Allowed

United India Insurance Co. Ltd. v. Raksha Devi

Himachal Pradesh HC19 Jul 2024FAO/355/2016

Case brief

AI extract

What is this about?

In a如其 appeal against a Motor Accident Claims Tribunal award, the High Court held that an insurer is not liable for death of a vehicle occupant under an 'Act Only' policy. Liability was instead imposed jointly and severally on the registered owner, transferee, and driver as the policy did not cover occupants.

What did the court decide?

Insurance company exonerated from liability; compensation payable by registered owner, transferee, and driver jointly and severally.

United India Insurance Co. Ltd. Vs… — Pension and Retirement Benefits | Himachal Pradesh HC (2024)

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2024:HHC:5536

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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FAO No.355 of 2016 Reserved on: 10^th July, 2024 Decided on: 19^th July, 2024 ------------------------------------------------------------------------------------- United India Insurance Company Ltd. …..Appellant

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Versus Raksha Devi and others .....Respondents -------------------------------------------------------------------------------------

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Coram

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Ms. Justice Jyotsna Rewal Dua

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Whether approved for reporting? Yes.

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For the Appellant:	Mr. Ashwani K. Sharma, Senior Advocate with Mr. Ishan Sharma, Advocate.
For the Respondents:	Mr. Malay Kaushal, Advocate, for respondents No.1 to 6.
------------------------------	Mr. Ajay Kumar Dhiman, Advocate, for respondents No.8 and 9. ------------------------------------------------------

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Jyotsna Rewal Dua, Judge

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One Sh. Piar Singh (husband of claimant No.1, son of claimant No.6 and father of claimants No.2 to 5) was travelling in a Car on 21.02.2010. Smt. Santosh (respondent No.1 in the claim petition) was the registered owner of the vehicle, who had statedly transferred the ownership of vehicle to Sh. Pawan Kumar (respondent No.4)

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in the claim petition). The vehicle driven by Sh. Achhar Pal

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Whether reporters of print and electronic media may be allowed to see the order?

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(respondent No.2 in the claim petition) met with an accident, resulting in Piar Singh’s death.

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In the claim petition, learned Motor Accident Claims Tribunal (in short ‘Tribunal’) held that the accident was caused on account of rash and negligent driving of the vehicle by Sh. Achhar Pal (respondent No.2 in the claim petition). For assessing the quantum of compensation, learned Tribunal held that the evidence on record established that the deceased was a skilled worker, hence, his income was taken as Rs.6000/- per month. Total compensation amount was computed as under:-

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Income taken	Rs.6,000/-
50% addition in income on account of futureprospects	Rs.3,000/-
Total income	Rs.9,000/-
Deduction (1/4)	Rs.9,000-2,250/-	Rs.6750/- per month
Annual income	6750x12	Rs.81,000/-
Multiplier of 15	81000x15	Rs.12,15,000/-
Loss of Estate	Rs.1,00,000/-
Funeral Expenses	Rs.50,000/-
Loss ofConsortium	Rs.1,00,000/-
Loss of love and affection	Rs.1,00,000/-
Towards expectationof life	Rs.1,00,000/-	Rs.4,50,000/-
Totalaward	12,15,000+4,50,000	Rs.16,65,000/-

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Liability to pay the compensation amount was fastened upon the Insurance-Company (respondent No.3 in the claim petition). Feeling aggrieved, the insurer has instituted the present appeal.

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Parties hereinafter are being referred to

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according to their status before the learned Tribunal.

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2. Heard learned counsel for the parties and

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considered the case file as well as the record.

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3. Sh. Ashwani K. Sharma, learned Senior Counsel for the appellant-Insurer has raised mainly twofold submissions:-

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(I). On quantum of compensation.

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(II). On liability of the insurer to pay the

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compensation.

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4. The above two points are being discussed separately hereinafter.

