Madras High Court
K.Kanagammal vs Chandran @ G.Mani on 1 July, 2011
Author: Aruna Jagadeesan
Bench: Aruna Jagadeesan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 01.07.2011
CORAM:
THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN
CMA.No.1997/2005
1.K.Kanagammal
2.K.Ramakrishna
3.K.Jayakumar Appellants
Vs
1.Chandran @ G.Mani
2.R.Ramesh
3.The New India Assurance Limited, Coimbatore-2
4.The Oriental Insurance Company Limited
Coimbatore-12 Respondents
Prayer:- This Civil Miscellaneous Appeal is filed against the Judgement and Decree dated 17.3.2004 made in MCOP.No.541 of 1999 by the learned Additional District and Sessions Judge (FTC-II) (MACT) Coimbatore.
For Appellant : Mr.K.Kalyana Sundaram
For Respondent : Mr.K.Padmanabhan-R3
Mr.S.Veeraraghavan-R4
JUDGEMENT
This Civil Miscellaneous Appeal is filed by the claimants against the Judgement and Decree dated 17.3.2004 made in MCOP.No.541 of 1999 by the learned Additional District and Sessions Judge (FTC-II) (MACT) Coimbatore.
2. The only point that arises for determination in this appeal is as to whether the Tribunal was justified in not passing the order of pay and recover against the Insurer in the light of the decision of the Honourable Supreme Court and a latest decision reported in CDJ-2011-SC-507 (Jawahar Singh Vs. Bala Jain and others), in a similar situation, in so far as the third party risks are concerned. In other respects, the findings of the Tribunal are not challenged.
3. The learned counsel for the Appellants submitted that unless the Honourable Supreme Court restricts application of any judgement to the case on hand, particularly, between the parties and further directs that the judgement would not operate as a prudent, will have to be followed as it stands as a binding precedent. The learned counsel also placed reliance on the law laid down in the form of direction in Baljit Kaur's Case (2004-ACJ-428-SC). The learned counsel referred to the decisions of this court reported in 2010-4-LW-742 (Bajaj Allianz Insurance Company Limited, Pune Vs. P.Manimozhi and others), 2009-5-MLJ-715 (United India Insurance Company Limited, Salem Vs. S.Saravanan and another) and 2001-3-LW-367 (M/s.National Insurance Company Limited, Karaikudi Vs. Sakthi and others), where similar directions were given to pay and recover against the Insurance Company placing reliance on the decisions of the Honourable Supreme Court .
4. On the other hand, Mr.K.Padmanabhan, the learned counsel for the 3rd Respondent Insurance Company argued that the court has no jurisdiction to pass an order of pay and recover against the Insurer. Even in a case of third party risk having been covered by the Insurer, if it was established that due to a fundamental breach of the essential condition of the policy i.e. the offending vehicle having been driven by a person not possessing a valid and effective driving licence, the insurer could avoid liability under Section 149 (2)(a)(ii) of the Act. He placed reliance on the decisions of this court reported in 2011-1-TNMAC-288 (The United India Insurance Company Limited, Salem Vs. E.Rajamanickam and another), 2010-1-TNMAC-65 (New India Assurance Company Limited Vs. V.Chandran and another) and 2009-2-TNMAC-364 (The Oriental Insurance Company Limited, Pondicherry Vs. Anbu Thiagarajan and another).
5. The learned counsel for the 3rd Respondent Insurance Company would contend that a direction of pay and recover is given to meet the ends of justice by the Apex Court of India, in exercise of the extraordinary jurisdiction of the Apex Court under Art.136 and 143 of the Constitution of India, which is not available to the Tribunal or even to the High Court.
