Selvarani and Others vs Balasubramanian and Others

P. Devadass, J.—These 5 connected appeals arise out of a common road accident. They are heard together and are being disposed of by

this common judgment. The road accident took place on 23.5.2007. In this, the occupants of a Tata Sumo car sustained multiple injuries. They

claimed compensation. The details of their claim and their appeals are tabulated as under:

Admittedly, at the time of accident, the driver of the offending Tata Sumo car was holding only a learner''s licence. The currency of the licence is

from 9.1.2007 to 8.7.2007. The accident took place on 23.5.2007. The Tribunal, coming to the conclusion that since the driver was not duly

licensed to drive the car, exempted the insurer of the vehicle, namely, United India Insurance Co. Ltd. from paying the quantified compensation

amount to the claimants, however, directed the driver of the vehicle and its owner to pay them the compensation amounts.

The appeals are directed as against leaving the insurer from indemnifying the vehicle owner. Further, in C.M.A. (MD) No. 8 of 2010, the

appellant seeks enhancement of compensation since her sufferings are more.

Learned counsel for the appellants would contend that at the time of accident there was insurance coverage for the car. The appellants are third

parties. For the sin of the car owner, allowing the respondent No. 1, who is having only learner''s licence to drive the car, the appellants cannot be

penalised. The learned counsel would cite Mahamooda v. United India Insurance Co. Ltd., 2006 ACJ 2825 (SC) and submit that under similar

circumstances, when the offending vehicle was driven by a person with learner''s licence, the Supreme Court issued direction for ''pay and

recover''. The learned counsel would also cite Jawahar Singh v. Bala Jain, 2011 ACJ 1677 (SC) and submit that even when the driver of the

offending vehicle did not possess a driving licence, the court issued direction for ''pay and recover''. So, according to the learned counsel for the

appellants, although the driver of the vehicle was not having any licence, the Tribunal rightly saddled liability for payment of compensation on the

vehicle owner, however, declined to issue direction to the insurance company to pay the amount and recover it from the vehicle owner. The

learned counsel would further contend that appellant Kanimozhi has suffered very much and undergone surgical treatment, however, the Tribunal

awarded her very less compensation.

On the other hand, learned counsel for United India Insurance Co. Ltd. would contend that the Tribunal has considered the driver of the vehicle

as a tortfeasor, further, the vehicle owner/respondent No. 2, is a wrongdoer in allowing a person with a learner''s licence to drive the vehicle. In the

circumstances, Claims Tribunal rightly directed the respondent Nos. 1 and 2 to pay the compensation amount and rightly exempted the insurance

company from paying the amount. Learned counsel would cite Sardari v. Sushil Kumar, 2008 ACJ 1307 (SC), wherein, when the driver of the

offending tractor was not having any driving licence, the court exempted the insurance company from paying the amount. The learned counsel

would also contend that as per the impugned judgment of the Tribunal, the vehicle owner and also the vehicle driver have been asked to pay so,

they are affected by the common award of the Tribunal and they have not preferred any appeal, the award is in the nature of granting benefit to the

appellants, in the circumstance, the appellants have no locus standi to prefer the appeals.

I have considered the rival submissions, perused the materials on record and the common impugned award of the Tribunal and the citations

produced by both sides.

In these cases, the insurance company has been exempted by the Tribunal. The appellants are having decrees. They cannot effectively enjoy the

fruits of it by getting the amounts from the vehicle owner. The Claims Tribunal by allowing the insurance company to avoid its liability under the

insurance policy, really the appellants are aggrieved. To that extent, they can appeal. The vehicle owner need not appeal. But, the vehicle owner

can appeal when wrongly ''pay and recover'' direction is issued against him. Therefore, the contention that in the absence of appeal by the driver

and the vehicle owner, the claimants cannot prefer the appeals cannot be accepted.

C.M.A. (MD) No. 8 of 2010 is concerned with injured Kanimozhi. She was then 13 years old. The doctor determined her disability at 75 per

cent. The Tribunal awarded her Rs. 1,50,000 as the disability compensation. PW 6, doctor, had stated that ball joint in her hip has been surgically

removed and she cannot sit or walk as before. Thus, there is loss of amenities of life to her. Under this head, she is awarded Rs. 20,000. The

suffering of the minor girl is much more. The Tribunal awarded her only Rs. 10,000 towards pain and suffering. In the facts and circumstances, it is

increased to Rs. 20,000. Towards extra nourishment only Rs. 5,000 has been granted. It is increased to Rs. 10,000. In other respects, we are not

interfering with the award of the Tribunal.

The problem of driving licence of drivers of offending vehicles assumes importance, since that has become a defence for the insurance

companies to avoid their liability on the ground of breach of terms and conditions of the policy.

In National Insurance Co. Ltd. v. Swaran Singh, 2004 ACJ 1 (SC), the Hon''ble Supreme Court had to deal with these matters. The court

categorised the erring drivers on the point of driving licence. There may be cases of drivers having learner''s licence, fake licence or not having a

valid licence. In Swaran Singh (supra), the Hon''ble Apex Court held that in view of section 149 of Motor Vehicles Act merely on account of these

problems, the insurance company cannot be allowed to avoid its liability under the contract of insurance except to the extent of proving that wilfully

the vehicle owner has placed the offending vehicle in the possession of a person with such driving licence or no licence.