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4(A). Quantum of compensation:-

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4(A)(i). The contention raised by the insurer is that the learned Tribunal has wrongly assessed the income of the deceased as Rs.6000/- per month. Piar Singh was a skilled worker, who lost his life in the accident on 21.02.2010. At that time, as per the minimum wages notification, Rs.138.60/- were the daily wages for the skilled worker or in other words, Rs.4158/- per month were payable to a skilled worker under the minimum wages notification dated 01.02.2010, issued by the Department of Labour and Employment, Himachal Pradesh. Hence, according to the learned Senior Counsel for the appellant, the computation of the monthly income of the deceased at Rs.6000/- was unwarranted.

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4(A)(ii). It is a fact that the deceased was in an unorganized sector. In Civil Appeal No.5461 of 2023

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(Kubrabibi & Ors. Vs. Oriental Insurance Co. Ltd. &

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Ors.) , decided on 28.08.2023, it was claimed that the deceased aged 35 years at the time of motor accident was working as a Mechanic and his monthly income from all sources was Rs.9000/-. The High Court reduced the monthly income to Rs.3000/-. Hon’ble Apex Court deprecated the approach of assessing the income on the basis of strict evidence and observed that the family members, who were before the Court seeking compensation on account of death of their bread earner who was not employed in a secure job, would not be in a position to secure all evidence of his income. It was held as under: -

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“It is unfortunate that in a case of the present nature, the High Court while assessing the evidence available on record, has sought to seek strict evidence with regard to the income of the deceased. When the wife and children of the deceased were before the Court, they would not be in a position to secure all evidence when the deceased earning member was not in secure job. Despite the same we note that in the instant case, a perusal of the judgment and award passed by the MACT, would indicate that an effort was made to examine the owner of the two wheeler repair shop where the deceased was said to be working. The High Court has discarded the same on the ground that no documents, to indicate that he is the owner of the shop and he had employed three persons, has been produced.

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In a matter of the present nature where the compensation is sought and even in the absence of definite proof of the income, the social status of the

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deceased is to be kept in perspective where such persons are employed in unorganized sector and the notional income in any event is required to be taken into consideration. The fact that the deceased had three dependents to be cared for and had claimed that he was working as a mechanic, the amount payable to an unskilled labour, cannot be the basis and in that circumstance when he was a skilled person, the daily income at Rs.200/- per day in any event could have been taken even if the income from jeep transport business was discarded for want of documents. More so in a circumstance, where the MACT had referred to the evidence available on record and then arrived at its conclusion, the re-appreciation of evidence by the High Court is without being sensitive to nature of lis before it.”

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In view of the above, assessment of income of

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the deceased at Rs.6000/- per month is just and proper. On the basis of the income of the deceased at Rs.6000/per month, the total compensation as per the decision rendered by the Hon’ble Apex Court in National Insurance Company Ltd. Vs. Pranay Sethi & Others¹ works out as

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under:-

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Income taken	Rs.6,000/-
40% addition in income on account of futureprospects	Rs.2,400/-
Total income	Rs.8,400/-
Deduction (1/4)	Rs.8,400-2,100/-	Rs.6300/- per month
Annual income	6300x12	Rs.75,600/-
Multiplier of 15	75600x15	Rs.11,34,000/-
Loss of Consortium	Rs.2,40,000/-
Loss of Estate	Rs.15,000/-
Funeral Expenses	Rs.15,000/-	Rs.2,70,000/-
Total award	11,34,000+2,70,000	Rs.14,04,000/-

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1 (2017) 16 SCC 680

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4(B). Liability of Insurer:-

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There are three insurance policies on record for the vehicle in question bearing registration No.HP-23B2447. Two policies, i.e. RW1/B and RW1/A, have been produced by the appellant-insurer through its employee Sh. Nikka Ram, who stepped into the witness box as RW-1. The accident had occurred on 21.02.2010. The endeavour of the insurer by producing these policies is to show that the period of insurance under both the policies was 23.04.2010 to 22.04.2011 and did not cover the period during which the accident took place.

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As against the above, respondent No.4 has produced the insurance policy, Ex. RW2/B, for the same vehicle, i.e. HP-23B-2447. In terms of this policy, the period of insurance is 13.02.2010 to 12.02.2011. The accident took place during the validity period of this policy.

