Karnataka High Court
Rathnamma vs Santosh on 12 September, 2024
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NC: 2024:KHC:37517
MFA No. 3413 of 2016
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA
MISCELLANEOUS FIRST APPEAL NO. 3413 OF 2016 (MV-D)
BETWEEN:
1. RATHNAMMA
W/O LATE LAXMANAPPA
AGED ABOUT 51 YEARS.
2. NAGARAJA
S/O LATE LAXMANAPPA
AGED ABOUT 29 YEARS.
3. SMT. HEMAVATHI
S/O LATE LAXMANAPPA
AGED ABOUT 27 YEARS.
ALL ARE RESIDENTS OF SOWLANAGA
HONNALI TALUK - 577 217.
DAVANAGERE DISTRICT.
...APPELLANTS
Digitally signed by (BY SRI RAJENDRA S, ADVOCATE FOR
PRAJWAL A SRI S V PRAKASH, ADVOCATE)
Location: HIGH COURT
OF KARNATAKA AND:
1. SANTOSH
S/O LATE PATRAPPA
AGED ABOUT 37 YEARS
DRIVER
R/O SURUMONNE
NEAR PRAVASI MANDHIRA
HONNALI TALUK - 577 217.
DAVANAGERE DISTRICT.
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NC: 2024:KHC:37517
MFA No. 3413 of 2016
2. K SHEKARACHAR
S/O SORABACHAR
HOUSE No.148
KUMBAR GUNDI
HONNALI - 577 217
HONNALI TALUK.
DAVANAGERE DISTRICT.
3. I.C.I.C.I. LOMBARD GENERAL
INSURANCE CO. LTD.,
HOUSE No.414
VEERA SAVARKAR MARG
PRABHADEVI
MUMBAI.
...RESPONDENTS
(BY SRI R SATISH CHANDRA, ADVOCATE FOR R2
SRI A N KRISHNASWAMY, ADVOCATE FOR R3
R1 SERVED AND UNREPRESENTED)
THIS MFA IS FILED U/S 173(1) OF MV ACT AGAINST THE
JUDGMENT AND AWARD DATED5.12.2015 PASSED IN MVC
NO.102/2013 ON THE FILE OF THE SENIOR CIVIL JUDGE, MEMBER,
ADDITIONAL MACT, HARIHAR, PARTLY ALLOWING THE CLAIM
PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF
COMPENSATION.
THIS APPEAL COMING ON FOR FURTHER HEARING THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA
ORAL JUDGMENT
In this appeal, the appellants apart from seeking enhancement of compensation have questioned the -3- NC: 2024:KHC:37517 MFA No. 3413 of 2016 exoneration of the Insurance Company from paying the compensation.
2. For the sake of convenience, the rank of the parties will be referred to as per their status before the Tribunal.
3. Brief facts of the case are that on 13.01.2013 at about 01.30 pm, the husband of petitioner No. 1 and father of petitioner Nos. 2 and 3 by name Laxmanappa, the deceased, while walking by the side of the road, a Maxi Cab bearing Registration No. KA-25-TRD-6242 dashed against him, due to which he sustained injuries. He was treated at Mc.Gaon Hospital at Shivamogga and also at Wenlock Hospital, Mangaluru. As the treatment could not save him, he succumbed to death on 11.03.2013. The petitioners claiming to be the dependants of the deceased have approached the Tribunal for grant of compensation of Rs.8,40,000/-.
4. Respondent Nos. 2 and 3 - owner and insurer of the vehicle have opposed the claim. After recording the -4- NC: 2024:KHC:37517 MFA No. 3413 of 2016 evidence and hearing both the parties, the Tribunal awarded compensation of Rs.7,99,999/- with interest at 6% per annum and directed further the driver and owner of the Maxi Cab to pay the compensation by exonerating the Insurance Company. Pleading inadequacy and seeking enhancement of compensation and also questioning the exoneration of the insurance company from its liability, the petitioners are before this Court.
5. Heard arguments of Sri. Rajendra S., Advocate for Sri. S.V. Prakash, learned counsel for petitioners, Sri. K. Satishchandra, learned counsel for respondent No. 2 - owner of the vehicle and Sri. A.N. Krishnaswamy, learned counsel for the Insurance Company.
6. It is contended by the learned counsel for the petitioners that the deceased was aged 49 years and he was earning more than Rs.10,000/- per month agricultural coolie, but the Tribunal has taken the monthly income at Rs.6,000/- only. The compensation under conventional heads is on the lower side and sought for enhancement. -5-
NC: 2024:KHC:37517 MFA No. 3413 of 2016 6.1 It is further contended that on the date of issuance of policy, the vehicle was carrying temporary registration, but, on the date of accident registration since expired, the Tribunal erroneously fastened the liability against the owner of the vehicle to pay compensation. To buttress his arguments he has relied the Full Bench judgment of this Court in the case of New India Assurance Co. Ltd., Bijapur Vs. Yallavva and another reported in 2020 (2) KCCR 1405 (FB).
