Delhi High Court
Bajaj Allianz General Insurance ... vs Sheela Devi & Ors. on 24 August, 2012
Author: G.P. Mittal
$~4, 5 & 6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 24th August, 2012
+ MAC. APP. No.780/2010
BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LTD.
..... Appellant
Through: Ms. Neerja Sachdeva, Advocate.
Versus
SHEELA DEVI & ORS. ..... Respondents
Through: Mr. O.P. Mannie, Advocate for the
Respondents No.1 & 2.
+ MAC. APP. No.894/2010
SHEELA DEVI & ORS. ..... Appellants
Through: Mr. O.P. Mannie, Advocate
Versus
MUKESH KUMAR & ORS. ..... Respondents
Through: Mr. Shahid Ali, Advocate for the
Respondent No. 2.
Ms. Neerja Sachdeva, Advocate for the
Respondent No.3 Insurance Company.
+ MAC. APP. No.1178/2011
SHEELA DEVI & ORS. ..... Appellants
Through: Mr.O.P. Mannie, Advocate
Versus
BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LTD & Ors.
..... Respondents
Through: Ms. Neerja Sachdeva, Advocate for the
Respondent Insurance Company.
Mr. Shahid Ali, Advocate for the
Respondent No.4/Owner
MAC. APP. Nos.780/2010, 894/2010 & 1178/2011 Page 1 of 14
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
1. These three Appeals (MAC. APP. 780/2010, MAC. APP.894/2010 and
MAC. APP. 1178/2011) arise out of a common judgment dated
19.08.2010 passed by the Motor Accident Claims Tribunal(the Claims
Tribunal) whereby a compensation of `6,28,642/- was awarded in favour
of the Claimants(the deceased's parents) for the death of Ashish Kumar, a
bachelor who was a 3rd year student pursuing B.Tech. in Electronics and
Communication Engineering(ECE).
2. MAC. APP. 780/2010 has been preferred by Bajaj Allianz General
Insurance Company Ltd., the insurer of the offending vehicle, truck
No.RJ-14-G-9150, which caused the accident. Its plea is that the
compensation awarded is exorbitant and excessive as in the absence of
any evidence with regard to the deceased's future prospects, the Claims
Tribunal erred in making an addition of 50% in the deceased's income to
award loss of dependency. It is stated that since the Appellant Insurance
Company successfully proved the breach of the policy, it was entitled to
be exonerated instead of making it liable to pay the compensation and
recover it from the owner and the driver.
3. MAC. APP. 894/2010 has been preferred by the Claimants, that is, the
deceased's parents for enhancement of compensation. It is averred that
the deceased was a very bright student pursing Electronics and
Communication Engineering(ECE) from Amity School of Engineering &
Technology, Bijwasan. His potential income ought to have been taken
into consideration to award the loss of dependency.
4. MAC. APP.1178/2011 are the Cross-Objections to MAC. APP. 780/2010
preferred by the Respondent No.4, the owner of the offending vehicle.
His plea is that temporary permit was valid upto 31.08.2008. The Claims
Tribunal erred in holding that the Respondent No.4 did not possess a
valid permit to ply the truck No.RJ-14-G-9150 in the National Capital
Territory of Delhi. Thus, according to the owner, the Claims Tribunal
erred in granting recovery rights to the Insurance Company against him.
5. For the sake of convenience, Appellant in MAC. APP. 780/2010 shall be
referred as the Insurance Company, Appellants in MAC. APP. 894/2010
as the Claimants and the Appellant in MAC. APP.1178/2011 as the
owner of the offending vehicle.
6. First, I shall deal with the quantum of compensation. According to the
Claimants, the deceased was a bachelor aged 19½ years. He was a 3rd
year student of Electronics and Communication Engineering(ECE) at
Amity School of Engineering & Technology, Bijwasan, New Delhi. It
was claimed that after completion of the course, the deceased would have
been gainfully employed with an annual package ranging between `5 to
10 lakhs. During inquiry before the Claims Tribunal, both the Claimants
filed their affidavits. Devi Singh (PW1), the deceased's father, filed his
affidavit Ex.PW1/A and testified that the deceased was a student of
Electronics and Communication Engineering(ECE) at Amity School of
Engineering & Technology, Bijwasan, New Delhi. His testimony in this
regard was not challenged in cross-examination. PW1 deposed that his
son worked as a part time employee with a company for fifteen days at a
salary of `8,000/- per month.
