Gujarat High Court

The New India Assurance Co. Ltd vs Nagjibhai Karmanbhai Bharwad on 27 June, 2024

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    C/FA/1351/2006                                  CAV JUDGMENT DATED: 27/06/2024

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              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                        R/FIRST APPEAL NO. 1351 of 2006
                                     With
                        R/FIRST APPEAL NO. 1352 of 2006
                                     With
                        R/FIRST APPEAL NO. 1353 of 2006

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE SANDEEP N. BHATT

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the judgment ?

4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== THE NEW INDIA ASSURANCE CO. LTD.

Versus NAGJIBHAI KARMANBHAI BHARWAD & ORS.

========================================================== Appearance:

MS KIRTI S PATHAK(9966) for the Appellant(s) No. 1 MR HARSHIT S TOLIA(2708) for the Defendant(s) No. 1 RULE SERVED for the Defendant(s) No. 2,3,4,5 ==========================================================

CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT

Date : 27/06/2024

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1. This group of appeals are filed by the appellant-

insurance company under Section 173 of the Motor Vehicles

Act, 1988 (`MV Act' for short), being aggrieved and

dissatisfied with the judgment and award dated 19.12.2005

passed by the Motor Accident Claims Tribunal (Aux.), Patan

in MACP No.5402 of 2022 and allied matters, whereby the

claim petitions of the opponents-claimants were partly allowed

and the appellant-insurance company was ordered to pay the

amount of compensation, as ordered in the impugned award,

to the original claimants and then recover the same from the

insured by execution process as per law.

2. As all these appeals arise out of the common

judgment and award, with the consent of the learned

advocates for the parties, they are heard together and

decided by this common judgment.

3. The brief facts leading to filing of these appeals

are such that three claim petitions were filed by the original

claimants stating that when the claimants were all standing

on Radhanpur cross road on 12.5.1995, the tanker bearing

registration no.GJ-12U-6556 took them as well as other

persons and thereafter drove it in an extremely rash and

negligent manner due to which, it overturned causing fatal

injuries to Setuben (claimant of MACP No.5402 of 2002) and

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injuries to the claimants of other claim petitions.

4. On issuance of notice, the appellant-insurance

company appeared and resisted the claim petitions by

contending that the deceased as well as injured were all

illegal passengers in the tanker and that their risk was not

required to be statutorily covered and not covered by the

policy in question and no carriage of persons was permitted

in the said tanker. However, the learned Claims Tribunal,

passed the impugned judgment and award, which is

challenged by way of these appeals.

5. Heard learned advocate Ms.Pathak for the

appellant and learned senior advocate Mr.Harshit Tolia with

learned advocate Mr.Parth Tolia for the opponents.

5.1 The main contention of the learned advocate

Ms.Pathak for the appellant is that the risk of passengers

was neither required to be covered nor as a matter of fact

statutorily covered under the MV Act; that the risk of illegal

passengers in a goods vehicle could not be fastened upon the

appellant-insurance company; that the learned Tribunal has

erred in holding that the appellant was required to satisfy

the award and thereafter recover the amount from the owner

of the vehicle; that in view of catena of judgments of the

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Hon'ble Apex Court, there was no question of the appellant

being liable to satisfy the award and then recover the same

from the insured. She also submitted that regarding the

quantum of compensation, the same is also not justifiable

and the learned Tribunal ought not to have granted such

compensation under different heads. She, therefore, submitted

that the appeals be allowed and the appellant-insurance

company be exonerated from the liability of paying the

amount of compensation to the claimants.

