Karnataka High Court
Smt.Mute Gangamma W/O Late Mutte ... vs Sidda Birappa S/O Siddaiah on 2 July, 2020
Bench: S G Pandit, V.Srishananda
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 02ND DAY OF JULY 2020
PRESENT
THE HON'BLE MR. JUSTICE S.G. PANDIT
AND
THE HON'BLE MR. JUSTICE V. SRISHANANDA
MFA NO.103388/2015(MV)
BETWEEN
1. SMT.MUTE GANGAMMA
W/O LATE MUTTE GANGAPPA
@ DODDA GANGAPPA, AGE-54 YEARS.
2. PARAMESHWARAPPA
S/O LATE MUTTE GANGAPPA
@ DODDA GANGAPPA, AGE 39YEARS.
3. SHIVANNA S/O LATE MUTTE GANGAPPA
@ DODDA GANGAPPA AGE : 29 YEARS,
4. SHANKARA S/O LATE MUTTE GANGAPPA @
DODDA GANGAPPA, AGE: 23 YEARS.
ALL ARE RESIDENTS OF RAMPURA VILLAGE,
MOLKALMURU TALUK, CHITRADURGA DIST.
NOW RESIDING AT MAHANANDI KOTTAM,
TALUR ROAD, BALLARI
...APPELLANTS
(BY SRI. MANJUNATH JADAI, ADV.)
2
AND
1. SIDDA BIRAPPA S/O SIDDAIAH
AGE:59 YEARS, DRIVER OF LORRY
BEARING NO. KA-17/A-4961,
R/O YALLECHIKERE VILLAGE,
NELAMANGALA TALUK,
BENGALURU RURAL DISTRICT.
2. NAGARAJU S/O BASAVANTHAPPA
MAJOR, OWNER OF LORRY BEARING
NO. KA-17/A-4961
R/O. NO.25, 3RD CROSS,
SAMPIGERAMAIAH LAYOUT,
SIDEDHALLI ROAD,
BENGALURU.
3. THE BRANCH MANAGER
RELIANCE GENERAL INSURANCE CO., LTD.,
PARVATHINAGAR MAIN ROAD,
BALLARI- 583101.
...RESPONDENTS
(BY SRI.SURESH S. GUNDI, ADV. FOR R3, APPEARED
THROUGH V.C. R1-SERVED,
R2-NOTICE HELD SUFFICIENT)
THIS MFA IS FILED UNDER SECTION 173(1) OF THE
MOTOR VEHICLES ACT, 1988, AGAINST THE JUDGMENT
AND AWARD DATED 21.04.2012, PASSED IN MVC
NO.1149/2011 ON THE FILE OF THE MOTOR ACCIDENT
CLAIMS TRIUBUNAL-XII, AT BALLARY, PARTLY ALLOWING
THE CLAIM PETITION FOR COMPENSATION AND SEEKING
ENHANCEMENT OF COMPENSATION.
3
THIS MFA IS COMING ON FOR HEARING, THROUGH
VIDEO CONFERENCE DUE TO COVID-19, THIS DAY,
S.G. PANDIT, J., DELIVERED THE FOLLOWING:
JUDGMENT
The claimants are before this court in this appeal praying for enhancement of compensation not being satisfied with the quantum of compensation awarded under common judgment and award dated 21.04.2012, passed by the Member, MACT-XII, Bellary in MVC No.1149/2011.
2. The claim petition was filed under Section 166 of M.V. Act claiming compensation for the death of Mutte Gangappa in a road traffic accident. It is stated that the accident occurred on 29.06.2010 at about 10.00 p.m. involving lorry bearing No.KA-17/A-4961 and tractor and trailer bearing No.KA-34/T-9355/T- 9408. The accident involving above vehicles and the accidental death of the deceased is not in dispute in this 4 appeal. The claimants are in this appeal praying for enhancement of compensation.