6. It is relevant to point that in the case of New India Assurance Company Limited Vs. Kamla (2001-ACJ-843-SC), National Insurance Company Limited Vs. Swaran Singh (2004-ACJ-1-SC) and M/s.National Insurance Company Limited Vs. Laxmi Narain Dhut (2007-ACJ-721-SC) , the Honourable Supreme Court had upheld the jurisdiction of the Tribunal, directing the insurer to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of Tribunal. In the present case, there is no dispute that the claimants are third parties being the legal representatives of the deceased V.Krishnasamy, who died in the accident that occurred on 12.3.1999 involving the offending vehicle owned by the 2nd Respondent owner. The finding of the Tribunal that the driver of the offending vehicle had no driving licence is not challenged either by the insured or by the claimants.
7. In Skandia Insurance Company Limited Vs. Kokilaben Chandravadan (1987-ACJ-411-SC), it was observed by the Honourable Supreme Court that the insistence of the legislature that a motor vehicle can be used in a public place only if that vehicle is covered by a policy of insurance is not for the purpose of promoting the business of the Insurance Company, but to protect the members of the community who become sufferers on account of accidents arising from use of motor vehicles. It is pointed out in the decision that such protection would have remained only a paper protection if the compensation awarded by the courts were not recoverable by the victims (or dependents of the victims) of the accident. This is the raison d'etre for motor vehicles being used in public places without covering third party risks by a policy of insurance. Any contract of insurance under Chapter XI of the Act, contemplates a third party who is not a signatory or a party to the contract of insurance but, is nevertheless, protected by such contract. As pointed out by the Apex Court in New Asiatic Insurance Co. Limited. Vs. Pessumal Dhanamal Aswani (1958-65-ACJ-559-SC), the rights of the third party to get indemnified can be exercised only against the insurer of the vehicle.
8. In New India Assurance Company Limited Vs. Kamla (2001-ACJ-843-SC) dealing with similar situation of renewal of a fake driving licence and breach of insurance policy conditions on account of vehicle being driven without a valid driving licence, the Honourable Supreme Court observed in paragraphs 19 to 22 and held in paragraph 25 as under:-
"19. Sub Section (4) of the Section 149 of the Act says that so much of the policy as purports to restrict the insurance of the persons insured by reference to any condition shall 'as respects such liabilities as are required to be covered by a policy, be of no effect'. The proviso to the said sub section is important for the purpose of considering the question involved in this case and hence, that proviso is extracted below:-
'Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub section shall be recoverable by the insurer from that person.'
20. Similarly, in this context sub section (5) is equally important and hence that is also extracted below:-
'If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy, exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.'
21. A reading of the proviso to sub section (4) as well as the language employed in sub section (5) would indicate that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This means the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but the insurer is entitled to recover any such sum from the insured if the insurer were not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy.
22. To repeat,the effect of the above provisions is this: When a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to third parties, whether or not there has been any breach or violation of the policy conditions. But, the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured.
25. The position can be summed up thus: The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But, the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. Learned counsel for insured contended that it is enough if he establishes that he made all due enquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there was no breach of the policy condition. As we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In the present case, if the insurance Company succeeds in establishing that there was breach of the policy condition, Claims Tribunal shall direct the insured to pay that amount to the insurer. In default, the insurer shall be allowed to recover that amount (which the insurer is directed to pay the the claimants-third parties) from the insured person."
9. In National Insurance Company Limited Vs. Swaran Singh (2004-ACJ-1-SC), the Honourable Supreme Court was considering a situation in which a claim for compensation was made by a third party and the liability of the insurer under Sections 147(1) and 149 (2) of the Act to pay compensation under its statutory liability to satisfy the award passed by the Tribunal was in question. In paragraph 102, the summary of findings of the Supreme Court to the various issues raised in the petitions were as under:-
"(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.
(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163A or Section 166 of the Motor Vehicles Act, 1988, inter lia, in terms of Section 149(2)(a)(ii) of the said Act.
(iii) The breach of policy conditions, e.g., disqualification of driver of invalid driving licence of the driver, as contained in sub section (2) (a) (ii) of section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time.
