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2014 DIGILAW 440 (MAD)

Oriental Insurance v. M. Thennarasu

2014-02-21

R.MAHADEVAN

body2014
Judgment : 1. This Civil Miscellaneous Appeal has been filed by the Insurance company questioning the liability of the Insurance Company to pay the award amount in the absence of driving licence to the rider of the vehicle responsible for the accident and the cross-objection has been filed by the claimant seeking enhancement. 2. The case of the claimant is that when he was travelling in his two wheeler bearing No TN 29 AZ 5663, the rider of another two wheeler TN 29 AZ 5276 came in the opposite side in a rash and negligent manner and crashed on the claimants bike. Hence, the claimant filed the claim petition seeking a compensation of Rs.10,00,000/- for the injuries suffered by him as a result of the accident that took place on 11.09.2006. 3. The owner of the offending vehicle has not contested the matter. The Insurance company claimed that the rider of the vehicle had no valid driving licence and therefore, sought for absolving their liability. 4. The Tribunal after considering the oral as well as documentary evidences before it awarded a sum of Rs.1,27,025/- with costs and interest @7.5% per annum and also placing reliance upon the Judgment reported in ICICI LOMBARD GENERAL INSURANCE COMPANY LTD., CHOTTA BAI CENTRE, CHENNAI v. AHILANDAM & OTHERS (2010 (1) TNMAC 613), directed the Insurance company to pay the amount and recover the same from the Owner of the Vehicle. 5. Heard both sides and perused the records of the Tribunal. 6. The Learned counsel for the Insurance company emphasized that when there is a violation of a basic policy condition, the insurance company cannot be made liable to pay the compensation inspite of a valid insurance policy during the period of accident. The counsel further argued that having found that the rider of the two wheeler responsible for accident had no driving licence, the Tribunal ought not have directed the insurance company to pay and recover from the owner. 7. Per contra, the Learned Counsel for the claimant has contended that there is nothing perverse in the award of the Tribunal below with regard to the direction to the insurance company to pay and recover from the owner. The counsel also claimed that the legal position that continues as on date is that the Insurance company has to pay and then recover from the owner in so far as accidents involving third parties. The counsel also claimed that the legal position that continues as on date is that the Insurance company has to pay and then recover from the owner in so far as accidents involving third parties. With regard to the quantum, the counsel has argued that the compensation awarded by the Tribunal under various heads is paltry, that the Tribunal ought not to have fixed the disability at 40%, that the Tribunal failed to award any amount towards loss in earning capacity adopting the multiplier and therefore sought an enhancement by Rs.1,00,000/-. 8. In reply, the learned counsel for the insurance company relying upon the judgments reported in BRANCH MANAGER, NEW INDIA ASSURANCE CO LTD. v. SALAT MARY (2006 ACJ 675), UNITED INDIA INSURANCE CO. LTD. v. A.VICTORIA (2001 ACJ 196), UNITED INDIA INSURANCE CO. LTD. v. RAJAMMAL (1993 ACJ 486) and GOVINDARAJAN,K.P. v. SECRETARY, REGIONAL TRANSPORT AUTHORITY, NAMAKKAL (2004 (1) TNMAC (DB) 450), raised a preliminary objection regarding the maintainability of the cross-objections and contended that when the quantum has not been challenged by the Insurance company, no enhancement can be sought for by the claimant by way of cross-objections. 9. In further reply, the counsel for the claimant has relied upon the judgment of the Apex Court reported in HARI SHANKAR RASTOGI v. SHAM MANOHAR & OTHERS (2006-1-LW 318) and argued that the cross-objections are maintainable. 10. In so far as the appeal is concerned, there is no dispute, in the fact, that the vehicle in question was covered by a valid insurance policy at the time of accident. Upon perusal of the records, it can be seen that neither the owner of the vehicle nor the rider of the bike Yamaha Crux has responded to the notice of the Insurance Company calling upon them to produce the licence. Therefore, the Tribunal has inferred that the rider of the vehicle had no valid licence. However, holding that the claimant is a third party to the insurance policy, the Tribunal, relying upon the Judgment reported in 2010 (1) TNMAC 613 and the fact that the reference to the Larger Bench is pending before the Apex Court, has directed the Insurance Company to pay the award amount and recover the same from the owner. 11. The facts in the judgment relied upon by the counsel for the appellant in 2010 (1) TNMAC 613 is identical to the case on hand. 11. The facts in the judgment relied upon by the counsel for the appellant in 2010 (1) TNMAC 613 is identical to the case on hand. No doubt, when a person drives a motor vehicle without licence, it is a breach of the basic condition of a policy. In cases, when there was a licence but with some defect or even in cases where there is a doubt regarding the genuineness of the licence, the court can direct the Insurance company to pay and recover. 