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2022 DIGILAW 1183 (AP)

Reliance General Insurance Company Ltd. v. M. Bhanu Sarath Sarma

2022-11-02

GANNAMANENI RAMAKRISHNA PRASAD, U.DURGA PRASAD RAO

body2022
JUDGMENT : (U. Durga Prasad Rao, J.) 1. M.A.C.M.A No.252/2017 and M.A.C.M.A.No.3035/2017 are filed by the Insurance Company and claimants respectively challenging the judgment dated 26.11.2016 in M.V.O.P.No.586/2012 passed by the Principal Motor Accidents Claims Tribunal, Nellore granting compensation of Rs.42,55,000/-against the claim of Rs.75,00,000/-for the death of one Cherukupalli Sailaja Rani in a lorry accident. 2. The claimants are the son and parents of the deceased who filed MVOP No.586/2012 against the owner and insurer of the offending lorry bearing registration No.AP-21-X-2898. Since both the appeals arose out of the same MVOP, they are disposed of by this common judgment. 3. Parties in these appeals are referred to as they are arrayed in M.V.O.P.No.586/2012. 4. Heard arguments of Sri P. Ramanjaneyulu, learned counsel for appellant in MACMA No. 252/2017 and Sri G. Venkateswarlu, learned counsel for appellants in MACMA No.3035/2017. 5. Severely fulminating the judgment of the lower tribunal, Sri P. Ramanjaneyulu, learned counsel for insurance company/Appellant in M.A.C.M.A.No.252/2017 would argue that by the date of accident, the crime vehicle bearing registration No.AP-21-X-2898 was not covered with valid permit and in spite of noting the said fact, the tribunal has, instead of exonerating the insurance company of its liability, erroneously fastened primary liability on it with a direction to pay the compensation to claimants at first and then recover the same from the owner of the offending lorry later. Learned counsel would emphasize that lack of the permit issued by the concerned RTA authorities amounts to violation of the terms of the insurance policy and thereby the liability of the insurance company ceases and hence the question of payment of compensation at first and recovering later does not arise. He reiterated that the lower tribunal ought to have directed the owner of the lorry to pay compensation by exempting the insurance company from its liability. To buttress his argument he placed reliance on National Insurance Co. Ltd., v. Challa Bharathamma, [(2004) ACJ 2094] and Amrit Paul Singh v. Tata Aig General Insurance Co. Ltd., [(2018) ACJ 1768]. 6. Nextly learned counsel argued that the lower tribunal committed gross mistake in fixing the monthly income of the deceased at Rs.30,000/-on mere conjecture and thereby smacked stout compensation upon the insurance company. He would argue that there is no legal or evidentiary basis to fix a high notional income of Rs.30,000/-per mensem. Ltd., [(2018) ACJ 1768]. 6. Nextly learned counsel argued that the lower tribunal committed gross mistake in fixing the monthly income of the deceased at Rs.30,000/-on mere conjecture and thereby smacked stout compensation upon the insurance company. He would argue that there is no legal or evidentiary basis to fix a high notional income of Rs.30,000/-per mensem. Instead, going by series of income tax returns of the deceased filed by the petitioners, the tribunal ought to have fixed a lesser and reasonable amount as monthly earnings of the deceased. Learned counsel thus, at the first instance, prayed to allow the appeal No.252 of 2017 and exonerate the insurance company from its liability and alternatively to re-assess the compensation in accordance with law and direct the insurance company to pay and recover. 7. In oppugnation, Sri G. Venkateswarlu, learned counsel for appellants/claimants in MACMA 3035/2017 would firstly argue that the tribunal has rightly held that mere lack of permit would not absolve the insurance company of its liability because the occurrence of the accident had no direct nexus with the lack of permit but the accident was due to the rash and negligent driving by the driver of the 1st respondent and more over, the offending vehicle was covered with insurance policy by the date of accident. Hence the tribunal directed the insurance company to pay compensation at first and recover the same later from the owner of the offending vehicle. He would emphasize that the said finding is backed by the relevant case law on the subject and hence the same needs no interference. He would further argue that in fact the decisions relied upon by the learned counsel for insurance company also reiterate the principle of pay and recover in cases of violation of terms of the policy and hence the finding of the lower tribunal need not be re-visited. 