Future General India Insurance Co. Ltd. vs Mahesh s/o Dataram Bhilware & Ors.

The decision rendered in both these appeal shall also govern the disposal of connected appeals bearing M.A. Nos.772/2017, 773/2017,

774/2017, 775/2017, 777/2017, 778/2017, 780/2017, 938/2017, 939/2017, 941/2017, 944/2017, 945/2017, 946/2017 and 947/2017.

By this common judgment, we propose to dispose of the aforenoted bunch of miscellaneous appeals as they arise out of the same proceedings

and common award passed by the learned Motor Accident Claims Tribunal, Indore. For the sake of convenience the facts are borrowed from

M.A. No.771/2017(Future General India Insurance Co. Ltd. v. Mahesh) and M.A. No.934/2017(National Insurance Co. Ltd. v.

Mahesh)886/2000(Bharat Singh Vs. State of Madhya Pradesh).

M.A. No.934/2017 has been filed by the National Insurance Company Limited, insurer of Omni Maruti Van bearing Registration No.MP-09-

BC-804 and M.A. No.771/2017 has been filed by the Future General India Insurance Co. Ltd., insurer of the Truck bearing HR-64-1055 against

the award dated 16/03/2017, passed by XII Motor Accident Claims Tribunal, Indore in Claim Case No.242/2016(in M.A. No.934/2017) and

Claim Case No.236/2016(in M.A. No.771/2017), by which the learned Tribunal in Para - 10 and 11 of the impugned award gave a finding that

the accident had occurred due to rash and negligent driving of the driver of Omni Maruti Van and while allowing the claim petition of the claimants

directed both the Insurance Company that is insurer of offending Omni Maruti Van and insurer of Truck to pay 50-50% of the claim amount as

awarded by the learned Claims Tribunal and recover the same from the owner and driver of the offending vehicle.

Both the Insurance Company aggrieved by the award passed in eight claim cases and filed these 16 appeals.

The facts of the case are that on 15/11/2010 when passengers of Omni Maruti Van were travelling in the said Maruti van bearing Registration

No.MP-09-BC-804 and when they reached Sharma Dhaba, Bypass, the truck bearing registration no.HR-64-1055 and the aforesaid Maruti van

met with an accident resulting into death of eight persons(Kusum Bai, Pappu, Nikita, Komal, Golu, Shantibai, Chanchal and Hemlata). At the time

of accident, the respondent No.3 - Momin Khan (in M.A. No.934/2017) was driving the vehicle Omni Maruti Van. The Maruti van was owned

by respondent No.2 - Shahid Khan and insured with appellant / National Insurance Company Ltd.( in M.A. No.934/2017) whereas the Truck

was owned by respondent No.5 - Harjindal Singh, driven by respondent No.4 - Avatar Singh(in M.A. No.934/2017) and was insured with

respondent No.6 - Future General Insurance Co. Ltd.

The claimants filed their claim under Section 163-A of the Motor Vehicle Act, 1988 before the learned Claims Tribunal for grant of

compensation on various heads.

The case was contested by the National Insurance Company Limited denying the allegation and further raise permissible defence whereas the

other nonapplicants/ respondents also opposed the claim petition.

Similar defence was taken by appellant - Future General India Insurance Co. Ltd. The learned Tribunal in Paras - 10 and 11 of the impugned

award considered the statement of Ramsingh, sole eye-witnesses of the accident, who was at that relevant point of time was driving auto-rickshaw

and was going towards Rau from Tejaji Nagar. As per his statement Truck bearing registration No.HR.64.1055 came at the place of occurrence

and dashed the Omni Maruti Van in which 7-8 persons were sitting. The matter was reported and FIR was lodged and police personnel after

investigating the matter filed the charge-sheet. The certified copy of the charge-sheet was filed before the learned Claims Tribunal vide Ex-P/1 to

P/33. As per charge-sheet the accident took place on 15/11/2010 at 7.30 in the evening near Rau, Dewas, Bypass culvert. This witness in his

cross-examination has deposed that FIR was not lodged by him nor he has shown as eye-witness in charge-sheet/final report(Ex-P/1). No

statement of offending Truck driver and Omni Maruti van driver were recorded before the Claims Tribunal nor the claimants cited any witness as

eye-witnesses or recorded their statement. On the basis of charge-sheet filed before the Claims Tribunal, the learned Tribunal gave a finding about

the accident which was occurred on 15/11/2010 between the Omni Maruti Van and the offending Truck at 7.30 p.m., in the evening near Rau

Bypass. The learned Tribunal also gave a finding that as per Inquest Report(Ex-P/5 to Ex-P/11), which is part of the charge-sheet it has been

established that on a vehicular accident, eight persons namely Kusum Bai, Pappu, Nikita, Komal, Golu, Shantibai, Chanchal and Hemlata have

died. The claimants have filed claim petitions on their behalf vide Claim Case Nos.242/16, 235/16, 236/16, 237/16, 238/16, 239/16,240/16 and

241/16.