7. Sheela Devi (PW2), the deceased's mother, filed her affidavit Ex.PW2/A.
She deposed that after completion of his course, the deceased would have
got a salary of more than `50,000/- per month. She proved certified copy
of the criminal records and documents with regard to the deceased's
educational qualification and his pursuing B.Tech. as Exs. PW2/1 to
PW2/16.
8. It is no longer res integra that potential income of a student pursuing
professional course has to be taken into consideration to award the loss of
dependency.
9. In the case of Haji Zainullah Khan (Dead) by Lrs. v. Nagar Mahapalika,
Allahabad, 1994 (5) SCC 667, death of a young boy, aged 20 years took
place in an accident which happened in the year 1972. The deceased was
a student of B.Sc Ist year (Biology), a compensation of `1,46,900/- was
increased and rounded off to ` 1,50,000/-.
10. In Ganga Devi & Ors. v. New India Assurance Co. Ltd. & Ors., MAC
APP. 359/2008, decided by this Court on 23.11.2009, which related to the
death of a student (studying medicine) who was doing internship and was
to be awarded the MBBS degree in a short time, the Tribunal awarded a
compensation of ` 9,35,352/- on the basis of the minimum wages of a
Graduate. This Court observed that although the deceased was getting a
stipend of ` 5,000/- per month at the time of his death due to the accident,
he would have ultimately joined as a doctor at a salary ranging between `
16,000/- per month to ` 25,000/- per month. Thus, the average monthly
income of the deceased was taken as ` 18,000/- and after adding 50%
towards future prospects, the compensation was enhanced to ` 21,36,000/.
11. In Ramesh Chand Joshi v. New India Assurance Company MAC
APP.212-213/2006, decided on 20.01.2010, this Court took the potential
income of a BE (Bio-Technology) First year student of Delhi College of
Engineer (DCE) as ` 38,333/- per month.
12. It is urged by the learned counsels for the owner as also the Insurance
Company that no reliable evidence was produced to prove that the
deceased was pursuing B.Tech. Therefore, his potential income cannot
be taken into consideration. In this regard, it is important to note that
PW1 and PW2's testimony that the deceased was pursuing Electronics
and Communication Engineering(ECE) from Amity School of
Engineering & Technology was not challenged in cross-examination.
The Claimants proved on record the receipts for deposit of fee with
Amity School of Engineering & Technology. Further, they proved the
statement of marks Exs. PW2/7 and PW2/8 issued by Guru Gobind Singh
Indraprastha University for the first and second semester. The Claimants
also proved copy of marks by CBSE for Secondary School Examination
and Senior Secondary Examination as Exs. PW2/4 and PW2/5. The
marksheet Ex.PW2/5 shows that the deceased scored 58.6% marks in
Senior School Certificate Examination. Although, no witness from
Amity School of Engineering & Technology was examined to prove the
mark sheet, but in the absence of any rebuttal to PW1 and PW2's
testimony and the documents with regard to the educational qualification
Exs.PW2/7 and PW2/8, I would rely thereon to conclude that the
deceased was a 3rd year student of B.Tech. in Electronics and
Communication Engineering(ECE). Thus, there is no manner of doubt
that the potential income of an Engineer has to be taken into
consideration to award loss of dependency.
13. No evidence was led by the Claimants with regard to the income which
the deceased would have earned on completion of the course. No
evidence was brought to prove the placements and the pay package
offered by various companies to a student of Amity School of
Engineering & Technology in the year 2009 and thereof.
14. A Division Bench of Andhra Pradesh High Court in B.Ramulamma &
Ors. v. Venkatesh, Bus Union, Rep. by A.M. Velu Mudaliyar & Anr., 2011
ACJ 1702, held that it was very difficult to determine the income of a
student who was about to complete his course. It was observed that thus it
was appropriate and reasonable to take a salary paid at the entry level as
fixed by the Govt. for such jobs.