7. Learned counsel appearing for the owner of the vehicle has contended that on the date of accident there was a valid insurance in force and the driver of the Maxi Cab was holding a effective driving license. The vehicle was carrying the temporary registration. Since the registration was not done within the prescribed 30 days, the insurance company contended that it can avoid its compensation. But the policy of insurance was issued on the basis of engine number and chassis number, the policy of insurance was valid for a period of 12 months from the date of temporary -6- NC: 2024:KHC:37517 MFA No. 3413 of 2016 registration. If there is any violation in non-registration, it is only amenable for penal action and the Insurance Company cannot avoid its liability. To buttress his arguments he has relied on the judgment in the case of Basavaraja Beerappa Kambali Vs. The Cholamandalam MS General Insurance Company Ltd., and others, M.F.A. No. 9207/2013 decided on 02.12.2022.
8. Per contra, learned counsel appearing for the Insurance company has contended that on the date of accident the temporary registration had expired. The policy of insurance was issued on the basis of the temporary registration. The owner of the vehicle is required to register the vehicle within 30 days from the date of temporary registration. In the instant case, the vehicle was not registered and thereby there is a violation of Section 39 of the Motor Vehicles Act and the policy of insurance will not be effective until the vehicle is registered in a proper manner. Till then, the insurance policy stands inoperative. -7-
NC: 2024:KHC:37517 MFA No. 3413 of 2016 There is no liability on the part of the insurer to indemnify the insured. It is further contended that plying of a vehicle without registration amounts to fundamental breach and the Insurance Company can avoid its liability. To buttress his argument he has relied on the judgment of the Hon'ble Apex Court in the case of Narinder Singh Vs. New India Assurance Co. Ltd., reported in 2014 (9) SCC 324 and United India Insurance Co. Ltd., Vs. Sushil Kumar Godara, C.A. No. 5887/2021.
9. I have given my anxious consideration to the arguments addressed by the learned counsel for both parties and perused the records.
10. On perusal of the material on record, two points arise for consideration in this appeal, one is quantum of compensation and second is, liability on the part of the Insurance Company to indemnify the insurer.
11. Admittedly, there was an accident, the deceased had sustained injuries, was hospitalized and on 11.03.2013 he succumbed to injuries. The petitioners being the wife -8- NC: 2024:KHC:37517 MFA No. 3413 of 2016 and children as dependents, are entitled to claim compensation. The petitioners claim that the deceased was earning Rs.15,000/- per month whereas the Tribunal has taken the income of the deceased at Rs.6,000/- per month. The accident is of the year 2013. There is no evidence in proof of the income of the deceased as claimed by the petitioners. In the absence of proof of income, the deceased is to be treated as a person with no proof of income and notional income of Rs.8,000/- is to be taken. The deceased was aged 49 years, future prospects of 25% is to be added, 1/3rd is to be deducted towards personal expenses and applicable multiplayer is 13. Then loss of dependency will be:
8000 + 2000 + (25%) = 10000 - 3333 (1/3rd) = 6666 6666 X 12 X 13 = 10,39,896/-.
12. Under conventional heads, towards loss of consortium to the wife and loss of love and affection to the two children, Rs.40,000/- each is to be awarded. Towards funeral expenses and loss of estate, Rs.15,000/- each has -9- NC: 2024:KHC:37517 MFA No. 3413 of 2016 to be assessed. In view of judgment in National Insurance Co. Ltd. Vs. Pranay Sethi and Others, reported in (2017) 16 SCC 680, case, since the claim is of the year 2013, 10% appreciation on the conventional heads has to be given. Then the compensation under conventional heads comes to Rs.1,65,000/-.
13. The deceased was hospitalized from 13.01.2013 to 30.03.2013. He was attended by attendants and they have incurred many expenses. Conveyance and incidental expenses comes to Rs.30,266/-. Thereby the total compensation comes to Rs.12,34,896/- (10,39,896 + 1,65,000 /- + 30,266/-) as against Rs.7,99,000/- awarded by the Tribunal. Thus, petitioners are entitled for enhancement of Rs.4,35,896/- (12,34,896/- - 7,99,000/-) rounded off to Rs.4,36,000/-. It is the just compensation to which the petitioners are entitled, in the facts and circumstances of the case.
