Seema Chhabra & Ors vs Raj Kumar & Ors
2015 Latest Caselaw 1397 Del

$~9 & 10
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                           Date of decision: 19th February, 2015
+        MAC.APP. 893/2010

         SEEMA CHHABRA & ORS                                 ..... Appellant
                     Through:              Mr. Amit Kumar Pandey, Adv. with
                                           Mr. Rajeshwar P. Gupta, adv.
                                  versus

         RAJ KUMAR & ORS                                     ..... Respondents
                      Through:             Ms. Savita Singh, Adv. for OICL/R-3.
                                           Ms. Neerja Sachdeva, Adv. for
                                           ICICI/R-6.
                                           Mr. S.N.Parashar, Adv. for R-7 & 8.
+        MAC.APP. 34/2011

         ORIENTAL INSURANCE CO. LTD.             ..... Appellant
                      Through: Ms. Savita Singh, Adv.

                     versus
         SEEMA CHHABRA & ORS                                  ..... Respondents
                     Through:              Mr. Amit Kumar Pandey, Adv. with
                                           Mr. Rajeshwar P. Gupta, Adv. for R-1
                                           to R-3.
                                           Mr. S.N. Parashar, Adv. for R-4 & 5.
                                           Ms. Neerja Sachdeva, Adv. for
                                           ICICI/R-10.
         CORAM:
         HON'BLE MR. JUSTICE G.P.MITTAL

G. P. MITTAL, J. (ORAL)

1. These two appeals arise out of the judgment dated 26.08.2010 passed

by the Motor Accident Claims Tribunal (the Claims Tribunal)

whereby compensation of `48,70,560/- was awarded in favour of the

Claimants for the death of Sanjeev Chhabra, who died in a motor

vehicular accident which occurred on 19.06.2006 at 07:35 a.m.

2. MAC APP.893/2010 is for enhancement of compensation whereas

MAC APP.34/2011 is filed by the Oriental Insurance Company

Limited seeking exoneration instead of mere grant of recovery rights,

which have been granted in favour of the Insurance Company on proof

of breach of the terms and conditions of the insurance policy.

3. For the sake of convenience, Appellants in MAC APP.893/2010 and

Respondents no.7 and 8, who are the parents of the deceased Sanjeev

Chhabra in MAC Appeal No. 34/2011 shall be referred to as the

Claimants, whereas Appellant Oriental Insurance Company Limited in

MAC APP.34/2011 and Respondent no.3 in MAC APP.893/2010 shall

be referred to as the Insurance Company.

4. During inquiry before the Claims Tribunal, it was established that

deceased Sajeev Chhabra was working as Manager (Administration)

with M/s. Panaccea Biotech and was getting a salary of `38,840/- per

month in addition to medical reimbursement of `15,000/- per annum.

On appreciation of evidence, the Claims Tribunal found that the

accident was caused because of rash and negligent driving of truck

bearing registration no.HP-23-1341 which was being driven by

Respondent no.1 (Raj Kumar) at the time of the accident. The truck

was owned by Respondent no.2 (Rakesh Chopra). The Claims

Tribunal accepted the deceased's income, deducted 1/4th towards

personal and living expenses and adopted a multiplier of 14 as per the

age of the deceased being 41 years. On addition of nominal

compensation towards non-pecuniary damages, the overall

compensation of `48,70,560/- was awarded.

5. The following contentions are raised on behalf of the Claimants:-

(i) Deceased Sanjeev Chopra was a highly qualified person

working on a senior position in a reputed company where he

had switched job just a few months prior to the accident. The

Claims Tribunal ought to have made addition of 30% towards

future prospects; and

(ii) The compensation awarded towards non-pecuniary damages is

on the lower side.

6. On the other hand, the learned counsel for the Insurance Company

submits that since breach on the part of the insured was proved, the

Insurance Company was entitled to avoid indemnification and

therefore, the Insurance Company was entitled to be completely

exonerated. It was the owner (Respondent no.2) who was liable to pay

the compensation.

7. First of all, I shall deal with the appeal preferred by the Claimants.

8. I have the Trial Court record before me. Seema Chopra, wife of the

deceased swore Affidavit Ex.PW-1/1 and entered the witness box as

PW-1. She testified that her husband was a Graduate and PG Diploma

holder in Personal Management. She testified about the salary of the

deceased and deposed that her late husband was being assessed to

income tax. She deposed that her husband had a bright future

prospects.

9. The Claimants also examined K.P. Singh Yadav, Executive

(Personnel) in the deceased's employer company who proved the

appointment letter Ex.PW-4/A and the salary slip Ex.PW-4/B. In

cross-examination, he deposed that one Rajeshwar Sharma, another

employee, was earlier a Manager and he was promoted as an Assistant

General Manager w.e.f. 01.12.2007. He deposed that deceased

Sanjeev Chopra would also have risen to the rank of General Manager

with a salary of `2,00,000/- per month in due course. The evidence

produced by the Claimants with regard to future prospects remained

unchallenged and unrebutted. Since there was ample evidence with

regard to deceased's future prospects, the Claimants were entitled to

addition of 30% towards future prospects.

10. A perusal of the appointment letter shows that the deceased was

getting a salary of `38,840/- per month which included a sum of

`10,550/- towards HRA and `7190/- towards transport allowance.

11. To my mind, the deceased would have spent only a sum of `3190/- in

connection with reporting to his work and the rest of the amount of

`4,000/- of Transport Allowance should be taken towards his income

for computation of loss of dependency. There will not be any liability

towards income tax on H.R.A. of `10,550/- per month and the

facilities of LTA and medical reimbursement. In view of this, the loss

of dependency comes to `58,38,924/- {`35,650/- x 12 - ` 40,360/-

(income tax) + 15,000/- + 25,320/- + 30% x 3/4 x 14}.

