Delhi High Court
New India Assurance Co. Ltd vs Naresh Kumar & Ors on 7 May, 2012
Author: G.P. Mittal
$~34
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision:7th May, 2012
+ MAC. APP. No.493/2012
NEW INDIA ASSURANCE CO. LTD ..... Appellant
Through: Mr. K.L. Nandwani, Advocate
Versus
NARESH KUMAR & ORS.
..... Respondents
Through: None
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
C.M. APPL No.8227/2012(Exemption)
Exemption allowed, subject to all just exceptions.
The application stands disposed of.
MAC. APP. No.493/2012 & CM. APPL No.8226/2012(stay)
1. The Appellant New India Assurance Co. Ltd. impugns a
judgment dated 03.03.2012 whereby while granting a
compensation of `4,29,779/- in favour of the Respondent No.1,
the Appellant was made liable to pay the compensation in spite
of the fact that it successfully proved the breach of the terms of
the policy.
2. It is urged by the learned counsel for the Appellant that since
the Appellant proved the breach of the terms of the policy, it
ought to have been exonerated from its liability to indemnify
the insured instead of granting recovery rights.
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 vis-a-vis third party is statutory.
4. There is an authoritative pronouncement of the Supreme Court
in National Insurance Company Limited v. Swaran Singh, 2004
(3) SCC 297 paras 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.
x x x x x x x
x x x x x x x
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 v. Sanjay Kumar, ILR, 2007 (2),
Delhi, 733 held that even when breach of the terms and
conditions of policy of insurance in terms of 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 329/2010, Oriental Insurance Company Limited
v. 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. Thus, the Appellant was only entitled to recovery rights which
have been granted.
8. The Appeal is devoid of any merit; the same is being dismissed
accordingly.
9. The application pending, if any, is disposed of accordingly.
10. The statutory amount of `25,000/-, if deposited, shall be
refunded to the Appellant Insurance Company.
(G.P. MITTAL)
JUDGE
MAY 07, 2012
pst