(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the owner of the vehicle, the burden of proof of wherefor would be on them.
(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each case.
(vi) Even where the insurer is liable to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches of the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply 'the rule of main purpose' and the concept of 'fundamental breach' to allow defences available to the insurer under Section 149(2) of the Act.
(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver (a fake one or otherwise) does not fulfill the requirements of law or not will have to be determined in each case.
(viii) If a vehicle at the time of the accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.
(xi) The Claims Tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or bodily injury or damage to property of third party arising fro use of motor vehicle. The said power of the Tribunal is not restricted to decide the claims inter se, between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in section 174 of the Act for enforcement and execution of the award in favour of the claimants.
(x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Section 149(2) read with sub section (7), as interpreted by this court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the Tribunal. Such determination of the claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the Tribunal.
(xi) The provisions contained in sub section (4) with proviso thereunder and sub section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover the amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended the claims and defences of insurer against insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims."
10. In the case of M/s.National Insurance Company Limited Vs. Laxmi Narain Dhut (2007-ACJ-721-SC) , the Honourable Supreme Court summarised its finding as under:-
"(1) The decision in National Insurance Company Limited Vs. Swaran Singh (2004-ACJ-1-SC) has no application to cases other than third party risks.
(2) Where originally the licence was a fake one, renewal cannot cure the inherent fatality.
(3) In case of third party risks the insurer has to indemnify the amount, and if so advised, to recover the same from the insured.
(4) The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act."
11. In the recent decision of the Honourable Supreme Court reported in CDJ-2011-SC-507 (Jawahar Singh Vs. Bala Jain and others) the Honourable Supreme Court, dealing with a case where the driver had no valid and effective driving licence, has held as follows:-
"11. We cannot shut our eyes to the fact that it was Jatin, who came from behind on the motorcycle and hit the scooter of the deceased from behind. The responsibility in causing the accident was, therefore, found to be solely that of Jatin. However, since Jatin was a minor and it was the responsibility of the petitioner to ensure that his motorcycle was not misused and that too by a minor who had no licence to drive the same, the Motor Accident Claims Tribunal quite rightly saddled the liability for payment of compensation on the Petitioner and accordingly, directed the Insurance Company to pay the awarded amount to the awardees and thereafter, to recover the same from the Petitioner. The said question has been duly considered by the Tribunal and was correctly decided. The High Court rightly chose not to interfere with the same."
12. In the present case, the Tribunal has held that the driver, who actually drove the vehicle at the time of the accident, had no valid and effective driving licence and thus, exonerated the Insurance Company from its liability. The Appellants/claimants are the widow and sons of the deceased, who was working as a Watchman. It is seen that the claimants are in a state of penury and compensation will not be immediately recoverable from the owner. In a fact situation, like the present case, the Honourable Supreme Court, even after exonerating the Insurance Company from the liability to pay compensation, has directed the Insurance Company to pay and recover.
13. In view of the decisions of the Honourable Supreme Court and also in view of the fact that the owner of the offending vehicle was not contesting the claim petition and had remained exparte, to meet the ends of justice, it is justified to pass an order directing the Insurance Company to pay the compensation awarded and recover it from the owner.
14. In the result, this Civil Miscellaneous Appeal is allowed to the extent indicated above and it is ordered that the 3rd Respondent Insurance Company is directed to deposit in the Tribunal the quantum of compensation awarded by the Tribunal to the Appellants/claimants within three months from today. On such deposit, the Appellants are permitted to withdraw the amount. For the purpose of recovering the same from the insured, the insurer shall not be required to file a suit and it may initiate a proceedings before the concerned executing court. The executing court shall take all necessary steps by even attaching the offending vehicle if necessity arises and take the assistance of the concerned Regional Transport Authority in that regard. No costs.
Srcm To
1.The Additional District and Sessions Judge (FTC-II) (MACT) Coimbatore
2.The Record Keeper, VR Section, High Court, Madras