Oriental Insurance Co. Ltd. ... vs Mandabai Wd/O. Bhaurao Natkar And ...
2003 Latest Caselaw 1215 Bom

JUDGMENT

S.T. Kharche, J.

1. The bunch of these first appeals involve common question and, therefore, they are being disposed of by this common judgment. All the appeals arise out of the claim petitions instituted by the legal representatives of the deceased under Section 110A of the Motor Vehicles Act, 1939 (for short the Act), granting compensation with interest to the respondents/claimants making the appellant/Insurance Company liable to pay jointly and severally.

2. Brief facts are as under :

The accident occurred on Deulgaon Raja - Jalna Road, two kilometres away from Deulgaon Raja, at about 5.00 a.m. on 17.5.1984. On 16.5.1984 one Ganpat Popalghate had hired the truck bearing No. MTB 1255 for carrying the marriage party of his son to village Loni in Beed district. After the marriage ceremony was over, the marriage party was returning by the same truck to village Rakshasbhawan. When they were on the way, the clutch rod of the truck was broken and, therefore, the truck driver parked the said truck on the foot path for the purpose of repairs. The passengers of the truck got down and slept nearby the truck. Thereafter, at about 5.00 a.m., the truck bearing No. MWA 597 came from the opposite direction and gave violent dash to the former truck killing as many as eight persons. The said truck is owned by respondent No. 3 whereas it was being driven in a rash and negligent manner by respondent No. 4. The said truck was duly insured with the appellant. First Information Report was lodged at the police station and offence was registered against respondent No. 4 under Section 304-A of the Indian Penal Code, under Section 66(1)(b) of the Bombay Prohibition Act and under Section 117 of the Motor Vehicles Act. Thereafter the legal representatives of the deceased had filed claim petitions which were decreed by the Tribunal and the judgment and Award passed by the Tribunal is under challenge in these appeals.

3. Mr. Kukdey, learned Counsel, for the Insurance Company contended that the offending truck bearing No. MWA 597 was purchased by respondent No. 3 in the year 1983 and subsequently it was sold to Darshan Singh Gill on 23.3.1983. He contended that the original owner/respondent No. 3 had taken the comprehensive insurance policy of that truck, but the Insurance Company would not be liable to pay the compensation because the policy was not transferred in the name of vendee, i.e. Darshan Singh. Secondly he contended that the offending truck was being driven under the influence of alcohol by the driver on the relevant date and time and there is medical evidence of Dr. Tikait (D.W. 1) to show that the respondent No. 4 was drunk on the date of the accident. He contended that since the driver was driving the offending vehicle under drunken condition, there was breach of the terms and conditions of the insurance policy. Thirdly, he contended that the Tribunal awarded interest at the rate of 12% per annum from the date of the order, but the Tribunal could have awarded interest at the rate of 9% per annum from the date of the petition till realisation. In support of his submissions, he relied on the decision of Supreme Court in Kaushnuma Begum v. New India Assurance Co. Ltd. . He contended that the Tribunal has committed an error in saddling the Insurance Company with the liability to pay compensation especially when the evidence has been led to show that there was breach of the terms and conditions of the insurance policy and, therefore, the impugned judgment of the Tribunal is not sustainable in law.

4. Mr. Khapre, learned Counsel, for the claimants contended that there was no breach of the terms and conditions of the insurance policy. He further contended that though the insurance policy was not transferred in the name of the vendee, i.e. Darshan Singh, it did not follow that the Insurance Company is absolved from the liability to pay compensation. In support of his submissions, he relied on the decision of the Supreme Court in the case of Rikhi Ram and Anr. v. Sukhrania (Smt.) and Ors. and contended that whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of the insurer does not cease so far as the third party/victim is concerned, even if the owner or purchaser does not give any intimation as is required under the provisions of Section 103A of the Act.

5. Mr. Khapre further contended that the motor vehicle involved in the accident, even if it is presumed was being driven by the driver, there is no evidence to show that the owner of the motor vehicle knowing full well placed the vehicle in the hands of the driver who was drunk and hence it cannot be said that there was breach of the terms and conditions of the insurance policy. In support of his contentions, he relied on the decisions of Apex Court in the case of Sohan Lai Passi v. P. Sesh Reddy and Ors. and in United India Insurance Co. Ltd. v. Gian Chand and Ors. .

6. Mr. Khapre further contended that the claimants have filed cross objections so fair as the grant of interest from the date of order is concerned. He contended that the Tribunal ought to have granted interest either from the date of the accident or from the date of the petition and in absence of special reasons the interest granted from the date of order is erroneous. In support of this submission, he relied on the decisions of Supreme Court in the case of United India Insurance Co. Ltd. v. Narendra Pandurang Kadam and in Municipal Corporation of Greater Bombay v. Shri Laxman Iyer and Anr. 2003 AIR S.C.W. 5505.

7. I have carefully considered the contentions canvassed by the learned Counsel for the parties. In Rikhiram's case , (cited supra), the Apex Court while interpreting Sections 94 and 95 of the Act has held that, "On an analysis of Sections 94 and 95, we further find that there are two-third parties when a vehicle is transferred by the owner to a purchaser. The purchaser is one of the third parties to the contract and the other third party for whose benefit the vehicle was insured. So far, the transferee who is the third party in the contract, cannot get any personal benefit under the policy unless there is a compliance with the provisions of the Act. However, so far as third party injured or victim is concerned, he can enforce liability undertaken by the insurer." The Supreme Court further held that "whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of the insurer does not cease so far as the third party/victim is concerned, even if the owner or purchaser does not give any intimation as required under the provisions of the Act."