15. Turning to the facts of the instant case, although the deceased was
pursuing B.Tech. in Electronics and Communication Engineering(ECE),
yet the institution from which the course was being pursued was an
ordinary education. The salary of a Group 'A' employee in the year 2008
on a Basic Pay of `15,600/- was `23,200/-. In B.Ramulamma & Ors., it
was held that the students who had completed or were in the final year or
last semester of B.Tech., B.E., B.C.A., M.Tech. M.E. or M.B.A., M.C.A.,
etc. courses and who died in the motor accidents or sustained permanent
disability, their salaries could also be fixed on the basis of the salary of
their classmates when they entered into jobs. Some percentage, say, 10
per cent per year can be deducted in respect of the students studying in III
year or II year as the case may be. In the circumstances, I would take the
potential income of the deceased to be `20,000/- per month. Since the
deceased was not doing engineering from any prestigious college and
university, I would not grant any future prospects. The loss of
dependency thus comes to ` 17,25,000/-(`20,000/- x 12= 2,40,000/- -
10,000/- (Income Tax) x 1/2 x 15). I would further make a provision of
`25,000/- towards loss of love and affection and `10,000/- each towards
loss to estate and funeral expenses. The overall compensation thus comes
to `17,70,000/-.
16. Thus, the compensation is enhanced from `6,28,642/- to `17,70,000/-.
The enhanced compensation of `11,41,358/- shall carry interest @ 7.5%
per annum from the date of the filing of the Petition till its payment. The
compensation shall be equally shared between the Claimants, who are the
deceased's parents.
17. Now comes the question of liability. In the Cross-Objection
(MAC.APP.1178/2011) preferred by the owner, an Application for
additional evidence filed by the owner was allowed and the owner was
granted an opportunity to prove the permit held by him on the date of the
accident. A perusal of the record shows that one witness from Regional
Transport Office, Jaipur, Rajasthan was present before the Registrar in
pursuance of the summons issued to him. The owner, however, preferred
not to examine him. The learned counsel for the owner(Respondent
No.4) closed his evidence by a statement made on 16.08.2012.
18. During inquiry before the Claims Tribunal, the Insurance Company
examined R3W1 Surender Kumar Sharma. He deposed that the
owner(Mitar Pal Singh) was issued a permit to ply truck No.RJ-14-G-
9150 in the State of Rajasthan from 29.08.2006 to 28.09.2011. The
testimony was not challenged by the driver and the owner. The Claims
Tribunal thus opined that the Insurance Company will pay the
compensation in the first instance and will recover from the owner. Paras
33 to 35 of the impugned judgment are extracted hereunder:
"33. R3, in order to prove that there was no valid permit of
the offending vehicle, has examined Sh. Surender Kumar
Sharma R3W1. This witness has stated that the offending
vehicle was not granted permit for Delhi. Not even a single
question was put to this witness on behalf of the R2 i.e. the
owner of the offending vehicle.
34. Therefore, R1, is the principal tort feaser. R2 and R3
are vicariously liable. All the respondents are held jointly
and severally liable to pay the awarded amount. However,
since the vehicle was insured with R3, therefore, it shall pay
the awarded amount by depositing account payee cheques in
favour of petitioners.
35. Since R3 has proved that the offending vehicle did not
have valid permit for Delhi on the date of accident and Smt.
Kirti Sobti, R3W2 has proved the policy Ex.R3W2/3,
therefore, in view of Bharathamma and Others, III (2004)
ACC 292(SC), R3 is entitled to recover the awarded amount
from R2."
19. As stated earlier, the owner was again granted an opportunity to rebut the
Insurance Company's evidence that the owner did not possess any permit
to ply the offending vehicle in National Capital Territory of Delhi where
this accident occurred. A witness from RTO, Jaipur was also present.
The learned counsel for the owner preferred not to examine him and
closed the evidence. It is, therefore, clear that there was nothing available
with the owner to rebut R3W1's testimony that the owner did not possess
any permit to ply the vehicle in Delhi.
20. It is urged by the learned counsel for the Insurance Company that since it
has successfully proved the breach of the terms of the policy, it should be
exonerated and the owner who is present before the Court should be made
liable to pay the compensation.
