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2013 DIGILAW 745 (RAJ)

New India Assurance Co. Ltd v. Chetan Prakash

2013-04-10

VIJAY BISHNOI

body2013
JUDGMENT 1. - Both these appeals are directed against the judgment and award dated 8.11.2004 passed by the Motor Accident Claims Tribunal, Udaipur (hereinafter referred to as 'the Tribunal') in Claim Cases No. 193/2004 and 192/2004, hence, are decided by this common order. 2. Brief facts of the case are that on 25.1.1998, a Truck No. RJ-26-G-0255, which was being driven by driver Kailash Chandra Gurjar rammed into the shops situated near Udaipur Hospital, Surajpol, Udaipur, resulting in causing destruction to the shops and properties therein, owned by the respondent- claimants. 3. The respondent-claimants, filed claim petitions before the Tribunal while alleging that the truck rammed into the shops on account of rash and negligent driving by the driver of the truck No. RJ-26-G-0255, which was insured with the appellant-Insurance Company and claimed damage for the losses suffered by them. 4. The claim of the respondent No. 1 was contested by the appellants and respondents No. 2 and 3 (owner and driver of the Truck No. RJ-26-G-0255). On the basis of the pleadings of the parties, the learned Tribunal has framed as many as four issues and after taking into consideration the evidence led by the parties decided the claim petitions preferred on behalf of respondent-claimants and held that on account of rash and negligent driving of the driver of the Truck No. RJ-26- G-0255, the same rammed into the shops owned by the respondent-claimants and due to that the shops and properties therein got damaged and awarded compensation of Rs. 38,680/- to the respondent-claimant Bhagwati Lal (respondent No. 1 in CM No. 608/2005) and compensation of Rs. 75,000/- to the respondent- claimant Chetan Prakash, (the respondent No. 1 in CMA No. 609/2005) along with interest at the rate of 6% per annum payable from the date of filing of claim petitions. However, the Tribunal found that the liability of the Insuranc:. Company is only upto Rs. 6,000/- but directed that the insurance Company will make the payment of whole compensation along with interest to the claimants and thereafter can recover the excess amount paid from the owner of the insured vehicle. The learned Tribunal further directed that if the amount of compensation is not paid within a period of three months then in case of default, the interest will be paid at the rate of 9% per annum. 5. The learned Tribunal further directed that if the amount of compensation is not paid within a period of three months then in case of default, the interest will be paid at the rate of 9% per annum. 5. The findings given by the learned Tribunal regarding the rash and negligent driving by the driver of the truck is not under challenge in this appeal, however, the learned counsel for the appellant has assailed the validity of the award passed by the learned Tribunal on other grounds and argued that the learned Tribunal has grossly erred in directing the appellants to make the payment of whole compensation to the respondent-claimants and, thereafter to recover it from respondents No 2 and 3 despite holding that the appellant- Insurance Company is liable to pay compensation to the extent of Rs. 6,000/- for the loss of property to the third party as per the policy. It is contended that such a direction given by the learned Tribunal is contrary to the law laid down by the Apex Court in New India Assurance Company Ltd. v. C.M. Jaya & Ors., reported in 2002 AIR SCW 259 , in Oriental Insurance Co. Ltd. v. Meena Variyal, 2007 ACJ 1284 (SC) and Oriental Insurance Company Ltd. v. Smt. Raj Kumari & Ors . and therefore, the same is liable to be quashed and set aside. 6. The learned counsel for appellant has further argued that the Tribunal is not empowered to direct the Insurance Company to pay compensation with a penalty of higher rate of interest as there is no provision under the Act of 1988 which empowers the Tribunal to give such direction. Learned counsel for the appellant has, therefore, prayed for quashing of the judgment and award dated 8.11.2004 to the extent it directed the appellants to pay the whole compensation in excess of Rs. 6,000/- and the direction of awarding penal interest on the compensation. 7. On the other hand, learned counsel for the respondent-claimant has argued that the judgments relied upon by the counsel for the appellant are not applicable in the present case as the point whether the order for making payment against the Insurance Company for entire amount permitting the Insurance Company to recover the amount from the insured, has not been answered by the Hon'ble Apex Court in the above referred decisions. 8. 8. However, the learned counsel for the respondent-claimant has placed reliance upon the judgment of Hon'ble Apex Court upon the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu & Ors., 2000 AIR SCW 4535 , and the judgment rendered by this Court in case of New India Assurance Company Ltd. v. Rajeev & Anr., 2004 RAA 200 (Raj.) and Sayra Devi (Smt.) & Ors. v. National Insurance Company Ltd. & Ors., 2006 RAR 313 (Raj.) and argued that there is no illegality in the directions of the Tribunal Given to the appellants to make payment of whole compensation to the respondent-claimants and, therefore, recover the excess amount paid over and above therein liability, from the respondents No. 2 and 3. 9. The Hon'ble Apex Court in New India Assurance Company Ltd. v. C.M. Jaya & Ors ., (supra) and other referred cases has held that the comprehensive policy issued on the basis of estimated value of the vehicle does not automatically result in covering the liability with regard to the third party risk for an amount higher than the statutory limit in absence of specific agreement and payment of separate premium to cover third party risk and thereafter further held that the liability of the appellant-Insurance Company is limited. In those judgments, though it was decided by the Hon'ble Apex Court that liability of the appellant Insurance Company is limited but the point whether the order of making payment against the Insurance Company for entire amount and thereafter to recover it from the owner of the insured vehicle, has not been answered. There are earlier judgments of the Hon'ble Apex Court in which it was laid down that even in case of limited liability, a direction can be given to the insurance Company to make payment of whole compensation while allowing insurance Company to recover excess amount from the insured. Therefore, in the facts and circumstances of the case, the judgments referred by the counsel for the appellant has no application in the present case. 10. Therefore, in the facts and circumstances of the case, the judgments referred by the counsel for the appellant has no application in the present case. 10. So far as the contention of learned counsel for appellant regarding penal interest imposed by the learned Tribunal is concerned, the same is having force because as per Section 171 of the Act of 1988, the Tribunal is empowered to award simple interest on the amount of compensation to be awarded on a particular rate and from a particular date, however, there is no scope of retrospective enhancement in the rate of interest in case of default in payment of compensation. 11. The Hon'ble Apex Court in AIR 2004 SC 1581 , National Insurance Co. Ltd. v. Keshav Bahadur & Ors ., has held as under: Though Section 110-CC of the Act (corresponding to Section 171 of the New Act) confers a discretion on the Tribunal to award interest, the same is meant to be exercised in cases where the claimant can claim the same as a matter of right. In the above background, it is to be judged whether a stipulation for higher rate of interest in case of default can be imposed by the Tribunal. Once the discretion has been exercised by the Tribunal to award simple interest on the amount of compensation to be awarded at a particular rate and from a particular date, there is no scope for retrospective enhancement for default in payment of compensation. No express or implied power in this regard can be-culled out from Section 110-CC of the Act or Section 171 of the new Act. Such a direction in the award for retrospective enhancement of interest for default in payment of the compensation together with interest payable thereon virtually amounts to imposition of penalty which is not statutorily envisaged and prescribed. It is, therefore directed that the rate of interest as awarded by the High Court shall alone be applicable till payment, without the stipulation for higher rate of interest being enforced, in the manner directed by the Tribunal. 12. In view of above discussion, the appeals preferred by the appellant are partly allowed and the directions given by the Tribunal with regard to payment of interest at the rate of 9% in default are set aside. The other part of the judgment and awarded dated 8.11.2004 shall remain same.Appeal Party Allowed. *******