Partly allowed

Smt. Shobha H N v. Sri. Suraj Kumar B

Karnataka HC21 Oct 2024MFA/5705/2022

Case brief

AI extract

What is this about?

This miscellaneous first appeal challenged a Motor Accident Claim Tribunal award which exonerated the insurer due to the driver's lack of a valid license and denied loss of dependency. The High Court applied the 'pay and recover' doctrine, ordered the insurer to pay the enhanced compensation, and awarded loss of dependency to the parents.

What did the court decide?

The appeal was partly allowed; the award was enhanced to Rs. 21,28,800/- with 6% interest, and the insurer was directed to deposit the amount with liberty to recover it from the owner.

Smt. Shobha H N Vs Sri. Suraj Kumar B — Insurance | Karnataka HC (2024)

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NC: 2024:KHC:42156-DB MFA No.5705/2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21^ST DAY OF OCTOBER, 2024 PRESENT

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THE HON'BLE MRS. JUSTICE K.S.MUDAGAL

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AND

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THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL MISCELLANEOUS FIRST APPEAL NO.5705/2022 (MV-D)

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BETWEEN:

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SMT. SHOBHA H.N. W/O SRINIVAS M.C. AGED ABOUT 42 YEARS.

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SRI. SRINIVAS M.C. S/O CHIKKAVENKATEGOWDA AGED ABOUT 48 YEARS.

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Digitally signed by RUPA V Location: HIGH COURT OF KARNATAKA

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MS. KEERTHANA M.S. S/O SRINIVAS M.C. AGED ABOUT 16 YEARS.

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SINCE MINOR REPRESENTED BY MOTHER AND NATURAL GUARDIAN SMT. SHOBHA H.N. THE APPELLANT NO.1 HERE IN.

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ALL ARE RESIDING AT NO.90/71 12TH CROSS, 2ND MAIN, VITTAL NAGAR CHAMARAJPET, BENGALURU 560018.

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…APPELLANTS

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(BY SRI. K.P. BHUVAN, ADV.,)

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AND:

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SRI. SURAJ KUMAR .B S/O BINAY THAKUR NO.5, C.K. LAYOUT VARAPANAHALLI BENGALURU 560077.

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NC: 2024:KHC:42156-DB MFA No.5705/2022

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TATA AIG GENERAL INSURANCE COMPANY LTD 2ND FLOOR, J P ALND DEVI JAMBUKESHWAR ARCADE NO.69, MILLERES ROAD BENGALURU 560051.

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…RESPONDENTS

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(BY SRI. B. PRADEEP, ADV., FOR R2 V/O/DTD:20.08.2024 NOTICE TO R1 IS H/S)

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THIS MFA IS FILED U/S 173(1) OF MV ACT, PRAYING TO CALL FOR RECORDS IN MVC NO.3964/2019 BY THE VIII SMALL CAUSES AND MOTOR ACCIDENT CLAIMS TRIBUNAL AT BANGALORE DTD:01.04.2022 (SCCH-5). MODIFY THE FINDINGS OF THE TRIBUNAL BELOW ENHANCE THE COMPENSATION WITH COST AND INTEREST, SADDLING THE LIABILITY ON THE 2^ND RESPONDENTINSURER TO SATISFY THE AWARD IN THE INTEREST OF JUSTICE & ETC.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MRS. JUSTICE K.S.MUDAGAL and HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL

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ORAL JUDGMENT

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(PER: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL)

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Challenging the judgment and award dated 01.04.2022,

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the claimants in MVC. No.3964/2019 on the file of the VIII Additional Small Causes Judge and Member, MACT, (SCCH-5), Bengaluru, have preferred this appeal.

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The appellants were the claimants and respondent

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Nos.1 and 2 in this appeal were respondent Nos.1 and 2 before

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the Tribunal. For the purpose of convenience, the parties are referred to henceforth according to their ranks before the Tribunal.

