Karnataka High Court
The Oriental Insurance Co Ltd vs Miss Sheela Bhavani @ Sheela on 15 April, 2013
Author: B.V.Nagarathna
Bench: B.V.Nagarathna
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IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS 15TH DAY OF APRIL 2013
BEFORE
HON' BLE MRS JUSTICE B.V.NAGARATHNA
MFA NO 7945 OF 2009(MV)
BETWEEN
THE ORIENTAL INSURANCE CO LTD
REGIONAL OFFICE, LEO
SHOPPING COMPLEX, M G ROAD
BANGALORE
(REPTD. BY ITS DEPUTY MANAGER
SMT. SUDHA GANESH)
...APPELLANT
(BY SHRI. M ARUN PONAPPA, ADVOCATE)
AND
1. MISS SHEELA BHAVANI @ SHEELA
AGED 20 YEARS, D/O MR PERUMAL
NO.22/1, DRQA RESIDENCY COMPLEX,
J C NAGAR, BANGALORE-560006
2. M CHARLES, MAJOR
S/O MARYADAS
NO.18, PACKRIYAN STREET
GUDIYATHAM TALUK
PERNAMBUT-635810
.....RESPONDENTS
(BY SHRI. CHANDRASHEKAR, ADV. FOR
LAWYERS NET FOR R1, R2 - SERVED)
MFA FILED U/S 173(1) OF MV ACT AGAINST THE
JUDGMENT AND AWARD DATED:03.06.2009 PASSED IN
MVC NO.5821/2007 ON THE FILE OF XVI ADDITIONAL
JUDGE, MEMBER, MACT, BANGALORE, AWARDING A
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COMPENSATION OF RS.2,54,640/- WITH INTEREST @ 6%
P.A. FROM THE DATE OF PETITION TILL REALISATION
ETC.
THIS APPEAL IS COMING ON FOR HEARING THIS
DAY, THE COURT DELIVERED THE FOLLOWING:-
JUDGMENT
This appeal is filed by the insurance company assailing the judgment and award passed in M.V.C.No.5821/2007, by the M.A.C.T., Bangalore City, dated 3.6.2009.
2. The relevant facts of the case are that on 8.1.2007, at about 10.30 p.m., the first respondent claimant was proceeding as a pillion rider on a motor cycle bearing No.TN 23 AV 493 on Hebbal fly over, at that time, when the rider of the motor cycle drove the same in a rash and negligent manner and at high speed, lost control of the vehicle and dashed against the wall of the fly over. As a result, the claimant fell down from the vehicle and sustained grievous injuries. She was shifted to the hospital for treatment. Contending that she had sustained permanent disability, she filed a claim petition seeking compensation on various heads.
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3. In response to the claim petition, the appellant - insurance company appeared and filed its written statement denying the averments made in the claim petition and that the liability of the company was subject to the terms and conditions of the policy and without there being a valid driving licence of the driver. The insurance company was not liable to satisfy the award.
4. On the basis of the aforesaid pleadings, the following issues were framed by the Tribunal;
1) Whether the petitioner proves that she sustained injury in the accident arising out of the use of Motor vehicle No.TN 23 AV 493 on 8.1.2007 at about 10.30 p.m?
2)Whether the petitioner is entitled to get the compensation? If yes, how much and from whom?
3) What order or award?
In support of her case, the respondent/claimant examined herself as P.W.1, Dr.N.R.Prakash as P.W.2 and one Roopesh as P.W.3. She produced twelve documents, which were marked as Ex.P.1 to Ex.P.12. The insurance company examined one of its officers as R.W.1 and four documents were produced as Ex.R.1 to Ex.R.4. On the 4 basis of the said evidence, the Tribunal answered issue no.1 in the affirmative, issued no.2 partly in affirmative and awarded compensation of Rs.2,54,640/- with costs and interest at 6 % per annum from the date of the petition till realisation. It also held that there was a breach of the terms and conditions of the policy inasmuch as there was no valid and effective driving licence possessed by the rider of the vehicle on the date of the accident but directed the insurance company to pay the compensation to the claimant and recover the same from the owner. Being aggrieved by this direction of " pay and recover " the insurance company has filed this appeal.
