MACMA/836/2010 of Reliance General Insurance Company Limited, Vs Mohd. Saleem on 28 December 2012

JUDGMENT:

This appeal is filed by the appellant-Reliance GeneralInsurance Company Limited against the order dated 02.12.2008passed in O.P.No.1173 of 2007 by the Motor Accident ClaimsTribunal-cum-XVI Additional Chief Judge-cum-II AdditionalMetropolitan Sessions Judge, Hyderabad.2.I have heard the learned counsel appearing for the appellant-Insurance Company and the learned counsel appearing for therespondent/claimant.

3. Mr.Mohd. Saleem, the claimant filed a claim case under Section166 of the Motor Vehicles Act seeking compensation of Rs.3 lakhs onaccount of the injuries sustained by him in a motor accident occurredon 23.11.2006 at about 11.30 p.m. on the outskirts of Pulluru villagewithin the territorial jurisdiction of Police Station, Manopad,Mahboobnagar District.

4. The claimant’s version before the Tribunal is that he wasproceeding on the Eicher Van bearing No.AP-28-X-2517,the offendingvehicle as owner of the goods from Hyderabad to Kurnool, when thevehicle reached outskirts of Pulluru village, it met with an accident asthe driver of the said vehicle drove it in a rash and negligent mannerand dashed the stationed tractor-trailor, he received grievous injuries,he was shifted to Government Hospital, Kurnool and from there to AreaHospital, Golconda . Stating that he sustained permanent disability, hesought compensation of Rs.3 lakhs against which the leaned Tribunalawarded compensation of Rs.1,44,200/- with interest @ 7.5% perannum from the date of petition till the date of realization.

5. Since the compensation has been properly computed and the main contention of the insurance company being as to its liability topay compensation to the claimant, the quantum of compensation doesnot require any reconsideration in the present appeal and the Tribunalhas also on evidence rightly held that the accident was on account ofthe rash and negligent driving of the driver of the said Eicher van andthe finding having attained finality also need not be re-examined.

6. The only question requires determination in the present appealis whether the Tribunal is right in issuing a direction to the insurancecompany to pay the compensation in the first instance and thenrecover the same from the owner of the vehicle.

7. The contention of the claimant that he was traveling in the saidvan along with load of his vegetables was repelled by the Tribunalbelow on the ground that in the cross-examination the claimant as PW-1 stated that he was working on the offending vehicle under the firstrespondent and that his work was to proceed with the Eicher Vanbelonging to the first respondent-owner and also that the said vehicleis a goods carrying vehicle. The Tribunal also further took intoconsideration Exs.A-1 and A-2 the documents relied upon by theclaimant which do not disclose that he was traveling in the vehicle asowner of the goods. Therefore, the Tribunal below rightly recorded afinding basing on the evidence before it that the claimant was nottraveling in the vehicle as owner of the goods and as he was allowedto travel in the goods vehicle, there was violation of terms andconditions of the policy. The Tribunal relying on the judgment inNATIONAL ASSURANCE COMPANY LIMITED v. KAMALA AND

OTHERS[[1]]held that the insurer who is made statutorily liable to paycompensation to third parties, on account of certificate of insurance

Issues

issued, shall be entitled to recover from the insured the amount paid tothird party, if there was any breach of conditions of the policy, but, inthe first instance it has to pay the compensation to the claimant. Thesaid finding has been challenged in the present appeal. Reliance isplaced by the learned counsel appearing for the insurance companiono n NEW INDIA ASSURANCE COMPANY LIMITED v. VEDWATI

AND OTHERS[[2]]wherein the Supreme Court held that the owner ofthe goods vehicle has no statutory responsibility to get his vehicleinsured for covering any passenger travelling in the goods vehicle andthe insurance company is not liable to pay compensation to theclaimants. I n NATIONAL INSRUANCE COMPANY LIMITED v.

PREMA DEVI AND OTHERS[[3]]the Supreme Court held that whenthe claimant was travelling in a goods vehicle not as owner of thegoods or as representative of the owner of the goods is a gratuitouspassenger and the insurance company can avoid its liability on theground that the owner of the vehicle had not taken policy for suchpassenger and there was no requirement under law for obtaining apolicy covering such passengers.

8. Basing on the judgments above referred, the learned counselappearing for the insurance company contends that in the said casesthe Supreme Court held that in the case of gratuitous passengers, theinsurance company is not liable to pay compensation and when onceit is not liable to pay compensation, the Tribunal has no jurisdictionunder Section 168 of the Motor Vehicles Act to issue a direction to theinsurance company to pay the amount in the first instance and then itcan recover the same from the owner of the vehicle.

As to this, I would like to state that whether the insurancecompany can be exonerated from liability to pay compensation on account of breach of terms and conditions committed by the insured isa different question from the one, whether the Tribunal is empoweredto issue a direction under Section 168 of the Motor Vehicles Act to paycompensation to the claimant, as a gratuitous passenger underSection 168 of the Motor Vehicles Act. In the judgments relied on bythe learned counsel appearing for the insurance company theSupreme Court does not dealt with the question whether the Tribunalhas no jurisdiction to issue such direction. The Supreme Court onlydealt with the issue as to whether the insurance company in the givencircumstances was liable to pay compensation to the claimants.

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

AND OTHERS[[4]]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 interest 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 accidentinasmuch as can be resolved by the Tribunal in such a proceeding. In KUSUM LATA AND OTHERS v SATBIR AND OTHERS[[5]]the

KUSUM LATA AND OTHERS v SATBIR AND OTHERS[[5]]the Supreme Court held that that the Tribunal has inherent power toissue such direction. Therefore, the argument advanced by thelearned counsel appearing for the insurance company goes contrato the ratio laid down in BALJITH KAUR case (cited supra) and thesame cannot be sustained. The Tribunal by virtue of its power andjurisdiction 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[[6]]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.

10. 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 itsobligation 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 a judgment 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.

11. In the instant case also, by allowing the claimant 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.

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

Date:28.12.2012 R. KANTHA RAO,J ccm

THE HON’BLE MR JUSTICE R. KANTHA RAO

[1]2001 ACJ 8432001 ACJ 843

[2]2007 ACJ 10432007 ACJ 1043

[3]2008 ACJ 11492008 ACJ 1149

[4](2004) 2 SCC 1(2004) 2 SCC 1

[5]AIR 2011 SC 1234AIR 2011 SC 1234

[6]2001 ACJ 8432001 ACJ 843

DATE:28.12.2012