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2001 DIGILAW 588 (MP)

NATIONAL INSURANCE CO. LTD. v. RAJENDRA PRASAD

2001-08-10

R.B.DIXIT, S.P.SRIVASTAVA

body2001
S. P. SRIVASTAVA, J. ( 1 ) MR. S. S. Bansal, advocate, for the appellant in all the three appeals. ( 2 ) MR. R. P. Gupta, Advocate, for the claimant (s) in all the three appeals. ( 3 ) MR. B. N. Malhotra, Advocate, representing the owner and driver of the car (Jata Shankar Dubey and Taj Khan) im-pleaded as respondents in all the three appeals is not present. Mr. D. C. Dubey, advocate, who had also put in appearance for them is, however, present but he states that he has not received any instructions. ( 4 ) MR. M. P. Agarwal, Advocate for the new India Assurance Co. Ltd. , Gwalior in all the three appeals. ( 5 ) ( 6 ) WITH the consent of the learned counsel for the parties, these appeals are heard together and are being disposed of by a common order. ( 7 ) THESE appeals which have been filed by the insurer are directed against the award given by Motor Accidents Claims tribunal, Datia in three claim cases which arose out of the same accident by the offending motor vehicles, a car bearing registration No. USG 5844 and a truck, a goods vehicle bearing registration No. CPJ 7815. ( 8 ) ACCIDENT had taken place on 8. 2. 1987 and the proceedings under section 110-A of the Motor Vehicles Act, 1939 had been initiated by the dependants-claimants of the two deceased persons who had met their untimely death and the third claim case was by a person who had received the grievous injuries. ( 9 ) IN all the three appeals referred to hereinabove, the claimants have filed the cross-objections seeking enhancement of the amount of compensation determined to be payable to claimants vide the impugned award. ( 10 ) MR. R. P. Gupta, learned counsel representing the cross-objector (s) in all the three appeals states that the claimants are not interested in prosecuting their cross-objections and the same may be dismissed as not pressed. ( 11 ) THE cross-objections are accordingly dismissed. ( 12 ) THE learned counsel for the insurer/appellant has urged that in the present case, the insurer was liable to be exonerated from the liability in regard to the payment of the amount of compensation as the terms and conditions subject to which the insurance policy had been issued had been violated. ( 12 ) THE learned counsel for the insurer/appellant has urged that in the present case, the insurer was liable to be exonerated from the liability in regard to the payment of the amount of compensation as the terms and conditions subject to which the insurance policy had been issued had been violated. ( 13 ) IT has also been urged by the learned counsel for the insurer that the statutory liability as envisaged under the provisions of the Motor Vehicles Act, 1939, so far as the insurer is concerned, was limited to an amount of Rs. 50,000 only and in this view of the matter, no liability in any case over and above the aforesaid amount could have been fastened upon the insurer. ( 14 ) THE learned counsel for the claimants has, however, urged that the statutory liability as envisaged under the provisions of the Motor Vehicles Act makes it obligatory for the insurer to pay to the claimants the entire amount determined towards the just compensation by the Motor Accidents Claims Tribunal for which the award had been given in favour of the claimants. The assertion is that the insurer cannot escape the liability to pay the amount due under the award to the claimants. ( 15 ) WE have considered the above submissions. ( 16 ) THE question in regard to the extent of the liability of the insurer under the provisions of Motor Vehicles Act, 1939, had been considered in detail by the Apex court in its decision in the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu, 2001 ACJ 1 (SC ). ( 17 ) IN its recent decision, the Apex court in the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu, 2001 acj 1 (SC), had elaborately dealt with the extent of liability of an insurance company towards the third party as per section 95 (1) (b) of the Motor Vehicles Act, 1939, and on the question as to what are its rights in case of payment of an amount in excess of the limits of the liability under the insurance policy vis-a-vis the insured. ( 18 ) IN the aforesaid case, the claimants had raised a claim for a total amount of rs. 2,00,000 as compensation on account of death of their predecessor-in-interest in a road accident on 6. 7. ( 18 ) IN the aforesaid case, the claimants had raised a claim for a total amount of rs. 2,00,000 as compensation on account of death of their predecessor-in-interest in a road accident on 6. 7. 