5. I have heard the learned counsel for the parties. Respondent no.2 owner of the vehicle is served and unrepresented.
6. It is contended on behalf of the appellant that the Tribunal has rightly concluded that there was a breach of the terms and conditions of the policy, but it could not have directed the insurance company to pay the compensation to the claimant and recover the same from the insured. In support of this contention, reliance has 5 been placed on a decision of the Apex Court in the case of Oriental Insurance Company - Vs- Premalatha Shukla reported in 2007 (13) SCC 476. It is further submitted that the document Ex.P7 produced by the claimant itself showed that there was a charge sheet issued against the rider of the vehicle under Section 181 of the Motor Vehicles Act. Therefore, there was a clear proof of the breach of the terms and conditions of the policy and he submitted that the direction issued by the Tribunal to pay and recover be set aside and the appeal of the insurance company be allowed.
7. Per contra, learned counsel for the respondent/claimant while supporting the judgment and award on this aspect has placed reliance on two decisions of the Apex Court namely i) Rukmani and others -Vs- New India Assurance Co. Ltd and others reported in 1999 ACJ 171 and ii) Manager, National Insurance Company Ltd., - Vs- Saju P. Paul and Another reported in AIR 2013 SCW 609, to contend that the direction for pay and recover ought not to be disturbed in this appeal. 6
8. Having heard the learned counsel for the parties, the only point for my consideration is: whether the impugned judgment and award requires to be set aside?
9. From the material on record, it is noted that in the accident that occurred on 8.1.2007 at about 10.30 p.m., the respondent/claimant sustained injuries. The Tribunal has assessed the compensation that is to be awarded and has awarded a sum of Rs.2,54,640/- with interest at the rate of 6 % per annum from the date of the petition till realisation to the respondent/claimant. It is significant to note that the respondent-claimant has not assailed the finding of the breach of the policy conditions.
10. The bone of contention of the parties is only with regard to the liability to be fastened on the insurance company. In this context, the Tribunal having found that the insurance company has proved breach of the terms and conditions of the policy has nevertheless directed the insurer to pay the amount and recover the same from the owner of the vehicle. It is this aspect which has been appealed against by the insurance company. Proof of breach of policy terms has been established, the finding 7 regarding the breach of the terms and conditions of the policy has been accepted by the claimant inasmuch as there is no appeal as against that finding. Therefore, the narrow compass in which this appeal has to be considered is as to whether the direction with regard to 'pay and recover' was in accordance with law. In support of this direction, learned counsel for the respondent has placed reliance on Saju P. Paul's case, in which, the Hon'ble Supreme Court at paragraph 25 has stated that the accident was of in the year 1993 and that time the claimant was 28 years old and at the time of the decision by the Supreme Court, he was 48 years. There was a lapse of 20 years. The insurance company had already deposited the entire award amount pursuant to the order of the Supreme Court on 1.8.2011 and the said amount has been invested in a Fixed Deposit. Having regard to these peculiar facts of the case, a direction was given to the claimant to withdraw the amount deposited by the insurance company before the Hon'ble Supreme Court along with accrued interest and the insurance company was permitted to recover the amount so paid from the owner, having regard to the principles stated in Challa 8 Bharathamma's 's case. It is noted that the said direction was issued against the insurer, since for a period of 20 years the claimant was deprived of the compensation which had been in fact deposited before the Hon'ble Supreme Court. It is noted that the said direction of the Hon'ble Supreme Court was in exercise of the powers conferred on the Hon'ble Supreme Court under Article 142 of the Constitution of India. Therefore, the said direction cannot be a direction issued under Article 141 of the Constitution of India.
11. In this context, reliance could be placed on a decision of the Division Bench of this Court in the case of The Oriental Insurance Co. Ltd,- Vs- Sri. K.C.Subramanyam and another reported in ILR 2012 KAR 5241, wherein this Court has observed that when the insurance company has proved the breach of the terms and conditions of the policy with regard to the rider or driver of the vehicle involved in the accident without having a valid and effective driving licence, then in such event, the insurance company ought to be exonerated of its liability. In the said decision at paragraph- 82, the law on the point is summerised as follows; 9
" 82. From the above discussion, what follows is :-
(a) If the vehicle involved in the accident is duly insured and the insurer has issued the certificate of insurance as provided under Sub-
Section (3) of Section 147, the liability of the insurer to satisfy the claim awarded under Section 147(1)(b) is absolute. Once the claimant issues the notice to the insurer in his claim petition and thereafter the Claims Tribunal passes an award, the insurer by virtue of Section 149(1) steps into the shoes of judgment debtor, that is steps into the shoes of the insured and is bound to pay the amount awarded to the third party. The liability is created under the statute.