8. In view of the ratio laid down by the Supreme Court in the aforesaid case, it is obvious that the Insurance Company cannot be absolved from the liability to pay compensation on the ground that there was no valid transfer of the insurance policy on the date of the accident in favour of Darshan Singh to whom respondent No. 3 is said to have transferred the vehicle by sale. Therefore, the first contention of the learned Counsel for the Insurance Company cannot be accepted for absolving the Insurance Company from the liability to pay compensation.

9. The next contention of the learned Counsel for the Insurance Company is that the offending vehicle was being driven by respondent No. 4 after consuming alcohol and the evidence of Dr. Tikait would also show that the driver was in a state of drunkenness at the time of his medical examination and, therefore, there was breach of terms and conditions of the insurance policy. This contention also cannot be accepted for the simple reason that there is no specific condition mentioned in the original insurance policy produced on record by the Insurance Company and secondly there is no evidence to show that the respondent No. 3/owner of the motor vehicle had placed the vehicle in the possession of the driver who was drunk before the accident. There is no evidence to show that the owner had a remote knowledge that the driver was driving the vehicle under the influence of alcohol. Hence, it is not possible to accept that there was breach of terms of conditions of insurance policy.

10. In United India Insurance Co. Ltd. v. Gian Chand (cited supra), the Supreme Court observed as under :

Even apart from these judgments, which do not improve the case of the respondents, strong reliance was placed on two other judgments of this Court by the learned Counsel for the appellant. As noted earlier they represent the first line of cases. In Kashiram Yadav v. Oriental Fire and General Insurance Co. . a Bench of two learned Judges of this Court, speaking through Jagannatha Shetty, J, distinguished the decision in Skandia Insurance Co. Ltd. v. Kokilaben Chandravandan - and took the view that when the insured had handed over the vehicle to an unlicensed driver, the Insurance Company would get exonerated from its liability to meet the claims to third party who might have suffered on account of vehicular accident caused by such unlicensed driver. In view of the aforesaid two sets of decisions of this Court, which deal with different fact situations, it cannot be said that the decisions rendered by this Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravandan and the decision of the Bench of 3 learned Judges in (supra) in any way conflict with the decisions rendered by this Court in the case of New India Assurance Company Ltd. v. Mandar Madhav Tambe . and Kashiram Yadav v. Oriental Fire and General Insurance Co. .

11. Mr. Khapre, learned Counsel for the claimants, rightly contended that the ratio laid down by the Supreme Court in the aforesaid decision would be useful to arrive at the conclusion as to whether the Insurance Company is liable to pay the compensation. It is true that evidence has been brought on record that the respondent No. 4 was driving the vehicle on the relevant date and time and subsequently when he was medically examined the doctor found that he had consumed alcohol and he was under the influence of alcohol. But then that does not mean that the driver had consumed the alcohol prior to driving of the vehicle or during the course of the driving or after finishing the driving. However, even if it is presumed that the driver had consumed the alcohol and was driving the offending vehicle under the influence of alcohol, that per se would not be sufficient to show that the owner of the motor vehicle knowing full well that the driver was drunk, placed the vehicle in possession of respondent No. 4 for the purpose of driving. In such circumstances, it is not possible to acept that there was breach of the terms and conditions of the insurance policy because the driver had no nexus with the terms and conditions of the insurance policy,

12. That takes this Court to consider as to the grant of interest. The Tribunal has granted compensation with interest at the rate of 12% per annum from the date of the order till realisation. No special reasons are found in the judgment as to why the interest has not been awarded from the date of the accident or from the date of the petition. There is also no reason mentioned in the judgment to show that the award of interest at the rate of 12% per annum would be reasonable. In this context reference may be had to the decision of the Supreme Court in the case of Smt. Kaushnuma Begum v. New India Assurance Co. Ltd. (cited supra), wherein it has been held in para 23 that "Now, we have to fixed up the rate of interest. Section 171 of the Motor Vehicles Act empowers the Tribunal to direct that in addition to the amount of compensation, simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as may be specified in this behalf. Earlier, 12% was found to be the reasonable rate of simple Interest. With a change in economy and the policy of the Reserve Bank of India, the interest rate has been lowered. The nationalised banks are now granting interest at the rate of 9% on fixed deposits for one year. We, therefore, direct that the compensation amount fixed hereinbefore shall bear interest at the rate of 9% per annum from the date of the claim made by the appellants." It follows that the award of interest at the rate of 9% per annum in the present case would be just, fair and reasonable and there is no reason as to why the interest should not be allowed from the date of the petition and to that extent the impugned Award passed by the Tribunal deserves to be modified.

13. In the result, the appeals are dismissed with partial modification in the order of the Tribunal and ends of justice would be met if the interest is awarded at the rate of 9% per annum from the date of the petition till realisation.

14. Mr. Kukdey, learned Counsel, for the Insurance Company contended that since the insurance policy was not transferred this Court may direct the insurer to recover the amount of compensation either from the insured or from the transferee of the vehicle. This submission is supported by the decision of the Supreme Court in Rikhi Ram and Anr. v. Sukhrania (Smt.) and Ors. (cited supra), and, therefore, it is manifest that it would be open for the insurer to recover the said amount either from the insured or from the transferee of the vehicle. However, there shall be no order as to costs.