21. The issue of satisfying the third party liability even in case of breach of
the terms of insurance policy is settled by a three Judge Bench report in
Sohan Lal Passi v. P. Sesh Reddy, (1996) 5 SCC 21. As per Section
149(2) of the Motor Vehicles Act (the Act), an insurer is entitled to
defend the action on the grounds as mentioned under Section
149(2)(a)(i)(ii) of the Act. As stated above, the breach must be conscious
and willful. Even if a conscious breach on the part of the insured is
established, still the insurer has a statutory liability to pay the
compensation to the third party and will simply have the right to recover
the same from the insured/tortfeasor either in the same proceedings or by
independent proceedings as the case may be, as ordered by the Claims
Tribunal or the Court. The question of statutory liability to pay the
compensation was discussed in detail by a two Judge Bench of the
Supreme Court in Skandia Insurance Company Limited v. Kokilaben
Chandravadan, (1987) 2 SCC 654 where it was held that exclusion clause
in the contract of Insurance must be read down being in conflict with the
main statutory provision enacted for protection of victim of accidents. It
was laid down that the victim would be entitled to recover the
compensation from the insurer irrespective of the breach of the condition
of policy. The three Judge Bench of the Supreme Court in Sohan Lal
Passi analyzed the corresponding provisions under the Motor Vehicles
Act, 1939 and the Motor Vehicles Act, 1988 and approved the decision in
Skandia. In New India Assurance Co., Shimla v. Kamla and Ors., (2001)
4 SCC 342, the Supreme Court referred to the decision of the two Judge
Bench in Skandia, the three Judge Bench decision in Sohan Lal Passi and
held that the insurer who has been made liable to pay the compensation to
third parties on account of issuance of certificate of insurance, shall be
entitled to recover the same if there was any breach of the policy
condition on account of the vehicle being driven without a valid driving
licence. The relevant portion of the report is extracted hereunder:
"21. A reading of the proviso to sub-section (4) as well as
the language employed in sub-section (5) would indicate that
they are intended to safeguard the interest of an insurer who
otherwise has no liability to pay any amount to the insured
but for the provisions contained in Chapter XI of the Act.
This means, the insurer has to pay to the third parties only on
account of the fact that a policy of insurance has been issued
in respect of the vehicle, but the insurer is entitled to recover
any such sum from the insured if the insurer were not
otherwise liable to pay such sum to the insured by virtue of
the conditions of the contract of insurance indicated by the
policy.
22. To repeat, the effect of the above provisions is this: when a
valid insurance policy has been issued in respect of a vehicle
as evidenced by a certificate of insurance the burden is on the
insurer to pay to the third parties, whether or not there has
been any breach or violation of the policy conditions. But the
amount so paid by the insurer to third parties can be allowed
to be recovered from the insured if as per the policy
conditions the insurer had no liability to pay such sum to the
insured.
23. It is advantageous to refer to a two-Judge Bench of this
Court in Skandia Insurance Company Limited v. Kokilaben
Chandravadan, (1987) 2 SCC 654. Though the said decision
related to the corresponding provisions of the predecessor Act
(Motor Vehicles Act, 1939) the observations made in the
judgment are quite germane now as the corresponding
provisions are materially the same as in the Act. Learned
Judge pointed out that the insistence of the legislature that a
motor vehicle can be used in a public place only if that vehicle
is covered by a policy of insurance is not for the purpose of
promoting the business of the insurance company but to
protect the members of the community who become suffers on
account of accidents arising from the use of motor vehicles. It
is pointed out in the decision that such protection would have
remained only a paper protection if the compensation
awarded by the courts were not recoverable by the victims (or
dependants of the victims) of the accident. This is the raison
d'etre for the legislature making it prohibitory for motor
vehicles being used in public places without covering third-
party risks by a policy of insurance.
24. The principle laid down in the said decision has been
followed by a three-Judge Bench of this Court with approval
in Sohan Lal Passi v. P. Sesh Reddy, (1996) 5 SCC 21.
25. The position can be summed up thus:
The insurer and the insured are bound by the
conditions enumerated in the policy and the insurer is not
liable to the insured if there is violation of any policy
condition. But the insurer who is made statutorily liable to
pay compensation to third parties on account of the certificate
of insurance issued shall be entitled to recover from the
insured the amount paid to the third parties, if there was any
breach of policy conditions on account of the vehicle being
driven without a valid driving licence........."
