Dismissed

The Oriental Insurance Co. Ltd. v. Geddam Veeraswamy

Telangana HC28 Dec 2012CMA/3576/2003

Case brief

AI extract

What is this about?

The Court dismissed the insurance company's appeal, upholding the Tribunal's direction to pay compensation first and recover it from the vehicle owner. The judgment clarifies that despite policy violations regarding gratuitous passengers in goods vehicles, Section 168 empowers the Tribunal to order the insurer to pay first.

What did the court decide?

The appeal filed by the insurance company is dismissed without any order as to costs.

The Oriental Insurance Co. Ltd. Vs Geddam Veeraswamy — Motor Accident Claims | Telangana HC (2012)

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HON’BLE SRI JUSTICE R.KANTHA RAO C.M.A.No.3576 of 2003

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DATE:28.12.2012

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BETWEEN:

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The Oriental Insurance Company Ltd. Rep. by its Branch Manager, Visakhapatnam

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.. Appellant/R-2

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And

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Geddam Veeraswamy and two others

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Respondents

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HON’BLE SRI JUSTICE R.KANTHA RAO

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C.M.A.No.3576 of 2003

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JUDGMENT:

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This appeal is filed by the Oriental Insurance Company Limited against the order dated 20.05.2003 passed in O.P.No.738 of 2000 by the Motor Accident Claims Tribunal-cum-VI Additional District Judge, Visakhapatnam.

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2. I have heard the learned counsel appearing for the appellantInsurance Company. None appeared for the respondents/claimants.

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3. The deceased-Geddam Srinivas Rao was said to be doing cloth business and he was selling cloths in the villages of Srikakulam District. He boarded the lorry bearing No. AP-04-T-0905 at Pendurthy to go to Kasibugga for the purpose of his cloth business, he paid the price to the owner-cum-driver of the lorry for his travel. While on the way, the lorry on account of rash and negligent driving of its driver, dashed a mile stone near Siddipeta of Srikakulam mandal, as a result of which, the lorry turned turtle, the deceased fell down under the lorry and died instantaneously. On facts and evidence, the learned Tribunal rightly held that the accident was due to rash and negligent driving of the driver of the lorry. The Tribunal also rightly held that the drivercum-owner of the lorry ought not to have allowed the deceased to travel in the said lorry since it is in violation of terms and conditions of the policy of insurance and accordingly, held that the insurance company is not liable to pay compensation. However, the learned Tribunal issued a direction to the insurance company to pay the compensation in the first instance and then recover the same from the owner of the vehicle. The said finding is assailed by the insurance company on the ground that once the insurance company is not liable to pay compensation to the legal representatives of the deceased who was gratuitous passengers in the goods vehicle, the Tribunal ought not to have issued a direction to the insurance company to satisfy the

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award in the first instance and then recover the amount paid from the owner of the vehicle. Reliance is placed on NEW INDIA ASSURANCE COMPANY LIMITED v. ASHA RAN I^[1] and NATIONAL INSRUANCE COMPANY LIMITED v. BOMMITHI SUBBHAYAMMA^[2] . In both the decisions, the Supreme Court has laid down that the insurance company is not liable to pay compensation to the claimants as the claimants/deceased was traveling as gratuitous passenger in a goods vehicle.

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4. But, the crucial question to be determined is whether the Tribunal is right in issuing a direction to the insurance company to satisfy the award in the first instance and then recover the same from the owner of the vehicle.

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5. In NATIONAL INSURANCE CO. LTD. v. BALJITH KAUR

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AND OTHERS^[3] , the Supreme Court did not lay down that the power to issue direction to the insurance company to satisfy the award in the first instance and then recover the same from the insurer was only with the Apex Court under Articles 136 or 141 of the Constitution of India. In the said case, the Supreme Court laid down the law in general terms and held that by issuing such direction interests of justice will be subserved and also emphasized that it has issued the aforesaid direction having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988 and has laid down the legal position in categorical and clear terms that the Tribunal is not only entitled to determine the amount of compensation claimed as put-forth by the claimant for recovery thereof from the insurer, owner or driver of the vehicle jointly and severally but also the dispute between the insurer on the one hand and the owner or driver of the vehicle involved in the accident

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inasmuch as can be resolved by the Tribunal in such a proceeding. In KUSUM LATA AND OTHERS v SATBIR AND OTHER S^[4] the Supreme Court held that that Insurance Company has inherent power to issue such direction. Therefore, the argument advanced by the learned counsel appearing for the insurance company goes contra to the ratio laid down in BALJITH KAUR case (cited supra) and the same cannot be sustained. The Tribunal by virtue of its power and jurisdiction under Section 168 of the Motor Vehicles Act can issue direction to the insurer to satisfy the award in the first instance in favour of the victims/third parties and then recover the amount so paid from the insured. In NATIONAL ASSURANCE COMPANY LIMITED v.

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KAMALA AND OTHERS^[5] the Supreme Court held that the insurance company is liable to pay compensation to third parties, irrespective of the fact that there was any breach or violation of any policy conditions, but the insurance company can recover the amount from the insured the amount paid to third party, if there was any breach of conditions of the policy, but, in the first instance it has to pay the compensation to the claimant.

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6. The Scheme of the Motor Vehicles Act, 1988 as can be seen from the provisions of Sections 147 and 149 is that after notice to the insurer when the award has been passed, the position of the insurer is that of a judgment debtor and it has legal obligation to satisfy the award, despite the fact that it is entitled to avoid liability on the ground of breach of terms and conditions of the contract or the statutory provisions so long as there is a valid third party insurance. A distinction has to be drawn between the defences which the insurance company can take under Section 149 of the Motor vehicles Act and its

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obligation to satisfy the decrees and awards insofar as victims/third parties are concerned. In MACMA Nos.2535 of 2006 and 1661 of 2006, a Division Bench of this Court to which I am a party rendered a judgment applying the ratio laid down in BALJITH KAUR case to the effect that even though the insurance company is not liable to pay compensation for violation of terms and conditions of the policy, it can be directed to satisfy the award in the first instance and then recover the same from the owner of the vehicle.

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7. In the instant case also, by allowing the deceased to travel in a goods vehicle, the insured committed breach of terms of the policy, on account of which the insurance company cannot be held liable to pay compensation to the claimants. But, at the same time, the Tribunal is right in issuing a direction to the insurance company to satisfy the award in the first instance and thereafter recover the same from the owner of the vehicle. The said direction issued by the Tribunal is in accordance with law lay down by the Supreme Court in BALJITH KAUR case. The finding of the Tribunal is therefore upheld by not accepting the contentions urged on behalf of the insurance company.

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8. For the foregoing reasons, the appeal filed by the insurance company fails and the same is dismissed without any order as to costs.

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__________________ Date:28.12.2012 R. KANTHA RAO, J ccm

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THE HON’BLE MR JUSTICE R. KANTHA RAO

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C.M.A.No.3576 of 2003

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DATE:28.12.2012

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