Madhya Pradesh High Court
Shriram Gen.Ins.Co.Ltd. vs Pappu on 11 February, 2020
Equivalent citations: AIRONLINE 2020 MP 475
Author: Anjuli Palo
Bench: Anjuli Palo
1 MA No. 894/2020
HIGH COURT OF MADHYA PRADESH
PRINCIPAL SEAT AT JABALPUR
Misc. Appeal No.894/2020
(Shriram General Ins. Co. Ltd. vs. Pappu & Ors.)
11.02.2020
Shri T.S. Lamba, learned counsel for the appellant.
Heard on the question of admission.
Perused the findings of the learned trial Court.
This appeal has been filed under Section 173 (1) of the Motor Vehicles Act,
1988 by the appellant - Insurance Company for setting aside the award dated
30.07.2019 passed by the First Additional Motor Accident Claims Tribunal,
Mandla (in short 'the Claims Tribunal') in MACC No.407/2017, whereby the
Tribunal directed the appellant-Insurance Company to pay the compensation first
and then recover the same from non-applicants nos.1 and 2 and completely
exonerated the appellant from liability to pay compensation.
Admittedly, due to rash and negligent driving of offending vehicle by
respondent No.2-Sahdeo, the accident occurred. In the accident, respondent no.1
and Ramcharan sustained grievous injuries. Ramcharan died in the hospital and slight deformity has been caused in the left hand and forehead of respondent no.1.
From perusal of the findings of the learned trial Court with regard to issue nos.3 & 4, it is clear that learned Claims Tribunal found that respondent no.2 -
driver and respondent no.3- conductor are responsible to pay the compensation, because they breached the terms and conditions of the Insurance Policy. Hence, they are liable to pay the compensation of Rs.95,000/- to the claimants.
Main point for consideration in this appeal is that, whether the learned Tribunal has wrongly directed the Insurance Company to first pay the 2 MA No. 894/2020 compensation amount to the claimants, then the company has liberty to recover it from the owner and driver. In this regard, learned counsel for the appellant has placed reliance in the case of Manager, Cholamandalam Ms Gen. Insurance Co.
Ltd. vs. Smt. Jagrani & others [M.A. No.2710/2017], in which the Co-ordinate Bench of this Court vide judgment dated 29.08.2019 held that:-
"The Insurance company is not liable to pay the insurance amount and the Claims Tribunal had committed an error in passing the award of pay and recover."
The Co-ordinate Bench also relied on the judgment passed in the matter of "New India Assurance Co. Ltd. vs. Asha Rani and others, reported in AIR 2003 SC 607, wherein it has been held that provisions of Act, 1988 do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for passenger traveling in goods vehicle, the insurer would not be liable. Because carrying of passengers in "goods carriage" is not contemplated under Act of 1988."
Learned counsel for the appellant has also placed reliance in the case of New India Assurance Co.Ltd. vs. Vedwati and others 2007 ACJ 1043, in which the Supreme Court has held as under:-
"The Tribunal and the High Court were not justified in holding that the insurer had the liability to satisfy the award.
16. This position was also considered in Oriental Insurance Co. Ltd. vs. Devireddy Konda Reddy, [2003(2) SCC 339]. Subsequently, also in National Insurance Co. Ltd. vs. Ajit Kumar, [2003(9) SCC 668], in National Insurance Co.Ltd. Baljit Kaur [2004 (2) SCC 1] and National Insurance Co. Ltd. v.
Bommithi Subbhayamma [2005 (12) SCC 243], the view taken in Asha Rani's case (supra) was reiterated."
Appellant further placed reliance in the cases of United India Insurance Co. Ltd. vs. Kamodi Bai and others 2007 ACJ 2031 and National Insurance Co. Ltd. vs. Raghunath Sahu ILR (2011) M.P. 1265, in which the Insurance Company was exonerated from the liability to pay compensation by the Co-
3 MA No. 894/2020ordinate Benches of this Court.
In the case of National Insurance Co. Ltd. vs. Raghunath Sahu ILR (2011) M.P. 1265, the Co-ordinate Bench of this Court also held as under :
"The Tribunal did not have any authority to direct to appellant - Insurance Company to pay the awarded sum and recover the same from owner and driver of the offending vehicle."