5.2 Learned advocate Ms.Pathak submitted that there

was no coverage of the claimants since the sitting capacity of

only one including driver and as per police papers, claimants

were sitting inside the tanker, thereby the driver and owner

of the tanker committed breach of the provisions of the MV

Act; further, the learned Tribunal has failed to accord

adequate reasoning for not considering the technical defence

of unauthorized passenger; that the findings rendered by the

learned Tribunal in the impugned judgment are thoroughly

misconceived, contrary to the provisions of MV Act and ratios

being laid down by the Hon'ble Apex Court in various

decisions. She submitted that when the insurer was not liable

to pay the compensation in respect of passengers who were

travelling in the vehicle unauthorizedly, then in exercise of

powers conferred under Article 142 read with Article 136 of

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the Constitution of India, the Hon'ble Apex Court can direct

the insurance company to pay compensation for doing

complete justice to the parties and the subordinate courts

and the learned Tribunal cannot exercise such extraordinary

powers. She, therefore, submitted that these appeals be

allowed.

5.3 She has relied on the following decisions in

support of her submissions:

1. New India Assurance Co.Ltd. V/s Darshana Devi reported

in 2008 ACJ 1388 (SC).

2. United India Insurance Co.Ltd. V/s Anubhai Gopichand

Thakare, reported in 2008 ACJ 213 (Bombay).

3. Oriental Insurance Company V/s Suresh Shankarbhai

Valand decided by this Court in First Appeal No.2917 of

2010 on 10.3.2023.

4. Phool Singh V/s Pankhi reported in 2004 ACJ 843f (MP).

5. National Insurance Co.Ltd. V/s Chinnamma reported in

2004 ACJ 1909(SC).

5. Decision of this Court in First Appeal No.2929 of 2009

decided on 17.12.2013.

6. Iffco-Tokio General Insurance Co.Ltd. V/s Shankarlal and

Ors. reported in 2009 ACJ 2618.

7. United India Insurance Company Ltd. V/s I.C.I.Abraham in

MFA No.1346 of 2000(C).

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6. Per contra, learned senior advocate Mr.Tolia for the original claimants submitted that the learned Tribunal

has rightly come to the conclusion, after discussing the

evidence produced on the record, that it is undisputed fact

that the vehicle in question was not a passenger vehicle but

the driver of the vehicle allowed the passengers to travel

therein and the accident in question has taken place due to

negligence on the part of the opponent no.1 and it is proved

by himself by lodgment of FIR and was corroborated by the

panchanama of the place of incident. The opponent no.1-

driver of the vehicle was deleted; the opponent no.2-owner

did not turn up to contest the case before the learned

Tribunal and the appellant-opponent no.3 appeared before the

learned Tribunal and contested the case; learned senior

advocate for the opponents submitted that the learned

Tribunal has rightly held that keeping mere technicalities in

mind, the claim petitions cannot be dismissed and the right

of compensation of the claimants cannot be wiped out.

Therefore, the learned Tribunal has rightly held that the

amount be paid to the claimants by the appellant-insurance

company and thereafter it can recover the same from the

insured. He, therefore, submitted to dismiss these appeals.

6.1 In support of his submissions, learned senior

advocate Mr.Tolia has relied on the following decisions:

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1. Royal Sundaram Alliance Insurance Company V/s

Kokolaben Wd/o Kanubhai Shanabhai Parmar reported in

2022 JX(Guj) 862.

2. Shamanna and Another V/s The Divisional Manager, The

Oriental Insurance Co.Ltd. And Others, in Civil Appeal

No.8144 of 2018 (Arising out of SLP(C) No.26955 of 2017.

3. New Insurance Co.Ltd. V/s Merambhai Ramjibhai Gohel &

Ors. in First Appeal No.725 of 2016 dated 19.2.2024.

4. National Insurance Co.Ltd. V/s Swaran Singh & Ors.,

reported in 2004(1) GLH 691.

5. Mangla Ram V/s Oriental Insurance Company Limited

reported in AIR 2018 SC 1900.

6. Manuara Khatun V/s Rajesh Kr.Singh V/s Mamoni Saikia

Mohanty & Ors. V/s Rajesh Kr.Singh reported in AIR 2017

SC 1204.