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4(B)(ii). Learned Senior Counsel for the insurer contended that Ex. RW2/B, i.e. the insurance policy produced by respondent No.4 is a forged document and had not been issued from the office of the appellant. This contention has been discarded by the learned Tribunal. Learned Tribunal held that the plea of forged policy/document had not been specifically taken by the insurer. Therefore, the insurer was not entitled to raise this

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defence. Also there is no answer provided by the insurer as to why two policies have been placed and proved by it on record pertaining to the same vehicle, i.e. HP-23B-2447, in the name of registered owner of the vehicle and for the same period, i.e. 23.04.2010 to 22.04.2011.

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4(B)(iii). Be that as it may. Even if all the insurance policies, be it Ex. RW2/B, Ex. RW1/A or Ex. RW1/B, are taken into consideration, the fact remains that all these policies are ‘Act Policies’, i.e. Liability Only Policies.

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Late Sh. Piar Singh was sitting inside the vehicle. He was not a third party. Being a Liability Only Policy and not a comprehensive one, the occupants of the vehicle were not covered under the policy. The Act Policy only covers the risk towards third parties and not towards the occupants of the vehicle. In this regard, it will be appropriate to refer to Yashpal Luthra and another V. United India Insurance Co. Ltd. and another² . It was a case where the motorcycle in question was insured under a package insurance policy. The insurance company contested the claim petition on the ground that risk of pillion rider on a two-wheeler was not covered in a comprehensive/package insurance policy. The Court examined the Deputy Manager of the Tariff Advisory

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2 2011 ACJ 1415

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Committee (TAC) under Section 165 of the Indian Evidence Act and he deposed that ‘all the insurance companies are liable to pay compensation in respect of occupants in a private car w.e.f. 25.3.1977 and in respect of a pillion rider on a two-wheeler w.e.f. 2.6.1986 under the Comprehensive/ Package Policy.’ He also deposed that Insurance Company is not liable in respect of pillion rider on a scooter and occupant in a car in respect of Act Policy, which only covers the risk towards third party. Relevant para from the judgment in this regard is extracted hereinafter:-

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“17. On 26^th October, 2009, the Deputy Manager of TAC was examined under Section 165 of the Indian Evidence Act and he deposed that all the Insurance Companies are liable to pay compensation in respect of occupants in a private car w.e.f. 25^th March, 1977 and in respect of a pillion rider on a two-wheeler w.e.f. 2^nd June, 1986 under the comprehensive/ package policy. The relevant statement of the Deputy Manager of IRDA (Mr. K.O. Antony) is reproduced hereunder:-

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"The Insurance Company is not liable in respect of the pillion rider on a scooter and occupant in a car in respect of an ‘Act Only’ policy which only covers the risks towards the Third Party. In respect of Comprehensive Policy, the TAC issued a circular dated 18^th March, 1978 instructing all the Insurance Companies to cover the liability towards the occupant in a car w.e.f. 25^th March, 1977. There is no change in position since then and the Insurance Companies are liable in respect of liability towards the occupant of a private car under the Comprehensive Policy, which is now called a Package Policy. On 2^nd June, 1986, the TAC issued instructions to all the Insurance Companies to cover the pillion rider on a scooter/motorcycle under the Comprehensive Policy. This position continues to be till date. The Comprehensive Policy is now called a Package Policy. The instructions/circulars dated 18^th March, 1978 and 2^nd June, 1986 continue to be valid and effective till

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date and all the Insurance Companies are bound to pay compensation in respect of the liability towards a pillion rider on a scooter and occupant in a car under the Comprehensive Policy/Package Policy irrespective of the terms and conditions contained in the policy."

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It was thus observed that in case of a

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comprehensive/package policy, the occupants of the private car would be covered and that under the circulars issued by the TAC, the insurance company will not be liable in respect of the pillion rider on a scooter or an occupant in a car in respect of an ‘Act Only Policy’, which only covers risk towards the third party.

