Partly allowed

New India Assurance Co.Ltd. v. Gangisetti Laxman

Telangana HC24 Jan 2013CMA/2419/2001

Case brief

AI extract

What is this about?

This appeal contesting a motor accident compensation award was partially allowed. The court held that the deceased mechanic was a gratuitous passenger, exempting the insurer from direct liability under the policy. However, following Supreme Court principles, the insurer must first pay the award to the claimants and later recover the amount from the vehicle owner.

What did the court decide?

The insurance company is directed to pay the awarded compensation to the claimants first and subsequently recover the amount from the owner of the tractor.

New India Assurance Co.Ltd. Vs Gangisetti Laxman — Motor Accident Claims | Telangana HC (2013)

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HON’BLE SRI JUSTICE R. KANTHA RAO

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C.M.A.NO.2419 OF 2001

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Date:24-01-2013

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Between:

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The New India Assurance Co.Ltd. rep. by its Divisional Manager, Nizamabad

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…Appellant

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And

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Gangishetty Laxman @ Lachanna and 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.2419 OF 2001

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JUDGMENT:

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This appeal is filed by the claimants challenging the order dated 26.04.1996 passed by the Motor Accidents Claims Tribunal (District Judge), Nizamabad in O.P.No.696 of 1993.

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2. The legal representatives of the deceased – Venugopal, a heavy motor mechanic at Nizamabad filed a claim petition under Section 166 of the Motor Vehicles Act before the Tribunal seeking compensation of Rs.3 lakhs on account of death of the deceased in the motor vehicle accident occurred on 06.06.1993 at about 9.15 p.m. The deceased attended the labour work of the tractor bearing No. AP-25-T-1059 and was proceeding in the tractor. Due to rash and negligent driving of the said tractor, the deceased fell down from the tractor, received severe injuries and was admitted in the hospital but ultimately succumbed to the injuries. The evidence of PW-2, an eyewitness to the accident examined by the petitioners discloses that the deceased attended to the tractor and while he was proceeding in the tractor after getting it repaired, met with the unfortunate accident due to rash and negligent driving of the tractor driver. The learned Tribunal below after making enquiry in to the claim, awarded compensation of Rs.1,10,200/- with interest at 12% per annum from the date of the petition till the date of realization holding that the appellant-insurance company and respondent No.6/owner of the tractor bearing No. AP-25-T-1059 jointly and severally liable to pay compensation to the claimants. Though, the insurance company challenged the quantum of compensation on the ground that it is excessive, I find no force in the challenge to the quantum of compensation since the Tribunal took the income of the deceased who was a heavy motor vehicle

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mechanic at Rs.1500/- per month, selected the multiplier relevant to the age of the mother of the deceased since the deceased was unmarried, granted only an amount of Rs.1,10,200/- with interest at 12% per annum from the date of the petition till the date of realization. The interest granted, however, seems to be on higher side and requires to be reduced in the present appeal to 7.5% per annum from the date of the petition till the date of realization and accordingly, the interest is reduced as such.

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3. The principal contention of the appellant-insurance company is that as per the terms and conditions of the policy Ex.B-3, the risk of the deceased despite the fact that he was a motor mechanic and returning on the vehicle after attending the repairs to the tractor is not covered, the learned Tribunal erred in holding that the insurance company is liable to pay compensation to the claimants.

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4. Sri Kota Subba Rao, learned counsel appearing for the appellant-insurance company would contend that there will be one seat of the driver in the tractor, it was not possible for any other person to travel in the tractor except the driver, by allowing the deceased to travel in the tractor, the insured committed breach of terms and conditions of the insurance policy and therefore, the insurance company is not liable to pay compensation to the legal representatives of the deceased.

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5. On the other hand, Sri M. Rajamalla Reddy, the learned counsel appearing for the respondents-claimants would contend

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that since the deceased met with the unfortunate accident after attending to the repair work of the tractor and he being a tractor mechanic, cannot be considered as a gratuitous passenger in the vehicle and therefore, the Tribunal is right in making the insurance company liable to pay compensation to the claimants. The learned counsel appearing for the claimants contended in the alternative that in the event of this Court coming to the conclusion that the appellant insurance company is not liable to pay compensation to the claimants, it would be appropriate on the part of this Court to pass the order directing the appellant-insurance company to satisfy the award in the first instance and then recover the amount paid from the owner of the vehicle. The learned counsel appearing for the appellant-insurance company relied on NEW INDIA ASSUANCE COMPANY v. K. BHARATH KUMAR AND

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OTHER S^[1] wherein the learned single Judge of this Court held that when the passenger boarded a goods vehicle in the midway with goods cannot be considered as owner of goods, he is a gratuitous passenger, the insurance company is not liable to pay compensation and the insurance company also cannot be directed to pay compensation to the claimants and then recover the amount from the insured.

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6. I have gone through the judgment relied on by the learned counsel appearing for the insurance company. But, in the said case, the learned single Judge has not considered the ratio laid down by the Hon’ble Supreme Court in NATIONAL INSURANCE

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CO.LTD. v. BALJITH KAUR AND OTHER S^[2] and the other

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judgments of the Apex Court which lay down the principles governing the subject. Further, the facts of the present are being altogether different from the facts of the case before the learned single Judge, the case on hand is distinguishable and the view expressed by the learned single Judge has no application to the facts of the present case.

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7. I would like to examine the legal position in the light of the principles laid down by the Apex Court in the judgments relied on by the learned counsel appearing for the respondents-claimants and some other pronouncements of the Supreme Court on the subject.

