Partly allowed

M. Tholashamma v. P. Bade Saheb

Telangana HC9 Dec 2014MACMA/2928/2008

Case brief

AI extract

What is this about?

The High Court allowed a partial appeal in a motor vehicle accident compensation case. It set aside the total exoneration of the insurer regarding a fake license, applying the principle of pay and recovery. The court also reduced the interest rate from 9% to 7.5% per annum.

What did the court decide?

Insurer directed to be liable for joint payment and recovery; interest rate reduced from 9% to 7.5%; insurer directed to deposit compensation amount within one month.

M. Tholashamma Vs P. Bade Saheb — Insurance | Telangana HC (2014)

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HONOURABLE Dr. JUSTICE B.SIVA SANKARA RAO M.A.C.M.A.No.2928 OF 2008

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JUDGMENT:

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The claimants filed this appeal having been aggrieved by the decree and Judgment of the learned Chairman of the Motor Accidents Claims Tribunal–cumIV Additional District Judge, Kurnool, (for short, ‘the Tribunal’) in M.V.O.P.No.823 of 2002 dated 09.03.2004, awarding compensation of Rs.2,00,000/-(Rupees Two Lakhs only) with interest at 9% per annum as against the claim of Rs.2,00,000/- in the claim petition under Section 140 and 166 of the Motor Vehicle Act, 1988 (for short, ‘the Act’), only against the owner of the tractor by exonerating the insurer for the driver not having valid license.

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2. Heard learned counsel for the petitioners and the learned counsel for the respondents. Perused the material on record. The parties hereinafter are referred to as arrayed before the Tribunal for the sake of convenience in the appeal.

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3. The appellants-claimants are no other than wife and parents of the deceased Mangali Laxmanna, aged 30 years as per Ex.A3 – Post Mortum Report, who claimed compensation against the owner and insurer of the tractor bearing No.AP 21V-1663 with a claim of Rs.2,00,000/- for the accident dated 01.09.2002 and the Tribunal while awarding the compensation of Rs.2,00,000/- with interest @9% per annum, exonerated the insurer even the Ex.B1-Insurance Policy covers risk for the reason of the Ex.B4 so called driving license of the driver A.Ramudu appears to be fake one and Ex.A4 - the M.V.I. Report in column No.17 also suggests the same, besides the Ex.A5 charge sheet, which clearly discloses that the driver of the offending vehicle did not possess valid and effective driving license for which he was also charged for the offence under Section 3 and 181 of the M.V.Act. The present appeal is maintained with the contentions that the Tribunal has gravely erred in respect of not fixing joint liability against the insurer atleast with liability of pay and recovery, hence sought to allow the appeal.

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4. Whereas, learned counsel for the insurer contended that the tribunal when exercised its discretion to exonerate the insurer for this Court sitting in appeal, there is nothing to interfere, hence to dismiss the appeal. It is also contended that the rate of interest of 9% per annum awarded by the Tribunal is also excessive, exorbitant and against the settled expressions.

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5. Now the points that arise for consideration in the appeal are:

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1. Whether the award of the Tribunal exonerating the insurer on the ground of the so called driving license of the driver of the tractor found fake one and not genuine, is unsustainable and requires interference by this Court, if so with what observations?

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2. To what result?

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POINT-1:

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6. The manner of accident is not in dispute. The quantum of compensation awarded by the Tribunal is also not in dispute. But the only dispute is regarding exonerating the insurer and also the rate of interest from one of the contentions supporting the Tribunal award otherwise to reduce the rate of interest as per the claim of the insurer. The Apex Court in United India Insurance Co. Ltd. Vs. Lehru and others^[1] held that even if the license is found to be fake, in the absence of showing that the owner has got conscious knowledge and willfully and intentionally allowed the driver, the insurer cannot be exonerated to the third party claim, once the policy covered the risk but for to pay and recover. Infact referring to the expressions of the Apex Court in National Insurance Company Limited Vs. Swaran Singh and others^[2] and Lehru (supra) it was held that due to imperfect license or no valid driving license, the insurer cannot be exonerated to indemnify the claims of the third party, once the policy is covered under risk. The law laid down in Swaran Singh (supra) so far not overruled by any other expression much less, but for some other expressions, though saying insurer to be exonerated where the owner cum driver had no license and when there is conscious knowledge. Even later expression in Oriental Insurance Co. Ltd. V. Nanjappan and others^[3] also held the same proposition

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upholding the expression in Lehru (supra) & Swaram Singh(supra) cases. The later expression in Kanwar Shamsher Singh and Others Vs. Satbir Singh and others^[4] and S.Iyyapan v. United India Insurance Company Limited^[5] , also held the same. Here, even coming to the facts on hand, there is nothing to say that the owner in conscious knowledge that the license is fake, and still allowed the driver, apart from same also no way exonerate to indemnify as per policy to the third party claims but for to recover from owner. As such, the Tribunal is not correct in exonerating insurer rather fixing joint liability to the extent of pay and to recover with necessary safeguards.

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Coming to the rate of interest, even though, there are no cross objections, the rate of interest seeks discretion if appellate Court could interfere as laid down by the Apex Court in DDA Vs. Joginder S. Monga^[6] and in TN Transport Corporation v. Raja Priya^[7] , it was held that the Courts are bound to consider the suit filed in rate of interest and under Section 171 of the Act, interest of 7.5% is just and reasonable. Even the recent 3 Bench Judgment, expression of the Apex Court in Rajesh v. Rajbir Singh^[8] , it was held that 7.5% per annum rate of interest is just and reasonable. Accordingly, the rate of interest is required to be modified from 9% per annum to 7.5% per annum. Accordingly, point No.1 is answered.

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POINT-2:

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7. The result is appeal is partly allowed, while upholding the compensation and by reducing the rate of interest from 9% per annum to 7.5% per annum, by fixing liability on the insurer by setting aside the order of total exoneration to the extent of pay and recovery, by directing the insurer to deposit the compensation amount within one month from the date of receipt of the order, failing which the claimants can execute and recover. It is made clear from the settled expressions of the Apex Court in Lehru (supra) and Nanjappa (supra) that the insurer is entitled, while depositing the amount payable, if not deposited or paid any amount so far to deposit the balance to approach the Tribunal to

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direct the RTA concerned not to register any transfer of the crime vehicle and to seek for attachment of the crime vehicle or other property of the insured as an assurance for execution and recovery in the same proceedings or under revenue recovery as per the M.V.Act, 1988 and also ask the Tribunal not to disburse the deposited amount to claimants (but for to invest in a bank) till such attachment order is made. However, after the same, the Tribunal shall not withhold the amount of the claimants, if there is any necessity to permit for any withdrawal but for to invest the balance in fixed deposit in a Nationalized Bank. Rest of the terms of the award of the Tribunal holds good. There shall be no order as to costs.

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Miscellaneous petitions, if any pending in this appeal, shall stand closed.

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_______________________ Dr. B. SIVA SANKARA RAO, J

09-12-2014

vhb

[1] 2003 ACJ 611

[2] 2004 ACJ-1 [3] (2004) 13 SCC 224 [4] (2006) ACJ 789 [5] 2013 (7) SCC 62