It is not in dispute that the claimant is a third party, therefore, even though, it is proved that the driver of the offending vehicle was driving in breach of policy conditions the Insurance Company is absolved of its liability. But, principle of "pay and recover" also applies.
Recently, in the case of the New India Assurance Co. Ltd. vs. Kalyan Kushwah and others [M.A. No.5817/2018], the Co-ordinate Bench of this Court in paras 6 & 7 discussed as under and directed the Insurance Company to pay and recover from the owner of the vehicle.
"(vi) Even where the insurer is able 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 on 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."
It is better to discuss that in several other cases the Hon'ble Supreme Court gave similar findings with regard to the third party Insurance directing that if the Tribunal holds that the owner of the vehicle is liable to pay the compensation to 4 MA No. 894/2020 the claimants, then the Tribunal has a power to direct the Insurance Company to first pay and then recover the same from the owner.
In the case of Pappu & others vs. Vinod Kumar Lamba and another (2018) 3 SCC 208, in paras 17 to 20 in the context, whether the Insurance Company can be and ought to be directed to pay the claim amount, with liberty to recover the same from the owner of the vehicle, it has been held as under:-
"17. This issue has been answered in the case of National Insurance Company Ltd. (supra). In that case, it was contended by the insurance company that once the defence taken by the insurer is accepted by the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle. However, this Court held that even if the insurer succeeds in establishing its defence, the Tribunal or the Court can direct the insurance company to pay the award amount to the claimant(s) and, in turn, recover the same from the owner of the vehicle. The three-Judge Bench, after analysing the earlier decisions on the point, held that there was no reason to deviate from the said well-settled principle. In paragraph 107, the Court then observed thus:
"107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realize the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Section 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it has not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the 5 MA No. 894/2020 owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage."
18. Further, in paragraph No.110, the Court in National Insurance Co. Ltd. (supra) observed thus:
110. The summary of our findings to the various issues as raised in these petitions are as follows:-
(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) An insurer is entitled to raise a defence in a claim petition filed under Section 163-A or Section 166 of the Motor Vehicles Act, 1988 inter alia, in terms of Section 149(2)(a)(ii) of the said Act.
(iii) The breach of policy condition, e.g. disqualification of driver or 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 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 where for 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 circumstance of each case.
(vi) Even where the insurer is able 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 insured unless the said breach or breaches on the condition of driving licence is/ are so fundamental as are found to have contributed to the cause of the accident.6 MA No. 894/2020
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 insured 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 fulfil the requirements of law or not will have to be determined in each case.
(viii) - (ix) xxx
(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 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 amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to 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." (emphasis supplied)
19. In the present case, the owner of the vehicle (respondent No.1) had produced the insurance certificate indicating that vehicle No. DIL- 5955 was comprehensively insured by the respondent No.2 (Insurance Company) for unlimited liability. Applying the dictum in the case of National Insurance Company Ltd. (supra), to subserve the ends of justice, the insurer (respondent No.2) shall pay the claim amount awarded by the Tribunal to the appellants in the first instance, with 7 MA No. 894/2020 liberty to recover the same from the owner of the vehicle (respondent No.1) in accordance with law.
20. Accordingly, the appeal is allowed to the extent that the compensation amount awarded by the Tribunal and confirmed by the High Court shall be paid and satisfied by the insurer (respondent No.2) in the first instance, with liberty to recover the same from the owner of the vehicle (respondent No.1) in accordance with law".
Similarly, in the case of Amrit Paul Singh & another vs. Tata AIG General Insurance Co. Ltd. & others (2018) 7 SCC 558, the Supreme Court has discussed the same issue in para 24 that "even though, the owner of the vehicle committed a breach of the terms and condition of the Insurance policy. The Tribunal as well as the High Court had rightly directed that the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from the owner and the driver. The said directions are in consonance with the principles stated in the case of National Insurance Co. Ltd. vs. Swaran Singh (2004) 3 SCC 297."
