Partly allowed

Shantha v. Kamalamma

Karnataka HC5 Jul 2023MFA/1069/2014

Case brief

AI extract

What is this about?

In a first appeal under the Motor Vehicles Act against a Tribunal award, the High Court held that the insurer must pay the compensation to the claimants in the first instance, with liberty to recover the amount from the vehicle owner, relying on Supreme Court precedents regarding the 'pay and recover' principle.

What did the court decide?

Insurance company directed to deposit Rs.3,90,000 with 6% interest; liberty to recover from vehicle owner.

Shantha Vs Kamalamma — Cheque Dishonour | Karnataka HC (2023)

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 5^TH DAY OF JULY, 2023

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BEFORE

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THE HON'BLE MR JUSTICE G BASAVARAJA

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MISCELLANEOUS FIRST APPEAL NO.1069 OF 2014

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BETWEEN:

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SHANTHA S/O LATE SIDDAIAH, AGED ABOUT 37 YEARS, SHIDIGALALE VILLAGE, SAKALESHPUR TALUK.

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…APPELLANT

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(BY SRI. SHRIPAD V SHASTRI., ADVOCATE)

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AND:

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KAMALAMMA, W/O LATE SANGAPPA, AGED ABOUT 45 YEARS, HEBBANAHALLI VILLAGE, SAKALESHPUR TALUK, 573134

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Digitally signed by RAMYA D Location: High Court of Karnataka

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CHANDRASHEKHAR, S/O LATE SANGAPPA, HEBBANAHALLI VILLAGE, SAKALESHPUR TALUK, 573134

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SUDARSHAN S/O LATE SANGAPPA, HEBBANAHALLI VILLAGE, SAKALESHPUR TALUK, 573134

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SHIVAJI

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S/O IYYAPPA GOWDA, SIDAPURA, GANGAVATHI TALUK, KOPPALA DISTRICT, 577126

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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THE MANAGER

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UNITED INDIA INSURANCE CO. LTD. K.M.ROAD, CHICKMANGALORE.

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REPTD.BY: THE MANAGER, UNITED INDIA INSURANCE CO. LTD. VENKATESHWARA BUILDING, B.M.ROAD, HASSAN-573201.

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…RESPONDENTS

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(BY SRI. JANARDHAN REDDY FOR R5; R1, R2, R3, R4 ARE SERVED AND UNREPRESENTED).

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THIS MFA FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED 08.11.2012 PASSED IN MVC NO.62/2010 ON THE FILE OF THE SENIOR CIVIL JUDGE, & JMFC, MACT, SAKALESHPUR, AWARDING COMPENSATION OF Rs.3,90,000/- WITH INTEREST @ 6% P.A. FROM THE DATE OF PETITION TILL REALIZATION.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, G BASAVARAJA . J., DELIVERED THE FOLLOWING:

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JUDGMENT

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The respondent No.2 - Shantha in MVC No.62/2010

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on the file of Senior Civil Judge, MACT at Sakleshpur, has preferred this appeal against the respondent Nos.1 to 5 to set aside the judgment and award dated 08.11.2012 passed by the Tribunal.

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The parties are referred to as per their ranks before the Tribunal.

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The brief facts of the case is that on 10.06.2010

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the deceased H.S.Sangappa and Jayashankar while riding motor bike bearing registration No.KA-13-S-2548 along with 7 months old son of Jayashankar from Belagodu to Hebbanahalli after fixing the drops to the said child at about 9.30 a.m. at Hebbanahalli Circle the driver of Maruthi Alto Car bearing No.KA-36-M-1451 drove the same with rash and negligent manner in a high speed and came from opposite side and dashed to the said motor bike. Due to that the said motor bike and car was damaged and said Jayashankara and H.S.Sangappa fell down along with the said child, Jayashankar suffered injuries to his right leg but Sangappa sustained grievous injury to his right leg, chest, kidney and other parts of the body. Immediately Sangappa was shifted to S.C.Hospital, Hassan, through the said Alto car and after the opinion of the doctor, Jayashankar was admitted in the said hospital and Sangappa was shifted to Mangalore Hospital but on the way near Uppinanagady at about 4.00 p.m. said Sangappa succumbed to injuries. The LR's of Sangappa

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have filed a claim petition against the owner of driver and insurance company, who are respondent Nos.1 to 3 in the Tribunal.

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Respondent No.1 who is the owner of Maruthi Alto car bearing registration No.KA-36-M-1451 was placed exparte. Respondent No.2 who is the appellant in this case has filed his written statement denying all the averments of the petition. Further he has stated that he was not the driver of Maruthi Alto car bearing No.KA-36M-1451 at the relevant point of time and sought for dismissal of the petition.

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The Tribunal has dismissed the petition against insurance company and fixed the liability on respondent Nos.1 and 2. The driver of the vehicle - respondent No.2 in MVC No.62/2010 has preferred this appeal.