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8. In BALJITH KAUR case (cited supra), the Hon’ble Supreme Court has laid down that in spite of the 1994 Amendment to the Motor Vehicles Act, the effect of the provisions contained in Section 147 with respect to persons other than the owner of the goods or his unauthorized representatives remains the same. According to the Supreme Court, the owner of the goods and also his authorized representative would now be covered by policy in respect of goods vehicle, it was not the intention of the legislature to provide for the liability of the insurer with respect to the passengers, especially gratuitous passengers, who were neither contemplated at the time of contract of insurance was entered into nor was any premium paid to the extent of the benefit of insurance to such category of people. I n BALJITH KAUR case (cited supra), the claim relates to the legal representatives of the deceased, a 16 year old boy who was returning in the truck from a

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marriage ceremony and died as a result of the rash and negligent driving of the driver of the goods vehicle. Therefore, the case relates to a gratuitous passenger. The Apex Court ultimately declared the legal position on the subject in the following terms: “We, therefore, are of the opinion that the interests of justice may be sub-served if the appellant herein is directed to satisfy the awarded amount in favour of the claimant if not already satisfied and recover the same from the owner of the vehicle. For the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing court as if the dispute between the insurer and the owner was the subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer.”

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9. It has been argued on behalf of the appellant-insurance company that under Section 168 of the Motor Vehicles Act the claims Tribunal is only empowered to make an award determining the award of compensation and it is not competent to issue any direction to the insurance company to pay the award amount in the first instance and then recover the same from the owner of the vehicle.

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10. It was argued by the learned counsel appearing for the insurance company that in some cases, the Hon’ble Supreme Court in exercise of its powers under Articles 136 to 141 of Constitution of India issued directions to the insurance company to satisfy the award in the first instance and then recover the same

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from the owner of the vehicle, but the Tribunals or the High Courts have no such powers to issue any such direction. I absolutely see no force in the contention.

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11. In BALJITH KAUR case (cited supra), 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 interest of justice will be sub-served 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 inasmuch as can be resolved by the Tribunal in such a proceeding. In KUSUM LATA AND OTHERS v

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SATBIR AND OTHER S^[3] 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

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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.

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12. I n UNITED INDIA ASSURANCE CO.LTD. v A.N. SUBBULAKSHMI AND OTHERS (NON-REPORTABLE – Civil Appeal No.5681 of 2004) when the direction issued by the High Court that the insurer of the lorry shall pay the compensation and thereafter it is for the insurer to institute appropriate action against the owner of the lorry thereafter for amount if any paid over and above the liability covered by the insurance policy, was questioned before the Supreme Court. Considering the appeal preferred on the said limited question, the Supreme Court upheld the direction issued by the High Court. I n NEW INDIA INSURANCE COMPANY v DARSHANA DEVI AND OTHER S^[4] the Supreme Court in exercise of its jurisdiction under Article 142 of the Constitution of India read with Article 136 despite holding that the insurance company is not liable to pay compensation issued direction to the insurance company to satisfy the award in the first instance and then recover the dues from the insured without instituting any separate suit. I n PRAMOD KUMAR AGRAWAL

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AND ANOTHER v MUSHTARI BEGUM (SMT.) AND OTHER S^[5] , the Supreme Court while upholding the judgment of the High Court that the insurance company is not liable to pay compensation to the claimants, directed in terms of BALJITH KAUR case (cited supra) that the insurer shall pay the quantum of compensation fixed by the Tribunal about which there was no dispute raised, to

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the respondent claimants within three months from the date of judgment and for the purpose of recovering the same from the owner the insurer shall not be required to file a suit.

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13. The provisions of the Motor Vehicles Act insofar as they relate to payment of compensation to the victims or their legal representatives, are beneficial in nature. They have been enacted by the Legislature with the object of providing compensation which is just and reasonable and also to enable the claimants to realise the fruits of the award easily and without being subjected to multiplicity of proceedings. Unless the victims of the accident or their legal representatives are able to secure the compensation by a speadier method, the very object of the act will be defeated.

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14. The scheme of the Motor Vehicles Act, 1988 as can be seen from the provisions of 147 and 149 of the Act is that after notice to the insurer when the award is passed, the position of the insurer is that of the 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 contract or the statutory provisions so long as there is a valid third party insurance. The distinction has to be drawn between the defences which the insurance compensation can take under Section 149 of the Motor Vehicles Act and its obligation to satisfy the decrees and awards insofar as the victims/third parties are concerned. In each and every case wherein there occurs the violation of terms and conditions of the policy by the insured, if the claimant is asked to pursue his remedies against the insured in execution which

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involves the long drawn procedure it causes undue hardship to the claimant and in most of the cases, the claimant may not be in a position to realise the award amount. Therefore, in appropriate cases the Tribunals constituted under the Act or this Court can issue a direction to the insurer to satisfy the award amount in the first instance by paying the same to the claimant and then recover the same from the owner of the offending vehicle. The said direction would be as already said is strictly in accordance with the ratio laid down by the Apex Court in Baljith Kaur case.

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15. Therefore, in the instant case, following the ratio laid down by the Supreme Court in Baljith Kaur case and other judgments which have been referred to hereinbefore it is held that the insurance company is not liable to pay compensation to the claimants on account of the violation of the terms and conditions of the policy by the insured in allowing the mechanic to travel in the tractor, the appellant-insurance company is directed to satisfy the award in the first instance by paying the award amount to the claimant and then it may recover the same from the owner of the offending vehicle.

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16. In the result, the appeal filed by the insurance company is allowed in part without any order as to costs.

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R.KANTHA RAO,J

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Date:24.01.2013 Ccm

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HON’BLE SRI JUSTICE R. KANTHA RAO

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C.M.A.NO.2419 OF 2001

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Date:24-01-2013