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The mother, father and sister of deceased Srihari M.S., filed the MVC No.3964/2019 under Section 166 of the Motor Vehicle Act, 1988 (hereinafter referred to as 'the Act'), seeking compensation for the death of Srihari M.S. in the road accident dated 23.04.2019. It is averred that the deceased was proceeding as a pillion rider on the motorcycle bearing Reg.No.KA-03-JW-3516 and one Aravind was riding the same in high speed, in a rash and negligent manner, proceeding on Hejjala-Kempadyapanahalli Road and when they reached near Mallathahalli Village, Bidadi Hobli, Ramanagara District, the rider of the motorcycle lost the control over the vehicle, resultantly the rider as well as pillion rider fell down on the footpath and dashed to the mud wall. Both the rider and pillion rider sustained head injuries and died on the spot.

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It is further averred that the deceased was aged about 19 years studying in final year of Diploma Course at PES College, Bengaluru, and was also doing milk vending business

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in the morning and evening hours and used to earn Rs.20,000/p.m. and used to contribute the said amount to the maintenance of the family. They sought compensation of Rs.30,00,000/-.

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The respondent No.1 - the owner of the vehicle remained absent. The Tribunal placed him exparte. Respondent No.2-insurer of the two wheeler filed written statement admitting the issuance of policy to the vehicle involved in the accident, however the liability is subject to fulfilment of terms of the policy. It is averred that the rider of the motorcycle was not having valid and effective driving licence to ride said vehicle as on the date of accident and respondent No.1 has violated the terms and conditions of the policy, hence respondent No.2-insuer is not liable to pay any compensation to the claimants. The insurer has denied age, avocation, income of the deceased and averred that the claimants have sought exorbitant compensation and sought for dismissal of claim petition.

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The Tribunal recorded the evidence of parties. Claimant No.2 examined himself as PW-1 and on their behalf

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Exs.P-1 to P-15 were got marked. Respondent No.2-insurer examined two witnesses as RWs-1 and 2 and on their behalf Exs.R-1 to R-4 were got marked. The Tribunal, on appreciation

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of evidence, recorded the finding that the rider of the motorcycle was not having valid and effective driving licence to ride the motorcycle as on the date of accident, hence, exonerated the insurer of the motorcycle from liability. The Tribunal further recorded the finding that the claimants have failed to prove that they were financially dependent on the earnings of the deceased. Hence, it has not awarded any compensation under the head of loss of dependency, it has awarded compensation only under the heads of loss of consortium, loss of estate and compensation under the head of funeral expenses and transportation of dead body. The Tribunal has awarded total compensation of Rs.1,53,000/- along with interest at 9% p.a. from the date of petition till its realisation. Being aggrieved, the claimants are in appeal seeking for enhancement of compensation as well as seeking to shift the liability on the insurer of the vehicle involved in the accident.

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Sri.K.P.Bhuvan, learned counsel for the claimants submits that the Tribunal has committed grave error in

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recording the finding that the rider of the motorcycle was not having the driving licence as on the date of accident and proceeded to saddle the liability on respondent No.1 - owner of the vehicle. The Tribunal ought to have directed respondent No.2 to pay the compensation and recover the same from the owner of the vehicle by following the law laid down by the Hon'ble Supreme Court in the case of Shamanna and another

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Vs. Divisional Manager, Oriental Insurance Co. Ltd. and others¹ . It is submitted that the Tribunal has further committed error in not assessing the compensation under the head of loss of dependency by recording incorrect finding that the claimants failed to prove that they were financially dependant on the deceased without properly appreciating the pleading and evidence on record. It is further submitted that the claimants are also entitled to compensation under the head of loss of future prospects, consortium and other conventional heads. He seeks to allow the appeal.

