Delhi High Court
Reliance General Insurance ... vs Rajender Singh Yadav & Ors. on 16 October, 2012
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 16th October, 2012
+ MAC. APP. 1115/2012
RELIANCE GENERAL INSURANCE COMPANY LTD. ..... Appellant
Through: Mr. Sameer Nandwani, Adv.
versus
RAJENDER SINGH YADAV & ORS. .... Respondents
Through: Nemo.
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
CM APPL.17942/2012 (Exemption)
Exemption allowed, subject to all just exceptions.
The Application is allowed.
MAC. APP. 1115/2012
1. The Appellant Reliance General Insurance Company Limited impugns a
judgment dated 08.08.2012 passed by the Motor Accident Claims
Tribunal (the Claims Tribunal) whereby while awarding compensation of
`1,31,641/-, the Appellant Insurance Company was made liable to pay
the compensation with right to recover the same from Respondents No.2
and 3, that is, owner and the driver of the vehicle.
2. There is twin challenge to the impugned judgment. First, the
compensation awarded is exorbitant and excessive, particularly, the
compensation of ` 65,000/- awarded towards pain and suffering was not
justified. Second, the Appellant Insurance Company successfully proved
the breach of the terms of policy, it was entitled to exoneration. The
Claims Tribunal erred in making it liable to pay the compensation in the
first instance and then to recover it from the owner and the driver.
3. The Appellant suffered fracture of both bones right leg. He was initially
removed to Kusum Hospital and was then shifted to St. Stephens Hospital
where he remained admitted from 29.12.2008 to 02.01.2009. The relevant
part of the impugned judgment is extracted hereunder:-
15. I have gone through the material on record. The
discharge summary issued by St. Stephen's hospital shows that
petitioner was admitted on 29.12.2008 and was discharged on
02.01.2009 and has suffered fracture of both bone of right leg. A
prescription of Kusum Hospital shows that petitioner had also
suffered fracture of jaw. Petitioner stated that he was working in
Delhi Jal Board and has placed on record his ID card issued by
Delhi Jal Board, however failed to place on record any document
with regard to his salary. Petitioner failed to place on record any
document or examine any witness to establish that he remained on
leave upto June 2009 and suffered any loss of earning due to
injuries suffered in the accident. However, under the facts and
circumstances, it cannot be denied that petitioner must have
remained out of work for about 1-2 months and must have
suffered loss of leaves, if not loss of salary, hence entitled to the
compensation for loss of leaves and in my opinion two months
salary would be just amount on this account. In the absence of any
material on record minimum wages for unskilled workman as
prevailing at the time of accident can be taken into consideration.
The minimum wages were Rs. 3700/- (approx.) per month. Bills
are for Rs. 57,241/-. Keeping in view the facts and circumstances, I
consider the following amount to be the just compensation to the
petitioner:-
1 Compensation towards pain and sufferings Rs. 65,000/-
2 Compensation towards loss of earning of
petitioner for 2 months @ Rs. 3700/- per month Rs.7,400/-
3 Expenses towards medical bills Rs. 57,241/-
4 Compensation towards conveyance and special diet
(without bills) Rs. 5,000/-
Therefore, in my opinion the petitioner is entitled to Rs. 1,31,641/-
(rounded off to Rs.,31,650/-) which shall be the just
compensation to petitioner."
4. Thus, it will be seen that the Appellant suffered not only fracture of both
bones of right leg but also fracture of jaw. He would be unable to have
any solid diet for a considerable period of time. In the circumstances, the
award of compensation of `65,000/- cannot be said to be exorbitant and
excessive. Moreover, the Appellant was not granted any compensation
towards the attendant charges. The overall compensation of `1,31,641/-
in the circumstances cannot be said to be exorbitant or excessive by any
stretch of imagination.
5. As far as the liability of the Insurance Company is concerned, the issue
of satisfying the third party liability even in case of breach of the terms
of insurance policy is settled by 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.
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 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........."
6. 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."
7. 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."
8. This Court in Oriental Insurance Company Limited v. Rakesh Kumar and
Others, 2012 ACJ 1268 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,
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.
9. In the circumstances, I am of the view that the liability of the Insurance
Company to satisfy the award in the first instance is statutory. It is bound
to satisfy the same and entitled to recover the amount of compensation
paid from the owner and the driver (Respondents No.2 and 3) in
execution of this very judgment without having recourse to independent
civil proceedings.
10. The Appeal is devoid of any merit; the same is accordingly dismissed.
11. The statutory deposit of `25,000/- shall be refunded to the Appellant
Insurance Company.
12. In view of dismissal of the Appeal, CM 17941/2012 also stands disposed
of.
(G.P. MITTAL)
JUDGE
OCTOBER 16, 2012
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