Madhya Pradesh High Court
New India Assurance Co. Ltd. vs Dayali And Ors. on 3 February, 1998
Equivalent citations: II(1998)ACC209, 2000ACJ295
Author: R.S. Garg
Bench: R.S. Garg
JUDGMENT R.S. Garg, J.
1. This order shall also dispose of Misc. Appeal No. 1219 of 1997.
2. Being aggrieved by interim award dated 3.9.1997 passed in Claim Case No. 139 of 1996, the insurance company has filed M.A. No. 1218 of 1997 and has filed M.A. No. 1219 of 1997 being aggrieved by the interim award dated 3.9.1997 passed in Claim Case No. 138 of 1996.
3. Mr. Rao, learned counsel for the appellant insurance company contends that the Division Bench judgment of this court in the matter of National Insurance Co. Ltd. v. Thaglu Singh 1995 ACJ 248 (MP), needs a reconsideration because the Division Bench was not justified in observing that the defence about breach of insurance policy was not available to the insurance company while making an award under Section 92-A of the old Act or under Section 140 of the new Act. Placing strong reliance on the judgment of Karnataka High Court in the matter of United India Insurance Co. Ltd. v. Immam Aminasab Nadaf 1990 ACJ 757 (Karnataka) and a judgment of the Bombay High Court in the matter of New India Assurance Co. Ltd. v. Gajanan Rambhau Mohite 1997 ACJ 605 (Bombay), it was contended that the Tribunal is required to conduct a summary trial or enquiry considering the plea of the insurance company and the documents placed on record to come to a prima facie conclusion that the insurance company would be liable under the terms of the policy. Mr. Rao submits that if there is a breach of the policy conditions then the insurance company would be well within its rights to challenge the claim and would not be answerable to the claim. On the other hand, Mr. Awasthy and Mrs. Tripathi placing reliance upon the Division Bench judgment of this court in the matter of National Insurance Co. Ltd. (supra) submit that Karnataka Full Bench judgment was considered by the Division Bench of this court and the Division Bench had taken a different view. They submit that at this stage, the court only has to see whether the vehicle was covered under the insurance policy and if the answer is in affirmative then the insurance company cannot avoid its liability.
4. I have heard the parties at length.
5. True it is that in the matter of United India Insurance Co. Ltd. 1990 ACJ 757 (Karnataka), the Full Bench of Karnataka High Court has taken a view that without a summary enquiry and a finding that prima facie the risk giving rise to the claim is covered by the policy, an award could not be made against the insurance company. Similar are the observations in the matter of New India Assurance Co. Ltd. 1997 ACJ 605 (Bombay). The Division Bench of this court has considered these aspects in detail in paras 14, 15 and 16 of its judgment. The Division Bench has observed that "in these cases there is no contention that the vehicles involved in the accidents are not covered by policies. There is also no dispute that the vehicles were involved in accidents and death followed as consequence of the accidents". The Division Bench further observed that as the accidents and policies were admitted, the Tribunal was justified in directing the insurance companies to pay compensation on the basis of no fault liability. I find no reason to take a different view or make a reference to a larger Bench. The Division Bench has considered this aspect of the matter in detail. I am also of the opinion that the moment accident is admitted and the insurance company admits that the vehicle was covered under some policy then at that stage, under Section 140 of Motor Vehicles Act, insurance company would not be permitted to raise the defence that the vehicle was driven in breach of the policy terms or either the driver or the owner committed violation of the policy terms.
6. In the present case, undisputedly, the accident took place and the vehicle was covered under the insurance policy. Following the dictum of Division Bench, this court is of the opinion that the Tribunal was justified in making the interim award in favour of the claimants. It is, however, made clear that grant of an interim award in favour of the claimants would not refrain the insurance company from raising this dispute on merits.
7. Mr. Rao submits that if the amount is paid to the respondents then in the event of its defences being upheld by the Tribunal, it would be impossible for the insurance company to recover the amount from the claimants.
8. Considering the totality of the circumstances it is directed that the claimants/respondents while withdrawing the amount deposited by the insurance company shall give a solvent security to the satisfaction of the Tribunal for restitution of the amount, in the event the claim is not allowed. The owner shall also furnish solvent security to the satisfaction of the Tribunal that in the event the claim is rejected against the insurance company and is made only against the owner then he shall pay back the amount to the insurance company or if the claimants are required to make the payment back to the insurance company then in such eventuality they would answer the claim in favour of the claimants.
9. The appeals with the direction aforesaid are dismissed. No costs.
10. C.C. be given within seven days, if applied on urgent charges.