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Rajasthan High Court · body

2022 DIGILAW 38 (RAJ)

New India Assurance Co. Limited v. Lalchand

2022-01-05

SUDESH BANSAL

body2022
ORDER 1. This appeal has been filed by the appellant New India Assurance Company Limited, assailing the judgment dated 30.11.2015 in relation to finding on issue No.3 whereunder the Tribunal although, has exonerated the Assurance Company due to alleged breach of condition of insurance policy, however, the Assurance Company has been directed to first pay the compensation to the claimants and then allowed, to recover the same from the owner and driver of the vehicle. 2. The appellant New India Assurance Company has deposited the entire compensation amount, in compliance of the interim order dated 19.04.2017 passed in the present appeal. 3. Notices were issued. The respondent-claimant has been served. Though, the notices of respondent Nos.2 and 3, driver and owner are not yet served. 4. The claimant has filed an application for vacation of stay order and for seeking disbursement of the compensation amount deposited by the Insurance Company. 5. On the joint request of counsel of the appellant and the respondent-claimant, the appeal is heard finally though without affecting the rights of respondent Nos.2 and 3, if any. 6. In the present appeal, the findings in relation to issue No.3 have been assailed on the ground that on the date of accident i.e. 30.01.2010, the vehicle in question was not having a valid and effective permit. As a matter of fact the vehicle in question Tempo No. RJ-02-PA-0713, plying from Khairthal to Kishangarhbas met with an accident and the permit for the said vehicle was only for the route from Leyland factory to Bakhtal Chowki and not for the route from Khairthal to Kishangarhbas. This factual aspect has been taken into account by the Tribunal and having no permit for the route, where the accident occurred, the same was found in breach of condition of the Insurance Policy. As such the Insurance Company has been exonerated from the liability to indemnify the award. However on the principal of pay and recover and further to ensure compliance of the payment of compensation to the claimant, it has been observed that the Insurance Company would pay the compensation awarded in favour of the claimant, however it would be entitled to recover the compensation from the owner and driver of the vehicle. 7. However on the principal of pay and recover and further to ensure compliance of the payment of compensation to the claimant, it has been observed that the Insurance Company would pay the compensation awarded in favour of the claimant, however it would be entitled to recover the compensation from the owner and driver of the vehicle. 7. Counsel for the appellant New India Assurance Company contends that ones the Tribunal has recorded a finding in favour of the Insurance Company that due to having no valid permit for the route where the accident occurred, there is a breach of the condition of policy, then the Insurance Company should not have been directed to pay the compensation and then to recover from the owner and driver of the vehicle. The contention of the appellant is that the Insurance Company ought to have been exonerated from making payment of compensation at all. The counsel for the appellant submits that on this ground alone, the findings on issue No.3 are liable to be reversed and Insurance Company should be exonerated without passing any order to pay and recover. 8. The counsel appearing for the respondent-claimant has argued that the issue raised by the counsel for the appellant in the present appeal has already been settled by the Hon’ble Supreme Court In case of National Insurance Co. Ltd. Versus Challa Bharthamma and Others. Reported in (2004) 8 SCC 517 . It has categorically been held in the judgment that the Motor Vehicle Act, 1988 is a beneficial piece of legislation, it is proper for the insurer to satisfy the award, though in law it has no liability. In the case of Challa Bharthamma (supra), the Hon’ble Supreme Court has considered the similar issue and after dealing with the provisions of Sections 66 & 149(2) of the Act of 1988, it has been observed as under:- "12. High Court was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed at a better pedestal vis-a-vis one who has a permit, but has violated any condition thereof. Plying of a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) defence is available to the insurer on that aspect. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed at a better pedestal vis-a-vis one who has a permit, but has violated any condition thereof. Plying of a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) defence is available to the insurer on that aspect. The acceptability of the stand is a matter of adjudication. The question of policy being operative had no relevance for the issue regarding liability of insurer. High Court was, therefore, not justified in holding the insurer liable. 13. The residual question is what would be the appropriate direction. Considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability. In some cases the insurer has been given the option and liberty to recover the amount from the insured. For the purpose of recovering the amount paid from the owner, 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 owner was the subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. 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 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 realization by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle i.e. the insured. In the instant case considering the quantum involved we leave it to the discretion of the insurer to decide whether it would take steps for recovery of the amount from the insured." 9. In the instant case considering the quantum involved we leave it to the discretion of the insurer to decide whether it would take steps for recovery of the amount from the insured." 9. Learned counsel for the respondent-claimant further submits that aforesaid proposition of law has further been fortified in the judgment of Amrit Paul Singh and Another versus Tata AIG General Insurance Company Limited and others reported in (2018) 7 SCC 558 and in case of Shamanna and Another versus Divisional Manager, Oriental Insurance Company Limited and Others reported in (2018) 9 SCC 650 . Thus, learned counsel for the claimant submits that once the issue has already been settled and it is no more res integra that the Insurance Company would be liable to pay the compensation to the claimants reserving the right to recover the same from the owner of vehicle, there is no reason to interfere with the findings of issue No.3 recorded by the Tribunal. The findings of issue No.3 are well within jurisdiction and within the limits of law as laid down by Hon’ble Supreme Court in the aforesaid judgments (supra). 10. After hearing counsels for both the parties, the counsel for the appellant also does not dispute that the proposition of law laid down in case of Challa Bharthamma (supra), still holds the field and the issue raised by the appellant-Insurance Company is squarely covered by the ratio of the said judgment. 11. In view of above, this Court is also of the opinion that the issue raised by the Insurance Company is squarely covered by the judgment of Challa Bharthamma (supra) and other subsequent judgments passed by Hon’ble the Supreme Court, therefore, there is no need to interfere with the findings of issue No.3. 12. As a consequence, the appeal is devoid of merits and is accordingly dismissed. There is no order as to costs. 13. The record of Tribunal be sent back. 14. The compensation amount deposited by the Insurance Company may be released to the respondent-claimant. It is made clear that this order will not affect the rights of respondent Nos.2 & 3 (owner and driver of the vehicle) if any manner. 15. In view of above, the application for vacation of stay order is disposed of as there is no need to pass any separate order. The other pending applications, if any, are also stand disposed of.