12. The contract of Insurance has evolved many changes and has, ultimately, ended up with Comprehensive Policy coverage indemnifying the owner against any liability towards damage to vehicle, insured, third parties, etc. Chapter X and XI of the Motor Vehicles Act 1988 is a social welfare legislation. The contract of insurance has to commemorate the provisions of the Motor Vehicles Act. Chapter XI of the Motor Vehicles Act deals with various provisions relating to third party risks. Section 149 mandates certain circumstances under which the Insurance Company is liable to satisfy the judgments and awards against persons insured in respect of third party risks. A reading of section 149 would imply that the liability of the Insurance company to satisfy the award is not absolved even in cases where the driver had no driving licence. The section only contemplates that notice of the claim or the award, as the case may be, must be given and the Insurance company must be permitted to defend any such claim. It casts a duty upon the Insurance company to satisfy the award amount and at the same time gives a right to recover the same from the insured. The Terms and conditions of the Policy conditions have been left open to the parties to the contract of Insurance to decide. But such policy cannot act against the intent or in other words the purpose for which Chapters X and XI of the Motor Vehicles Act were enacted. When the insured himself has driven or used the vehicle, in breach of the Policy Conditions, the insurance company cannot be made liable. However, the liability of the insurance company with regard to a third party is completely different from the liability to the insured. In so far as the third party is concerned, it is a dispute between the owner of the vehicle and the Insurance company. However, the liability of the insurance company with regard to a third party is completely different from the liability to the insured. In so far as the third party is concerned, it is a dispute between the owner of the vehicle and the Insurance company. The third party is only a beneficiary of the Insurance Policy. 13. But the situation becomes uncanny considering that section 3 contemplates that no person shall drive any motor vehicle without an effective driving licence and section 149, provides for satisfaction of the award by Insurance Company even when there is a breach of policy condition. 14. Every insurance policy will have a condition that the company would not be liable if the driver of the vehicle involved in the accident did not possess a valid driving licence at the time of Accident. This condition is precisely against the intent of Chapter XI of the Motor Vehicles Act. Numerous claims involving the liability of Insurance Company when there is a patent violation of a policy condition are now pending. Therefore, a situation has now emerged to strike a balance by protecting the interest of the Insurance Company and also implement the intent of Chapter XI of the Motor Vehicles Act. This is precisely why the reference has been made to the Larger Bench of the Apex Court. Certainly to meet out the requirement of the hour, the Insurance Companies can impose some conditions in the contract of Insurance whereby some extra premium can be collected for indemnifying the insured against the liability towards third party risks in situations where the driver of vehicle has no driving licence or for breach of other conditions and can also restrict the liability of the Insurance Company in terms of quantum in such cases. The Insurance Companies must not enter into a contract of Insurance unless the Insured produces a valid driving licence to drive the subject vehicle. 15. In this case, unarguably, the claimant is a third party to the insurance policy. The Insurance Companies must not enter into a contract of Insurance unless the Insured produces a valid driving licence to drive the subject vehicle. 15. In this case, unarguably, the claimant is a third party to the insurance policy. In view of the pendency of the reference regarding the liability of the Insurance Company before the Larger Bench of the Apex Court and considering the consistent stand taken by this Court and many other courts and considering the facts of the case, this court is not inclined to interfere with the award of the Tribunal and the direction of the Tribunal to the Insurance company to satisfy the award and recover the same from the owner of the vehicle is upheld. 16. With regard to the maintainability of the cross-objections, Various Division Benches of this Court in the judgments reported in 2006 ACJ 675, 2001 ACJ 196 and 1993 ACJ 486, 2004 (1) TNMAC 450, have held that when the appeal has not been preferred challenging the quantum, the cross-objections for enhancement is not maintainable. 17. In the Judgment reported in 2006 -1 LW 318, relied upon by the counsel for the claimant, the Hon’ble Apex Court has held that cross-objection, being in the nature of an appeal would survive even if the appeal is withdrawn by the appellant. The ratio has been laid down by the Apex Court in para 5 as follows: “ 5. Thus, it is clear that cross objection is like an Appeal. It has all the trappings of an Appeal. Even when the Appeal is withdrawn or is dismissed, cross-objection can still be heard and determined” 18. The Hon’ble Apex Court has followed another judgment of the Apex Court in SUPERINTENDING ENGINEER AND OTHERS v. B.SUBBA REDDY ( 1999 (4) SCC 423 ), wherein it was held as follows:- “From the examination of these judgments and the provisions of Section 41 of the Act and Order 41 Rule 22 of the Code, in our view, the following principles emerge: (1) Appeal is a substantive right. It is a creation of the statute. Right to appeal does not exist unless it is specifically