Section 146 of the Motor Vehicles Act prescribes compulsory insurance of vehicles plying on public roads. Section 147 of the Act prescribes

limit, such as, number of persons, extent of liability. Section 149 of the Act starts with the head note, duty of the insurance company to satisfy the

award passed against the insured.

The contract of insurance is a bipartite agreement as between the insured (vehicle owner) and the insurer. Third parties, namely, road accident

victims are not a party to such contract. Liability created under contract of insurance is contractual in nature. The terms and conditions therein will

regulate the parties to the contract, namely, the insurer and the insured. The liability created u/s 149, Motor Vehicles Act is statutory in nature.

There is distinction between the said contractual liability and the said statutory liability.

Liability to pay compensation to road accident victims has been statutorily imposed on the insurance company by directing them to satisfy the

award passed against the vehicle owner (see section 149 of the Motor Vehicles Act). It introduced the ''concept of indemnification''. When the

vehicle owner is called upon to pay the compensation amount in view of his fault or fault of his driver, there is a risk for him to pay the amount to

the road accident victim. To cover this risk, the vehicles on public roads must be insured with an approved insurance company. This has been

brought about by a contract of insurance as between the vehicle owner and the insurer. This bipartite agreement is to cover the insured from the

said risk. It is an arrangement between the vehicle owner and the insurance company. Actually it is to safeguard the road accident victims. The

road accident victims are third parties. The liability created u/s 149 of Motor Vehicles Act is statutory.

But, the liability created under contract of insurance as between the vehicle owner and the insurance company is contractual. If there is any

breach of terms and conditions of the policy, it would be a matter between the vehicle owner and the insurance company. For that, the insurance

company can proceed against the other party to the contract of insurance, namely, the vehicle owner. For the sin of the vehicle owner, a third

party/road accident victim should not be made to suffer.

In such circumstances, in order to protect the road accident victims, the idea of directing the insurance company first to honour its statutory

commitment by paying the compensation amount to the victims (see section 149, Motor Vehicles Act) and then, by virtue of the right available to it

under the contract of insurance policy, proceed against the insured for the breach of terms and conditions of the policy has been devised in New

India Assurance Co. Ltd. v. Kamla, 2001 ACJ 843 (SC).

An innocent road accident victim should not be left in lurch, asked to run after the owners of offending vehicles with paper decrees. In Indian

condition, the mental agony of a decree holder really starts when he was granted a decree. Unless the awards are satisfied they remain paper

decrees/awards. Many awards are filed in execution courts and they remain unexecuted. Its effect will be more on the road accident victims. That

is how, ''the concept of pay and recover'' came into being.

In Sardari v. Sushil Kumar, 2008 ACJ 1307 (SC), on 4.3.2008, in similar circumstances, a two-Judge Bench of the Hon''ble Supreme Court

held that the insurance company need not pay. But, on 9.5.2011, in Jawahar Singh v. Bala Jain, 2011 ACJ 1677 (SC), a two-Judge Bench of the

Hon''ble Apex Court held that when the minor had driven the offending vehicle, the insurance company cannot avoid its liability and it has to pay

the compensation amount to the claimants and recover it from the vehicle owner. These are rendered by two co-equal Benches. We have to follow

the latest decision. In the recent decision, when the rider of the motor cycle at the time of accident was minor, who did not hold a driving licence at

all, the Hon''ble Apex Court directed the insurance company to pay the award amount to the road accident victims and recover it from the vehicle

owner.

In the case before us, Tata Sumo was driven by the respondent No. 1, who was then having only learner''s licence. As per the Motor Vehicles

Act, it is also a valid driving licence. No doubt, it is a breach of terms and conditions of insurance policy. But, that has not been breached by the

inmates of the vehicle. No doubt, there is a duty upon the owner of Tata Sumo car to place the vehicle in the possession of proper person. He has

breached it. He has committed the fault. But, that is not the fault of the road accident victims.

In the circumstances, we are of the view that the Tribunal is not right in allowing the insurance company to avoid its statutory liability u/s 149,

Motor Vehicles Act to pay the compensation amount to the victims. It is a fit case for issuing ''pay and recover'' direction. In the result, in C.M.A.

(MD) No. 8 of 2010, the award amount is modified. The appellant is awarded Rs. 2,82,000 with 7.5 per cent interest per annum from the date of

claim petition till deposit. Within 4 weeks from the date of receipt of a copy of this judgment, respondent No. 3, United India Insurance Co. Ltd.,

shall deposit the entire compensation amount, less amount, if any, already deposited and recover the entire amount from the respondent No. 2. For

this purpose, it need not file a separate suit. Based on the direction in this judgment itself, it can file execution petition before the appropriate court.

On such deposit, the adult appellants are entitled to withdraw their compensation amount, less amount, if any, already withdrawn. The minors''

amount shall be kept in bank deposit up to 18 years of their age. However, the accrued interest thereon shall be regularly paid to their guardian.

The civil miscellaneous appeals are disposed of accordingly. No costs.