8. Nextly he argued that the tribunal granted very low compensation in spite of claimants’ placing cogent material regarding the earnings of the deceased. In expatiation he would submit that the claimants produced income tax returns of the deceased for the five years preceding her death which would show that her income was gradually increasing year by year. Considering this fact the tribunal ought to have fixed a reasonable amount as her monthly income instead of a lesser amount of Rs.30,000/-, by which, the compensation was drastically reduced. Considering this fact the tribunal ought to have fixed a reasonable amount as her monthly income instead of a lesser amount of Rs.30,000/-, by which, the compensation was drastically reduced. Further, the tribunal has not added future prospects of the deceased to her income and due to this omission also the compensation was plummeted. He thus prayed to re-assess the compensation. 9. The points for consideration in these appeals are: (1) Whether the insurance company deserves to be exonerated completely without a direction to pay and recover the compensation from the owner of the offending lorry ? (2) Whether the compensation awarded by the lower tribunal is just and reasonable or requires re-assessment ? 10. POINT No.1 A perusal of the judgment shows that as per Ex.X3, national permit was issued to the offending lorry of the 1st respondent for the period 30.12.2005 to 29.12.2010, whereas the accident resulting in death of the deceased was occurred on 03.01.2011. Thereafter, the owner of the offending lorry /1st respondent in MVOP No.586/2012 applied for renewal of the permit to his lorry on 25.1.2011 and a fresh permit seems to be issued for the period from 25.01.2011 to 24.01.2016. Thus, admittedly the offending lorry was not covered with the permit on the crucial date of accident. Be that as it may, Ex.B1 – policy copy shows that the offending vehicle was covered with policy from 16.12.2010 to 15.12.2011 i.e., covering the date of accident. Taking these facts into consideration and observing that the occurrence of the accident has no direct nexus with the lack of permit but it was due to the rash and negligent driving by the driver of the 1st respondent, the tribunal gave a finding that insurance company has to pay the compensation at first and later recover from the owner of the offending lorry. In this context, the lower tribunal relied upon the decision of Hon’ble Apex Court in S. Iyyapan v. M/s United India Insurance, [2013 AIR (SC) 2262 {Civil Appeal No.4834 of 2013 (Arising out of Special Leave Petition (Civil) No.5091 of 2009) dated 1st July, 2013}]. We find no irregularity or illegality in the said finding. Since the policy was in force, the insurance company cannot repudiate its liability on the mere ground that there was no permit to the offending vehicle as on the date of accident. We find no irregularity or illegality in the said finding. Since the policy was in force, the insurance company cannot repudiate its liability on the mere ground that there was no permit to the offending vehicle as on the date of accident. Having regard to the fact that the Motor Vehicles Act, 1988 is a beneficial legislation and the victim had no role in the violation of the terms of the policy, we hold that the tribunal was right in directing the insurance company to pay compensation at first and later recover from the owner of the offending vehicle. In the two decisions relied upon by the Insurance Company, the issue was whether the insurance company was liable to pay compensation when the offending vehicle was not covered with valid permit by the date of accident. In those two decisions Hon’ble Apex Court held that the insurance company cannot be fastened with liability, however, if the policy was in force by the date of accident, the insurance company has to pay compensation and later recover from the owner of the offending vehicle. A fortiori, we find no force in the contention of the insurance company and hold that it has to pay compensation at first and later recover from the owner of the offending lorry treating this judgment as a decree in its favour. 