Surider Pal vs National Insurance Co. Ltd. and Another

Devinder Gupta, J.—Order passed on 18.10.2000 by learned Single Judge in I.A. 17/17/2000 in S.No. 513/99 is under challenge by the plaintiff/appellant in this appeal by which learned Single Judge directed the amount of Rs.5,47,000/- to be released in favor of defendant/respondent No.2.

Under the Hire Purchase Agreement an amount of Rupees four lakhs was disbursed to the appellant to enable him to purchase truck Tata 1612 (Make 1997) bearing Registration No.HR 10GA-0030; Engine No.679-D23-FSQ-129521 and Chasis No. 360-324-FSQ-008814. The vehicle was insured with respondent No.1. Under the said Hire Purchase Agreement the appellant had agreed to pay monthly hire charges @ Rs.14,688/- which was payable in 35 Installments. Three Installments had already been paid by the appellant. In the meanwhile, vehicle was stolen. Appellant lodged claim with the Insurance Company. As the claim was not settled by the Insurance Company, on 22.2.99 suit was filed by the appellant claiming a decree for Rs.6,50,000/- with interest @ 24% against the Insurance Company and an injunction against respondent No.2 prohibiting it from levying any damages/charges/penal interest against the outstandings.

During the pendency of the suit the Insurance Company deposited a sum of Rs.5,47,000/- and took up a stand that the obligation of the insurer under the policy is only to indemnify the market value of the vehicle prevailing at the time of loss and not the insured value. After the amount had been deposited respondent No.2 filed an application (I.A.1717/2000) praying that the amount be released in its favor. This prayer was opposed by the appellant. Learned Single Judge on 18.10.2000 passed the impugned order directing release of Rs.5,47,000/- in favor of respondent NO.2. Learned Single Judge took note of Clause IMT 10 of the policy and also of the fact that by that date more than Rupees six lakhs including delayed payment charges were payable by the plaintiff/appellant to respondent No.2. This order is under challenge by the appellant.

Learned counsel for the appellant vehemently contended that may be that under the hire purchase agreement the financier (respondent No. 1) is deemed to be the owner but under the provisions of the Motor Vehicle Act 1988 for all intends and purposes the appellant is the owner of the vehicle. As such the impugned order is liable to be set aside.

We have perused relevant clauses of the insurance policy as well as the terms of the Hire Purchase Agreement. Learned Single Judge did correctly appreciate the provisions of the policy but did not appreciate another aspect that by allowing the amount to be released in favor of respondent No.2 the suit filed by the appellant is rendered almost infructuous. Even adequate precaution was not taken for making available the said amount o the Court in the event of suit of appellant being decreed or respondent No.2 held not entitled to the amount. The fact that the appellant''s suit is yet to be adjudicated upon in which respondent No.2 has not laid any claim yet, we are of the view that the learned Single Judge failed to exercise discretion properly in ordering release of the amount in favor of respondent No.2 and the also without any condition. At this stage we are not inclined to go into the question of entitlement of the appellant to the amount in question and there is no question of release of the amount in favor of the appellant for that reason. However, in order to safeguard the interest of the parties we are inclined to modify the impugned order to the extent of aforementioned. Accordingly the appeal is partly allowed. The impugned order is modified to the extent that the amount will be released to respondent No.2 subject to its furnishing Bank Guarantee to the satisfaction of the Registrar of this Court for refund of the amount with interest at Bank Rate or any part of the said amount in the event of the suit being decreed and it being held that respondent No.2 is not entitled to this amount.