Gujarat High Court
Upendra Mangaldas Modi vs Manji Ranchhodbhai Patel & 3 on 4 September, 2015
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.B.Shah, K.J.Thaker
C/FA/1482/1990 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST APPEAL NO. 1482 of 1990
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UPENDRA MANGALDAS MODI....Appellant(s)
Versus
MANJI RANCHHODBHAI PATEL & 3....Defendant(s)
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Appearance:
MS PJ DAVAWALA, ADVOCATE for the Appellant(s) No. 1
GOVERNMENT PLEADER for the Defendant(s) No. 1
MR VASANTS SHAH, ADVOCATE for the Defendant(s) No. 2
NOTICE SERVED for the Defendant(s) No. 3 - 4
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.B.SHAH
and
HONOURABLE MR.JUSTICE K.J.THAKER
Date : 04/09/2015
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. This reference has been made in view of the question posed for our consideration by the order dated 29th June 2007 passed in First Appeal No.1076 of 1985 by this Court (Coram:Honourable Mr.Justice R.S.Garg, as he then was). Relevant paragraph nos.5 and 6 of the aforesaid order dated 29th June 2007 read as under:-
"5. Under the law of insurance, the insurer undertakes to protect the insured from the liability in accordance with the policy with an assurance that the Insurance Company would reimburse the expenses. When the insured suffers losses and he recovers the money from his own Insurance Company, then, his Insurance Company after making the payment would step into the shoes of the claimant and with the authority from the original claimant-insured, they would be entitled to recover the Page 1 of 7 HC-NIC Page 1 of 7 Created On Fri Apr 01 01:43:25 IST 2016 C/FA/1482/1990 ORDER damages from the driver, owner or Insurance Company of the offending vehicle.
6. True it is, that a tort-feasor cannot be allowed to raise a defence that the loss occasioned to the owner of the damaged property has been compensated by the third party, therefore, he is not liable. In fact, the law simply is that a tort-feasor is always answerable to the person who had suffered the damages. If he receives money from his Insurance Company, then, he can continue the litigation for the benefit of his own Insurance Company. In such a case, the tort-feasor would not be allowed to defeat the claim of the claimant on the ground that as he has been reimbursed, he is not entitled to continue with the claim petition."
2. When the matter was argued earlier, following decisions were relied by the learned counsel for the parties.
(i) United Insurance Co. Ltd. and Others v. Patricia Jean Mahajan and Others. (2002) 6 SCC 281.
(ii) Helen C. Rebello (MRS) and Others v. Maharashtra Road Transport Corporation and Another, (1999) 1 SCC 90.
(iii) Gobald Motor Service Ltd. and Another v. R.M.K.Veluswami and Others, AIR 1962 SC 1.
(iv) Judgment of this Court dated 23.9.2014 passed in First Appeal No.2016 of 2012.
(v) Judgment of Delhi High Court in the case of Iffco Tokio General Insurance Co. Ltd. v. Shambhu Pathak and Others, III (2012) ACC 936.
(vi) Judgment of Delhi High Court in the case of National Insurance Co. Ltd. v. Deepmala Goel and Others, IV (2012) ACC 383.
(vii) Judgment of this Court in First Appeal Nos.4043 to 4043 of 2007 and First Appeal No.4172 of 2007 dated 13-15.11.2014.
(viii) United India Insurance Company Limited v. Hasumatiben Kanubhai Patel and Others, 2015 (2) GLR 1446.Page 2 of 7
HC-NIC Page 2 of 7 Created On Fri Apr 01 01:43:25 IST 2016 C/FA/1482/1990 ORDER
3. Today, counsel for the appellant, Ms.Davawala contended that in view of decision of the Honourable Supreme Court in Economic Transport Organization, Delhi v. Charan Spinning Mills Private Limited and Another, [2010 (4) SCC 114], more particularly, paragraphs 28, 28.1, 30 and 35, the issue is now squarely covered and the insurance company will step into the shoes of the claimant and can claim from other insurance company.