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Per contra, Sri.B.Pradeep, learned counsel for respondent No.2 supports the impugned judgment and award

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1 (2018) 9 SCC 650

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of the Tribunal and submits that the rider of the motorcycle did not possess valid driving licence as on the date of accident which is a clear breach of terms of the policy issued on the vehicle in question. He further submits that the claimants as well as respondent No.1 failed to prove that the rider Aravind was having valid and effective driving license as on the date of accident. Hence, the Tribunal recorded detailed finding and saddled the liability on respondent No.1 which does not call for any modification. It is submitted that the claimants have failed to prove before the Tribunal that they are the dependants of the deceased as the deceased was aged about 19 years and there was no secured income of the deceased. Hence, the Tribunal has rightly come to the conclusion that the claimants are not the dependants and proceeded to award compensation only on conventional heads which also does not call for any interference in the present appeal. He seeks to dismiss the appeal.

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Considering the rival submissions of the parties and examining the materials on record including the Trial Court records, the point that arises for consideration is “ Whether

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the impugned judgment and award calls for interference

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in the present appeal”?

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ANALYSIS

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Regarding Insurer's Liability:

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The undisputed facts are that on 23.04.2019, the

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deceased Srihari was proceeding as a pillion rider on motorcycle bearing registration No.KA-03 JW-3516 and Sri.Aravind was the rider of the motorcycle. The pleading and evidence on record indicate that the rider of the motorcycle rode the same in rash and negligent manner and caused the accident resultantly both the rider as well as pillion rider sustained grievous injuries and succumbed to those injures. The jurisdictional police registered the said accident in Crime No.106/2019 and on completion of investigation, filed abated charge sheet against the rider of the motorcycle for the negligent act. The pleading and evidence on record indicate that the accident is caused due to negligence of the rider of the motorcycle and the deceased was the pillion rider.

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The claimants, in order to prove their case, examined claimant No.2 - father of the deceased as PW-1 and got marked the investigation papers and other documents to

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prove the age, income and avocation of the deceased. Respondent - insurer has taken specific contention that the rider of the motorcycle did not possess valid driving license as on the date of accident which is clear breach of policy conditions. In support of such plea, the Insurance Company examined two witnesses and produced copy of the policy as Ex.R2 and notice issued to the owner and driver of the offending vehicle as Ex.R3. Perusal of the said notice indicates that the Insurance Company made certain attempts to find out whether the rider of the motorcycle was possessing driving license or not. The records indicate that the respondent No.1 who was the owner of the vehicle did not contest the proceedings before the Tribunal. On appreciation of the entire pleading and evidence on record, we are of the considered view that the rider of the motorcycle was not possessing valid and effective driving license as on the date of accident. Admittedly, the claimants have not produced the driving license of the rider of the motorcycle either before the Tribunal or before this Court. Still the Tribunal ought to have invoked the principle of pay and recover as held by the Hon'ble Supreme Court in catena of cases and directed the insurance company to

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pay the compensation and recover the same from the owner of the motorcycle. The Hon'ble Supreme Court in the case of Shamanna, supra reiterating the law laid down in its earlier judgment in National Insurance Co. Ltd. Vs. Swaran Singh² , has approved the doctrine of 'pay and recover'. It would be useful to extract the relevant paragraphs of the aforesaid judgment for ready reference.

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"5. In the case of third-party risks, as per the decision in National Insurance Co. Ltd. v. Swaran Singh [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] , the insurer had to indemnify the compensation amount payable to the third-party and the insurance company may recover the same from the insured. Doctrine of “pay and recover” was considered by the Supreme Court in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] wherein the Supreme Court examined the liability of the insurance company in cases of breach of policy condition due to disqualifications of the driver or invalid driving licence of the driver and held that in case of thirdparty risks, the insurer has to indemnify the compensation amount to the third-party and the

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2 (2004) 3 SCC 297

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insurance company may recover the same from the insured. Elaborately considering the insurer's contractual liability as well as statutory liability vis-àvis the claims of third parties, the Supreme Court issued detailed guidelines as to how and in what circumstances, “pay and recover” can be ordered. In para 110, the Supreme Court summarised its conclusions as under : (SCC pp. 341-42)

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“110. The summary of our findings to the various

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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 the 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 a

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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 wherefor 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 circumstances of each case.

