New India Assurance Company Limited vs Akshay Kumar and Others

Dev Darshan Sud, J.—This appeal has been preferred by the Insurance Company against the award made by the Commissioner, under the Workmen''s Compensation Act, Shimla awarding a sum of Rs. 4,84,542/-to the Petitioners who are the son, daughter and wife of deceased Mohan Lal who died in a motor accident. This appeal was admitted on 23.6.2008 on questions of law as set out in the appeal:

1 Whether insurer is liable for the interest imposed on the amount of compensation determined by the Commissioner when the Insurance Policy expressly had excluded such liability?.

2 Whether the Insurance Company is liable to pay interest from the date of accident or from one month after the date of adjudication of the claim?.

Whether the Insurance Company is liable to pay the amount at the first instance in cases of violation of terms of policy despite the law laid down by the Apex Court in National Insurance Co. Ltd. Vs. Bommithi Subbhayamma and Others,

Adverting to the third question, in Mohan Lal v. Smt. Veena Devi and Ors. 2010 (1) Him.L.R. 27 , referring to the decision of the Supreme Court in National Insurance Co. Ltd. Vs. Parvathneni and Another, this Court held:

Learned Counsel appearing for the claimants submits that the Insurance Company would be free to recover this amount in execution from the owner. He placed reliance on the decision of the apex Court in National Insurance Co. Ltd. Vs. Parvathneni and Another, in which it has been held as under:

4 No doubt, there are some decision 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 and Another, , Samundra Devi and Others Vs. Narendra Kaur and Others, Oriental Insurance Co. Ltd. Vs. Brij Mohan and Others, and The New Indian Insurance Company Vs. Darshana Devi and Others, etc. We have some reservations about the correctness of the aforesaid decisions of this Court.

Hence, we direct that the papers of this case be placed before the 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 vehicle?.

(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?.

The law that the Insurance Company can be asked to satisfy the award has as yet not been changed. judgments of the Supreme Court on this point still hold the field. (P. 29)

I also find on the decision of FAO. No. 444 of 2008 decided on 18th December, 2008 that a direction can be issued to the Insurance Company to deposit the amount in question before recovering it from the owner.

Adverting to question No. 2, the law is already well settled. (See: Sita Ram v. Satvinder Singh and Anr. 2008 HLJ 1110) The question is decided accordingly. In this view of the matter, it is but obvious that the Appellant-Insurance Company will be entitled to refund of the interest amount which has been deposited from the date of accident and will be liable only to deposit the interest after thirty days of the date of accident. So far as question No. 1 is concerned, there are no pleadings of proof before the Commissioner. This appeal is accordingly disposed of.