Jammu & Kashmir High Court
Oriental Insurance Co. Ltd vs Som Raj & Ors on 4 April, 2009
Author: Barin Ghosh
Bench: Barin Ghosh, J. P. Singh
HIGH COURT OF JAMMU AND KASHMIR AT JAMMU. LPA(C) No. 1 OF 2008 Oriental Insurance Co. Ltd. Petitioners Som Raj & ors. Respondent !Mr. Baldev Singh, Advocate. ^Mr. Gagan Basotra, Advocate. Hon'ble Mr. Justice Barin Ghosh, Chief Justice. Hon'ble Mr. Justice J. P. Singh, Judge. Date: 04.04.2009 :J U D G M E N T :
Per Barin Ghosh, CJ:
A motor vehicle accident resulted in filing of a claim before the Claims Tribunal. The foundation of the claim did not rest only on no fault liability. Before the Tribunal, the appellant before us, contended that it has no liability. The grounds in support of such contention had also been mentioned. The Tribunal, on consideration of the pleadings filed by the appellant, found that it had admitted insurance of the offending vehicle with it on the date of the accident. It also noted that various grounds had been 2 taken by the appellant in defence and those were of legal nature. The Tribunal, thereupon, proceeded to decide the claim on the basis of no fault liability as a claim for interim compensation and awarded the same with the observation that the defences raised by the appellant shall be looked into and dec6ided when the claim petition would be finally decided upon considering the evidence to be led by both sides. Challenging the award of the Tribunal, termed as interim award, the appellant filed an appeal. In the appeal, it was highlighted, as was contended before the Tribunal, that the driver of the vehicle, at the time of the accident, was not holding a valid driving license and, accordingly, the appellant had no liability on account of the claim. A learned Single Judge of this Court by the judgment and order under appeal, dismissed the appeal, holding that whether the driver had a valid driving license or not, is a question of fact which can be determined only during the trial of the case and that, at the time of considering the claim on the basis of no fault liability, the Tribunal was not required to go in for a roving enquiry. The learned Judge further held that when it was not in dispute that the vehicle stood insured with the appellant at the time of the accident, the Tribunal committed no error of law or fact in fixing the liability to pay the interim compensation upon the appellant-insurer. Being aggrieved by the said judgment and order, the present appeal has been preferred.3
Section 140 of the Motor Vehicle Act, 1988 puts no fault liability on the owner of the vehicle. It provides that the amount of money mentioned in the said section is payable without pleading and establishing that the death or permanent disablement was due to any wrongful act, neglect or default of the owner or owners of the vehicle. It further says that the death or permanent disablement resulting from an accident arising out of use of a motor vehicle or motor vehicles would entail such payment and such claim, in terms of the provisions contained in the said section, is not defeatable by showing that there was a wrongful act, neglect or default of the person who suffered death or permanent disablement by reason of the motor vehicle accident. The section further makes it clear that the amount of compensation mentioned is the minimum compensation payable, although more than that may be payable under any other law for the time being in force. Section 141 of the Act makes it further clear that a claim for compensation under section 140, i.e., on the basis of no-fault, is in addition to claim for compensation on the principle of fault; but, at the same time, specifies that a claim on no fault basis shall be disposed of as expeditiously as possible and, where such claim and additional claim has been made, the claim for compensation on the basis of no fault shall be disposed of in the first place.4
The claim on the basis of no fault as also on the principle of fault can be lodged against the owner of the vehicle. The owner of the vehicle can pass off such liability to the insurer by taking out an insurance cover with third party risks, obtaining of which is mandatory. Sub-section (1) of section 149 of the Act directs the insurer, notwithstanding he may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, subject to the provisions of section 149 of the Act, to pay, to the person entitled to the benefit of the decree or award passed against the owner, the sum not exceeding the sum assured payable under the policy as if the insurer was the judgment debtor in respect of the liability. Sub- section (2) of section 149 of the Act provides that the insurer would not incur any such liability when, inter alia, there is a breach of a specified condition of the policy that the driver was not duly licensed.
A person who is entitled to compensation on the basis of no fault has a choice to restrict his claim to the extent permissible under section 140 of the Act or he may, in addition thereto, claim compensation on the principle of fault. The claim, if it is restricted only on the basis of no fault and if the owner satisfies the claim, the matter is over. If the owner tells the claimant that the vehicle was insured and the insurance company honours the claim, then again the matter stands concluded. But, if neither the owner satisfies the claim, nor the insurance 5 company, then the claimant has to enforce the claim through some forum.