4. The decisions which were cited earlier have been considered by us, however, it is now not necessary for us to threadbare discuss the same as we are satisfied that the question posed for our consideration has been answered by the Honurable Apex Court in the aforesaid decision cited by Ms.Davawala. Relevant paragraphs 28, 28.1, 30 and 35 of decision of the Honourable Apex Court in Economic Transport Organization, Delhi (supra) are reproduced hereunder:-
"28. We may, therefore, classify subrogation under three broad categories:
(i) subrogation by equitable assignment;
(ii) subrogation by contract; and
(iii) subrogation-cum-assignment.
28.1 In the first category, the subrogation is not evidenced by any document, but is based on the insurance policy and the receipt issued by the assured acknowledging the full settlement of the claim relating to the loss. Where the insurer has reimbursed the entire loss incurred by the assured, it can sue in the name of the assured for the amount paid by it to the assured. But where the insurer has reimbursed only a part of the loss, in settling the insurance claim, the insurer has to wait for the assured to sue and recover compensation from the wrongdoer; and when the assured recovers compensation, the assured is entitled to first appropriate the same towards the balance of his loss (which was not received from the insurer) so that he gets full reimbursement of his loss and the cost, if any, incurred by him for such recovery. The insurer will be entitled only to whatever balance remaining, for reimbursement of what it paid to the assured.
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30. The assured has no right to deny the equitable right of subrogation of the insurer in accordance with law, even whether there is no writing to support it. But the assured whose claim is settled by the insurer, only in respect of a part of the loss may insist that when compensation is recovered from the wrongdoer he will first appropriate the same, to recover the balance of his loss. The assured can also refuse to execute a subrogation-cum-assignment which has the effect of taking away his right to receive the balance of the loss. But once a subrogation is reduced to writing, the rights inter se between the assured and insurer will be regulated by the terms agreed, which is a matter of negotiation between the assured and insurer.
35. The principles relating to subrogation can therefore be summarized thus :
(I) Equitable right of subrogation arises when the insurer settles the claim of the assured, for the entire loss. When there is an equitable subrogation in favour of the insurer, the insurer is allowed to stand in the shoes of the assured and enforce the rights of the assured against the wrong-doer.
(ii) Subrogation does not terminate nor puts an end to the right of the assured to sue the wrong-doer and recover the damages for the loss. Subrogation only entitles the insurer to receive back the amount paid to the assured, in terms of the principles of subrogation.
(iii) Where the assured executes a Letter of Subrogation, reducing the terms of subrogation, the rights of the insurer vis-
a-vis the assured will be governed by the terms of the Letter of Subrogation.
(iv) A subrogation enables the insurer to exercise the rights of the assured against third parties in the name of the assured. Consequently, any plaint, complaint or petition for recovery of compensation can be filed in the name of the assured, or by the assured represented by the insurer as subrogee-cum- attorney, or by the assured and the insurer as co-plaintiffs or co-complainants.
(v) Where the assured executed a subrogation-cum- assignment in favour of the insurer (as contrasted from a subrogation), the assured is left with no right or interest. Consequently, the assured will no longer be entitled to sue the wrongdoer on its own account and for its own benefit. But as the instrument is a subrogation-cum-assignment, and not a mere assignment, the insurer has the choice of suing in its own Page 4 of 7 HC-NIC Page 4 of 7 Created On Fri Apr 01 01:43:25 IST 2016 C/FA/1482/1990 ORDER name, or in the name of the assured, if the instrument so provides. The insured becomes entitled to the entire amount recovered from the wrong- doer, that is, not only the amount that the insured had paid to the assured, but also any amount received in excess of what was paid by it to the assured, if the instrument so provides."
5. In a recent decision in the case of United India Insurance Co. Ltd. v. Hasumatiben Kanubhai Patel and Others reported in 2015 (2) GLR 1446, after considering the judgment under reference, in paragraph 7 and 7.1 it is held as under:-
"7.0. Now, question no.2 posed for consideration of this Court whether having received Rs. 4,45,000/- by the owner of the vehicle from her insurance company United India Insurance towards settlement of her claim under the insurance policy of covering risk of "own damage" to the car, whether the original claimant owner of the motor car in question can maintain the claim petition to recover the compensation towards the damage caused to the motor car from the tortfeasor appellant and whether payment of premium covering the compensation towards the damage caused to the motor car from the tortfeasor- appellant and whether payment of premium covering risk upto Rs.4,45,000/, the original owner of the vehicle in question can claim the amount towards compensation more than Rs.4,45,000/- and/ or over and above Rs.4,45,000/- is concerned, it is required to be noted that as such it is an independent insurance contract between the original claimant - owner of the car and Insurance Company of her car. Therefore, so far as appellant - tortfeasor is concerned, the owner of the vehicle can file claim petition claiming the compensation towards damage caused to the motor car irrespective of insurance policy and having received any amount from the insurance company under the Insurance Policy and if the valuation of the car is found to be more than the amount received from the Insurance Company on the basis of risk covered, the claim petition by the owner of the car would still be maintainable.
