United India Insurance Ltd vs Firdous Hussain Mir & Anr
2021 Latest Caselaw 289 j&K/2

                                IN THE HIGH COURT OF JAMMU AND KASHMIR
                                              AT SRINAGAR

                                                                          Reserved on: 02.03.2021
                                                                        Pronounced on:05.03.2021


                                                                             CMAM No.186/2014


                        United India Insurance Ltd.                               ...Petitioner(s)

                                     Through: - Ms. Alia, Adv., vice Mr. Nissar, Adv.
                        Vs.

                        Firdous Hussain Mir & anr.                           ...Respondent(s)
                                     Through: - Mohammad Amin, Advocate
                                                Mr. Tariq Ahmad, Advocate


                        CORAM:       HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE


                                                         JUDGMENT

1) The instant appeal is directed against the interim award dated

09.04.2014 passed by learned Motor Accident Claims Tribunal,

Srinagar, under Section 140 of the Motor Vehicles Act, in a claim

petition filed by respondent No.1/claimant whereby a sum of

Rs.25,000/ has been awarded by the learned Tribunal in favour of the

claimant to be payable by the appellant insurance company.

2) The aforesaid interim award has been challenged by the

appellant on the ground that the offending vehicle was not covered

under the policy of insurance at the time of the accident, inasmuch as

the policy of insurance relating to the vehicle in question had been

cancelled on account of dishonour of cheque pertaining to the premium

of insurance of the vehicle in question and that this aspect of the matter MOHAMMAD ALTAF BHAT 2021.03.05 14:28 I attest to the accuracy and integrity of this document

has not been considered by the learned Tribunal while passing the

impugned interim award.

3) I have heard learned counsel for the appellant and the learned

counsel for respondent No.1. I have also gone through the memo of

appeal and the grounds of appeal.

4) It appears that the claim petition has arisen out of a motor

vehicular accident involving vehicle bearing registration No.JK01F-

2944 that was being driven by respondent No.2. As a result of the

accident, the respondent No.1 is alleged to have sustained grievous

injuries which led to the registration of FIR No.113/2012 of offences

under Section279, 338 RPC registered with Police Station, Beeru. The

injured/claimant is stated to have sustained permanent disability. It

appears that the claimant had placed on record photocopy of insurance

policy issued by the appellant herein, according to which the vehicle in

question was insured at the time of the accident.

5) The learned Tribunal after observing that the requirements as are

necessary for awarding interim compensation under the principle "No

Fault Liability" are fulfilled in the instant case, awarded a sum of

Rs.25,000/ as interim compensation in favour of the claimant, holding

the appellant insurance company liable for its payment.

6) The learned counsel for the respondent/claimant has raised a

preliminary objection to the maintainability of the appeal on the ground

that the award in question is an interim award and not a final award, as

MOHAMMAD ALTAF BHAT 2021.03.05 14:28 I attest to the accuracy and integrity of this document

such, the same is not appealable in terms of Section 173 of the Motor

Vehicles Act

7) The contention raised by the learned counsel for the respondent

No.1 is without merit as an interim award made under Section 140 of

the Motor Vehicles Act has been held to be an award for the purpose of

Section 173 of the Motor Vehicles Act and, as such, appealable under

the said provision. I am supported in my aforesaid view by the

judgment of the Supreme Court in Yallwwa & Ors. v. National

Insurance Co. Ltd. & anr. (2007) 6 SCC 657. In the said case, the

Supreme Court has clearly observed that an order of Tribunal awarding

compensation under Section 140 of the of the Motor Vehicles Act is

appealable under Section 173 of the said Act as it amounts to an award

under Section 173.