Section 165 of the Act authorizes setting up of Claims Tribunals. In terms of the explanation appended to sub-section (1) of section 165, a claim based on no fault is also a claim to be decided by the Claims Tribunal. Therefore, if the claim is based only on no fault basis, the Claims Tribunal would decide the same once for all. However, if the claim is based on no fault basis and also on the principle of fault, by reason of the mandate of the law contained in section 141 of the Act, the Claims Tribunal would be required to decide the claim based on no fault basis first. The words b� the claim for compensation under section 140 shall be disposed of as aforesaid in the first placeb� used in sub-section (2) of section 141 are significant. Such claim can be disposed of only by deciding whether, in the facts and circumstances of the case, the owner has earned liability on the principle of no fault and, if so, whether, in view of section 149(1) of the Act, the insurer is liable to pay the amount of the award but subject to the provisions contained in section 149 of the Act, including its defences, as provided in sub-section (2) of section 149 of the Act. In the event the circumstances, as mentioned in the said sub-section, are in existence, the insurer can avoid its liability and, for that purpose, it has been authorized to defend any claim for recovery of claim made against it but only on the 6 principles enunciated in sub-section (2) of section 149 of the Act.
Therefore, while disposing of the claim based on no fault basis, as the owner of the vehicle is required to be heard, so is the insurer. It may be possible that the owner may contend that he is not the owner of the vehicle involved in the accident and, if such a plea is taken, unless there is a finding that the vehicle in question was owned by him, no compensation can be awarded against him. Similarly, if the insurer takes a plea, which it is entitled to take as and by way of defence and as has been provided in sub-section (2) of section 149 of the Act, the veracity and effect of such plea is required to be adjudicated, otherwise the right of the insurer to defend a claim on it would be defeated. In the circumstances, when a plea is taken by the insurer as is available to it under sub-section (2) of section 149 of the Act, there must be an adjudication that such a plea is not sustainable and, accordingly, the insurer is liable to pay the amount due and payable by the owner to the extent of the insurance policy and all costs, interest etc. payable thereon.
In the event anything else is thought to be the law governing the subject, then the right of the insurer to defend, granted by sub-section (2) of section 149 of the Act, would be defeated.
7The mistake, as is committed often, and as was committed in the instant case, was considering the claim based on no fault basis as an interim claim and not as an independent claim. The Tribunal as well as the learned Single Judge of this Court proceeded on the basis that the right to defend in terms of sub-section (2) of section 149 is delayed to the stage of considering and disposing of the claim based on the principle of fault. It must be kept in mind that the amount payable by the insurer under section 149 of the Act to the extent mentioned in sub- section (1) thereof is not recoverable by the insurer from the owner. A look at sub-section (4) of section 149 of the Act read with proviso thereto as well as sub-section (5) would amply make clear that a payment made or directed to be made by the insurer, which can be defeated under sub-section (2) of section 149, is not recoverable from the insured. Therefore, unless the liability of the insurer is adjudged with regard to a claim, be that on the basis of no fault or on the principle of fault, the insurer cannot be made liable to pay any claim, so the insurer has been empowered to defend any such claim on the grounds mentioned in sub-section (2) of section 149 of the Act.
Therefore, the conclusion would be that while disposing of a claim founded on no fault, there must be a pronouncement that the defence put forward by the insurer under sub-section (2) of section 149 of the Act is not available or that the defence put forward is not 8 available under sub-section (2) of section 149. For that purpose, if all facts have to be gone in and evidence therefor is required to be taken, the same would be a necessity.
The moment the insurer is directed to pay an amount under section 149 of the Act, the same would be a pronouncement that the insurer is liable to pay the amount under the policy of insurance issued by it and, accordingly, has incurred the liability to pay the same. If, at a later point of time, it is adjudged that the insurer had no liability to pay the amount, for, it had a valid defence to the claim under sub-section (2) of section 149 of the Act, that would not authorize the insurer to recover the payment, already directed to be made, from the insured as the same would not be in excess of the liability of the insurer under the policy. In consequence thereof, despite a good defence to the claim, based on no fault, the insurer would lose its right to defend such claim.
We may lastly refer, once again, to section 165 of the Act and, in particular, to sub-section (1) thereof, which authorizes setting up of Claims Tribunal for the purpose of 9 adjudicating the claims for compensation in respect of accidents involving death of, or bodily injury to, persons arising out of use of motor vehicles, or damages to any property of a third party so arising, or both. As aforesaid, in the explanation, a claim founded on no fault basis is included in the claim for the purpose of adjudication for which the Claims Tribunals have been authorized to be set up. The adjudication, as aforesaid, cannot be made by only fixing the liability, but is required to be made by also fixing the liability of the person liable to discharge the liability and the same can only be done by a pronouncement that the defence put forward to avoid the liability is not available. The same cannot be kept pending adjudication at any later point of time while adjudicating more than one claims, one of which is based on no fault liability.
However, while adjudicating a claim based on no fault liability as can be preferred under section 140 of the Act, it may not be necessary in all cases to follow the elaborate procedure prescribed therefor, which is evident 10 from Rules 324, 325 and 326 of the J&K Motor Vehicles Rules, 1991.
We, therefore, conclude in favour of the appellant and, accordingly, set aside the judgment and order under appeal as well as the award, said to be interim award, passed by the Tribunal, and remit the matter to the Tribunal for doing the needful.
The appeal is, accordingly, allowed, however, without any order as to costs.
(J. P. Singh) (Barin Ghosh)
Judge Chief Justice.
Jammu,
04.04.2009
A. H. Khan, JR.