14. As regards liability is concerned, the fundamental argument canvassed on behalf of the
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 Insurance Company is that plying of a vehicle without registration amounts to violation of Section 39 of the Motor Vehicles Act and it is a fundamental breach, the Insurance Company can avoid its liability. In Narindar Singh's case (supra) case arising under Consumer Protection Act, where the owner of the vehicle was making a claim for own damages. The Insurance Company repudiating the claim on the ground that the vehicle was not registered and it is a fundamental breach. The Hon'ble Apex Court expressed a view that using a vehicle on the public road without any registration is not only an offence punishable under section 192 of the Motor Vehicles Act but also a fundamental breach of the terms and conditions of the policy. This judgment has been followed by the Hon'ble Apex Court in the case of Sushil Kumar Godara (supra) and reiterated the law laid down in Narinder Singh's case.
15. The argument of the learned counsel for the petitioners as well as the owner of the vehicle is that in Narinder Singh's case as well as in Sushil Kumar
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 Godara's case the Apex Court was dealing with the liability issue under the Consumer Protection Act between Insurance Company and owner of the vehicle under own damage. The Hon'ble Apex Court in both the cases was not dealing with liability in respect of third party claim, it is not applicable to facts of this case.
16. Full Bench of this Court in Yallavva's case (supra) referred two questions for consideration in respect of third party liability under the contract of policy.
I) If it is shown the insurance policy is not 'Act' policy in terms of Sections 145 and 147 of the Motor Vehicles Act, but a contractual policy issued collecting extra premium indicating insurance company has enlarged its liability, will not the insurance company be liable to pay and recover even if there is any breach by the insurer?
II) In such cases, is not the rule to 'pay and recover' applicable in view of the mandate in Section 149, M.V.Act that upon issuance of policy, the insurer is bound to discharge the award as if it were a judgment debtor?
The above questions were answered as under:
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NC: 2024:KHC:37517 MFA No. 3413 of 2016
i) Having regard to Section 149(1) r/w Section 149(7) whenever a case falls under Section 149(2)(a) and the same is successfully established or proved by the Insurance Company, as per the twin tests laid by the Hon'ble Supreme Court in Swaran Singh, nevertheless, the insurer or Insurance Company is liable to satisfy the award vis-
à-vis a third party and is entitled to recover from the insured. This is irrespective of, the policy being an Act policy in terms of Section 147 pertaining to compulsory coverage of risks of third parties and other classes of persons stated therein or a policy covering other risks by specific contract being entered into in that regard and where additional premium is paid by the insured i.e., a contractual policy.
ii) The Insurer is liable to pay the third party and recover from the insured even if there is breach of any condition recognized under Section 149 (2), even if it is a fundamental breach (that is breach of condition which is the cause for the accident) and the insurer proves the said breach in view of the mandate under Section 149(1) of the Act. But, no such order can be passed against the insurer, if, on the facts and circumstances of a case, a finding is given by the Court that the third party (injured or
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 deceased) had played any fraud or was in collusion with the insured, individually or collectively, for a wrongful gain to themselves or cause wrongful loss to the insurer.
iii) The Court can also fasten the absolute liability on the insurer, if there is any breach of condition which is enumerated under Section 149(2) of the Act or any other condition of the policy if the Insurance Company has waived breach of any such condition or has taken the special responsibility to pay by collecting extra premium by covering any type of risk depending upon facts of each case.
iv) Thus, the rule of pay and recover is applicable in view of the mandate in Section 149(4) of the Act and even if there is a breach of the terms of the insurance policy, the insurer is bound to satisfy the judgment and award as if it were a judgment debtor, even if it satisfies the twin tests enunciated by the Hon'ble Supreme Court under Section 149(4)(a) of the Act.
v) Before passing any order on the Insurance Company to pay and recover, the Court has to examine the facts and circumstances of each case and if it finds that the victim, injured or the deceased, in a particular case, was solely or jointly
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 responsible for breach of such fundamental condition by playing fraud or in collusion with the insured, the Court may exercise its discretion not to fasten the liability on the insurer.
vi) However, the Court should not adopt the above guideline as a general rule in all cases, but only under peculiar facts and circumstances of each case and on giving appropriate reasons.
vii) If the Insurance Company makes out a case under Section 149(2)(b) of the Act, then also the Insurance Company has to satisfy the award so far as third party is concerned, as it is the duty of the Insurance Company to indemnify the insured on the basis of the policy of the insurance and even when the contract of insurance itself is void, nevertheless the liability to indemnify the insured would arise and insurer is entitled to recover from the insured.
viii) Thus, in a case where Section 149(2)(b) applies and the Insurance Company successfully establishes that the policy is void, in such a case also, the insurer is not absolved of its liability to satisfy the judgment or award as rights or obligations would flow even from a policy which is void vis-à-vis third party. In such a case, the insurer
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 is not completely absolved of its liability, the insured would have to satisfy the award vis-à-vis the third party and recover from the insured the amount paid to the third party and may also have a right to seek damages from the insured.