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In National Insurance Co. Ltd. V. Balakrishnan and another³ , an argument was raised on behalf of the claimants that barring the insurer and insured, all others are third parties and, therefore, the deceased/injured has to be deemed to be covered by the policy. It was also urged that the injured (therein) had travelled as an occupant in a private car and, therefore, he has to be treated as third party vis-à-vis the insurer and the insurer was bound to indemnify the owner in respect of third party. The precise argument raised on behalf of the claimant in the judgment is reproduced hereunder:-

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“6. …………………………… In oppugnation, the learned counsel for the respondent-claimant has proponed that barring the insurer and the insured, all others are third parties and, therefore, he is covered by the policy. It is

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3 (2013) 1 SCC 731

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also urged by him that as he had travelled as an occupant in a private car he is a third party vis-à-vis the insurer and hence, it is bound to indemnify the owner as the risk of the third party is covered.”

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While answering the arguments advanced by the parties, the Hon’ble Apex Court considered various precedents in the timeline. After considering the judgment passed in Bhagyalakshmi v. United India Insurance Co. Ltd.⁴ , in para 15, following was observed in paras 16 and

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17:-

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“16. Thus, it is quite vivid that the Bench had made a distinction between the “Act policy” and “comprehensive policy/package policy”. We respectfully concur with the said distinction. The crux of the matter is what would be the liability of the insurer if the policy is a “comprehensive/package policy”. We are absolutely conscious that the matter has been referred to a larger Bench, but, as is evident, the Bench has also observed that it would depend upon the view of the Tariff Advisory Committee pertaining to enforcement of its decision to cover the liability of an occupant in a vehicle in a “comprehensive/package policy” regard being had to the contract of insurance.

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17. At this stage, it is apposite to note that when the decision in Bhagyalakshmi, (2009) 7 SCC 148, was rendered, a decision of High Court of Delhi dealing with the view of the Tariff Advisory Committee in respect of “comprehensive/package policy” had not come into the field. We think it apt to refer to the same as it deals with certain factual position which can be of assistance. The High Court of Delhi in Yashpal Luthra v. United India Insurance Co. Ltd., 2011 ACJ 1415 (Delhi),after recording the evidence of the competent authority of Tariff Advisory Committee (TAC) and Insurance Regulatory and Development Authority (IRDA), reproduced a circular dated 16.11.2009 issued by IRDA to CEOs of all the Insurance Companies restating the factual position relating to the liability of Insurance companies in respect of a pillion rider on a two-wheeler

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4 (2009) 7 SCC 148

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and occupants in a private car under the comprehensive/package policy. The relevant portion of the circular which has been reproduced by the High Court is as follows…………………………..”

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Further in para 17, the Apex Court considered

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the circular, which, inter alia, stated as under:-

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“IRDA

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Ref: IRDA/NL/CIR/F&U/073/11/2009 16.11.2009

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CEOs of all general insurance companies

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Re: Liability of insurance companies in respect of occupants of a private car and pillion rider on a two-wheeler under standard motor package policy (also called comprehensive policy).

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Insurers’ attention is drawn to wordings of section II(1)(ii) of standard motor package policy (also called the comprehensive policy) for private car and two-wheeler under the (erstwhile) India Motor Tariff. For convenience the relevant provisions are reproduced here-under:

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(ii) MOT/GEN/10 dated 2.6.1986 (regarding pillion riders in a two-wheeler) effective from the date of the circular. The above circulars make it clear that the insured’s liability in respect of occupant(s) carried in a private car and pillion rider carried on twowheeler is covered under the standard motor package policy . A copy each of the above circulars is enclosed for ready reference.”

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In paragraphs 19 and 20, taking note of the circulars of IRDA and TAC, it was observed that comprehensive policy is also called as package policy and that all insurance companies are bound to pay compensation in respect of liability towards an occupant in a private car under the comprehensive/package policy irrespective of the terms and conditions contained in the

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policy. Following observations of the Apex Court are material in respect of liability of the insurance company under the Act Policy:-

