CMA/3576/2003 of The Oriental Insurance Co. Ltd. Vs Geddam Veeraswamy on 28 December 2012

JUDGMENT:

This appeal is filed by the Oriental Insurance Company Limitedagainst the order dated 20.05.2003 passed in O.P.No.738 of 2000 bythe Motor Accident Claims Tribunal-cum-VI Additional District Judge,Visakhapatnam.

2. I have heard the learned counsel appearing for the appellant-Insurance Company. None appeared for the respondents/claimants.

3. The deceased-Geddam Srinivas Rao was said to be doingcloth business and he was selling cloths in the villages of SrikakulamDistrict. He boarded the lorry bearing No. AP-04-T-0905 at Pendurthyto go to Kasibugga for the purpose of his cloth business, he paid theprice to the owner-cum-driver of the lorry for his travel. While on theway, the lorry on account of rash and negligent driving of its driver,dashed a mile stone near Siddipeta of Srikakulam mandal, as a resultof which, the lorry turned turtle, the deceased fell down under the lorryand died instantaneously. On facts and evidence, the learned Tribunalrightly held that the accident was due to rash and negligent driving ofthe driver of the lorry. The Tribunal also rightly held that the driver-cum-owner of the lorry ought not to have allowed the deceased totravel in the said lorry since it is in violation of terms and conditions ofthe policy of insurance and accordingly, held that the insurancecompany is not liable to pay compensation. However, the learnedTribunal issued a direction to the insurance company to pay thecompensation in the first instance and then recover the same from theowner of the vehicle. The said finding is assailed by the insurancecompany on the ground that once the insurance company is not liableto pay compensation to the legal representatives of the deceased whowas gratuitous passengers in the goods vehicle, the Tribunal ought notto have issued a direction to the insurance company to satisfy the award in the first instance and then recover the amount paid from theowner of the vehicle. Reliance is placed on NEW INDIA

ASSURANCE COMPANY LIMITED v. ASHA RANI[[1]]andNATIONAL INSRUANCE COMPANY LIMITED v. BOMMITHI

SUBBHAYAMMA[[2]].In both the decisions, the Supreme Court haslaid down that the insurance company is not liable to paycompensation to the claimants as the claimants/deceased wastraveling as gratuitous passenger in a goods vehicle.

4. But, the crucial question to be determined is whether theTribunal is right in issuing a direction to the insurance company tosatisfy the award in the first instance and then recover the same fromthe owner of the vehicle.

5. In NATIONAL INSURANCE CO. LTD. v.BALJITH KAUR

AND OTHERS[[3]], the Supreme Court did not lay down that the powerto issue direction to the insurance company to satisfy the award in thefirst instance and then recover the same from the insurer was only withthe Apex Court under Articles 136 or 141 of the Constitution of India. In the said case, the Supreme Court laid down the law in general termsand held that by issuing such direction interests of justice will be sub-served and also emphasized that it has issued the aforesaid directionhaving regard to the scope and purport of Section 168 of the MotorVehicles Act, 1988 and has laid down the legal position in categoricaland clear terms that the Tribunal is not only entitled to determine theamount of compensation claimed as put-forth by the claimant forrecovery thereof from the insurer, owner or driver of the vehicle jointlyand severally but also the dispute between the insurer on the onehand and the owner or driver of the vehicle involved in the accident inasmuch as can be resolved by the Tribunal in such a proceeding. In

inasmuch as can be resolved by the Tribunal in such a proceeding. In KUSUM LATA AND OTHERS v SATBIR AND OTHERS[[4]]theSupreme Court held that that Insurance Company has inherentpower to issue such direction. Therefore, the argument advancedby the learned counsel appearing for the insurance company goescontra to the ratio laid down in BALJITH KAUR case (cited supra)and the same cannot be sustained. The Tribunal by virtue of its powerand jurisdiction under Section 168 of the Motor Vehicles Act can issuedirection to the insurer to satisfy the award in the first instance in favourof the victims/third parties and then recover the amount so paid fromthe insured. In NATIONAL ASSURANCE COMPANY LIMITED v.

KAMALA AND OTHERS[[5]]the Supreme Court held that theinsurance company is liable to pay compensation to third parties,irrespective of the fact that there was any breach or violation of anypolicy conditions, but the insurance company can recover the amountfrom the insured the amount paid to third party, if there was any breachof conditions of the policy, but, in the first instance it has to pay thecompensation to the claimant.

6. The Scheme of the Motor Vehicles Act, 1988 as can be seenfrom the provisions of Sections 147 and 149 is that after notice to theinsurer when the award has been passed, the position of the insurer isthat of a judgment debtor and it has legal obligation to satisfy theaward, despite the fact that it is entitled to avoid liability on the groundof breach of terms and conditions of the contract or the statutoryprovisions so long as there is a valid third party insurance. Adistinction has to be drawn between the defences which the insurancecompany can take under Section 149 of the Motor vehicles Act and its obligation to satisfy the decrees and awards insofar as victims/thirdparties are concerned. In MACMA Nos.2535 of 2006 and 1661 of2006, a Division Bench of this Court to which I am a party rendered ajudgment applying the ratio laid down in BALJITH KAUR case to theeffect that even though the insurance company is not liable to paycompensation for violation of terms and conditions of the policy, it canbe directed to satisfy the award in the first instance and then recoverthe same from the owner of the vehicle.

7. In the instant case also, by allowing the deceased to travel in agoods vehicle, the insured committed breach of terms of the policy, onaccount of which the insurance company cannot be held liable to paycompensation to the claimants. But, at the same time, the Tribunal isright in issuing a direction to the insurance company to satisfy theaward in the first instance and thereafter recover the same from theowner of the vehicle. The said direction issued by the Tribunal is inaccordance with law lay down by the Supreme Court in BALJITHKAUR case. The finding of the Tribunal is therefore upheld by notaccepting the contentions urged on behalf of the insurance company.

8. For the foregoing reasons, the appeal filed by the insurancecompany fails and the same is dismissed without any order as to costs.

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Date:28.12.2012 R. KANTHA RAO,J

ccm

THE HON’BLE MR JUSTICE R. KANTHA RAO

C.M.A.No.3576 of 2003

DATE:28.12.2012

[1]2003-AIR(SC)-0-6072003-AIR(SC)-0-607

[2]2005-SCC-12-2432005-SCC-12-243

[3](2004) 2 SCC 1(2004) 2 SCC 1

[4]AIR 2011 SC 1234AIR 2011 SC 1234

[5]2001 ACJ 8432001 ACJ 843