7.1. Even the contention on behalf of the the appellant Insurance Company that as while taking comprehensive Page 5 of 7 HC-NIC Page 5 of 7 Created On Fri Apr 01 01:43:25 IST 2016 C/FA/1482/1990 ORDER insurance policy towards own damage to the car, the risk was covered upto Rs.4,45,000/- and therefore, the owner of the vehicle cannot claim any amount above Rs.4,45,000/- and/or market value of the motor car cannot be considered more than Rs.4,45,000/- is concerned, the aforesaid has no substance. Irrespective of value of the car, still the owner of the vehicle can cover risk upto a particular amount which may be lower than the market value of the vehicle. The risk covered would be only for the purpose of premium and liability to cover the risk under the contract. It means that if the premium is paid and the risk is covered upto a particular amount, under the said contract the Insurance Company shall be liable to pay damages / compensation towards damage to the extent risk covered, irrespective of actual loss which may be higher than risk covered or market value of the vehicle in question. Therefore, it is the discretion of the owner of any car to cover risk of his car for "own damage" to his car at a particular amount, which may be less than the market value of the car and sometime to save amount of premium."
6. Considering the aforesaid decision and the law prevailing as on today, we are of the opinion that the question which has been posed for our consideration will not survive in view of the aforesaid decision of the Honourable Supreme Court. It goes without saying that the claimant cannot have a windfall and he cannot claim from both the insurance companies. He has to choose from amongst both the insurance companies and if there is deficit in the amount he can claim it from the other insurance company. If the other insurance company pays such deficit amount that insurance company can recover it from the insurance company of the tort-feasor. In view of this clarification, we find that decision of this Court (Coram:Honourable Mr.Justice Akshay H. Mehta, as he then was) in the case of Gujarat State Road Transport Corporation v. Hargovindas R. Modi reported in 2007 (1) GLR 369 (in First Appeal No.1583 of 1983 and other connected matters), is not required to be reconsidered. In paragraph 15 of the said decision, the Page 6 of 7 HC-NIC Page 6 of 7 Created On Fri Apr 01 01:43:25 IST 2016 C/FA/1482/1990 ORDER learned Single Judge has observed as under:-
"15. The net result is that First Appeal No. 1583 of 1983, filed by G.S.R.T.C., is dismissed. First Appeal No. 1584 of 1983 filed by the Insurance Company against the award made in MACP No. 126/1980 also stands dismissed. First Appeal No. 1426 of 1983 which is filed by M/s. Deepak Transport owner of the motor tanker is partly allowed and it shall be entitled to recover additional sum of Rs.16,000=00 which has been wrongly deducted by the Tribunal. First Appeal no. 2025 of 1983 filed by the G.S.R.T.C., stands dismissed and First Appeal No. 1896 of 1983 filed by the driver of the S.T. Bus is also dismissed. In the facts and circumstances of the case, there is no order of costs."
7. In view of the aforesaid discussion and clarification, we do not find that decision of learned Single Judge in the case of Gujarat State Road Transport Corporation v. Hargovindas R. Modi (supra) passed in First Appeal No.1583 of 1983 and other connected matters requires reconsideration. We accordingly answer the question posed for our consideration. The matter may be placed before the learned Single Judge for deciding the same on merits.
Sd/-
(K.S.JHAVERI, J.) Sd/-
(G.B.SHAH, J.) Sd/-
(K.J.THAKER, J) *malek Page 7 of 7 HC-NIC Page 7 of 7 Created On Fri Apr 01 01:43:25 IST 2016