Delhi High Court
National Insurance Co. Ltd. vs Bhagat Ram Mittal & Ors. on 9 May, 2012
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 9th May, 2012
+ MAC.APP. 473/2007
NATIONAL INSURANCE CO. LTD. ..... Appellant
Through: Mr. Pradeep Gaur, Adv. with
Mr. Amit Gaur, Adv.
Mr. Shashank Sharma, Adv.
versus
BHAGAT RAM MITTAL & ORS. ..... Respondent
Through: Mr. O.P. Mannie, Adv. for R-1.
+ MAC.APP. 518/2012
BHARAT RAM MITTAL ..... Appellant
Through: Mr. O.P. Mannie, Adv.
versus
NATIONAL INSURANCE CO. LTD. ..... Respondent
Through: Mr. Pradeep Gaur, Adv. with
Mr. Amit Gaur, Adv.
Mr. Shashank Sharma, Adv.
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
CM APPL.13203/2010
These are Cross Objections filed by Respondent No.1.
It may be registered as an Appeal.
MAC.APP. 473/2007 and MAC APP.518/2012
1. The Appellant National Insurance Company Limited in MAC
APP.473/2007 seeks exoneration from its liability to pay the
compensation of `1,79,774/- awarded in favour of the First
Respondent Bhagat Ram Mittal, the Appellant in Cross Appeal,
who suffered injuries in a motor accident which occurred on
31.01.2005.
2. Bhagat Ram Mittal, the First Respondent in MAC
APP.473/2007 and Appellant in MAC APP. 518/2012 seeks
enhancement of compensation on the ground that the
compensation awarded is inadequate.
3. It is urged by the learned counsel for the Appellant Insurance
Company that the Appellant successfully proved that
Respondent No.2 Jabbar Singh driver of vehicle No.DL-IRF-
9097 did not possess a valid driving licence at the time of the
accident, yet instead of exonerating it from its liability, the
Claims Tribunal only granted recovery rights from Respondents
No.3 and 4 herein.
4. As per Section 149(2)(a), an insurer is entitled to defend the
action on the grounds as mentioned under Section 149(2)(a)(i)
of the Act. Thus, the onus is on the insurer to prove that there is
breach of the condition of the policy. It is well settled that 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 v. P. Sesh Reddy, (1996) 5 SCC 21
analyzed the corresponding provision under the Motor Vehicles
Act, 1939 and the Motor Vehicles Act, 1988 and approved the
decision in Skandia (supra). 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(supra), the three Judge Bench decision in Sohan Lal
Passi(supra) and held that the insurer who has been made liable
to pay the compensation to third parties on account of certificate
of insurance issued, 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........."
5. 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(supra), Sohan Lal
Passi(supra) and Kamla(supra) 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."
6. 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 (supra),
Kamla (supra) and Lehru (supra). Para 73, 103 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."
7. 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(supra) and Swaran
Singh(supra), 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.
8. The Appellant Insurance Company established the willful
breach of the terms of policy and therefore, it was entitled to
recovery rights which have been duly granted. The Appeal filed
by the Insurance Company fails; the same is accordingly
dismissed.
9. It is the time to refer to the Cross-Objections filed by the First
Respondent.
10. The Claims Tribunal awarded a compensation of `2,35,774/-
which is tabulated hereunder:-
Sl. Compensation under various Awarded by the
heads Claims Tribunal
No.
1. Compensation for medical expenses `1,06,695/-
2. Compensation for Conveyance & ` 10,000/-
Special Diet
3. Compensation for Permanent ` 33,079/-
Disability
4. Compensation for Future Expenses ` 31,000/-
5. Compensation for Loss of Income ` 25,000/-
6. Compensation for Pain & Suffering ` 30,000/-
and Loss of Amenities of Life
Total ` 2,35,774/-
11. In General Manager, Kerala State Road Transport
Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors,
(1994) 2 SCC 176, the Supreme Court observed that the
determination of the quantum must answer what contemporary
society "would deem to be a fair sum such as would allow the
wrongdoer to hold up his head among his neighbours and say
with their approval that he has done the fair thing". The amount
awarded must not be niggardly since the law values life and
limb in a free society in generous scales. At the same time, a
misplaced sympathy, generosity and benevolence cannot be the
guiding factor for determining the compensation. The object of
providing compensation is to place the claimant(s), to the extent
possible, in almost the same financial position, as they were in
before the accident and not to make a fortune out of misfortune
that has befallen them.