7. Heard learned advocates for the parties and

perused the material placed on record including the impugned

common judgment and award.

8. The learned Tribunal, has discussed the evidence

led before it i.e. the complaint filed by the original opponent

no.1-driver himself and the panchanama and came to the

conclusion that the opponent no.1-driver was driving the said

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vehicle in question and he was negligent for the accident.

That the learned Tribunal has also rightly come to the

conclusion that the passengers (claimants) were not

authorized to travel in the said vehicle in question as it was

a goods vehicle and not passenger vehicle and therefore, has

rightly held that the insurance company is not liable to pay

the compensation. However, as the said vehicle was insured

with the appellant-insurance company, for the discussion

stated in the impugned award, the learned Tribunal passed

the award directing the appellant-insurance company to pay

the amount of award first to the claimants and thereafter

recover the same from the insured.

9. As regards the quantum, the learned Tribunal has

considered the oral and documentary evidence led before it,

and has rightly calculated the amount, applying the principles

laid down in the case of Sarla Verma (Smt.) and others V/s

Delhi Transport Corporation and another reported in (2009)6

SCC 121.

10. Now, as regards the main grievance of the

appellant-insurance company with regard to the impugned

award to pay to the claimants first and then recover the

same from the insured, the submissions made by learned

advocate Ms.Pathak for the appellant that the said order can

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only be passed by the Hon'ble Apex Court and not by the

subordinate courts cannot be accepted in view of the fact

that the Hon'ble Apex Court has laid down certain guidelines

in the case of National Insurance Company Ltd. V/s Swaran

Singh and Others reported in (2004)3 SCC 297, in which it

is held in paragraph 110 as under:

"Summary of findings

110. The summary of our findings to the various issues as

raised in these petitions is as follows:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing

compulsory insurance of vehicles against third-party risks is

a social welfare legislation to extend relief by compensation

to victims of accidents caused by use of motor vehicles. The

provisions of compulsory insurance coverage of all vehicles

are with this paramount object and the provisions of the Act

have to be so interpreted as to effectuate the said object.

(ii) An insurer is entitled to raise a defence in a claim

petition filed under Section 163-A or Section 166 of the

Motor Vehicles Act, 1988, inter alia, in terms of Section

149(2)(a)(ii) of the said Act.

(iii) The breach of policy condition e.g. disqualification of the

driver or invalid driving licence of the driver, as contained

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in sub-section (2)(a)(ii) of Section 149, has to be proved to

have been committed by the insured for avoiding liability by

the insurer. Mere absence, fake or invalid driving licence or

disqualification of the driver for driving at the relevant time,

are not in themselves defences available to the insurer

against either the insured or the third parties. To avoid its

liability towards the insured, the insurer has to prove that

the insured was guilty of negligence and failed to exercise

reasonable care in the matter of fulfilling the condition of

the policy regarding use of vehicles by a duly licensed driver

or one who was not disqualified to drive at the relevant

time.

(iv) Insurance companies, however, with a view to avoid

their liability must not only establish the available defence(s)

raised in the said proceedings but must also establish

"breach" on the part of the owner of the vehicle; the burden

of proof wherefor would be on them.

(v) The court cannot lay down any criteria as to how the

said burden would be discharged, inasmuch as the same

would depend upon the facts and circumstances of each case.

(vi) Even where the insurer is able to prove breach on the

part of the insured concerning the policy condition regarding

holding of a valid licence by the driver or his qualification

to drive during the relevant period, the insurer would not be

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allowed to avoid its liability towards the insured unless the

said breach or breaches on the condition of driving licence

is/are so fundamental as are found to have contributed to

the cause of the accident. The Tribunals in interpreting the

policy conditions would apply "the rule of main purpose" and

the concept of "fundamental breach" to allow defences

available to the insurer under Section 149(2) of the Act.

(vii) The question, as to whether the owner has taken

reasonable care to find out as to whether the driving licence

produced by the driver (a fake one or otherwise), does not

fulfil the requirements of law or not will have to be

determined in each case.