11. POINT No.2: Regarding this point, while it is the contention of the insurance company that the tribunal has fixed high compensation, the claimants would argue that the tribunal granted very low compensation, without taking into consideration the future prospects of the deceased. So far as the occupation and earnings of the deceased are concerned, a perusal of Ex.A6 to A10 would indicate that the deceased was in the business of maintenance of restaurants, guest houses and apartments etc., and making her earnings. The income tax returns were filed for the period 2005-2006 to 2009-2010 i.e., for five years preceding the death of deceased. This record would show, there was a steady increase in the income of the deceased. The tribunal though took note of this fact, however notionally fixed her income as Rs.30,000/-per month on the premise that there was no stable and consistent income for the deceased. In our view the tribunal committed a wrong in notionally fixing the monthly income of the deceased leaving the reliable income data. The tribunal though took note of this fact, however notionally fixed her income as Rs.30,000/-per month on the premise that there was no stable and consistent income for the deceased. In our view the tribunal committed a wrong in notionally fixing the monthly income of the deceased leaving the reliable income data. It should be noted that the income tax returns cover the period prior to the death of deceased and hence there cannot be any manipulation in anticipation of the death of the deceased in future. Therefore the income projected in Ex.A6 to A10 can be safely relied upon. In that view, the tribunal ought to have fixed the earnings of the deceased basing on the average income in the 5 preceding years. It would be more logical than the notional fixation. The annual income of the deceased on average basis comes to Rs.2,79,839/- (Rs.98,467 + Rs.1,21,709 + Rs.2,01,640 + Rs.2,15,380 + Rs.7,62,000 / 5). The said amount is rounded of to Rs.2,80,000/-. Admittedly the tribunal has not taken the future prospects of the deceased. In National Insurance Company Limited v. Pranay Sethi, [ AIR 2017 SC 5157 ], Hon’ble Apex Court held that in case the deceased was self-employed or on fixed salary an addition of 40% of the established income should be made where the deceased was below the age of 40 years. In the instant case the deceased was 29 years old. Therefore, adding 40%, the annual income of the deceased comes to Rs.3,92,000/- (Rs.2,80,000 + Rs.1,12,000). From this 1/3rd is deducted towards personal and living expenses and balance amount of Rs.2,61,333/-is taken as the annual contribution of the deceased to her family. Multiplying the said amount with the multiplayer 17, we will arrive at the loss of dependency which comes to Rs.44,42,666/- (Rs.2,61,333/-X 17). Thus the total compensation payable to the claimants can be stated as follows: (i) Loss of dependency = Rs.44,42,666=00 (ii) Funeral expenses = Rs.25,000=00 (iii) Loss of estate = Rs.50,000=00 (iv) Loss of love and affection = Rs.1,00,000=00 TOTAL = Rs.46,17,666=00 Thus the claimants are entitled to a total compensation of Rs.46,17,666/-with proportionate costs and interest at 7.5% p.a. from the date of MVOP till the date of realization. It is brought to the notice of this Court that pending appeals, the 1st claimant became major and 2nd claimant namely Cherukupalli Vivekanand expired on 02.10.2020. 12. It is brought to the notice of this Court that pending appeals, the 1st claimant became major and 2nd claimant namely Cherukupalli Vivekanand expired on 02.10.2020. 12. In the result: (i) MACMA No.252/2017 filed by the insurance company is dismissed. (ii) MACMA No.3035/2017 filed by the claimants is partly allowed and compensation awarded by the lower tribunal is enhanced from Rs. 42,55,000/-to Rs.46,17,666/-with proportionate costs and simple interest at 7.5% p.a. from the date of MVOP till the date of realization. The insurance company shall deposit the compensation amount within two months from the date of this common judgment and recover the same from the owner of the offending lorry i.e., the 1st respondent in MVOP No.586/2012. Failing to deposit the amount, the claimants will be at liberty to take out execution against the owner and insurance company of the offending lorry. The apportionment of the compensation amount made by the tribunal among the claimants will hold good, however the compensation amount of the deceased 2nd claimant shall be vested in the 3rd claimant who is his wife. As a sequel interlocutory applications, if any pending, shall stand closed.