3. The tribunal based on the material produced before it, awarded total compensation of Rs.3,59,000/- with interest @ 6% p.a. from the date of petition till realization on the following heads:
Towards funeral and last 1 10,000/-
obsequies For the loss of consortium 2 20,000/-
to the first petitioner 3 For the loss of estate 5,000/-
For the loss of dependency 4 3,24,000/-
to petitioners no.1 and 4 3,59,000/-
held just to
first
TOTAL petitioner
and fourth
petitioner
only.
4. While awarding the above compensation, the tribunal assessed the income of the deceased at 5 Rs.4,500/- per month. The claimants not being satisfied with the quantum of compensation are before this court in this appeal praying for enhancement of compensation.
5. Heard the learned counsel for the appellants-claimants and learned counsel for the respondent-Insurance company through video conference. Perused the material placed on record.
6. The learned counsel for the appellants- claimants would submit that the deceased was an agriculturist and was earning Rs.10,000/- per month. Without looking into the evidence of PW1-wife of the deceased, the tribunal assessed the income at Rs.4,500/- which is on the lower side and prays for enhancement of the compensation.
7. The learned counsel for the claimants further submits that the tribunal committed an error in saddling the liability on respondent Nos.1 and 2 owner 6 and driver of the vehicle. He submits that the insurance company is liable to pay the compensation.
8. Per contra, the learned counsel for the Insurance company would submit that the compensation awarded by the tribunal is just compensation, which needs no interference.
9. Further, the learned counsel submits that in the absence of any material to establish the income of the deceased the tribunal has rightly assessed the notional income of the deceased at Rs.4,500/- per month, which needs no interference.
10. Further the learned counsel submits that the tribunal has rightly saddled the liability on respondent Nos.1 and 2 owner and driver of the vehicle since the driver had no driving licence at all as on the date of accident.
7
11. Having heard the learned counsels for the parties and on perusal of the material placed on record, the following points would arise for consideration.
1. Whether the income assessed by the tribunal at Rs.4,500/- per month of the deceased is proper and correct?
2. Whether the claimants would be entitled for enhancement of compensation?
3. Whether the claimants have made out a case for pay and recovery by following Full Bench judgment of this court in MFA No.30131/2010?
12. Answer to the above point No.1 in the negative and point Nos.2 and 3 are in the affirmative for the following reasons :
13. The accident is of the year 2010. It is stated by the claimants that the deceased was an agriculturist and earning Rs.10,000/- per month, but no material 8 placed on record to establish the income of the deceased. In the absence of any material, the tribunal assessed the income of the deceased notionally at Rs.4,500/- per month. The income assessed by the tribunal is on the lower side. This court and Lok Adalath while settling the accident claims of the year 2010 would normally take the notional income at Rs.5,500/- per month. In the absence of any material to establish the income of the deceased, we deem it appropriate to take the notional income at Rs.5,500/- per month.
14. The tribunal failed to award compensation on the head of future prospects. Since the deceased was aged 56 years, in view of the principles laid down in the case of National Insurance Company Limited V/s. Pranay Sethi and others reported in AIR 2017 SC 5157, the claimants would be entitled for addition of 10% towards future prospects. The tribunal made 9 deduction at 1/3rd towards personal and living expenses of the deceased and adopted multiplier of 9, is proper and correct.
