,000/- with interest awarded to claimants. The balance has to be paid by the insured.

At this stage, a reference will have to be made to certain decisions of this Court. In the case of United India Insurance Co. Ltd. Vs. Kamal Maruti Darekar and Others, , this Court had occasion to consider the question whether the insurer can be directed to deposit the amount of compensation though a defence u/s 149(2) of the said Act of 1988 was proved by the Insurer. This Court relied upon a decision of the Apex Court in the case of National Insurance Co. Ltd. Vs. Swaran Singh and Others, . After considering the said decision, in Paragraph 16, this Court held thus :

From the above observations, it is amply clear that the insurer may legally establish defence to avoid liability and cannot be held jointly liable to pay compensation amount to the claimants, if such defence is duly proved within the meaning of Section 149(2), but even in such a case the insurer is statutorily liable to satisfy the award in the first instance qua the claimants, who are third parties. In view of the fact that special protection is made available to third parties under statutory provisions of the Motor Vehicles Act, third parties are not concerned with terms of the contract between insurer and insured. They cannot be, therefore, denied fruits of the award rendered by the Tribunal and cannot be compelled to seek recovery only from the owner of the vehicle, due to absence of legal liability of the insurer or on account of faults committed by the insured.

(Emphasis added)

Similar view has been taken by this Court in the case of United India Insurance Co. Ltd. Vs. Smt. Suryakantabai Patle, Mr. Sahasram Rahangadale and Mr. Laxman Baghale, . This Court relied upon a decision of three Judge Bench of the Apex Court in the case of National Insurance Co. Ltd. Vs. Baljit Kaur and Others, .

Learned Counsel appearing for the appellant has placed reliance on an unreported judgment of a Division Bench of this Court in LPA No. 121 of 2000. After considering the law on this aspect in paragraph 65, the Division Bench held thus :

The question which arises is what is the effect of Section 96(3) and (4) of the said Act and Section 149(4) and (5) of the Motor Vehicles Act, 1988. Can it be said that because of these provisions, the Insurance Company can be compelled to make payment of the awarded amount and recover it from the insured in all cases ? We have carefully considered these provisions. On the basis of these provisions, we are unable to lay down a broad proposition that in all cases, the insurer must be made to pay the entire compensation amount and then recover it from the owner of the offending vehicle.

In the case of National Insurance Co. Ltd. Vs. Swaran Singh and Others, , Apex Court dealt with the said question. In paragraph 104 of the decision it was held thus :

It is, therefore, evident from the discussions made hereinbefore that the liability of the Insurance Company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time.

Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle.

It is a well settled Rule of law and should not ordinarily be deviated from. See The Bengal Immunity Company Limited Vs. The State of Bihar and Others, , The Keshav Mills Co. Ltd. Vs. Commissioner of Income Tax, Bombay North, , Union of India (UOI) and Another Vs. Raghubir Singh (Dead) by Lrs. Etc., , Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, ; Belgaum Gardeners Cooperative Production Supply and Sale Society Ltd. Vs. State of Karnataka, and Hanumantappa Krishnappa Mantur and others Vs. State of Karnataka, .

We may, however, hasten to add that the Tribunal and the Court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of Clause (a) of sub-section (2) of Section 149 of the Act, the Insurance Company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the Insurance Company may initiate a separate action therefore against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all.. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.

(Emphasis added)

Lastly a reference will have to be made to a recent order of the Apex Court in the case of National Insurance Company Limited v. Parvatheneni and Anr. (supra). In paragraph 4 of the said decision, the Apex Court observed thus :

No doubt, there are some decisions which have taken the view that even if the Insurance Company has no liability, yet it must pay and later on recover it from the owner of the vehicle. See for example National Insurance Co. Ltd. Vs. Yellamma and Another, , Samundra Devi and Others Vs. Narendra Kaur and Others, , Oriental Insurance Co. Ltd. Vs. Brij Mohan and Others, vide S.C.C. 64, para 13 and The New Indian Insurance Company Vs. Darshana Devi and Others, .

We have some reservations about the correctness of the aforesaid decisions of this Court.

These observations were made after recording a prima facie view in paragraph 3 which reads thus :

Prima facie, we are of the opinion if the Insurance Company proves that it has no liability to pay compensation to the claimants, the Insurance Company cannot be compelled to make payment and later on recover it from the owner of the vehicle.

In paragraph 7, the Apex Court issued following directions.

Hence, we direct that the papers of this case be placed before the Hon''ble the Chief Justice of India for constituting a larger Bench to decide the following questions :

(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehicle ?

(2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142 ? Does Article 142 permit the Court to create a liability where there is none ?