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“21. In view of the aforesaid factual position, there is no scintilla of doubt that a “comprehensive/package policy” would cover the liability of the insurer for payment of compensation for the occupant in a car. There is no cavil that an “Act Policy” stands on a different footing from a “Comprehensive/Package Policy”. As the circulars have made the position very clear and the IRDA, which is presently the statutory authority, has commanded the insurance companies stating that a “Comprehensive/Package Policy” covers the liability, there cannot be any dispute in that regard. We may hasten to clarify that the earlier pronouncements were rendered in respect of the “Act Policy” which admittedly cannot cover a third party risk of an occupant in a car . But, if the policy is a “Comprehensive/Package Policy”, the liability would be covered. These aspects were not noticed in the case of Bhagyalakshmi, (2009) 7 SCC 148 and, therefore, the matter was referred to a larger Bench. We are disposed to think that there is no necessity to refer the present matter to a larger Bench as the IRDA, which is presently the statutory authority, has clarified the position by issuing circulars which have been reproduced in the judgment by the Delhi High Court and we have also reproduced the same.”

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The Apex Court, thus, clearly observed in the

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above judgment that Act Policy stands on a different footing than a comprehensive/package policy. The liability towards an occupant in a private car under the comprehensive/ package policy would require to be indemnified by the insurance company, but such a situation would not be there in case the policy is an ‘Act Policy’.

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In the case in hand also, all the insurance

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policies, be it Ex. RW2/B, Ex. RW1/A or Ex. RW1/B, reflect that the vehicle in question was insured under the Act Policy. Only the basic premium of Rs.670/- alongwith Rs.100/- as PA for owner Driver premium (Total Rs.770/-) was paid by the insured (respondent No.1-Smt. Santosh). No additional premium was paid and no other risks were covered under the policy. Therefore, the contention of learned Senior Counsel for the appellant has merit that in absence of insuring the occupants in a private vehicle, in absence of paying any premium towards the occupants in a private vehicle and in absence of having purchased the comprehensive/package policy by the owner, the liability to indemnify the owner towards death/injury caused to the occupant in a private vehicle could not have been fastened upon the appellant-insurance company. Held accordingly.

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4(C). Liability to satisfy the compensation amount:-

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In view of the above discussion, it is writ large

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that the insurer cannot be saddled with the liability to pay the compensation amount to the claimants. It has also come on record that the vehicle in question was owned by respondent No.1-Smt. Santosh. She was the registered owner of the vehicle on the date of the accident. Her reply to

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the claim petition was that she had sold the vehicle to Sh. Pawan Kumar-respondent No.4 under an agreement dated 23.06.2008. The agreement, however, has not been proved.

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It is well settled that the registered

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owner/insurer is liable to pay compensation to the claimants. In Naveen Kumar Vs. Vijay Kumar and others⁵ , Hon’ble Apex Court was considering a situation where the registered owner had purported to transfer the vehicle but continued to be reflected in the record of registering authority as owner of the vehicle. The Apex Court considered the definition of “Owner” in Section 2(30) of the 1988 Act and in Section 2(19) of the 1939 Act as

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under:-

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“6. The expression ‘owner’ is defined in Section 2(30) of the Act, 1988, thus:

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“2(30) “owner” means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement.”

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The person in whose name a motor vehicle stands registered is the owner of the vehicle for the purposes of the Act. The use of the expression ‘means’ is a clear indication of the position that it is the registered owner who Parliament has regarded as the owner of the vehicle. In the earlier Act of 1939, the expression ‘owner’ was defined in Section 2(19) as follows:

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“2. (19) ‘owner’ means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor

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5 (2018) 3 SCC 1

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vehicle which is the subject of a hire-purchase agreement, the person in possession of the vehicle under that agreement.”

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Comparing the definition of ‘owner’ as given in

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both the Acts, it was held that under the 1988 Act, the owner of the vehicle would be the person in whose name the motor vehicle stands registered. Para-7 of the judgment reads as follows:-

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“7. Evidently, Parliament while enacting the Motor Vehicles Act, 1988 made a specific change by recasting the earlier definition. Section 2(19) of the earlier Act stipulated that where a person in possession of a motor vehicle is a minor the guardian of the minor would be the owner and where the motor vehicle was subject to a hire purchase agreement, the person in possession of the vehicle under the agreement would be the owner. The Act of 1988 has provided in the first part of Section 2(30) that the owner would be the person in whose name the motor vehicle stands registered. Where such a person is a minor the guardian of the minor would be the owner. In relation to a motor vehicle which is the subject of an agreement of hire purchase, lease or hypothecation, the person in possession of the vehicle under that agreement would be the owner. The latter part of the definition is in the nature of an exception which applies where the motor vehicle is the subject of a hire purchase agreement or of an agreement of lease or hypothecation. Otherwise the definition stipulates that for the purposes of the Act, the person in whose name the motor vehicle stands registered is treated as the owner.”