15. The tribunal has saddled the liability on respondent Nos.1 and 2 the driver and the owner of the offending vehicle. It is admitted fact that the driver of the offending vehicle was not possessing the driving licence to drive the vehicle as on the date of accident. In that situation, Full Bench of this Court in M.F.A. No.30131/2010 decided on 12.05.2020 after examining the legal position with regard to pay and recovery and provisions of Sections 147 and 149 of the Act has held as follows:
"62. It is worth reiterating here that the insurance policy between the insurer and insured is a contract which is purely binding upon the parties to the contract. The parties on a consensus can enter into any type of legal agreement between themselves which is recognized as a valid 10 contract. On an offer and acceptance of consideration, if the contract is entered into between the parties, it will create a binding contract between the parties. Under the provisions of the Act, the policy should contain all the statutory liabilities of the insurer irrespective of other conditions that may be agreed upon by the parties incorporated in the contract. So far as on "Act policy" is concerned, or a policy which should contain the statutory liabilities and requirements there is no problem in interpreting the same, because the statute itself imposes the liability on the insurer to incorporate those legal requirements as per the provisions of the Act. Apart from incorporating those requirements, the Insurance Company may also incorporate other conditions which are legally recognized under Section 147 (2) of the Act. Therefore, it goes without saying that the contract of insurance may contain conditions as recognized under Section 147 (2) of the Act and any other conditions which are mutually agreed upon by the parties.11
63. In this background, it can be safely understood that the policy of insurance may also contain conditions otherwise than the conditions which are recognized under Section 147 (2) of the Act. But breach of only those conditions, which are recognized under Section 149(2) of the Act, can be permitted to be raised by the insurer against third parties. The other conditions though incorporated in the insurance policy cannot be pressed into service in order to resist a claim before the Tribunal because the other conditions, even though mutually agreed upon between the parties, can only be enforced between the insurer and the insured but it will not have any effect so far as the third parties are concerned. So, those conditions which are within the statutory purview of Section 149 (2) of the Act are considered as defendable conditions by the insurer. However, all those conditions can be enforced between the insurer and insured inter se exclusively between themselves if they are not void or voidable at the instance of the said parties.12
65. The above are general concept of breach of contract. But, in the context of fundamental breach of a contract of insurance, it is necessary to explain the expression fundamental breach with reference to the Act. Of course, insurance companies would not draw up a separate contract with every individual but they will prepare a standard form contract containing various conditions whereby a standard form with a large number of terms and conditions are imposed on the insured, restricting the liability of the insurer to the contract. Therefore, the individual can hardly bargain with the insurers which are mighty organizations and third parties may also suffer due to such conditions. Thus, the only option available to the insured is either to accept or reject the terms of insurance except what are stipulated in Section 147 of the Act.
72. Therefore, the main purpose recognized under the statute is that no third party should suffer despite breach of any condition in the insurance policy between insurer and insured. Though such breach of 13 condition is proved by the insurer against the insured, it should be treated as an inter se dispute between the insurer and the insured and the same should not affect the right of a third party, unless, there is a contribution by the third party himself in causing the breach of any condition of the policy. This is the main object and purpose of the Act and the provisions of the Act under consideration. Therefore, the purpose for which the conditions have been imposed in the policy as recognized under Section 149 (2) of the Act and the breach of those conditions are to be tested, as to, whether, the breach is referable to the cause of the accident so as to exonerate the insurer. If not, any condition imposed in the policy and breach of such a condition will not exonerate the Insurance Company so far as a third party risk is concerned. Thus, the first main test, if on ascertaining breach of a condition in the policy by the Court as to, whether the said breach is referable to the cause of accident in which case it would become a fundamental breach, then, the second test would be, whether, the victim or third party, in any manner contributed or 14 was responsible for such breach of the condition by the insured and only thereafter, the Courts have to examine whether the Insurance Company could be directed to pay the compensation and recover from the insured or be completely absolved of its liability. This is how we understand the expressions regarding "fundamental breach" and main purpose rule.
75. As we have stated above, the interpretation of a provision of a statute in the present context must be to protect the interest of the innocent third parties who are not responsible for the cause of the accident or who have not contributed in any way to the accident or towards breach of conditions of the policy by the insured in any manner; those persons should not suffer for any reason. Therefore, in all such circumstances, the insurer has to indemnify the third party with reference to the payment of compensation. Hence, the breach of conditions in such cases should be treated as a fundamental breach only insofar as the insured is concerned. It would not affect the right of a third party 15 from recovering compensation awarded by the Courts, jointly or severally from the insurer or the insured.