The learned Claims Tribunal considering the fact that at the time of accident total 9 persons were travelling in the Maruti Van and gave a finding

that the driver of the Maruti van was not negligent in driving the vehicle. In Para -14 of the impugned award, learned Claims tribunal gave a finding

that as nine persons were travelling in the vehicle and, therefore, there is violation of terms and conditions of the licence issued to the Omni Maruti

Van holder by the competent authority/National Insurance Company Limited and held that the driver was driving the offending vehicle contrary to

the terms and conditions of licence. In Para - 25 , the learned Tribunal awarded the compensation and held that both the Insurance Companies I.e.

National Insurance Company Limited and Future General India Insurance Company Limited, driver and owner of the Omni Maruti Van and the

Truck are jointly and severally liable to pay the compensation and directed both the aforesaid Insurance Companies to pay the amount first and

then recover it from their respective owner and driver of the offending vehicle. It is this finding by which both the Insurance Companies have been

aggrieved and challenged the same by filing these appeals under Section 173 (1) of the Motor Vehicles Act, 1988.

Shri S.V. Dandwate, learned counsel for the appellant - National Insurance Company Limited(in M.A. No.934/2017) has submitted that the

learned Tribunal erred in holding that the appellant is also liable to pay the amount inspite of there being categorically finding to hold that the

accident was due to negligent driving on the part of the truck driver alone. In view of the aforesaid finding, the appellant / National Insurance

Company Limited, who is insurer of Maruti Omni is not liable to pay 50% of the amount.

His second submission is that Motor Vehicle Act, 1988, there is no such provision which mandates that the insurer should pay first and then

can recover it from the owner, on the contrary, the operating section 149 of the Motor Vehicle Act starts with the wordings that ""no sum shall be

payable."" which means that in case, if the insurer is able to prove their defence, that no sum is payable by the insurer. He further submitted that the

Hon''ble Supreme Couirt in the matter of National Insurance Co. Ltd. vs. Parvath Henny (2009 MACD 552) was examining the reference to

consider whether such directions of pay and recover can be given or not, when there is no liability of the insurer, but it is learnt that the reference

has not been answered till today and, therefore, till the matter is decided by the Apex Court, no such direction can be issued by the learned Claims

Tribunal.

He further submitted that once insurer is able to establish that there was a breach of policy condition, then there is no provision under the

Motor Vehicle Act, which directs the insurer to pay first and then recover the same from the insured. Such right was being exercised by the

Hon''ble Supreme Court under Article 142 of the Constitution of India. But the tribunals are hearing the case under Section 166/163A of the

Motor Vehicle Act, and no such powers are vested to grand such directions. He further pointed out that by virtue of Section 149(A) of the Motor

vehicle Act, only in such cases where the policy has been issued with restricted liability, or policy contains such a condition which otherwise is not

enumerated under section 149(2) of the Motor Vehicle Act, pay and recover directions can be given. After the amendment in the Motor Vehicle

Act, there cannot be any policy restricting the liability of the insurance company, except for third party property damage, the question of pay and

recover in any other eventuality does not arise.

He lastly drawn my attention to Section 149(7) of the Motor Vehicle Act and submitted that the Insurance Company can avoid their liability

only in terms of Section 149(2) of the Act, which further clarifies that once the defence under Section 149(2) is established, there cannot be any

liability upon the insurance company and prayed that the impugned award against the appellant/ National Insurance Co. Ltd. be set aside and the

insurance company be absolved from the liability satisfying the award and pay compensation to the claimants.

