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2011 DIGILAW 104 (RAJ)

Oriental Insurance Co. Ltd. v. Puran

2011-01-13

R.S.CHAUHAN

body2011
Hon'ble CHAUHAN, J.—With the consent of the parties, this case is being decided at this stage itself. 2. The Insurance Company is aggrieved by the award dated 31.08.2010 passed by the Motor Accident Claims Tribunal, Kishangarh (Ajmer) (hereinafter referred to as the “learned Tribunal”), whereby the learned Tribunal has directed the appellant-Company to initially pay the compensation and to subsequently recover the same from the owner of the offending vehicle. 3. The only contention raised by Mr. Vinod Tyagi, the learned counsel for the appellant, is that the learned Tribunal has erred in directing the Insurance Company to pay the award amount to the claimant-respondent initially and thereafter to recover the same from the owner of the offending vehicle. According to the learned counsel, the learned Tribunal could not have given such a direction. Moreover, once it is held that there is breach of the policy, the Insurance Company cannot be held liable to make the payment. 4. On the other hand, Mr. Veyankatesh Garg, the learned counsel for the claimant-respondent, has contended that the extent of the liability of the Insurance Company to pay the compensation amount and the extent of its right to recover the compensation amount is well settled by the Hon'ble Supreme Court in the case of National Insurance Co. Ltd. vs. Swaran Singh & Ors. ( (2004) 3 SCC 297 ). In the said case, the Hon'ble Supreme Court had clearly opined that it is well settled that the Insurance Company is liable to satisfy the decree at the first instance and to recover the awarded amount from the owner of the vehicle. Therefore, if the learned Tribunal has passed a similar order, the order does not suffer from any illegality or perversity. Moreover, since the right of recovery has been given to the Insurance Company, it would not suffer any financial loss. After all, it can recover not only the principal amount of the compensation, but also recover the interest on the said amount from the owner of the offending vehicle. Lastly, he has contended that the Motor Vehicle Act is a social beneficial piece of legislation which protects the interest of the claimants. The claimants who have lost the bread-earner, or the claimants who have injured their bodies are entitled to a compensation so as to ameliorate their condition through monetary benefits. Lastly, he has contended that the Motor Vehicle Act is a social beneficial piece of legislation which protects the interest of the claimants. The claimants who have lost the bread-earner, or the claimants who have injured their bodies are entitled to a compensation so as to ameliorate their condition through monetary benefits. In case, the claimants are left to recover the amount from the owner, the beneficial purpose of the act would be diluted. For, generally it is difficult for the claimants to recover the amount from the owner. In such a scenario the claimants would run from pillar to post hoping justice would be done to him / her. 5. Heard the learned counsel for the parties and perused the impugned award. 6. Undoubtedly the Act is a social beneficial piece of legislation. Certainly the Act was meant to protect the interest of the claimants. With the death of the bread-earner, the claimants may find themselves thrown on the footpath and out in the cold. Even an injured person may find it extremely difficult to lead a normal life. Therefore, the world over, the law requires that monetary benefit should be paid to the victims of a vehicular accident so as to ameliorate their condition. Although it is true that neither injury, nor death can be replaced by money, but the plight of the victim can certainly be diluted by monetary compensation. Since the Act has specific purpose, the Act should be interpreted in such a way as to further the purpose behind the law. 7. In a battle between the Insurance Company and the owner, the claimants cannot be left to fend for himself. Keeping the beneficial nature of the provision in the case of Swaran Singh (Supra), the Hon'ble Supreme Court had opined that “a beneficent statute, as is well known, must receive a liberal interpretation. Furthermore, the liability of the insurer is statutory one. The liability of the insurer to satisfy the decree passed in favour of a third party is also statutory.” Relying on the case of Sohan Lal Passi vs. P. Sesh Reddy & Ors. (AIR 1996 SC 266), the Hon'ble Supreme Court had held that the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no licence. (AIR 1996 SC 266), the Hon'ble Supreme Court had held that the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no licence. Thus, where a liability has been established by a judgment, it is not permissible to look beyond the determination in order to establish the basis of the liability. After considering a large number of case law, in the case of Swaran Singh (Supra), Their Lordships of the Hon'ble Supreme Court had observed that “the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for long time. Therefore, Their Lordships have no reason for deviating from the settled principle of law”. Ultimately, Their Lordship summarized the finding as under : 8. 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) 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, have 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. 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 wherefor 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. 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) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree. (ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. (ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants. (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. 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. 9. The case of Swaran Singh (Supra) has been decided by a Full Bench of the Hon'ble Supreme Court. So far, the opinion of the Full Bench has not been diluted by any other Larger Bench. Therefore, the principle laid down in Swaran Singh (Supra) still holds a field. Hence, this Court is also of the opinion that even if there is a breach of policy condition, even then the Insurance Company is liable to satisfy the decree at the first instance. But of course, the Insurance Company shall have the right to recover the compensation amount from the owner and / or driver of the offending vehicle. 10. Therefore, this Court does not find any illegality of perversity in the impugned award. Hence, this appeal is devoid of any merit; it is, hereby, dismissed.