12. The Appellant suffered fracture of both bone left lower leg,
abrasions and blunt injuries all over his body. He was admitted
in Max Hospital on 31.01.2005 to 03.02.2005. He was shifted
to Jaipur Golden Hospital and remained admitted there upto
08.02.2005.
13. The Appellant underwent surgery and screws were put to give
strength to the bones. The Appellant made over a dozen visits
to Dr. Raj Kumar. On 22.06.2005, the Appellant underwent
another surgery as the fracture showed "delayed union". On
28.06.2005, the Appellant was readmitted to Jaipur Golden
Hospital where plating and bone grafting was done on the left
leg.
14. The Appellant deposed that he was working as a Commission
Agent in the name and style of M/s. Ashok Kumar Anil Kumar,
due to injuries suffered by him, he cannot run his business
properly, he cannot walk properly, he cannot lift weight.
15. The Appellant was issued a Disability Certificate showing
disability of 20% in respect of the left lower limb which the
doctors stated to be 7.5% in respect of whole body which was
accepted by the Claims Tribunal.
16. It is urged by the learned Counsel for the Appellant that the
Claims Tribunal accepted the fact that the Appellant could not
attend to his business for a period of six months, his
(Appellant's) income on the basis of the Income Tax Return
(ITR) Ex.PW-1/89 for the Assessment year 2005-06 was duly
proved as `88,210/-, yet the Claims Tribunal awarded a
compensation of just ` 25,000/-.
17. In my view, the Appellant (the injured) is entitled to be
compensated for loss of actual income for six months which
comes about to `44,105/- rounded off to `45,000/-. The
compensation for loss of income is thus enhanced from
`25,000/- to `45,000/-.
18. The Claims Tribunal awarded compensation of `33,079/-
towards permanent disability. This was really towards loss of
earning capacity. Claimants income was proved to be `88,210/-
per annum. The loss of earning capacity would come to
`46,310/- (88210/- x 7.5% x 7), which is rounded off to
`50,000/-.
19. A consolidated compensation of ` 30,000/- was awarded
towards pain and suffering and loss of amenities in life. In my
view, it would be appropriate to grant the compensation
separately under the head of pain and suffering and loss of
amenities in life.
20. It is difficult to measure in terms of money the pain and
suffering which has been suffered by the claimant on account of
serious injuries caused to him in a motor accident. Since the
compensation is required to be paid for pain and suffering an
attempt must be made to award compensation which may have
some objective relation with the pain and suffering underwent
by the victim of a motor accident. For this purpose, the Claims
Tribunal and the Courts normally consider the nature of injury;
the parts of the body where the injuries were sustained;
surgeries (if any) underwent by the victim; confinement in the
hospital and the duration of the treatment.
21. Considering the nature of injuries suffered, surgeries underwent,
and duration of treatment, I award a sum of `30,000/- towards
pain and suffering.
22. The Appellant's testimony that he cannot walk properly and he
cannot lift weight was not challenged in the cross-examination.
He has suffered permanent disability to the extent of 20% in
respect of left lower limb which was assessed to be 7.5% in
respect of whole body. There was shortening of his (the
injured's) leg by 1.5 cm. Considering all these facts and that
fact that the Appellant was aged 61 years, I would make an
award of `40,000/- towards loss of amenities and disfigurement.
23. The compensation awarded is thus re-assessed as under:-
Sl. Compensation under various heads Awarded by
this Court
No.
1. Compensation for medical expenses `1,06,695/-
2. Compensation for Conveyance & Special ` 10,000/-
Diet
3. Compensation for Permanent Disability/ ` 50,000-
Loss of Earning Capacity
4. Compensation for Future Expenses ` 31,000/-
5. Compensation for Loss of Income ` 45,000/-
6. Compensation for Pain & Suffering ` 30,000/-
7. Loss of Amenities & Disfigurement ` 40,000/-
Total ` 3,12,695/-
24. The overall compensation is thus enhanced from `2,35,774/- to
`3,12,695/-.
25. The enhanced compensation of `76,921/- rounded off to
`77,000/- shall carry interest @ 7.5% per annum from the date
of filing of the Petition till its deposit in this Court.
26. Respondent National Insurance Company Limited is directed to
deposit the enhanced amount along with interest in UCO Bank,
Delhi High Court, New Delhi in the name of the Appellant.
27. On deposit, the amount shall be released to the Appellant
immediately.
28. MAC APP.518/2012 filed by the injured Appellant is allowed
in above terms.
29. The statutory amount of `25,000/- deposited in MAC
APP.473/2007 be refunded to the Insurance Company.
(G.P. MITTAL)
JUDGE
MAY 09, 2012
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