Shri Jain, learned counsel appearing on behalf of appellant / Future General India Insurance Co. Ltd. (in M.A. No.771/2017 has supported

the arguments of the learned Shri Dandwate, learned counsel appearing in M.A. 934/2017 on behalf of National Insurance Co. Ltd. He has drawn

my attention to Para - 25 of the award by which the learned Tribunal directed the Insurance Company to pay and recover the amount and

submitted that the learned Tribunal committed jurisdictional error in passing the impugned award directing the insurance company to pay and

recover. Such direction can only be issued by the Hon''ble Supreme Court under Article 142 of the Constitution of India and prayed that the

impugned award against the appellant / Future General India Insurance Co. Ltd. be set aside and the insurance company be absolved from the

liability satisfying the award and pay compensation to the claimants.

Shri Gautam Gupta, learned counsel appearing on behalf of the respondent /claimant(s) has supported the award passed by the learned Claims

Tribunal and submitted that if a claim for compensation is made under Section 163 (A) of the Act, the learned Tribunal has to prove the use of

Motor Vehicle in an accident. In a claim petition under Section 163A, the fault on the part of driver is not required to be proved. The

compensation will be awarded in terms of the schedule without calling upon the victim or his dependents to establish any negligence or default on

the part of the owner of the vehicle or the driver of the vehicle. The proof of negligence is not a pre-condition to award the compensation and,

therefore, arguments of the learned counsel Shri Dandwate, on the issue of negligence has no relevance. He submitted that the learned Tribunal

rightly disbelieved the statement of Ramsingh, sole eye-witness of the case and on the basis of the charge-sheet gave a finding that the accident

which occurred on 15/11/2010 between the offending Omni Maruti Van and the Truck has been duly proved and as the use of the said motor

vehicles are involved, rightly awarded the compensation and directed both National Insurance Co. Ltd. and Future General India Insurance Co.

Ltd. to satisfy the award. He submitted that the main issue in the present Bunch of appeals is about correctness of the view taken by the learned

Tribunal by absolving the National Insurance Company Ltd., insurer of the Omni Maruti Van bearing registration no.MP-09-BC-804 and Future

General India Insurance Company Ltd., insurer of the offending truck bearing registration no.HR 64 1055, which were duly insured with them. He

has drawn my attention to the latest decision of the Hon''ble Supreme Court in the case of Pappu & Ors. v. Vinod Kumar Lamba & Anr.[2018

SCC Online SC 23]. Paras -15 and 16 are relevant which reads as under :-

The next question is: whether in the fact situation of this case the insurance company can be and ought to be directed to pay the

claim amount, with liberty to recover the same from the owner of the vehicle (respondent No.1)? This issue has been answered in the

case of National Insurance Company Ltd. (supra). 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 paragraph 107, the Court then observed thus:

We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such

a direction upon 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 realize 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 has not been able to do so, the insurance company may initiate a separate action therefor 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.

Further, in paragraph No.110, the Court observed thus:

The summary of our findings to the various issues as raised in these petitions are as follows:

(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.

(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163A or Section 166 of the Motor

Vehicles Act, 1988 inter alia in terms of Section 149(2)(a) (ii) of the said Act.

(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, have 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 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 duly licensed driver or one who was not

disqualified to drive at the relevant time,

(iv) The insurance companies are, 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.

(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would

depend upon the facts and circumstance of each case.

(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 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 insured under Section 149(2) of the Act.

(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.

(viii) xxx

(ix) xxx

(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.

(xi) The provisions contained in Sub-section (4) with proviso thereunder and Sub-section (5) which are intended to

cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of

insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of

insurer against 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.

He has further drawn my attention to Para - 76 of the law laid down the Hon''ble Apex Court in the case of National Insurance Co. Ltd. vs.

Swaran Singh & Ors. passed by Accident Claims Journal 2004(Volume 1), the decision of the Division Bench of the Principal Seat, M.P. High

Court, Jabalpur in the case of United India Insurance Co. Ltd. v. Annapurna Shandilya & Ors. [2007 ACJ 1168], Asha & Ors. v. National

Insurance Co. Ltd. & Ors.[2006 ACJ 2778], M. Lakshmi & Ors. v. D. Chandran[2007 ACJ 1173] and submitted that the learned Tribunal has

rightly directed both the Insurance Companies to pay the awarded amount to the claimants and in turn recover the same from the owner of the

vehicle.

Para - 76 of National Insurance Co. Ltd. vs. Swaran Singh & Ors.(supra) reads as under :-

Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be

liable to satisfy the decree and, therefore, its liability may be zero but it does mean that it did not have initial liability at all. Thus, if the insurance

company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured. If this interpretation is

not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can

be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for

the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid

liability in terms of sub- section (2) of Section 149 is restricted as has been discussed hereinbefore. It is one thing to say that the insurance

companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the

facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the

same from the owner. These two matters stand apart and require contextual reading.