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Section 50 of the Motor Vehicles Act, which

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deals with the procedure for transfer of the ownership was also noticed in the judgment.

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After adverting to its several previous authorities

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on the subject, the Hon’ble Supreme Court held that the

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principle underlying the provisions of Section 2(30) is that the victim of a motor accident or in the case of death, the legal heirs of the deceased should not be left in the state of uncertainty. A claimant for compensation ought not to be burdened with following a trail of successive transfers, which are not registered with the registering authority. To hold otherwise would be to defeat the salutary object and purpose of the Act. Hence, the interpretation to be placed must facilitate the fulfilment of the object of the law. Failure to intimate the transfer will only result in a fine under Section 50(3) but will not invalidate the transfer of the vehicle. There can be transfer of title by payment of consideration of delivery of the vehicle, but for the purposes of the Act, the person whose name is reflected in the records of the registering authority, is the owner. The owner within the meaning of Section 2(30) is liable to compensate. Para 13 and 14 of the judgment relevant to the context read as under:-

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“13. The consistent thread of reasoning which emerges from the above decisions is that in view of the definition of the expression ‘owner’ in Section 2(30), it is the person in whose name the motor vehicle stands registered who, for the purposes of the Act, would be treated as the ‘owner’. However, where a person is a minor, the guardian of the minor would be treated as the owner. Where a motor vehicle is subject to an agreement of hire purchase, lease or hypothecation, the person in possession of the vehicle under that agreement is treated as the owner. In a situation such as the present where the registered owner has purported to transfer

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the vehicle but continues to be reflected in the records of the registering authority as the owner of the vehicle, he would not stand absolved of liability. Parliament has consciously introduced the definition of the expression ‘owner’ in Section 2(30), making a departure from the provisions of Section 2(19) in the earlier Act of 1939. The principle underlying the provisions of Section 2(30) is that the victim of a motor accident or, in the case of a death, the legal heirs of the deceased victim should not be left in a state of uncertainty. A claimant for compensation ought not to be burdened with following a trail of successive transfers, which are not registered with the registering authority. To hold otherwise would be to defeat the salutary object and purpose of the Act. Hence, the interpretation to be placed must facilitate the fulfilment of the object of the law. In the present case, the First respondent was the ‘owner’ of the vehicle involved in the accident within the meaning of Section 2(30). The liability to pay compensation stands fastened upon him. Admittedly, the vehicle was uninsured. The High Court has proceeded upon a misconstruction of the judgments of this Court in Reshma and Purnya Kala Devi.

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14. The submission of the Petitioner is that a failure to intimate the transfer will only result in a fine under Section 50(3) but will not invalidate the transfer of the vehicle. In Dr T V Jose, this Court observed that there can be transfer of title by payment of consideration and delivery of the car. But for the purposes of the Act, the person whose name is reflected in the records of the registering authority is the owner. The owner within the meaning of Section 2(30) is liable to compensate. The mandate of the law must be fulfilled.”

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To the similar effect is the judgment in Prakash

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Chand Daga Vs. Saveta Sharma and others⁶ . The law relating to the liability of registered owner/transferee of the vehicle was summarized as under:-

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“9. The law is thus well settled and can be summarized:-

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“4……..Even though in law there would be a transfer of ownership of the vehicle, that, by itself, would not absolve the party, in whose name the vehicle stands

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6 (2019) 2 SCC 747

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in RTO records, from liability to a third person … … … Merely because the vehicle was transferred does not mean that such registered owner stands absolved of his liability to a third person. So long as his name continues in RTO records, he remains liable to a third person.”

