New India Assurance Co. Ltd, ... vs Smt. Phulabai Wd/O Jaydev Meshram ...
2017 Latest Caselaw 8669 Bom

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                     IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                           NAGPUR BENCH, NAGPUR


                                     FIRST APPEAL No.1256 OF 2016


        New India Assurance Co. Ltd.,
        Patni Bhawan, Gandhi Bagh,
        Nagpur, through the Regional Manager,
        Nagpur, Regional Office at
        Dr. Ambedkar Bhawan, M.E.C.L.
        premises 4th Floor, High Land Drive,
        Seminary Hills, Nagpur-440 006 (M.S.).                                                :      APPELLANT

                           ...VERSUS...

        1.   Smt. Phulabai wd/o. Jaydev Meshram,
              aged about 35 years, 
              Occupation : Household.

        2.    Dhanraj s/o. Jaydev Meshram,
               aged about 17 years,
               Occupation : Education.

        3.    Amol s/o. Jaydev Meshram,
               aged about 14 years,
               Occupation : Education.

        4.    Ku. Sneha d/o. Jaydev Meshram,
               aged about 7 years,
               Occupation : Education.

               All R/o. Betala, Tahsil Bramhapuri,
               Distt. Chandrapur, Applicant No.2 to 4
               are minors, represented by their natural
               guardian mother, the Applicant No.1.

        5.    Shri Rajendra s/o. Ganpatrao Katole,
               aged about ____ years,
               Occupation : Business,
               R/o. House No.508,
               Ghat Road, Nagpur - 440 009.




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        6.    Naresh s/o. Panduran Waghmare,
               Aged about 19 years,
               Occ.: Driver, R/o. Pipala,
               Tahsil Umrer, Distt. Nagpur.                                                :      RESPONDENTS


        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
        Shri B.P. Bhatt, Advocate for the Appellant.
        None for the Respondents.
        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-


                                                      CORAM  :   S.B. SHUKRE, J.

th DATE : 14 NOVEMBER, 2017.

ORAL JUDGMENT :

1. This appeal questions the legality and correctness of the

judgment and order which fastens liability to pay compensation while

exonerating the insured and the owner of the offending vehicle from very

same liability, which has been passed on 22 nd June, 2016 by Motor

Accident Claims Tribunal, Chandrapur, in Motor Accident Claim Petition

No.116/2003.

2. A claim petition was filed under Section 166 of the Motor

Vehicles Act by the respondent Nos.1 to 4 against the appellant and

respondent Nos.5 and 6, the insurer, the owner and the driver of the

offending vehicle, one matador bearing registration No.MH-34/A-1630.

Deceased Jaydev, husband and father of the respondent Nos.1 to 4

respectively was travelling by this vehicle on 26.3.2003. He was

proceeding to Bramhapuri from Piprada and on way, due to rash and

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negligent driving of the vehicle, the vehicle turned turtle and the

accident occurred. In this incident, deceased Jaydev lost his life on the

spot of the accident.

3. It appears that the claim petition was resisted only by the

appellant which filed its written statement. The petition was dismissed

against respondent No.5, the insured and the owner of the offending

vehicle because, respondent Nos.1 to 4 the claimants took no steps to

serve the respondent No.5. The dismissal order was specially passed

below Exh.-1, the claim petition, on 15.7.2010 by the Claims Tribunal,

Chandrapur. The respondent No.3 though duly served, chose to remain

absent before the Tribunal and, therefore, the petition was proceeded

against him exparte.

4. On merits of the case, the Tribunal found that the respondent

Nos.1 to 4 were entitled to receive compensation of Rs.5,17,000/-

together with interest at the rate of 7.5 % p.a. from 22.6.2016 till actual

realization, inclusive of no fault liability of Rs.50,000/-. It further found

that this compensation was payable jointly and severally by the insurance

company and owner of the offending vehicle/insured and driver of the

offending vehicle. The judgment and order in this regard were passed on

22.6.2006. Being aggrieved by the same, the appellant is before this

Court in the present appeal.

5. I have heard Shri B.P. Bhatt, learned counsel for the

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appellant. Nobody is present on behalf of respondent Nos.1 to 5 though

duly served. Ample opportunities have also been granted to them to

make their final submissions, but to no avail. In fact, the first notice that

was issued by this Court on 21st December, 2016 itself indicated that the

matter would be finally heard. On 3 rd October, 2017, the appeal was

fixed for final disposal, by consent. On 10 th October, 2017, learned

counsel for the appellant and learned counsel for the respondent Nos.1 to

4 were present, although nobody was present on behalf of respondent

Nos.5 and 6. On 10 th October, 2017, the appeal was extensively heard

but learned counsel for respondent Nos.1 to 4 was of the opinion that

this Court must grant time to her. In deference, the time was granted

and the matter was kept for final disposal on the next day i.e. 11 th

October, 2017. On 11th October, 2017, it was urged by learned counsel

for respondent Nos.1 to 4 that record and proceedings were necessary,

which was inspite of the fact that it was agreed earlier that record and

proceedings would not be required in the present case as the issue

involved could be decided on the basis of admitted facts and applicable

law. Yet, this Court, passed an order calling for record and proceedings.

The record and proceedings were received on 13 th November, 2017 and

now, this matter has been taken up for final disposal. But, as stated

earlier, nobody is present on behalf of respondent Nos.1 to 4. Similarly,

respondent Nos.5 and 6 are also absent. Therefore, I have considered the

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submissions made by learned counsel for the appellant. I have gone

through the record and proceedings and also the impugned judgment

and order.

6. Now, the only point which arises for my determination is :

Whether any liability to pay compensation can be fastened upon the insurance company without first holding the insured and the owner of the offending vehicle as liable to pay compensation ?

