M/S Royal Sundaram General Vs Smt Sujatha

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1 - NC: 2025:KHC:16103 MFA No. 8731 of 2017

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 17^TH DAY OF APRIL, 2025

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BEFORE

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THE HON'BLE MR JUSTICE T.M.NADAF MISCELLANEOUS FIRST APPEAL NO.8731 OF 2017

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(MV-D)

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BETWEEN:

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M/S ROYAL SUNDARAM GENERAL INSURANCE COMPANY LTD., REGISTERED OFFICE, SUNDARAM TOWERS, NO.45 & 46, WHITES ROAD, CHENNAI - 600 002 REPRESENTED BY MANAGER

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…APPELLANT

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(BY SRI. RAVI S SAMPRATHI, ADVOCATE)

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AND:

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Digitally signed 1. SMT SUJATHA by W/O LATE SUNIL KUMAR, MADHUSHREE AGED ABOUT 29 YEARS H Location: High Court of 2. KUM. ULLASINI Karnataka D/O LATE SUNIL KUMAR

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KUM. ULLASINI D/O LATE SUNIL KUMAR AGED ABOUT 07 YEARS

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MASTER UTHSAV S/O LATE SUNIL KUMAR AGED ABOUT 04 YEARS

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SINCE RESPONDENT NOS.2 & 3 ARE MINORS REPRESENTED BY RESPONDENT NO.1, MOTHER AND NATURAL GUARDIAN,

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ALL ARE RESIDING AT HOSAKERE, NAGALAPURA VILLAGE, N.R PURA TALUK, CHICKMAGALUR DISTRICT - 577 101

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SRI GOPAL S/O ANKAIAH, AGED ABOUT 30 YEARS RESIDENT OF KRISHNOOR, NAGALAPURA VILLAGE, N.R.PURA TALUK, CHICKMAGALUR DISTRICT - 577 101

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…RESPONDENTS

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(BY SRI. K.S.GANESHA & SRI. S.Y.SUMA DIXIT, ADVOCATE FOR R1; R2 & R3 ARE MINORS REP BY – R1; R4-SERVED & UNREPRESENTED)

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THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED 16.08.2017 PASSED IN MVC NO.294/2015 ON THE FILE OF THE PRINCIPAL SENIOR CIVIL JUDGE & CJM, MEMBER, MACT, CHIKKAMAGALURU AND DISMISS THE SAID CLAIM PETITION AS AGAINST THE APPELLANT, IN THE INTEREST OF JUSTICE AND EQUITY.

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

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CORAM: HON'BLE MR JUSTICE T.M.NADAF

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ORAL JUDGMENT

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Though this appeal is posted for Admission, with the

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consent of both the learned counsel for the parties, the matter is taken up for final disposal.

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This appeal is filed by the appellant - Insurance

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company calling in question the judgment and award dated 16.08.2017, in MVC No.294/2015, passed by the Principal Senior Civil Judge and CJM and Addl.MACT, Chikkamagaluru on the ground of liability fastened.

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The parties shall be referred to as per their rankings before the Tribunal for easy reference.

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It is undisputed that the accident occurred on 22.12.2014, wherein one Sunil Kumar succumbed to the injuries suffered in a road traffic accident. The deceased was aged 33 years at the time of the accident and was earning a sum of Rs.10,000/- per month. As per the contention of the claimants before the Tribunal, the claimants instituted a claim petition, claiming a sum of Rs.20,00,000/- along with interest.

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Upon service of notice to the respondents, respondent No.1 though served remained exparte. Respondent Nos.2 and 3 appeared before the Court through their respective counsel. Respondent No.3 –

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appellant herein filed its statement of objections. However, respondent No.2 has not filed any written statement or objections.

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The appellant – insurance company in the statement of objections denied the case of the claimants. It is further contended that the vehicle involved in the accident is a goods vehicle. The deceased was travelling as a gratuitous passenger and was not a coolie under the insurer. It also contended that there is a delay in lodging the complaint and the compensation claimed by the claimants is excessive, exorbitant and unjust.

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The Tribunal upon completion of the pleadings, proceeded to pass the impugned judgment and award whereby a compensation of Rs.11,34,000/- was awarded under various head along with interest at 9% per annum and directed the insurance company to deposit the amount holding that as on the date of the accident, the insurance policy was in existence and the deceased being coolie was

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covered under the policy. It is this award which is under

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challenge in the present appeal.

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Heard Sri. Ravi S. Samprathi learned counsel

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for the appellant and Sri. K.S. Ganesha and Smt.S.Y.Suma

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Dixit, learned counsel for respondents and respondent Nos.2 and 3 being minors are represented by respondent No.1. Respondent No.4 though served remained unrepresented.