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Sri.Sripad V. Shastri, learned counsel appearing

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on behalf of appellant has submitted his arguments that appellant was not the driver of the vehicle at the relevant

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point of time. To substantiate the same he has relied on the evidence of RW1. The insurance company has not adduced any evidence before the Tribunal to rebut the evidence of RW1. It is admitted fact that offending vehicle insured with the insurance company - respondent No.5. Even if this Court were to come to the conclusion that the driver of offending vehicle was not having valid and effective driving licence at the relevant point of time, then this Court can direct the insurance company to pay the award amount to the petitioners and recover the same from the owner of the vehicle. To substantiate his arguments he has relied on the decision of Hon'ble Apex Court in the case of PAPPUU AND OTHERS VS VINOD

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KUMAR LAMBA AND ANOTHER r eported in (2018) 3 SCC 208. On all these grounds he sought for allowing this appeal.

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7. As against this, Sri.Janardhan Reddy, learned

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counsel appearing on behalf of insurance company has submitted his arguments that Tribunal has rightly held

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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that insurance company is not liable to pay any compensation as the owner of the vehicle has violated the provisions of Motor Vehicles Act, 1988. That there are no grounds to interfere with the impugned judgment and award passed by the Tribunal. To substantiate his arguments he has relied on the decision of Division Bench of this Court rendered in SMT.AADILAKSHMAMMA AND

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OTHERS v. SRI. RAJU B AND ANOTHER MFA No.3297/2019 (MV-D) dated 13.04.2023.

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Having heard the arguments and perusal of records the following points would arise for my

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consideration:

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(1) Whether the appellant has made out grounds to interfere with the impugned judgment and award passed by the Tribunal?

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(2) What order/award?

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My finding to the above points are as under:

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(1) Partly affirmative (2) As per final order

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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A perusal of para 17 of the impugned judgment

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the Tribunal has observed as under:

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"17. The petitions and pleadings of the respondent no.2 and 3 clearly reveals that the respondent no.2 having no valid and effective driving licence to the said Maruthi Alto Car bearing no. KA-36-M-1451 on the date of accident. Hence, the respondent no.3 insurance company is not liable to pay any compensation amount to the petitioner. It is clear that the vehicle violate the terms and conditions of the respondent no.1 and 2 who are the owner and driver of the said vehicle. Hence, the respondent no.1 and 2 jointly and severally liable to pay the compensation amount to the petitioner as a master and servant. Hence, I have answered issue no. 2 and 5 as per final order and issue no. 4 affirmative."

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A perusal of documentary evidence placed by

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the claimants in Ex.P-1 reveals that claim petition notice issued by the concerned police to the claimants reveals driver of the vehicle bearing registration No.KA-36-M-1451 was Shantha S/o.late Siddaiah. In Column No.7(b) it is clearly stated that he has no driving licence. On the basis of the complaint filed by the complainant - Nanjundappa H.S., Sakaleshpura Rural Police have registered the case

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in Crime No.18/2010 against the driver of the Maruthi Alto 800 bearing registration No.KA-36-M-1451 for the commission of offences punishable under Sections 279, 337, 304(a) IPC r/w Section 3 r/w Section 181 of Motor Vehicles Act, 1989 and submitted the FIR to the court. Thereafter police have visited to the spot and conducted spot panchanama as per Ex.P-4 and P-5 and recorded statement of complainant as per Ex.P-6 and obtained the MV report and PM report as per Exs.P-7 and P-8 and after through investigation the IO submitted the charge sheet

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against the appellant for the offence punishable under Sections 279, 337, 304(a) IPC r/w Section 3 r/w Section 181 of Motor Vehicles Act, 1989, which is marked as Ex.P3. In the evidence of RW1 - Shantha he has deposed that police have submitted false charge sheet against him. But he has not deposed anything in his evidence regarding whether he is acquitted in a case registered against him before the jurisdictional Magistrate or not. Even in the appeal also the appellant has not placed any materials to show that whether appellant is acquitted from the alleged

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commission of offences or not. Therefore, without any legal evidence it is not possible to come to the conclusion that appellant has proved before the Tribunal that he was not the driver of the offending vehicle at the relevant point of time. Considering the evidence placed before this Court, I am of the opinion that appellant was the driver of the offending vehicle as on the date of accident. Accordingly, Tribunal has rightly observed that the driver of the offending vehicle was not having valid and effective driving licence as on the date of the accident. Now the

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question is whether the insurance company is liable to pay the compensation under the principle of pay and recovery as per the decision of Hon'ble Supreme Court in the case

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of PAPPUU AND OTHERS vs VINOD KUMAR LAMBA AND ANOTHER reported in (2018) 3 SCC 208 . In para

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16 to 21 the Hon'ble Apex Court has observed as under:

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“16. The next question is : whether in the fact situation of this case the insurance company can be and ought to be directed to pay the claim amount, with liberty to recover the same from the owner of the vehicle (Respondent 1)?

