The Telangana High Court in one of its recent rulings has held that the insurer is still liable to pay the compensation even if insurance policy conditions are violated.
The single-judge Bench of Justice G. Sri Devi placed heavy reliance on principle of "pay and recover" as laid down in the SC Ruling in Manuara Khatun & Ors. Vs. Rajesh Kr. Singh & Ors., 2017 Latest Caselaw 156 SC and added that insurer may recover the same from the owner of the offending vehicle later but first it has to pay to the claimant.
Brief Facts of the Case
The claimant has assailed the MAT order wherein the insurance company's liabilty to pay his compensation has been ruled out. He has filed for compensation under Section 166 of the Motor Vehicles Act of Rs. 1,50,000/- for the injuries sustained by him in a motor vehicle accident has been rejected.
The claimant was travelling in Innova Car along with others and the driver of the said vehicle drove in a rash and negligent manner with high speed and dashed to a bus-stand building. As a consequence, the inmates of the car sustained grievous injuries.
In view of this, the claimant filed claim petition against respondent 1 being the owner and respondent 2 being the insurer of the car.
Respondent 1-owner of the car remained ex parte and the Respondent 2 filed counter denying the manner in which the accident took place, age, avocation, earnings of the claimant and also denied the injuries sustained by the claimant and the medical expenditure incurred by him. It has contended that as per the police record, the crime vehicle was used for hire purpose at the time of the accident and the insurance policy was issued for private use, as such the owner of the car has violated the terms and conditions of the policy and the owner alone is liable to pay the compensation and not the insurance company.
The Motor Accident Tribunal awarded compensation of Rs. 26,707/- with proportionate cost and interest at 7.5% per annum but at the same time held that since the claimant has travelled in a hire vehicle, the same goes against the terms and conditions of the insurance policy and therefore, the insurance company is not liable to pay compensation and the liablity was of the owner alone.
Aggrieved, the claimant filed the said appeal. It is a fact that the claimant died during pendency of appeal and his legal heirs are impleaded as legal representatives. The Counsel for claimant contended that in case of violation of policy conditions, the insurer is still liable to pay the compensation to the claimant and shall recover the same from the owner of the vehicle later. Reliance was placed on SC decision in Manuara Khatun & Ors. Vs. Rajesh Kr. Singh & Ors., 2017 Latest Caselaw 156 SC. It was further pleaded that the compensation so granted by the Tribunal was low and inadequate.
High Court Observation
The Court identified the two prime issues in the present case to be settled:
1. Whether any cause of action survives to the legal heirs of the injured/claimant?
2. Whether the vehicle was used for hire purpose and claimant, who was traveling in the vehicle, comes under the purview of gratuitous passenger and if the claimant comes under the purview of gratuitous passenger, pay and recovery can be ordered against the insurer?
Point No.1: -
The Court referrred to one Karnataka High Court ruling and noted that the answer here is whether the injured/claimant dies as a consequence of bodily injuries sustained in the motor accident, then, his legal representatives can prosecute the claim relates to loss to the estate of the deceased.
In the present case, there is nothing on record to show that the appellant has died as a result of suffering injuries in the accident.
Taking cue from one Himachal Pradesh High Court ruling, the Court stated that an action in torts for claim of compensation for damages on account of injuries suffered by an injured as a right personal to the injured and this right cannot be continued by legal heirs.
It is settled law that claim for permanent injury would abate on the death of original claimant, it concluded.
"In the instant case also, the injured/claimant has died during pendency of the appeal, hence the appeal for enhancement of claim awarded for permanent injury filed under Section 173 of the Motor Vehicles Act, would also abate on the death of claimant and would not survive to his legal representatives. Even otherwise, on merits also, I find that the compensation awarded by the Tribunal is just and adequate and no reason is there to enhance it."
Point No.2:-
“The statements under Section 161 Cr.P.C. being wholly inadmissible in evidence, could not at all be taken into consideration.”
The Court mentioned the above settled position of law as established by the Apex Court. (Rajendra Singh Vs. State of Uttar Pradesh, 2018 Latest Caselaw 766 SC, N.Rama Krishna Reddy v. M.Santhakumari and another)
"“It is well settled that a statement made under Section 161 Cr.P.C. is not a substantive piece of evidence. However, in view of the proviso to Sub-section (1) of Section 162 Cr.P.C., the statement can be used for the limited purpose of contradicting the maker thereof in the manner set out in the said proviso.”
The Court then referred to SC ruling in Saju Vs. State of Kerala, 2000 Latest Caselaw 569 wherein the Apex Court took note of entire previous case law on the subject mentioned and examined the question in the context of Section 147 of the M.V. Act. While allowing the appeal filed by the Insurance Company by reversing the judgment in Saju P.Paul v. National Insurance Co. Ltd. of the High Court, it was held on facts that since the victim was traveling in offending vehicle as “gratuitous passenger” and hence, the Insurance Company cannot be held liable to suffer the liability arising out of accident on the strength of the insurance policy. However, the Apex Court keeping in view the benevolent object of the Act and other relevant factors arising in the case, issued the directions against the Insurance Company to pay the awarded sum to the claimants and then to recover the said sum from the insured in the same proceedings by applying the principle of “pay and recover”.
The above principle has been uphled in one recent ruling of SC in Manuara Khatun & Ors. Vs. Rajesh Kr. Singh & Ors., 2017 Latest Caselaw 156 SC wherein it was observed that the direction to the Insurance Company, being the insurer of the offending vehicle which was found involved in causing accident due to negligence of its driver needs to be issued directing them to first pay the awarded sum to the claimants and then recover the paid awarded sum from the owner of the offending vehicle in execution proceedings.
Placing reliance on Anu Bhanvara v. Iffco Tokio General Insurance Company Limited, 2019 Latest Caselaw 695 SC wherein the Apex Court while dealing with the case of gratuitous passenger directed the insurer to pay the awarded sum to the claimant therein and recover the same from the insured in the same proceedings, the Court noted:
"It is not in dispute that the Innova Car was insured and Ex.B2-Insurance Policy clearly indicates that the accident has occurred during the policy period, it can be said that the claimant was travelled as a gratuitous passenger in the crime vehicle."
The Court thus concluded that the Insurance Company is liable to pay the compensation to the claimant at the first instance and then recover the same from the owner of the offending vehicle by invoking the principle “pay and recover” even though the liability of Insurance Company is exonerated.
The appeal was accordingly allowed and the insurer company was directed to pay the compensation amount.
Read Order Here:
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