22. Again in United India Insurance Company Ltd. v. Lehru & Ors., (2003) 3
SCC 338, in para 18 of the report the Supreme Court referred to the
decision in Skandia, Sohan Lal Passi and Kamla and held that even
where it is proved that there was a conscious or willful breach as
provided under Section 149(2)(a) (ii) of the Motor Vehicle Act, the
Insurance Company would still remain liable to the innocent third party
but may recover the compensation paid from the insured. The relevant
portion of the report is extracted hereunder:
"18. Now let us consider Section 149(2). Reliance has been
placed on Section 149(2)(a)(ii). As seen, in order to avoid liability
under this provision it must be shown that there is a "breach". As
held in Skandia and Sohan Lal Passi cases the breach must be on
the part of the insured. We are in full agreement with that. To
hold otherwise would lead to absurd results. Just to take an
example, suppose a vehicle is stolen. Whilst it is being driven by
the thief there is an accident. The thief is caught and it is
ascertained that he had no licence. Can the insurance company
disown liability? The answer has to be an emphatic "No". To
hold otherwise would be to negate the very purpose of compulsory
insurance.........."
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
20. ..........If it ultimately turns out that the licence was fake, the
insurance company would continue to remain liable unless they
prove that the owner/insured was aware or had noticed that the
licence was fake and still permitted that person to drive. More
importantly, even in such a case the insurance company would
remain liable to the innocent third party, but it may be able to
recover from the insured. This is the law which has been laid
down in Skandia, Sohan Lal Passi and Kamla cases. We are in full
agreement with the views expressed therein and see no reason to
take a different view."
23. The three Judge Bench of the Supreme Court in National Insurance
Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297 again
emphasized that the liability of the insurer to satisfy the decree passed in
favour of the third party was statutory. It approved the decision in Sohan
Lal Passi, Kamla and Lehru. Paras 73 and 105 of the report are extracted
hereunder:
"73. The liability of the insurer is a statutory one. The liability of
the insurer to satisfy the decree passed in favour of a third party is
also statutory.
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
105. Apart from the reasons stated hereinbefore, the doctrine of
stare decisis persuades us not to deviate from the said principle."
24. This Court in (MAC APP. No.329/2010) Oriental Insurance Company
Limited v. Rakesh Kumar and Others and other Appeals decided by a
common judgment dated 29.02.2012, noticed some divergence of opinion
in National Insurance Company Limited v. Kusum Rai & Ors., (2006) 4
SCC 250; National Insurance Company Limited v. Vidhyadhar
Mahariwala & Ors., (2008) 12 SCC 701; Ishwar Chandra & Ors. v. The
Oriental Insurance Company Limited & Ors., (2007) 10 SCC 650 and
Premkumari & Ors. v. Prahalad Dev & Ors., (2008) 3 SCC 193 and held
that in view of the three Judge Bench decision in Sohan Lal Passi and
Swaran Singh, the liability of the Insurance Company vis-à-vis the third
party is statutory. If the Insurance Company successfully proves the
conscious breach of the terms of the policy, then it would be entitled to
recovery rights against the owner or driver, as the case may be.
25. In view of this, the Insurance Company will first pay the compensation
and would then recover from the owner Respondent No.4 in MAC.
APP.780/2010.
26. The compensation awarded by the Claims Tribunal shall be released to
the Claimants in terms of the impugned judgment. 60% of the enhanced
compensation shall be held in fixed deposit in the name of the Claimants
for two years, four years and six years in equal proportion. Rest of the
amount shall be released on deposit.
27. The Bajaj Allianz General Insurance Company Ltd. is directed to deposit
the enhanced compensation along with interest in UCO Bank, Delhi High
Court Branch in the name of the Claimants within six weeks.
28. Appeal filed by the Insurance Company being MAC.APP. 780/2010 and
Appeal filed by the owner being MAC.APP. 1178/2011 are dismissed
with costs throughout.
29. The Appeal filed by the Claimants being MAC.APP. 894/2010 is allowed
with costs in above terms.
30. Statutory amount of `25,000/- shall be refunded to the Bajaj Allianz
General Insurance Company Ltd.
31. Pending Applications stand disposed of.
(G.P. MITTAL)
JUDGE
AUGUST 24, 2012
pst