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17. This issue has been answered in National Insurance Co. Ltd. [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] In that case, it was contended by the insurance company that once the defence taken by the insurer is accepted by the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle. However, this Court held that even if the insurer succeeds in establishing its defence, the Tribunal or the court can direct the insurance company to pay the award amount to the claimant(s) and, in turn, recover the same from the owner of the vehicle. The three-Judge Bench, after analysing the earlier decisions on the point, held that there was no reason to deviate from the said well-settled principle. In para 107, the Court then observed thus : (SCC p. 340)

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“107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of subsection (2) of Section 149 of the Act, the insurance company shall be entitled to realise

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.”

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18. Further, in para 110, the Court in National Insurance Co. Ltd. [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] observed thus : (SCC pp. 341-42)

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“110. The summary of our findings to

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the various issues as raised in these petitions is as follows:

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(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third-party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

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(ii) An insurer is entitled to raise a defence in a claim petition filed under Section 163-A or Section 166 of the Motor Vehicles Act, 1988, inter alia, in terms of Section 149(2)(a)(ii) of the said Act.

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(iii) The breach of policy condition e.g. disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time.

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(iv) Insurance companies, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish “breach” on the part of the owner of the vehicle; the burden of proof where for would be on them.

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(v) The court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply “the rule of main purpose” and the concept of “fundamental breach” to allow defences available to the insurer under Section 149(2) of the Act. (vii) The question, as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.

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(viii)-(ix) ***

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(x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Section 149(2) read with sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third-party under the award of the Tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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thirty days from the date of announcement of the award by the Tribunal.

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(xi) The provisions contained in sub-section (4) with the proviso thereunder and sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover the amount paid under the contract of insurance on behalf of the insured can be taken recourse to by the Tribunal and be extended to claims and defences of the insurer against the insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims.”

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(emphasis supplied)

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19. In the present case, the owner of the vehicle (Respondent 1) had produced the insurance certificate indicating that Vehicle No. DIL 5955 was comprehensively insured by Respondent 2 (insurance company) for unlimited liability. Applying the dictum in National Insurance Co. Ltd. [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] , to subserve the ends of justice, the insurer (Respondent 2) shall pay the claim amount awarded by the Tribunal to the appellants in the first instance, with liberty to recover the same from the owner of the vehicle (Respondent 1) in accordance with law.

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20. Accordingly, the appeal is allowed to the extent that the compensation amount awarded by the Tribunal and confirmed [Dhrupati v. Vinod Kumar, 2014 SCC OnLine All 16493] by the High Court shall be paid and satisfied by the insurer (Respondent 2) in the first instance, with liberty to recover the same from the owner of the vehicle (Respondent 1) in accordance with law.

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21. The appeal is disposed of in the aforementioned terms with no order as to costs.”

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In the case on hand, owner of the vehicle who

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is respondent No.1 in the Tribunal was placed exparte. The IO has not filed charge sheet against the owner of the offending vehicle under Section 180 of the MV Act. If really the owner of vehicle allowing unauthorized person to drive the vehicle, the IO ought to have filed the charge sheet against him under Section 5 r/w 180 of MV Act, but no such accusation has been made against the owner of the vehicle by the IO. That there is no dispute between the parties that offending vehicle was insured with the insurance company. In view of decision of Hon'ble Apex Court the liability of insurance company cannot be discharged. Learned counsel appearing on behalf of insurance company has submitted that the principle of pay and recover is not applicable to the case on hand. To substantiate his arguments he relied on the decision of the Division Bench of this Court in MFA No.3297/2019 (MV-D) dated 30.04.2023. The facts and circumstances of this case and facts of the case in MFA No.3297/2019 are not

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similar. Hence, considering the facts and circumstances of

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the case relying on the aforesaid decision of Hon'ble Apex Court it is just and proper to direct the insurance company to pay the claim amount awarded by the Tribunal to the claimants in the first instance with liberty to recover the same from the owner of the vehicle (respondent No.4 in this appeal) in accordance with law. Accordingly, I answer point No.1 in partly affirmative.

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RE. POINT NO.2:

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13. For the aforesaid reasons, I proceed to pass the

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following:

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ORDER

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(1) Appeal is partly allowed .

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(2) Petitioners who are respondent Nos.1 to 3

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are entitled for the compensation of Rs.3,90,000/- with interest @ 6% p.a. from the date of filing the petition till its realization as awarded by the Tribunal.

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NC: 2023:KHC:23246 MFA No. 1069 of 2014

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(3) Respondent Nos.1 to 3 in MVC

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No.62/2010 are jointly and severally liable to pay the compensation.

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(4) Insurance company/respondent No.5 is directed to deposit the award amount within 30 days from the date of award passed by this Court with liberty to recover the same from the owner of the vehicle, who is respondent No.1 in MVC No.62/2010 in accordance with law.

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(5) Deposited amount, if any, shall be transmitted to the Tribunal to disburse

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the same to the claimants.

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(6) Draw the award accordingly.

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Sd/JUDGE

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Shantha v. Kamalamma

Case brief

What is this about?

What did the court decide?

Shantha v. Kamalamma

Case brief

What is this about?

What did the court decide?

What the court decided

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