(viii) If a vehicle at the time of accident was driven by a

person having a learner's licence, the insurance companies

would be liable to satisfy the decree.

(ix) The Claims Tribunal constituted under Section 165 read

with Section 168 is empowered to adjudicate all claims in

respect of the accidents involving death or of bodily injury or

damage to property of third party arising in use of motor

vehicle. The said power of the Tribunal is not restricted to

decide the claims inter se between claimant or claimants on

one side and insured, insurer and driver on the other. In

the course of adjudicating the claim for compensation and to

decide the availability of defence or defences to the insurer,

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the Tribunal has necessarily the power and jurisdiction to

decide disputes inter se between the insurer and the

insured. The decision rendered on the claims and disputes

inter se between the insurer and insured in the course of

adjudication of claim for compensation by the claimants and

the award made thereon is enforceable and executable in the

same manner as provided in Section 174 of the Act for

enforcement and execution of the award in favour of the

claimants.

(x) Where on adjudication of the claim under the Act the

Tribunal arrives at a conclusion that the insurer has

satisfactorily proved its defence in accordance with the

provisions of Section 149(2) read with sub-section (7), as

interpreted by this Court above, the Tribunal can direct that

the insurer is liable to be reimbursed by the insured for the

compensation and other amounts which it has been

compelled to pay to the third party under the award of the

Tribunal. Such determination of claim by the Tribunal will

be enforceable and the money found due to the insurer from

the insured will be recoverable on a certificate issued by the

Tribunal to the Collector in the same manner under Section

174 of the Act as arrears of land revenue. The certificate

will be issued for the recovery as arrears of land revenue

only if, as required by sub-section (3) of Section 168 of the

Act the insured fails to deposit the amount awarded in

favour of the insurer within thirty days from the date of

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announcement of the award by the Tribunal.

(xi) The provisions contained in sub-section (4) with the

proviso thereunder and sub-section (5) which are intended to

cover specified contingencies mentioned therein to enable the

insurer to recover the amount paid under the contract of

insurance on behalf of the insured can be taken recourse to

by the Tribunal and be extended to claims and defences of

the insurer against the insured by relegating them to the

remedy before regular court in cases where on given facts

and circumstances adjudication of their claims inter se might

delay the adjudication of the claims of the victims."

11. Further, in the case of Khenyel V/s New India

Assurance Company Limited and others reported in (2015)9

SCC 273, it is held by Hon'ble Supreme Court in paragraph

20 as under:

"20. This Court in Challa Upendra Rao [(2004) 8 SCC 517 :

2005 SCC (Cri) 357] and Nanjappan [(2004) 13 SCC 224 :

2005 SCC (Cri) 148] has dealt with the breach of policy

conditions by the owner when the insurer was asked to pay

the compensation fixed by the Tribunal and the right to

recover the same was given to the insurer in the executing

court concerned if the dispute between the insurer and the

owner was the subject-matter of determination for the

Tribunal and the issue has been decided in favour of the

insured."

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12. In the case of Shamanna v. Oriental Insurance Co.

Ltd., (2018) 9 SCC 650, it is held in paragraphs 12 to 14 as under:

"12. The above reference in Parvathneni case [National

Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 :

(2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] has been

disposed of on 17-9-2013 [National Insurance Co. Ltd. v.

Parvathneni, (2018) 9 SCC 657] by the three-Judge Bench keeping the questions of law open to be decided in an

appropriate case.

13. Since the reference to the larger Bench in Parvathneni

case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943]

has been disposed of by keeping the questions of law open

to be decided in an appropriate case, presently the decision

in Swaran Singh case [National Insurance Co. Ltd. v.

Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] followed in Laxmi Narain Dhut [National Insurance Co. Ltd.

v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC

(Cri) 142] and other cases hold the field. The award passed

by the Tribunal directing the insurance company to pay the

compensation amount awarded to the claimants and

thereafter, recover the same from the owner of the vehicle

in question, is in accordance with the judgment passed by

this Court in Swaran Singh [National Insurance Co. Ltd. v.

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Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] and Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] cases. While so, in our view, the High Court ought not to

have interfered with the award passed by the Tribunal

directing the first respondent to pay and recover from the

owner of the vehicle. The impugned judgment [ Shamanna v.

Laxman, 2016 SCC OnLine Kar 6928] of the High Court exonerating the insurance company from its liability and

directing the claimants to recover the compensation from the

owner of the vehicle is set aside and the award passed by

the Tribunal is restored.

14. So far as the recovery of the amount from the owner of

the vehicle, the insurance company shall recover as held in

the decision in Oriental Insurance Co. Ltd. v. Nanjappan

[Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC

224 : 2005 SCC (Cri) 148] wherein this Court held that :

(SCC p. 226, para 8)

"8. ... For the purpose of recovering the same from the

insured, the insurer shall not be required to file a suit. It

may initiate a proceeding before the executing court

concerned as if the dispute between the insurer and the

owner was the subject-matter of determination before the

Tribunal and the issue is decided against the owner and in

favour of the insurer."

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13. In the case of Manuara Khatun v. Rajesh Kr. Singh,

(2017) 4 SCC 796, it is held in paragraphs 11 to 16 as under:

"11. In reply, the learned counsel for the respondents

(insurance companies) supported the impugned order and

contended that no case is made out to interfere in the

impugned judgment. It was his submission that once it is

held and rightly that the insurance company is not liable

because the victims were travelling in the offending vehicle

as "gratuitous passengers", there did not arise any occasion

to pay the awarded sum to the claimants by the insurance

company and nor the principle " pay and recover" could be

applied against the insurance company in such circumstances

thereby making them liable to pay the awarded sum to the

claimants.

12. Having heard the learned counsel for the parties and on

perusal of the record of the case, we find force in the

submission of the learned counsel for the appellants

(claimants).

13. The only question, which arises for consideration in these

appeals, is whether the appellants are entitled for an order

against the insurer of the offending vehicle i.e. (Respondent

3) to pay the awarded sum to the appellants and then to

recover the said amount from the insured (owner of the

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offending vehicle Tata Sumo) Respondent 1 in the same

proceedings.

14. The aforesaid question, in our opinion, remains no more

res integra. As we notice, it was the subject-matter of

several decisions of this Court rendered by three-Judge

Bench and two-Judge Bench in the past viz. National Insurance Co. Ltd. v. Baljit Kaur [National Insurance Co.

Ltd. v. Baljit Kaur, (2004) 2 SCC 1 : 2004 SCC (Cri) 370] , National Insurance Co. Ltd. v. Challa Upendra Rao [National Insurance Co. Ltd. v. Challa Upendra Rao, (2004)

8 SCC 517 : 2005 SCC (Cri) 357] , National Insurance Co.

Ltd. v. Kaushalaya Devi [National Insurance Co. Ltd. v. Kaushalaya Devi, (2008) 8 SCC 246 : (2008) 3 SCC (Cri) 467] , National Insurance Co. v. Roshan Lal [National

Insurance Co. Ltd. v. Roshan Lal, (2017) 4 SCC 803] and National Insurance Co. Ltd. v. Parvathneni [National

Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 :

(2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] .

15. This question also fell for consideration recently in

National Insurance Co. Ltd. v. Saju P. Paul [National

Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41 :

(2013) 1 SCC (Civ) 968 : (2013) 1 SCC (Cri) 812 : (2013) 1

SCC (L&S) 399] wherein this Court took note of entire

previous case law on the subject mentioned above and

examined the question in the context of Section 147 of the

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Act. While allowing the appeal filed by the insurance

company by reversing the judgment [ Saju P. Paul v.