(b) When the notice is issued under Section 149(2), the insurer gets a right to defend the action, that is the action brought by the claimants. He can defend the action only on the grounds mentioned in Sub-Section (2) of Section 149. No other grounds are available to the insurer.
(c) If the defence of the insurer is that under the terms of the policy he has restricted his liability to indemnify a particular amount and is not liable to pay the amount as statutorily provided under Section 147 (1) (b), though he is entitled to such a defence, the tribunal or 10 Court shall ignore the said restrictive clause in the policy and pass a decree or award directing payment of compensation in terms of Section 147(1)(b) of the Act. The insurer shall satisfy the decree or award. On such satisfaction, the insurer gets the right to recover the amount which was not liable to be paid under the policy from the insured.
(d) Similarly if the amount paid by the insurer in terms of the award or decree is in excess of the amount agreed to be paid under the policy, the insurer gets a right under sub-section (5) of Section 149 to recover the same from the insured after paying the said amount to the third party.
(e) The condition precedent for application of the rule 'pay and recover' is, there should be a valid policy of insurance and there is no breach of the terms and conditions of the policy. The dispute is regarding the nature and quantum of liability to be satisfied. If the contract restricts the liability to a particular sum, when the Statute provides for payment of a higher sum, then the liability is not in dispute. It is the quantum, which is in dispute. Therefore, the Legislature advisedly expressed this principle of pay and recover in Sub-Sections (4) and (5) of Section 149 and directed the insurer to pay 11 the amount awarded or decreed and recover the excess amount from the insured. In other words, this principle of pay and recover applies to cases, which fall under Sub-Section (4) and (5) of Section 149 only.
(f) The Legislature consciously has not conferred such a right or obligation while dealing with the cases of breach of terms of the agreement or cases in which the statutory grounds mentioned in Section 149(2) are established. Such a provision is conspicuously missing in Section 149(2) or in Section 149(1). On the contrary, the express provision under Section 149(7) has been introduced. The purport of Sub-Section (7) of Section 149 is if the claimant has issued notice to the insurer and if the insurer wants to avoid the liability under Section 149(1), he is at liberty to do so by establishing the grounds mentioned in Section 149(2). If these grounds are established, then there is no liability on the part of the insurer to pay the amount decreed or awarded under Section 149(1). When the liability itself is not there or when the liability is avoided on one of the grounds mentioned in Section 149(2), there is no liability to pay the amount decreed or awarded. When there is no liability to pay or satisfy the award or decree, the question of directing the insurer in those 12 circumstances to pay and recover would not arise.
(g) The Apex Court after holding that the insurer has no obligation to pay, but still has directed the insurer to pay and recover from the insured. Such a direction is issued by virtue of the power conferred on the Apex Court under Article 142 of the Constitution, which power neither this Court nor the Tribunal can exercise.
(h) Therefore, it is not the law laid down by the Apex Court under Article 141 of the Constitution that when the insurer is not liable to pay still he can be directed to pay and recover.
(i) In fact, one of the Benches of the Supreme Court, doubting the correctness of this practice in the Supreme Court of directing pay and recover by exercising the power conferred under Article 142 of the Constitution, has referred the matter to a larger Bench. We have not interpreted in this case the scope and ambit of Article 142 of the Constitution. We are strictly confining our jurisdiction to interpret the statutory provisions in the light of the judgments of the Supreme Court."
13The same is squarely applicable to the present case also. Therefore, placing reliance on the above cited decision of the Division Bench of this Court, the direction issued by the Tribunal to the insurance company to pay the compensation amount and then to recover the same from the owner of the vehicle is set aside. The judgment and award in all other aspects is maintained. It is needless to observe that respondent no.2 is liable to satisfy the award passed by the Tribunal.
12. The appeal is allowed in the aforesaid terms. Parties to bear their respective costs.
The amount in deposit to be refunded to the appellant.
Sd/-
JUDGE Msu