National Insurance Co Ltd vs Sanjay Kumar & Ors.
2012 Latest Caselaw 1711 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                                      Decided on: 13th March, 2012

+       MAC APP. Nos. 59/2010

        NATIONAL INSURANCE CO LTD              ..... Appellant
                     Through: Ms. Shantha Devi Raman,
                     Advocate

                        versus

        SANJAY KUMAR & ORS.                   ..... Respondent
                    Through: Mr. Arvind Kumar Patel,
                    Advocate For respondents no.2 and 3.

        MAC.APP. 60/2010

        NATIONAL INSURANCE CO LTD             ..... Appellant
                     Through: Ms. Shantha Devi Raman,
                     Advocate

                        versus

        NAWAL KISHORE & ORS                ..... Respondent
                    Through: Mr. Arvind Kumar Patel,
                    Advocate for respondents no.2 and 3.

        CORAM:
        HON'BLE MR. JUSTICE G.P.MITTAL

                         JUDGMENT

G. P. MITTAL, J. (ORAL)

1. These two appeals arise out of a common judgment dated 29th September, 2009 passed by the Motor Accident Claims

Tribunal, New Delhi whereby Claim Petition no. 933/2004 and 934/2004 came to be decided. While granting a compensation of ` 42,400/- and ` 86,235/- in the two claim petitions

respectively, the Claims Tribunal granted recovery rights against respondent no. 2, (Krishna Murari Dixit), the driver of the offending vehicle. The contention raised on behalf of the Appellant are :-

(i) The appellant ought to have been completely exonerated as there was breach of the terms of policy,

(ii) In any case, recovery rights ought to have been granted against the owner also i.e, the third respondent.

2. On the other hand, it is submitted by learned counsel for the second and the third Respondent that insurance company did have the liability to satisfy the award in the first instance.

3. The issue is no longer res integra that even in a case where the insurance company establishes a conscious breach of the terms of the insurance policy, the liability of the insurer to satisfy the decree is statutory.

4. There is a authoritative pronouncement of the Supreme Court in National Insurance Company Limited Vs. Swaran Singh, 2004 (3) SCC 297 para 73, 104 and 105 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.

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104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time.

105. Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle.

5. Following Swaran Singh, (Supra) this Court in National Insurance Company Limited Vs. Sanjay Kumar, ILR, 2007 (2), Delhi, 733 held that even when breach of the terms and conditions of policy of insurance and Section 149(2)(a) of the Motor Vehicle Act, 1988 is proved, the insurance company would still be required to pay the sum awarded to the claimant, but would be entitled to the recovery rights against the insured.

6. In MAC App No. 329/2010, Oriental Insurance Company Limited Vs. Rakesh Kumar and Others, decided on 3rd February, 2012, this Court noticed National Insurance Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297, Sohan Lal Passi v. P. Sesh Reddy, (1996) 5 SCC 21, New India Assurance Co., Shimla v. Kamla and Ors., (2001) 4 SCC 342 and United India

Insurance Company Ltd. v. Lehru & Ors., (2003) 3 SCC 338 and held that even when there is a willful breach of the terms of policy under Section 149(2)(a) of the Act, the Insurance Company is under obligation to indemnify the liability towards the third party and recover the same from the owner.

7. In the circumstances, the Claims Tribunal was right in not exonerating the Appellant insurance company completely.

8. It is true that the second Respondent being driver is the principal tortfeasor yet the third Respondent being the owner of the offending vehicle was vicariously liable to pay the compensation to the victim of the accident. The Appellant insurance company was liable to indemnify the insured only on account of contract of insurance. Thus, the Appellant was entitled to recovery rights against the owner as well.

9. The Appeals are liable to be allowed. The Appellant will have recovery rights against the second and the third Respondent (the driver and the owner of the offending vehicle).

9. The Appeals are allowed in the above terms.

10. No costs.

(G.P. MITTAL) JUDGE MARCH 13, 2012 P