12. Further, the compensation awarded towards non-pecuniary damages is

liable to be enhanced on the basis of Rajesh & Ors. v. Rajbir Singh &

Ors., (2013) 9 SCC 54. I tend to award a sum of `1,00,000/- each

towards loss of love and affection and loss of consortium. The

Claimants are further entitled to a sum of `25,000/- towards funeral

expenses and `10,000/- towards loss to estate.

13. The overall compensation thus, comes to `60,73,924/- as against

`48,70,560/- awarded by the Claims Tribunal.

14. The enhanced compensation of `12,03,364/- shall carry interest @

7.5% per annum from the date of filing the Claim Petition till its

payment.

LIABILITY

15. While dealing with the aspect of liability, the Claims Tribunal found

that the owner of the offending truck failed to produce the permit

despite service of notice under Order XII Rule 6 CPC and thus, it was

held that the vehicle was being driven without permit. The Claims

Tribunal held that there was breach of the terms and conditions of the

insurance policy and while directing Oriental Insurance Company

Limited to pay the compensation initially, it was entitled to recover the

same from the driver and the owner of the offending vehicle.

16. The owner and driver have not challenged this finding of the Claims

Tribunal. They have preferred not to contest these proceedings in spite

of service through publication.

17. The question of statutory liability to pay the compensation was

discussed in great detail by a two Judge Bench of the Supreme Court

in Skandia Insurance Company Limited v. Kokilaben Chandravadan,

(1987) 2 SCC 654 wherein it was held that an exclusion clause in the

contract of Insurance must be read down being in conflict with the

main statutory provision enacted for protection of victims accident. It

was laid down that the victim would be entitled to recover the

compensation from the insurer irrespective of breach of any condition

of the insurance policy. Again, a three Judge Bench of the Supreme

Court in Sohan Lal Passi v. P. Sesh Reddy, (1996) 5 SCC 21 analyzed

the corresponding provisions under the Motor Vehicles Act, 1939 and

the Motor Vehicles Act, 1988 and approved the decision in Skandia

(supra). Thereafter, 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), and 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 from the insured if there was any breach of the

policy condition on account of the vehicle being driven by a person

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........."

18. 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 decisions 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 Vehicles Act, 1988, 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

..........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."

19. Also, a three Judge Bench of the Supreme Court in National Insurance

Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297 again

emphasised 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

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."

20. This Court in MAC APP. No.329/2010 titled 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 Malla Prakasarao v. Malla Janaki &

Ors.(2004) 3 SCC 343; 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 on the one hand and Sohan Lal Passi v. P.

Sesh Reddy, (1996) 5 SCC 21; New India Assurance Co., Shimla v.

Kamla and Ors., (2001) 4 SCC 342; United India Insurance Company

Ltd. v. Lehru & Ors., (2003) 3 SCC 338; National Insurance

Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297;

Oriental Insurance Co. Ltd. v. Zaharulnisha and Ors., (2008) 12 SCC

385; National Insurance Company Limited v. Geeta Bhat & Ors.,

2008 (12) SCC 426; and National Insurance Company Limited v.

Laxmi Narain Dhut, (2007) 3 SCC 700 on the other and held that in

view of the three Judge Bench decisions 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 conscious breach of the terms of the insurance

policy, it would merely be entitled to recovery rights against the owner

or driver, as the case may be.

21. In view of the matter, Oriental Insurance Company Limited,

Respondent no.3 in MAC APP.893/2010 and Appellant in MAC

APP.34/2011 shall be liable to pay the compensation awarded by the

Claims Tribunal as also the enhanced compensation. It shall however,

be entitled to recover the compensation paid from the driver and

owner of the offending truck bearing registration no. HP-23-1341,

who are Respondents no.1 and 2 in MAC APP.893/2010 and

Respondents no.6 and 7 in MAC APP.34/2011.

22. The Oriental Insurance Company Limited is directed to deposit the

enhanced compensation along with interest @ 7.5% per annum within

six weeks with the Claims Tribunal, failing which the Claimants will

be entitled to interest @ 12% per annum from the date of this

judgment.

23. The amount deposited shall be released in terms of the order passed by

the Claims Tribunal.

24. Out of the enhanced compensation 15% of the compensation along

with proportionate interest each shall be payable to Respondents no.7

and 8 (Rajan Kumar and Smt. Bimla Devi), 10% of the enhanced

compensation along with proportionate interest each shall be payable

to Appellants no.2 and 3 (Baby Paavni and Baby Kaashvi) and the rest

50% of the enhanced compensation along with proportionate interest

shall be payable to Appellant no.1 (Smt. Seema Chhabra), widow of

the deceased.

25. 50% of the compensation awarded to Appellants no.2 and 3 and

Respondents no.7 and 8 shall be held in fixed deposit for a period of

two years. Rest shall be released on deposit.

26. 75% of the compensation awarded to Appellant no.1 (Claimant) shall

be held in fixed deposit for a period of two years, four years, six years

and eight years respectively in equal proportion and rest 25% shall be

released on deposit.

27. Amount awarded by the Claims Tribunal shall be disbursed/held in

fixed deposit in terms of the order passed by the Claims Tribunal.

28. Both the appeals are disposed of in above terms.

29. Pending applications, if any, also stand disposed of.

30. Statutory amount, if any, shall be refunded to the Insurance Company.

(G.P. MITTAL) JUDGE FEBRUARY 19, 2015 vk