7. Learned counsel for the appellant submits that this question

has been answered affirmatively by the learned Member of the Motor

Accident Claims Tribunal, Chandrapur, by not considering the applicable

law. He submits that the judgment of the Hon'ble Apex Court rendered

in the case of A. Robert vs. United India Insurance Co. Ltd., reported in

2000 ACJ 252 was misread by the Tribunal and the Tribunal failed to

apply the law settled by the Hon'ble Apex Court. For his such

submission, he places his reliance upon the cases Oriental Insurance Co.

Ltd. vs. Sunita Rathi and others, reported in 1998 ACJ 121 and V. Raja

Reddy vs. T. Venkata Subbarao and another, reported in 2013 (1)

T.A.C. 872 (A.P.).

8. On going through the judgments relied upon by the learned

counsel for the appellant and also the judgment relied upon by the

Tribunal, I find great substance in the argument of learned counsel for

the appellant.

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9. The law in this regard has been settled by the three Judges

Bench of the Hon'ble Apex Court in the case of Sunita Rathi and others

(supra). This judgment has clarified the nature of liability of the

insurance company and held that the liability is in the nature of

indemnifying the insured for the loss that he incurs on his being made to

pay compensation to the claimants, in terms of contract of insurance

entered into between the insurer and the insured. It is observed that the

insurer cannot be held liable on the basis of insurance policy unless the

owner of the vehicle who is insured is first fastened with liability to pay

compensation. Relevant observations of the Hon'ble Apex Court as they

appear in paragraph 3 are reproduced thus :

"It follows that the insurer cannot be held liable on the basis of the above policy in the present case and, therefore, the liability has to be of the owner of the vehicle. However, we find that the High Court, without assigning any reason, has simply assumed that the owner of the vehicle was not not liable and that the insurer alone was liable in the present case. This conclusion, reached by the High Court, is clearly erroneous. The liability of the insurer arises only when the liability of the insured has been upheld for the purpose of indemnifying the insured under the contract of insurance. There is, thus, a basic fallacy in the conclusion reached by the high Court on this point."

10. This judgment of the Hon'ble Apex Court has been followed

by the learned Single Judge of Andhra Pradesh High Court in V. Raja

Reddy (supra). The facts of V. Raja Reddy's case were almost identical to

the facts of the present case wherein claim petition filed by the appellant

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under Section 166 of the Motor Vehicles Act was dismissed against the

owner of the offending vehicle and, therefore, no liability to pay

compensation was fixed upon the owner of the offending vehicle.

11. In the instant case, there is no dispute about the fact that the

claim petition was dismissed on 15.7.2010 against the respondent No.5,

the owner of the offending vehicle and the insured, by the Tribunal for

failure of respondent Nos.1 to 4/claimants to take steps for effective

service upon him. This order was never sought to be recalled by the

respondent Nos.1 to 4. It was also not challenged at any point of time by

respondent Nos.1 to 4. Therefore, the order became final. The Motor

Accident Claims Tribunal in the impugned judgment and order, has also

found that the order of dismissal of the petition against the respondent

No.5 having become final, no liability to pay compensation could be

fastened upon the owner, who is the respondent No.5 in this appeal and

accordingly, it exonerated respondent No.5 of his any liability to pay the

compensation. This is reflected from the final order that has been made

in the present case by the Tribunal. Under the final order, liability to pay

compensation has been fastened only upon the insurance company and

the driver of the offending vehicle and not upon the owner of the

offending vehicle. This finding is completely inconsistent with the law

laid down by the Hon'ble Apex Court in Sunita Rathi (supra). The law is

clear and it is to the effect that liability of the insurance company arises

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only after the liability of the insured is fixed because it is in the nature of

indemnifying the insured for the loss that he would incur on his being

made to pay compensation to a person seeking compensation under

Section 166 of the Motor Vehicles Act. However, this law has not been

applied by the Tribunal and thus it has committed an illegality in the

present case.

12. In fact, what the Tribunal has done is to place its reliance

upon the case of A Robert (supra) wherein facts were entirely different.

The Hon'ble Apex Court observed that the name of respondent No.2, who

was the insured and owner of the motor vehicle stood deleted and the

Special Leave Petition against him was also dismissed by an order dated

14.9.1998 on account of absence of service to him and, therefore, the

question of statutory liability of the insurance company would survive for

its consideration. This observation has been made in the background of

facts peculiar to the case of A. Robert. In that case, the liability to pay

compensation was fixed upon the insured and the owner by the Tribunal

and service upon him was not completed by the appellant in the Special

Leave Petition filed by the appellant. That was the reason why the

Special Leave Petition was dismissed against him and it was in this

background that the Hon'ble Apex Court held that the question of

statutory liability of the insurance company would survive for its

consideration. It was not a case where the insured and the owner of the

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offending vehicle had not been found to be liable to pay compensation.

It was a case where the insured, after having been found liable to pay

compensation, was absent before the Hon'ble Apex Court. Therefore, in

my humble opinion, this case could not have been applied to the facts of

the present case.

13. In the result, I find that the insurance company in the present

case would have to be exonerated of its liability to pay the compensation

as the insured, whom it indemnifies, has already been exonerated of his

liability to pay compensation. Such being the facts of this case, there

would be no question as well of directing the insurance company to first

pay and recover later from the owner in the present case. The question is

answered as in the negative. The appeal deserves to be allowed.

14. The appeal is allowed with costs.

15. The impugned judgment and order are hereby quashed and

set aside.

16. The claim petition filed against the appellant stands

dismissed with costs.

17. The amount deposited in this Court is permitted to be

withdrawn by the appellant.

JUDGE okMksns