National Insurance Co., 2011 SCC OnLine Ker 3791 : 2012 ACJ 1852] of the High Court, it was held on facts that

since the victim was travelling in offending vehicle as

"gratuitous passenger" and hence, the insurance company

cannot be held liable to suffer the liability arising out of

accident on the strength of the insurance policy. However,

this Court keeping in view the benevolent object of the Act

and other relevant factors arising in the case, issued the

directions against the insurance company to pay the awarded

sum to the claimants and then to recover the said sum from

the insured in the same proceedings by applying the

principle of "pay and recover".

16. R.M. Lodha, J. (as his Lordship then was and later

became CJI) speaking for the Bench held in paras 20 and

26 as under : (Saju P. Paul case [National Insurance Co.

Ltd. v. Saju P. Paul, (2013) 2 SCC 41 : (2013) 1 SCC (Civ) 968 : (2013) 1 SCC (Cri) 812 : (2013) 1 SCC (L&S) 399] ,

SCC pp. 52 & 55)

"20. The next question that arises for consideration is

whether in the peculiar facts of this case a direction could

be issued to the Insurance Company to first satisfy the

awarded amount in favour of the claimant and recover the

same from the owner of the vehicle (Respondent 2 herein).

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26. The pendency of consideration of the above questions by a larger Bench does not mean that the course that was

followed in Baljit Kaur [National Insurance Co. Ltd. v. Baljit

Kaur, (2004) 2 SCC 1 : 2004 SCC (Cri) 370] and Challa Upendra Rao [National Insurance Co. Ltd. v. Challa Upendra Rao, (2004) 8 SCC 517 : 2005 SCC (Cri) 357] should not be followed, more so in a peculiar fact situation

of this case. In the present case, the accident occurred in

1993. At that time, the claimant was 28 years old. He is

now about 48 years. The claimant was a driver on heavy

vehicle and due to the accident he has been rendered

permanently disabled. He has not been able to get

compensation so far due to the stay order passed by this

Court. He cannot be compelled to struggle further for

recovery of the amount. The Insurance Company has already

deposited the entire awarded amount pursuant to the order

of this Court passed on 1-8-2011 [National Insurance Co.

Ltd. v. Saju P. Paul [National Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41, 55 (footnote 14)] ] and the said amount has been invested in a fixed deposit account. Having

regard to these peculiar facts of the case in hand, we are

satisfied that the claimant (Respondent 1) may be allowed to

withdraw the amount deposited by the Insurance Company

before this Court along with accrued interest. The Insurance

Company (the appellant) thereafter may recover the amount

so paid from the owner (Respondent 2 herein). The recovery

of the amount by the Insurance Company from the owner

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shall be made by following the procedure as laid down by

this Court in Challa Upendra Rao [National Insurance Co.

Ltd. v. Challa Upendra Rao, (2004) 8 SCC 517 : 2005 SCC (Cri) 357] ."

14. In the judgment in the case of Shivaraj V/s Rajendra

and another reported in 2018 ACJ 2755, the Hon'ble Apex Court

has held in paragraph 10 as under:

"10. At the same time, however, in the facts of the present

case the High Court ought to have directed the insurance

company to pay the compensation amount to the

claimant(appellant) with liberty to recover the same from the

tractor owner, in view of the consistent view taken in that

regard by this court in National Insurance Co.Ltd. V.Swaran

Singh, 2004 ACJ 1(SC); Mangla Ram v.Oriental Insurance Co.ltd., 2018 ACJ 1300(SC); Rani v.National Insurance Co.ltd., 2018 ACJ 2430(SC) and Manuara Khatun v.Rajesh Kumar Singh, 2017 ACJ 1031 (SC). In other words, the High Court should have partly allowed the appeal preferred

by the respondent No.2, Appellant may, therefore, succeed in

getting relief of direction to respondent No.2 insurance

company to pay the compensation amount to the appellant

with liberty to recover the same from the tractor owner

(respondent No.1)."