ix) The judgment of the Division Bench of this Court in Subramanyam, holding that a pay and recovery order cannot be made as there is no liability to pay or satisfy the award or decree in respect of a case falling under Section 149(2) is not correct. Hence, that portion of the judgment in Subramanyam, which states that if the case falls within the scope of Section 149(2) of the Act and the insurer is successful in establishing any of the defences as stated therein, it would be completely absolved of its liability to satisfy the award is also not correct and to that extent, it is held to be bad in law.
x) Article 142 of the Constitution of India being a power granted under the Constitution only to the Supreme Court can be exercised in appropriate cases only by the Apex Court. Exercise of power under Article 142 by the Hon'ble Supreme Court in a particular case cannot be a precedent for other Courts and Tribunals to exercise such a power
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 unless the same is indicated to be a precedent by the Apex Court."
17. The Full Bench was referring to Section 149 of the Motor Vehicles Act where the Insurance Company can avoid its liability and observed in particular thus:
viii) Thus, in a case where Section 149(2)(b) applies and the Insurance Company successfully establishes that the policy is void, in such a case also, the insurer is not absolved of its liability to satisfy the judgment or award as rights or obligations would flow even from a policy which is void vis-à-vis third party. In such a case, the insurer is not completely absolved of its liability, the insured would have to satisfy the award vis-à-vis the third party and recover from the insured the amount paid to the third party and may also have a right to seek damages from the insured.
18. Section 168 of the Motor Vehicle Act, 1988 contemplates the award of the claims Tribunal has to be decided on the facts of each case. Here in this case admittedly in the light of the judgment of Narendra Singh's case which is followed in Godhra's case that the
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 non registration of motor vehicle plying on the road amounts to fundamental breach and Insurance Company can avoid its liability for own damage claim. Here in this case facts are different as 3rd parties are before this Court and not the owner.
19. The Coordinate bench in BASAVARAJA BEERAPPA KAMBALI'S case apart from referring the Yellava's case also referred to the judgment of Hon'ble Apex Court in SRI RAJA LINGAIAH V/S SRI MANJU @ MANJA AND ANOTHER reported in SCC ONLINE KAR 7099, ORIENTAL INSURANCE COMPANY LIMITED V/S SMT. SAVITHRI HUDGE AND ANOTHER reported in 2014 SCC Online KAR 12505 and FUTURE GENERAL INDIA INSURANCE COMPANY LIMITED V/S VALLI AND OTHERS reported in 2020 SCC Online Madras 5214 and held that when there was no valid registration on date of the accident, though it is a violation of provisions of Motor Vehicle Act, 1988 in case of third party liability the Insurance Company has to pay the compensation and
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 recover from the owner of the vehicle. In order to protect the interest of the poor petitioners, who are waiting since 2013, even after 11 years of the accident, asking them to recover the compensation from the owner of the vehicle is not proper. For the omission on the part of the owner of the vehicle it is proper to direct the Insurance Company to satisfy the award and recover the same from the owner of the vehicle.
20. The accident took place on 13.01.2013, the injured was under hospitalization till 11.03.2013 and the deceased was poor agriculturist coolie, the petitioners are wife and children who are dependents of bread earring of the deceased, they under went trauma as the deceased was under hospitalization for more than two months at Mangalore and they being the natives of Honnali taluk of Davanagere district. The fault is on the part of owner of the vehicle in not registering the said vehicle so as to validated the policy of insurance on the date of accident. The temporary registration was expired on 20.12.2012 and
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NC: 2024:KHC:37517 MFA No. 3413 of 2016 within 23 days thereof the accident occurred. However, the vehicle was registered on 12.03.2013. From 12.03.2013 onwards the same policy of insurance was regularized.
21. At the same time, the owner of the vehicle cannot be allowed to watch the payment of compensation by the Insurance Company. In order to protect the interest of the Insurance Company the owner of the vehicle is also be directed to furnish security for the equivalent amount of compensation before the Tribunal in favour of the Insurance Company.
22. In view of the above discussions, appeal filed by the petitioners merits consideration, in the result, the following:
ORDER
i) Appeal is allowed-in-part;
ii) Impugned judgment and award is modified;
iii) The petitioners would be entitled to enhanced compensation of Rs.4,36,000/- with interest of 6% p.a. from the date of petition till the date of deposit;
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NC: 2024:KHC:37517 MFA No. 3413 of 2016
iv) The owner of the vehicle is held liable to pay the compensation;
v) The Insurance Company is directed to deposit the total compensation with interest 6% p.a within eight weeks from the date of receipt of certified copy of the judgment;
vi) The owner of the vehicle shall furnish the surety before the Tribunal within three months from today to the amount deposited by the Insurance Company.
SD/-
(T.G. SHIVASHANKARE GOWDA) JUDGE LRS,PNV List No.: 2 Sl No.: 10