Similarly, in case of Shivawwa & another vs. Branch Manager, National India Insurance Co. Ltd. & another (2018) 5 SCC 762, after following the principles stated in the case of Swarn Singh, the Supreme Court held that :
"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. With regard to the liability in cases of third party insurance, it is directed that principle of pay and recover even in absence of liability to pay compensation retreated."
"11. As mentioned earlier, the High Court by a sweeping observation proceeded to reverse the finding of fact recorded by the Tribunal. Whereas, the Tribunal had duly considered the evidence of PW-1, PW-2 and the material accompanying the charge-sheet filed in respect of Crime No.12/2001 as also the plea taken by the insurer and the evidence of RW-1. In our opinion, the conclusion reached by the Tribunal is a possible view, which could 8 MA No. 894/2020 not have been disturbed by the High Court in the appeal filed by the insurer, much less in such a casual manner, as has been done by the High Court.
12. Notably, the High Court has not even adverted to the other findings recorded by the Tribunal as regards the manner in which accident occurred and, in particular, about the rash and negligent act of the driver of the tractor which had caused the accident resulting into the death of Chanabasayya on the spot due to grievous injuries suffered by him. The High Court has also not adverted to the finding recorded by the Tribunal in respect of Issue Nos.2 and No.3 regarding the proof of age, occupation and income of the deceased and the quantum of just and reasonable compensation. The High Court based its conclusion that the insurer cannot be saddled with the liability to satisfy the award, on the finding that the deceased was not travelling along with his goods at the time of accident. No more and no less. However, as the said finding recorded by the High Court cannot be sustained, the finding of the Tribunal on the factum that the deceased had travelled along with his goods will have to be affirmed and restored. It would necessarily follow that the insurer was not absolved of its liability to pay the compensation amount awarded to the claimants. We say so because the Tribunal has found, as of fact, that the insurance policy brought on record was a valid policy in respect of the offending tractor for the period commencing from 12.02.2000 to 11.02.2001.
13. Assuming for the sake of argument that the insurance company was not liable to pay compensation amount awarded to the claimants as the offending tractor was duly insured, the insurer would be still liable to pay the compensation amount in the first instance with liberty to recover the same from the owner of the vehicle owner (respondent No.2), in light of the exposition in the case of National Insurance Co. Vs. Swarn Singh and Ors."
[See also Rani & others vs. National Insurance Co. Ltd. & ors. (2018) 8 SCC 492 & Shamanna and another vs. the Divisional Manager, the Oriental Insurance Co. Ltd. & others (2018) 9 SCC 650].
Recently, in the case of Anu Bhanvara etc. vs. Iffco Tokio General Insurance Co. Ltd. and others 2019 SCC Online SC 1006, the Supreme Court has held as under :-
"The principle of pay and recover would be invoked even in case of a gratuitous passenger in a goods vehicle. The insurance company should thus be made liable for 9 MA No. 894/2020 the payment of compensation to the appellants and in turn they would have the right to realise/recover the same from the owner and driver of the vehicle.
On the facts and circumstances of the case, the principle of pay and recover would be directed to be invoked."
In the case of Parminder Singh vs. New India Assurance Co. Ltd. & ors.
(2019) 7 SCC 217, the Supreme Court after allowing the appeal directed to the Insurance Company to make out a demand draft in the name of the appellant, which can be used for his care for the rest of his life. The Insurance Company is entitled to recover the amount from the owners and drivers of the offending vehicles.
In the light principle laid down by the Supreme Court in the above cases, this Court does not find any illegality in the impugned award while directing the Insurance Company to pay first compensation to the claimants, then recover it from the driver and owner of the offending vehicle.
Accordingly, this appeal is hereby dismissed at motion stage, on the foregoing reasons.
(SMT. ANJULI PALO) JUDGE rj Digitally signed by RAJESH KUMAR JYOTISHI Date: 2020.02.17 17:25:29 +05'30'