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Sri.Ravi S. Samprathi vehemently contended

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that the claimants have not produced any documents to show that the deceased was an employee / loader under the insured. The deceased was a gratuitous passenger in the offending vehicle. The Tribunal has not considered the contentions raised by the insurance company. He has taken this Court through the complaint at Exhibit-P2 to contend that the complainant has not stated that the deceased Sunil was a coolie under the insured. However, has specifically stated the names of the coolies as Krishna, Guru, Krishnappa, Venkatesha, George, Mohan,

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Paramesha and that Sunil was in cabin and sustained grievous injuries and succumbed to the injuries while under treatment. He has further submitted that the Tribunal has failed to consider this fact and came to the conclusion that, the deceased was an employee/loader under insured and in that view of the matter, the liability fastened on the insurance company is liable to be setaside and the petition be dismissed against the insurance company.

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Refuting the submissions of learned counsel appearing for the appellant / insurance company, Sri.Ganesh vehemently submitted that now it is a settled position of law by the Hon’ble Apex Court in the case of

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PAPPU YADAV AND OTHERS vs. VINOD KUMAR LAMBA AND ANOTHER¹ wherein on adjudication of the claim petition, in case of third party claimant, it was held that the insurance company is primarily liable to pay the compensation with a liberty to recover the same from the

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1 (2018) 3 SCC 208

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owner. He further submitted that the deceased was a coolie under the insured. The failure of the complainant to name the deceased in the complaint is not fatal, as he has specifically stated that the deceased was travelling in the vehicle, after collecting arecanuts from the owners to unload the same to the market. The Tribunal has rightly considered the case of the claimants and awarded the compensation, which does not call for interference at the hands of this Court.

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Having heard the learned counsel for the parties and perused the record the point that emerges for consideration of this court is:

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“Whether the Tribunal is right in fastening the absolute liability on the appellant- insurance company in the absence of the respondent / insured -owner of the offending vehicle failed to discharge the burden casted upon him?”

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My answer to the above point is ‘partly in affirmative’ for the following reasons:

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Though the deceased was travelling in the offending vehicle, he becomes a third party to the insured and the insurer. In the absence of any material to the effect that the deceased was employee / loader under the insured and in the absence of any written statement by the owner of the vehicle and as per statement in the complaint, Exhibit-P2, there is some force in the arguments advanced by the learned counsel for the appellant that the deceased was not a coolie / employee under the insured.

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However, the learned counsel for the appellant does not dispute that the law is now settled in respect of the third party claims as per the judgment of the Hon’ble Apex Court referred supra. Though the owner of the vehicle appeared through counsel, however, he has not filed the written statement nor produced any documents to show that the deceased was in fact was an employee under him and failed to discharge the burden casted upon him. The mere fact that the existence of the insurance policy, let alone will not absolve the burden of the insured

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to prove his case, in order to satisfy the conditions stated

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in the insurance policy.

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The Hon’ble Apex Court in the case of PAPPU

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YADAV supra, is paragraph Nos.17 and 18, has held as follows:

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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

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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 sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realise 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 therefore 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

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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 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

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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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(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)-(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 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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In view of the statement in FIR, the deceased although a gratuitous passenger in the goods vehicle, but was a third party to the contract between insured and insurer.

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In view of the principle of law laid down by the Hon’ble Apex Court, in the aforesaid judgment, this Court holds that the appellant - insurance company is primarily liable to pay the compensation and thereafter recover the same from the owner of the vehicle as the deceased being the third party to the policy.

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REGARDING INTEREST:

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So far as interest is concerned, the Tribunal has awarded 9% interest per annum, without there being any material on record and discussion in the judgment. In the absence of any specific material regarding the rate of interest, the interest on the compensation would be at 6% per annum.

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For the reasons stated above, this Court passes the following :

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ORDER

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i) The appeal is Allowed-In-Part ;

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ii) The judgment and award passed by the Tribunal dated 16.08.2017, in MVC No.294/2015, passed by the Principal Senior Civil Judge and CJM and Addl.MACT, Chikkamagaluru is modified;

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iii) So far as fastening the absolute liability on the insurance company is concerned, the insurance company is directed to pay the award amount, along with interest at 6% from the date of filing of the petition till realization within six weeks from the date of receipt of a copy of this order, with liberty to recover the compensation from the owner of the vehicle.

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Page Nos.15 & 16 retyped and replaced vide order dated 25.07.2025.

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