1988 involving the offending motor vehicle an autorickshaw bearing registration No. KRN 1859. The insurer had contested the claim specifically stating therein that its liability was limited to Rs. 50,000 under the policy of insurance. The Claims Tribunal, however, had granted an award for an amount of rs. 1,94,150 and has fastened the entire liability on the appellant insurance company. The insurance policy in that case was of a date prior to the coming into force of the new Motor Vehicles Act, 1988 on 1. 7. 1989. ( 19 ) UNDER the aforesaid insurance policy the limit of the insurance company's liability in respect of any one claim or series of claims arising out of one event was fixed at Rs. 50,000 only. However, the avoidance clause of the policy provided that "nothing in the said policy or the endorsement hereon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act, 1939, section 96. But the insured shall repay to the company all sums paid by the company which the company would not have been liable to pay but for the said provisions". Section II of the policy dealt with 'liability of third party' and provided that the company will indemnify the insured against all sums including claimants' costs and expenses which the insured becomes legally liable to pay in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle or damage to the property caused by such use. ( 20 ) TAKING into consideration the earlier decisions of the Supreme Court in the cases of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani, 1958-65 acj 559 (SC) and Amrit Lal Sood v. Kaushalya Devi Thapar, 1998 ACJ 531 (SC), the Hon'ble Supreme Court came to the conclusion that despite holding the liability under the policy limited to the extent of Rs. Ltd. v. Pessumal Dhanamal Aswani, 1958-65 acj 559 (SC) and Amrit Lal Sood v. Kaushalya Devi Thapar, 1998 ACJ 531 (SC), the Hon'ble Supreme Court came to the conclusion that despite holding the liability under the policy limited to the extent of Rs. 50,000, the Claims Tribunal and the High Court were not unjustified in directing the appellant insurance company to pay the whole of the awarded amount to the claimants on the basis of the contractual obligations contained in clauses relaing to the liability of the third parties and avoidance clause. However, it was further indicated that the Claims Tribunal and the high Court were not justified in rejecting the right of the appellant insurance company to recover from the insured the excess amount paid in execution and discharge of the award of the Tribunal. ( 21 ) IN the aforesaid view of the matter, the Apex Court allowed the appeal holding that the appellant insurance company was liable to pay the entire award amount to the claimants. Upon making such payment, the appellant can recover the excess amount from the insured by executing the award against the insured to the extent of such excess as per section 174 of the Motor Vehicles Act, 1988. ( 22 ) IN its another decision in the case of New India Assurance Co. Ltd. v. Kamla, 2001 ACJ 843 (SC), the Supreme Court had indicated taking into consideration the implications arising under sub-section (4)and its proviso together with sub-section (5) of section 149 of the Motor Vehicles act, 1988, that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This, it was clarified means that the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but the insurer is entitled to recover any such sum from the insured if the insurer were not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy. ( 23 ) IN para 22 of the aforesaid decision, the Apex Court summarised the position in law indicating that when a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to third parties, whether or not there has been any breach or violation of the policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured. ( 24 ) IN para 25 of the aforesaid decision, it was indicated that the insurer and the insured are bound by the conditions enumerated in the policy and the insurer was not liable to the insured if there was violation of any policy condition. But the insurer who was made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy condition. ( 25 ) IN view of the aforesaid position in law and what has been indicated herein before, the appeal is allowed holding that the appellant insurance company is liable to pay the entire award amount to claimants and upon making such payment, the appellant company can recover the excess amount from the insured by executing the award against the insured to the extent of such excess as per section 174 of the Motor vehicles Act, 1988. The impugned award shall stand modified to that extent. In other respects, since the owner has submitted to the impugned award, it shall remain intact. ( 26 ) THERE shall however be no order as to costs. Appeal allowed. .