Delhi High Court
Oriental Insurance Co. Ltd. vs Ajay Gaur & Ors. on 29 August, 2019
$~26
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Decided on: 29.08.2019
+ MAC.APP. 333/2019 & CM Nos.10374 & 14984/2019
ORIENTAL INSURANCE CO LTD. ..... Appellant
Through: Mr. R. K. Tripathi, Advocate.
Versus
AJAY GAUR & ORS. ..... Respondents
Through: Mr. Bhupesh Narula, Advocate for
Respondent No.1.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J. (Oral)
1. Notice was sought to be effected upon respondent no. 4 - United
India Insurance Company through ordinary process. However, the same
was refused. The remarks of the Process Server - Mr. Gautam Madan, who
visited respondent no. 4 on 13.08.2019 at 3.04 p.m., reads as under:-
"Today I Reached The Given Address And Enquired About
The Concerned Person Who Shall Receive The Said Notice .
On The Spot The Branch Manager Sunita Suman Declared
Herself To Be The Said Receiving Person. I Served The
Summons To Her And She After Going Through The Contents
Returned The Said Summons By Saying That The Said Case
Does Not Pertains To Their Branch. Hence The Said Notice
Remained Unserved."
2. The Court would note that the address mentioned in the appeal is the
same as was given in the Memo of Parties before the learned MACT. In the
circumstances, the aforesaid refusal is deemed served upon the said
respondent.
3. The case of the appellant is that despite there being a Knock-for-
Knock Agreement between the insurance companies, wherein the insurer of
the damaged vehicle is to pay damages for the insured vehicle, irrespective
of the fact as to which insured vehicle is the cause of the damage, and
furthermore subrogation rights would not be sought against the insurer of the
offending vehicle. This aspect has been duly considered in the impugned
order as under:-
"16. I have heard rival submissions advanced by counsel for
the parties, perused the record carefully and gave my
thoughtful consideration to their contentions.
(i) From the testimony of R4W1, it is clear that claimant had
submitted own damage claim with respondent no.4 and a
claim of ₹7,15,000/- was passed, but since claimant failed to
comply with certain formalities, the amount could not be
released. He further testified that claimant had not withdrawn
the said claim till date. He also admitted, that at the time of
insurance; claimant had disclosed the value of the car to the
sum of ₹8,23,650/-. He further admitted that Knock for Knock
Agreement has been executed among all the insurance
companies under which it is agreed that the claim for
damaged vehicle shall be submitted before the company with
whom the vehicle is insured.
(ii) Counsel for respondent no.3 filed the copy of Knock for
Knock agreement. Perusal of the same reveals that
irrespective of the negligence, insurance companies are liable
to satisfy the claim submitted before them by the claimants. It
further reveals that said Knock to Knock agreement is not
mandate of any Regulator, but it is an internal understanding
among insurance companies. Relevant clauses of the Knock
for Knock Agreement are reproduced as under.
Knock for Knock Agreement:
(i) Therefore, insurers have entered into an agreement
(called Knock for Knock Agreement) according to which,
irrespective of who was negligent, provided the damage
is covered under the policy, the insurers covering the
damage will not exercise subrogation rights against the
party involved in the accident. Instead they will indemnify
their insured subject to the terms of policy.
Similarly, the other insurers will insured provided
the damage is covered under the policy. In other words,
each insurer will indemnify their insured.
This agreement, however, does not apply to goods
vehicles policies and Public Service Vehicles (i.e. Taxies,
Buses) used for hire or reward, and technically the
insurers are free to enter into litigation to recover losses
caused by such vehicles.
Definition:
The dictionary defines the term "Knock for Knock" as
an agreement between auto insurers that in the even (sic)
of an accident each insurance company will pay for the
damage to the vehicle insured with it without attempting
to establish blame for the accident.
Why do Insurers have this Agreement?
Every year the insurers sign a Knock-for-knock
agreement with all other insurers. The insurers do so to
avoid getting into litigation and unnecessary delays by
dragging the matter to the court on account of third-party
policies. So instead of finding whose fault it is and
making the insurer compensate the victim, both the
insurers of both the vehicles pay for the damages of their
insured vehicles respectively. This is an internal
understanding among the insurers and is not mandated
by the regulator.
(i) From bare perusal of Knock for knock agreement, it is
clear that the said agreement does not disqualify the claimant
either to claim compensation from his insurance company or
from the insurer of the offending vehicle."
4. What emanates from the above is that the conclusion that the Knock-
for-Knock Agreement does not limit the rights and the freedom of the
claimant to claim compensation from either of the insurer companies. The
court is of the view that while the aforesaid liberty may be available to a
claimant, nevertheless, the Knock-for-Knock Agreement has been brought
about between the insurance companies for orderly indemnification of
damage to motor vehicles. The Scheme to streamline claims between the
insurance companies should be given effect to, in the larger interest of
administration and settlement of claims of the insurance industry. One of
the objectives of this Agreement is that settlement of claims should not be
delayed. In the present case, the accident happened in the year 2015 and the
claim of the car has not been settled as yet. The monies should have been
paid to the claimants by now. Insofar as the Award has been pressed
apropos damage to the vehicle at an amount of Rs.8,24,000/-, the same
would be payable by the insurer of the vehicle in terms of the Knock-for-
Knock Agreement, as mentioned hereinabove.
5. The impugned order is modified to the extent that respondent no. 4 -
United India Insurance Co. Ltd. shall pay the aforesaid amount alongwith
interest accrued thereon, as specified in the Award, to the claimant within
three weeks of receipt of a copy of this order. The amounts deposited shall
be released to the beneficiary of the Award in terms of the scheme of
disbursement specified therein.
6. The statutory deposit of Rs.25,000/-, alongwith interest accrued
thereon, shall be refunded to the insurance company.
7. The appeal, alongwith pending application, stands disposed-off in the
above terms.
NAJMI WAZIRI, J.
AUGUST 29, 2019
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