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In Balwant Singh and Sons Vs. National Insurance Company Limited and another⁷ , provisions of

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the Motor Vehicles Act were under consideration. Taking note of various precedents in time line including the above referred judgments in Prakash Chand Daga and Naveen Kumar cases (supra), it was held that so long as the name of the registered owner continues in the certificate of registration in the records of the RTO, that person as an owner would continue to be liable to a third party, under Chapter XI of the Act. It would be appropriate to extract the relevant para from the judgment hereinafter:-

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“19. The principle that emerges from the precedents of this Court is that even though in law there would be a transfer of ownership of the vehicle, that by itself would not absolve the person in whose name the vehicle stands in the registration certificate, from liability to a third party. So long as the name of the registered owner continues in the certificate of registration in the records of the RTO, that person as an owner would continue to be liable to a third party under Chapter XI of the Motor Vehicles Act, 1986. The above decisions, therefore, deal with the obligation of the registered owner to meet third party claims.”

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However, in the instant case, the fact cannot be

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ignored that in the reply filed by respondent No.4 (the

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7 (2020) 11 SCC 741

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alleged transferee of the vehicle) to the claim petition, it was clearly projected that the Car belonged to and was under the control of respondent No.4 at the relevant time. The driver was also engaged by respondent No.4. Following pleadings from the reply filed by respondent No.4 are

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relevant:-

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“1. That the contents of the para No.1 of the claim petition are incorrect hence denied. No accident took place with the said vehicle of the replying respondent nor the replying respondent have ever authorised to the respondent No.2 to take the vehicle, but since the respondent No.2 was having the close friendly relation with the replying respondent and he used to take the vehicle without consent of the replying respondent No.4 at his own.”

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Thus, the registered owner-present respondent

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No.7, through her legal heir, i.e. respondent No.7(i), the transferee, i.e. respondent No.9 as well as the Driver of vehicle, i.e. respondent No.8, are jointly and severally liable to pay compensation to the claimants. Reference in this regard can also be made to the judgment rendered by the Hon’ble Supreme Court in Anamika and others vs. Jaipal Singh and others⁸ . The relevant portion of the aforesaid judgment is extracted below:-

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“3. In the light of the contentions urged herein, we have referred to the award dated 7.3.2005 passed by the MACT. On the aspect relating to liability for payment of compensation, the Tribunal has recorded the finding as hereunder:

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8 2023 ACJ 2015

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“(30) On the basis of this ruling, the learned counsel for the respondent Nos. 2 and 3 contended that although in the registration certificate, the latter continued to be the registered owners of the offending vehicle, yet because of change of possession thereof, in favour of respondent No.4 who had employed respondent No. 1 as driver of the offending vehicle, only latter can be held liable to pay the compensation to the claimants in this case. This contention of the learned counsel for respondent Nos.2 and 3 deserves to be repelled as in the registration record, respondent Nos.2 and 3, now deceased, continued to be the owners of the offending vehicle and that being so, in view of Dr. T.V. Jose v. Chacko P.M., 2001 ACJ 2059 (SC), rendered by the Hon’ble Supreme Court they continued to remain liable to the third parties when their names continued in the record of the registering authority as owners.

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(31) In the ruling supra, it was held that the appellant still continued to remain liable to third party as his name continued in the record of RTO as owner. So, it was held that the appellant could not escape that liability and it will be for the appellant to adopt appropriate proceedings against the vendee if, in law, he is entitled to do so. Even affidavit, mark R7, was given by Sham Singh, respondent No.2 herein, now deceased, regarding sale of offending truck in favour of respondent No.4. In this affidavit, he has described himself to be an attorney of the coowner of the truck, respondent No.3, but that power of attorney has not been placed on the record, meaning thereby that there is no evidence on the record to indicate that respondent No. 3 had constituted respondent No.2 as his attorney to sell the offending truck to respondent No.4.

¶143

(32) So, in view of the affidavit, mark R7, respondent No.3 still continues to be the owner of the offending truck.”

¶144

As against the finding recorded therein, the High Court, while reversing the same, has merely taken into consideration that the vehicle, which had been seized by the police after the accident, had been thereafter released by the competent court in favour of the respondent No.6 herein, who is the subsequent purchaser and that too by ignoring the decision of this court and noting the same.