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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.

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(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) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.

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(ix) The Claims Tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third-party arising in use of motor vehicle. The said power of the Tribunal is not restricted to decide the claims inter se between

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claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between the insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.

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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 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

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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) 6. As per the decision in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] , 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

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“as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver … does not fulfil the requirements of law or not will have to be determined in each case”.

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Keeping in mind the enunciation of law laid down

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by the Hon'ble Supreme Court referred supra, we are of the considered view that the Tribunal is justified in saddling the liability on respondent No.1 - owner of the vehicle. However, it ought to have directed respondent No.2 - Insurance Company

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to pay the compensation and recover the same from the owner of the vehicle in question. Considering the settled position of law, we uphold saddling of liability on the owner of the vehicle by directing respondent No.2 - insurer to pay the compensation and recover the same from the owner of the vehicle.

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Regarding Quantum:

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Insofar as entitlement of compensation, the Tribunal has awarded Rs.1,53,000/- compensation under the head of loss of consortium, loss of estate and funeral expenses which in our considered view is not just compensation. The pleading and evidence on record indicate that deceased Srihari was the son of claimant Nos.1 and 2 and brother of claimant No.3. Though PW-1 claimed that deceased was aged about 19 years, was pursuing Diploma at PES College, Bengaluru and

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also doing milk vending work in the mornings and evenings, used to earn Rs.20,000/- p.m., there was no concrete material in proof of such occupation and income. However, his age and pursuing Diploma a career course was proved. However, nothing was elicited to disbelieve that the parents were getting monetary support from their young son. However, claimant No.3 the sister of the deceased cannot be treated as dependant

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of the deceased as she is dependent on her parents. Having considered claimant Nos.1 and 2 as dependants of the deceased, the claimants are entitled to compensation under the head of loss of dependency. The deceased was aged about 19 years at the time of accident. The appropriate multiplier would be 18 and deduction would be 50% towards personal and living expenses of the deceased as he was unmarried. In the absence of proof of actual income of the deceased, considering prevailing wage rates and cost of living at the relevant period, this Court notionally assesses the income of the deceased at Rs.14,000/- p.m. and adds 40% under the head of loss of future prospects. Therefore, loss of dependency is assessed as under:

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Rs.14,000/- + Rs.5,600/- (40% future prospects) x 12 x 18 x 50% = Rs.21,16,800/-

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Each of the claimants are entitled to consortium at Rs.40,000/- with 10% escalation i.e. Rs.44,000/- x 3 = Rs.1,32,000/-.

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The claimants are entitled to compensation under the head of loss of estate at Rs.15,000/- with 10% escalation

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and Rs.15,000/- with 10% escalation under the head of transportation of dead body and funeral expenses which would be Rs.16,500/- and Rs.16,500/-, respectively. Therefore, just

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compensation payable is as follows:

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Sl. No.	Particulars	Compensation awarded in Rs.
1.	Loss of dependency	21,16,800/-
2.	Loss of consortium	1,32,000/-
3.	Funeral expenses	16,500/-
4.	Loss of estate	16,500/-
	Total	22,81,800/-
Aw	arded by Tribunal	1,53,000/-
Enh	anced compensation	21,28,800/-

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For the aforementioned reasons, we proceed to pass the following:

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ORDER

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The appeal is partly allowed. The impugned award in M.V.C.No.3964/2019 is modified as follows:

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(i) The claimants are entitled to enhanced compensation of Rs.21,28,800/with interest thereon at 6% p.a. from the date of petition till the date of deposit.

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(ii) Respondent No.2 Insurer shall deposit the said compensation before the Tribunal within four weeks

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