77. Therefore, looking to the aforesaid well settled principles in the rulings referred above, the law is abundantly clear as laid down by the Apex Court in Swaran Singh's case, which has been consistently adopted and followed in various subsequent judgments. The same clarifies the position that the Tribunal or the High court, under the peculiar and special facts and circumstances of each case, could ascertain whether there was any fundamental breach of condition, referable to the cause of accident and depending upon the circumstances, may order for 'pay and recover'. However, the guiding principle that has to be adopted is either absolving the liability of the insurer in toto or fastening the liability on the insured and ordering to insurer to pay and recover the award amount accordingly.
83. With the above said observations, we answer the questions 1 and 2 which are 16 referred for our consideration, in the following manner:
Questions referred:-
I) If it is shown the insurance policy is not 'Act' policy in terms of Sections 145 and 147 of the Motor Vehicles Act, but a contractual policy issued collecting extra premium indicating insurance company has enlarged its liability, will not the insurance company be liable to pay and recover even if there is any breach by the insurer?
II) In such cases, is not the rule to 'pay and recover' applicable in view of the mandate in Section 149, M.V.Act that upon issuance of policy, the insurer is bound to discharge the award as if it were a judgment debtor?
Answers:
i) The Insurer is liable to pay the third party and recover from the insured even if there is breach of any condition recognized under Section 149(2), even if it is a fundamental breach (that is breach of condition which is the cause for the accident) and the insurer proves the said 17 breach, in view of the mandate under Section 149(1) of the Act. But no such order can be passed against the insurer, if, on the facts and circumstances of a case, a finding is given by the court that the third party (injured or deceased) had played any fraud or was in collusion with the insured, individually or collectively, for a wrongful gain to themselves or cause wrongful loss to the insurer.
ii) The Court can also fasten the absolute liability on the insurer, if there is any breach of condition which is enumerated under Section 149(2) of the Act or any other condition of the policy if the Insurance Company has waived breach of any such condition or has taken the special responsibility to pay by collecting extra premium by covering any type of risk depending upon facts of each case.
iii) Before passing any order on the Insurance Company to pay and recover, the Court has to examine the facts and circumstances of each case and if it finds that the victim, injured or the deceased, in a particular case, was solely or jointly 18 responsible for breach of such fundamental condition by playing fraud or in collusion with the insured, the Court may exercise its discretion not to fasten the liability on the insurer.
iv) However, the court should not adopt the above guideline as a general rule in all cases, but only under peculiar facts and circumstances of each case and on giving appropriate reasons."
16. By following the principles laid down in the above said judgment, we are of the view that it is a case where the Insurance company shall pay the compensation amount at the first instance with liberty to recover the same from the owner of the vehicle.
17. Thus, the claimants would be entitled for the modified compensation as under :
19
Loss of dependency including future prospects 4,35,672/-
1 (5500+10%=6050-1/3=2016 (6050-2016=4034) 4034X12X9 2 Conventional heads 77,000/-
5,12,672/ TOTAL
-
18. Thus, claimants would be entitled for total compensation of Rs.5,12,672/- as against Rs.3,59,000/- awarded by the tribunal with interest at the rate of 6% p.a. from the date of petition till realization.
Accordingly, appeal is allowed in part. Since there was a delay of 1215 days in filing the appeal. This court by order dated 22.10.2019 condoned the delay subject to the condition that the claimants would not be entitled interest for the delayed period of 1215 days on the enhanced compensation. 20
The respondent-Insurance company is directed to deposit the compensation awarded by this Court with up to date interest within a period of six weeks from the date of receipt of copy of this order and shall recover the same from the owner of the offending vehicle.
Out of compensation awarded, 50% of the award amount shall be kept in a fixed deposit in any nationalized bank for a period of three years in favour of the claimants and remaining 50% of the award amount shall be released in favour of the claimants on proper identification.
The registry is directed to draw the modified award accordingly.
Sd/-
JUDGE Sd/-
JUDGE MNS/