To counter the aforesaid, Shri Jain, learned counsel for the claimants has drawn my attention to the decision of the Single Bench in the case of

National Insurance Co. Ltd. v. Ramkalibai & Ors. in M.A. No.3531/2008, decided on 11/01/2011. Para 3 and 5 are relevant which reads as

under:-

In support of his submission, learned counsel for the appellant drew my attention to the statement of Suresh(AW2) and submitted that Suresh

and deceased Radheshyam were working as labourer and they were doing the work of lifting the sand from the river bed. At the time of accident

the tractor was transporting the sand, which is a commercial purposes and therefore, in view of law laid down by the Apex Court in the case of

National Insurance Co. Ltd. Vs. Parvathneni & Anr., reported in MACD 2009 (SC) 552, the Insurance Company has no liability to pay

compensation to the claimants nor the insurance company can be compelled to make payment and later on recover it from the owner of the

vehicle. Para 7, 8 and 9 are quoted herein below :-

No doubt, there are some decisions which have taken the view that even if the insurance company has no liability, yet it must pay

and later on recover it from the owner of the vehicle. [See for example National Insurance Co. Ltd. vs. Yellamma & Another (2008)

7 SCC 526, Samundra Devi vs. Narendra Kaur (2008) 9 SCC 100 (vide para 16), Oriental Insurance Co. vs. Brij Mohan (2007) 7

SCC 56 (vide para 13), New India Insurance Co. vs. Darshan Devi (2008) 7 SCC 416 (vide para 21), etc.].

We have some reservations about the correctness of the aforesaid decisions of this Court. If the insurance company has no liability

to pay at all, then, in our opinion, it can not be compelled by order of the Court in exercise of its jurisdiction under Article 142 of the

Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle. In our view, Article 142

of the Constitution of India does not cover such type of cases. When a person has no liability to pay at all how can it be compelled to

pay? It may take years for the insurance company to recover the amount from the owner of the vehicle, and it is also possible that for

some reason the recovery may not be possible at all.

Hence, we direct that the papers of this case be placed before Hon''ble the Chief Justice of India for constituting a larger bench to

decide the following questions:

(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor

Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the

same from the owner of the vehcile.

(2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142

permit the Court to create a liability where there is none?

He further submitted that the learned Claims Tribunal has committed an error in directing both the Insurance Companies to pay first the amount

of compensation and then recover the same from the owner and driver of the offending vehicle.

I have heard the learned counsel for the parties and arguments advanced by them and also perused the impugned award and record of the

case.

It is not in dispute that the claim for compensation is made under Section 163(A) of the Motor Vehicles Act, 1988. the learned Claims

Tribunal rightly held that the no insurer of the offending motor vehicles can be absolved on the ground of rash and negligent driving and violation of

terms and conditions of the licence.

On due consideration of the aforesaid and in view of the law laid down by the Hon''ble Apex Court in the case of Oriental Insurance Co. Ltd.

v. Nanjappan[2004 AIR (SC) 1630], I am of the view that both the insurers(National Insurance Co.Ltd. and Future General India Insurance Co.

Ltd.] are bound to pay the quantum of compensation as fixed by the Tribunal. This amount can be recovered from the insured subsequently. For

the purpose of recovering the same from the insured, the insurers shall not be required to file a suit. It may initiate a proceeding before the

concerned Executing Court as if the dispute between the insurers 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 insurers.

For the reasons recorded herein above, we find no merit in the instant appeals.

Consequently, the appeals filed by the Insurance Companies/appellants are hereby dismissed. The appellants are directed to deposit the entire

awarded amount of compensation together with interest before the Claims Tribunal within four weeks from the date of receipt of certified copy of

order passed today. The Tribunal shall invest the same in a short term fixed deposit account of any nationalized bank fetching maximum interest in

the same proportion as has been fixed in the names of the claimant/s. Parties shall bear their own costs.

A copy of the order be retained in the record of connected miscellaneous appeal bearing M.A. Nos.772/2017, 773/2017, 774/2017,

775/2017, 777/2017, 778/2017, 780/2017, 938/2017, 939/2017, 941/2017, 944/2017, 945/2017, 946/2017 and 947/2017.