¶145

¶146

4. The award passed by the Tribunal would in fact disclose that the Tribunal, at the first instance, while arriving at its conclusion, has taken into consideration the law laid down by this court and on taking note that though the predecessors of the respondent Nos.1 to 5 and the respondent Nos.8 to 12 herein had contended that the vehicle had been sold, they continued to be the registered owners and they remained liable to the third parties.

¶147

5. In that view, we are of the opinion that the High Court was not justified in modifying the finding which had been rendered by the MACT towards liability. To that extent, we note that the MACT was justified in its conclusion and as such, the registered owner as well as the subsequent purchaser in the instant case would remain liable and the registered owner, who is stated to have sold the vehicle, would be entitled to make appropriate recoveries from their vendee but they would still remain liable to the appellants/claimants herein.”

¶148

Held accordingly.

¶149

4(D). Pay and Recover:-

¶150

Learned counsel appearing for the respondents have urged for applying the principle of ‘pay & recover’. Learned counsel submit that the liability to pay the compensation amount in the first instance be fastened upon the appellant-insurance company. The above contention, however, cannot be accepted in the facts of the case. In this regard, it will be appropriate to refer to the decision rendered by the Hon’ble Apex Court in Shamanna and another Versus Divisional Manager, Oriental

¶151

Insurance Company Limited and others⁹ , wherein it was observed as under vide para 6 and 7:-

¶152

9 (2018) 9 SCC 650

¶153

¶154

“6. As per the decision in Swaran Singh case¹⁰ , onus is always upon the insurance company to prove that the driver had no valid driving licence and that there was breach of policy conditions. Where the driver did not possess the valid driving licence and there are breach of policy conditions, “pay and recover” can be ordered in case of third party risks. The Tribunal is required to consider “as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver … does not fulfill the requirements of law or not will have to be determined in each case.

¶155

7. The Supreme Court considered the decision of Swaran Singh case in subsequent decision in National Insurance Co. Ltd. v. Laxmi Narain Dhut¹¹ , wherein this Court held that:

¶156

“5. The decision in Swaran Singh case has no application to cases other than third party risks and in case of third party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured”.”

¶157

In the instant case, there was no insurance

¶158

policy in place for covering the liability towards occupants of the vehicle. It is not a case of breach of policy, rather, it’s a case of absence of a comprehensive/package policy. Out of the three insurance policies on record, two do not cover the period of accident. All three policies are the ‘Act Policies’ (Liability only Policies). Therefore, even if the issue of forging of policies as is urged by the learned Senior Counsel is not to be dwelled upon, then also stark reality is absence of a comprehensive/package policy. In the given facts, principle of ‘pay and recover’ cannot be applied against the appellant. The appellant is not at all liable to pay the compensation amount. It cannot be directed to pay &

¶159

10 National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297

¶160

11 (2007) 3 SCC 700

¶161

¶162

recover the amount from the registered owner-present respondent No.7, through her legal heir, i.e. respondent No.7(i), the transferee (present respondent No.9) as well as the Driver of vehicle (present respondent No.8).

¶163

5. In view of above discussion, present appeal is allowed. The impugned award dated 19.04.2016 passed by the learned Motor Accident Claims Tribunal, Ghumarwin, District Bilaspur, H.P. in M.A.C. No.12/2 of 2010 is modified to the extent indicated above. The appellantinsurance company is exonerated from the liability to satisfy the compensation award. The liability to pay the compensation amount as determined heretobefore is fastened jointly & severally upon present respondents No.7(i), 8 and 9 (respondents No.1, 2 and 4 in the claim petition). The remaining terms and conditions of the impugned award including the interest component shall remain the same.

¶164

The appeal stands disposed of in the above terms, so also the pending miscellaneous application(s), if any.

¶165

Jyotsna Rewal Dua Judge

¶166

July 19, 2024 Mukesh

United India Insurance Co. Ltd. v. Raksha Devi

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United India Insurance Co. Ltd. v. Raksha Devi

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