It must be stated that there are at least two decisions of a Bench of three Hon''ble Judges of the Apex Court taking a view that in a case where breach of policy condition was established in a claim by third party, a direction can be issued by against the Insurer to deposit compensation amount and thereafter to recover the same from the Insured by executing the said award. In fact, in the said case of National Insurance Company Limited v. Parvathneni & anr. (supra), the Apex Court has referred to at least four such decisions taking a view that the insurer can be directed to deposit first and thereafter recover from the insured. However, a doubt has been expressed regarding correctness of the aforesaid decisions of the Apex Court and a reference has been made to a larger Bench. However, the view taken in the decision of larger Bench in the case of Swaran Singh (supra) still holds the field. The Division Bench of this Court in LPA No. 121 of 2000 has observed that the Bench was unable to lay down a broad proposition that in all cases, the insurer must be made to pay the entire compensation amount and then recover it from the owner of the offending vehicle. It is true that in all the cases where the insurer is held not liable, such a course cannot be adopted. It will depend on the facts and circumstances of each case.

Therefore, as the legal position stands today, there is a power vesting in Tribunal and in this Court, depending upon the facts and circumstances of each case, to direct the insurer to pay compensation amount and thereafter to recover the same from the insured." Relying upon the said judgment of this Court while disposing of First Appeal No. 67/2004, by judgment dated 2nd December, 2010, a similar direction to pay the amount by the Insurance Company and recover the same from the owner and the driver was also passed by this Court. Considering the said judgment of the learned Single Judge of this Court which has been passed after considering all the judgments in the field, I find that there is no infirmity committed by the learned Tribunal in directing that the amount of compensation is to be paid by the appellant and the same be directed to be recovered from the owner and the driver. As such, the contention of the learned Counsel appearing for the appellant to that effect that the Tribunal has no such power cannot be accepted. The first point for determination is answered accordingly.

Dealing with the contention of the learned Counsel for the appellants that, the deceased was a gratuitous passenger, I find that the Tribunal was justified to come to the conclusion that the deceased was a gratuitous passenger. Thus, in view of the findings recorded by the Tribunal, it is obvious that the appellant was not liable under the contract of Insurance and to indemnify the owner of the vehicle. The only point to be decided would be whether the appellant can be directed to pay the compensation amount and thereafter recover the same from the insured. In view of the said judgment of this Court in United India Insurance Co. Ltd. v. Sindhubai Kondiram Darwante & Ors. (supra) such power is available to the Tribunal as well as in this Court depending upon the facts and circumstances of the case. In the judgment of the Hon''ble Madras High Court in the case of Branch Manager, United India Insurance v. Nagammal & Ors. (supra) at para 31 (ii) & 31 (iii) it has been held thus :

31(ii) Section 149 envisages the defenses which are open to the Insurance Company. Where the Insurance Company is not successful in its defense, obviously it is required to satisfy the decree and the award. Where it is successful in its defense, it may yet be required to pay the amount to the claimant and thereafter recover the same from the owner under such circumstance envisaged and enumerated in Section 149(4) and Section 149(5).

31(iii) u/s 147 the Insurance Company is not statutorily required to cover the liability in respect of a passenger in a goods vehicle unless such passenger is the owner or agent of the owner of the goods accompanying such goods in the concerned goods vehicle. In the judgment of this Court in United India Insurance Co. Ltd. v. Sindhubai Kondiram Darwante & Ors. (supra), this Court at para 28 has held thus:

Now coming to the facts and circumstances of the present case, the owner (insured) has not chosen to appear before the Tribunal. He has not appeared before this Court though service has been effected. Therefore, this is a case where the Claimants cannot be denied fruits of the award and cannot be compelled to seek recovery only from the owner.

The facts in the present case are similar and as such the appellant can be directed to pay the amounts of compensation and recover the same from the insured/driver.

The learned Tribunal whilst passing the impugned judgment has also found that the rickshaw driver (respondent No. 3) did not have any effective driving licence at the time of the accident and, as such, there was a breach of the terms of the policy committed by the owner of the rickshaw (respondent No. 5, herein). The said findings are on the basis of the evidence on record. As such, the learned Tribunal was justified to direct the payment of compensation by the appellant and recover from the owner. But, however, the Respondent No. 3 and the owner are jointly and severally liable to pay the said compensation. The Tribunal erred while passing the impugned judgment in not directing that the amount is to be paid also by the driver of the rickshaw who is respondent No. 3, herein. The amount of compensation would have to be paid by the appellant and the same would have to be recovered from the owner of the said rickshaw (i.e. legal representatives of Respondent No. 5).

In view of the above, I pass the following order :

ORDER

(i) The appeal is partly allowed.

(ii) The impugned judgment and award is modified and the respondent No. 3 and the legal heirs of respondent No. 5 and the appellant are held liable to pay jointly and severally the compensation of a sum of Rs. 1,57,000/- to the respondent No. 1/claimant together with interest at the rate of 7.5% per annum from the date of filing of the claim petition up to actual payment.

(iii) The appellant shall be at liberty to recover the said amount from the insured i.e. the legal heirs of respondent No. 5 in accordance with law.

(iv) The remaining part of the award stands confirmed.

(v) The appeal stands disposed off accordingly with no order as to costs.