conferred. (2) Cross-objection is like an appeal. It has all the trappings of an appeal. It is a creation of the statute. Right to appeal does not exist unless it is specifically conferred. (2) Cross-objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and the provisions of Rule 1 of Order 41 of the Code, so far as these relate to the form and contents of the memorandum of appeal apply to cross-objection as well. (3) Court fee is payable on cross-objection like that on the memorandum of appeal. Provisions relating to appeal by an indigent person also apply to cross-objection. (4) Even where the appeal is withdrawn or is dismissed for default, cross-objection may nevertheless be heard and determined. (5) The respondent even though he has not appealed may support the decree on any other ground but if he wants to modify it, he has to file cross-objection to the decree which objections he could have taken earlier by filing an appeal. Time for filing objection which is in the nature of appeal is extended by one month after service of notice on him of the day fixed for hearing the appeal. This time could also be extended by the court like in appeal. (6) Cross-objection is nothing but an appeal, a cross-appeal at that. It may be that the respondent wanted to give a quietus to the whole litigation by his accepting the judgment and decree and order even if it was partly against his interest. When, however, the other party challenged the same by filing an appeal the statute gave the respondent a second chance to file an appeal by way of cross-objection if he still felt aggrieved by the judgment and decree or order." 19. Applying the ratio laid down by the Apex Court, I hold that the cross-objections as maintainable and proceed to hear the claim for enhancement. 20. The learned counsel has argued that the reduction of disability from 60% to 40% is bad in law and applying the multiplier, the Tribunal ought to have awarded compensation towards loss in earning capacity. 21. In case of Injuries which have not resulted in 100% permanent disablement, the multiplier cannot be adopted. The disability has been reduced by the Tribunal only because the claimant has not taken all the possible steps for full and speedy recovery. This court does not find any error in the same. 21. In case of Injuries which have not resulted in 100% permanent disablement, the multiplier cannot be adopted. The disability has been reduced by the Tribunal only because the claimant has not taken all the possible steps for full and speedy recovery. This court does not find any error in the same. Further factually, it has been found by the Tribunal that the claimant has commenced to work, after recovery. Therefore, there is no loss in earning capacity. With regard to compensation for permanent disability, the Tribunal has fixed the compensation at Rs.2,000/- for each percentage. In view of the fact that the petitioner is a teacher, considering that he may have to spend long hours, standing, the compensation for continuing disability is enhanced by Rs.500/- for 1% and for 40%, it comes to Rs.20,000/-. 22. With regard to medical expenses, the Tribunal has awarded compensation of Rs.24,337/- towards medical expenses. However, the claimant has marked exhibit A7, wherein the hospital has issued a certificate that the actual expenses incurred by the appellant towards the treatment is Rs.26,537/-. Further, for reduction of disability, the Tribunal has considered that the claimant has taken country made treatment. Therefore, there is a possibility that the claimant must have spent some amount for the same. In view of the fact that the disability is permanent, the claimant may have to take further medication. Considering the above aspect, the compensation for medical expenses is fixed at Rs.50,000/-. Apart from the above claims, this court does not find any irregularity in the award of the Tribunal in awarding compensation under any other heads. 23. The appellant has already deposited the award amount with accrued interest. The enhanced amount of Rs.45,663/- with interest at 7.5% from the date of award shall be deposited within four weeks by the appellant and the appellant shall be entitled to recover the same from the owner of the vehicle as per the mode of recovery mentioned in paragraph 7 of the judgment in ORIENTAL INSURANCE CO. LTD. v. SHRI.NANJAPPAN AND OTHERS ((2004) ACC 524 (SC)), which is extracted hereunder:- "For the purpose of recovering the compensation amount from the insured, the insurer shall not be required to file a suit. LTD. v. SHRI.NANJAPPAN AND OTHERS ((2004) ACC 524 (SC)), which is extracted hereunder:- "For the purpose of recovering the compensation amount from the insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court as if the dispute between the insurer and the insured was the subject matter of determination before the Tribunal and as if the issue is decided against the owner and in favour of the insurer. A notice shall be issued to the insured to furnish security for the entire amount. The offending vehicle shall be attached as a part of the security. If necessity arises, the Executing Court shall take assistance of the concerned Regional Transport Authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the insured/owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realisation by disposal of the securities to be furnished or from any other property of the insured." In the result, the Civil Miscellaneous Appeal is dismissed and the Cross-objection is partly allowed. No costs.