8) Coming to the merits of the instant appeal, it has been contended

by the learned counsel for the appellant that at the time of the accident,

the offending vehicle was not insured with the appellant insurance

company as the insurance policy, a photocopy whereof had been placed

on record by the claimant before the learned Tribunal, had been

cancelled on account of dishonour of cheque relating to premium

amount. To buttress his point, the appellant has placed on record copy

of communication dated 03.09.2012, issued by the appellant insurance

company to the owner of the offending vehicle conveying him the

cancellation of the policy of insurance, as also other documents like

copy of the cheque, dishonour memo and the documents evidencing the MOHAMMAD ALTAF BHAT 2021.03.05 14:28 I attest to the accuracy and integrity of this document

dispatch of intimation regarding cancellation of policy of insurance to

the owner.

9) It is contended by learned counsel for the appellant that in its

reply to the claim petition, the appellant insurance had raised the plea

as regards the cancellation of policy of insurance but the same has not

been taken note of by the learned Tribunal and without adjudicating the

defence of the insurer, the liability has been fastened upon the

appellant.

10) Learned counsel for the respondent No.1, on the other hand, has

contended that at the stage of passing an interim award of

compensation under Section 140 of the Motor Vehicles Act, a Tribunal

is not expected to make a detailed enquiry to adjudicate upon all the

defences that an insurer may take and, as such, the learned Tribunal

was well within its jurisdiction to pass the impugned interim award.

Learned counsel for the respondent No.1 has relied upon the judgment

of this Court in the case of National Insurance Co. Ltd. v. Nasib Chand

& Ors. 2010 (4) JKJ [HC] 41.

11) So far as the question whether or not a defence raised by the

insurer in its reply, particularly when the coverage of insurance of the

offending vehicle has been disputed by the insurer, can be gone into by

the Tribunal at the time of passing of an interim award under Section

140 of the Motor Vehicles Act, is concerned, the same has been

considered by a Division Bench of this Court in Oriental Insurance Co.

Ltd. v. Som Raj & Ors. 2009 (2) JKJ[HC] 26. Para 9 to 12 of the said MOHAMMAD ALTAF BHAT 2021.03.05 14:28 I attest to the accuracy and integrity of this document

judgment are relevant to the context and the same are reproduced as

under:

"9. Therefore, the conclusion would be that while disposing of a claim founded on no fault, there must be a pronouncement that the defence put forward by the insurer under sub-section (2) of Section 149 of the Act is not available or that the defence put forward is not available under sub-section (2) of Section 149. For that purpose, if all facts have to be gone in and evidence therefor is required to be taken, the same would be a necessity.

10. The moment the insurer is directed to pay an amount under Section 149 of the Act, the same would be a pronouncement that the insurer is liable to pay the amount under the policy of insurance issued by it and, accordingly, has incurred the liability to pay the same. If, at a later point of time, it is adjudged that the insurer had no liability to pay the amount, for, it had a valid defence to the claim under sub-section (2) of Section 149 of the Act, that would not authorize the insurer to recover the payment, already directed to be made, from the insured as the same would not be in excess of the liability of the insurer under the policy. In consequence thereof, despite a good defence to the claim, based on no fault, the insurer would lose its right to defend such claim.

11.We may lastly refer, once again, to Section 165 of the Act and, in particular, to sub-section (1) thereof, which authorizes setting up of Claims Tribunal for the purpose of adjudicating the claims for compensation in respect of accidents involving death of, or bodily injury to, persons arising out of use of motor vehicles, or damages to any property of a third party so arising, or both. As aforesaid, in the explanation, a claim founded on no fault basis is included in the claim for the purpose of adjudication for which the Claims Tribunals have been authorized to be set up. The adjudication, as aforesaid, cannot be made by only fixing the liability, but is required to be made by also fixing the liability of the person liable to discharge the liability and the same can only be done by a pronouncement that the defence put forward to avoid the liability is not available. The same cannot be kept pending adjudication at any later point of time while MOHAMMAD ALTAF BHAT 2021.03.05 14:28 I attest to the accuracy and integrity of this document

adjudicating more than one claims, one of which is based on no fault liability.

12.However, while adjudicating a claim based on no fault liability as can be preferred under Section 140 of the Act, it may not be necessary in all cases to follow the elaborate procedure prescribed therefor, which is evident from Rules 324, 325 and 326 of the J&K Motor Vehicles Rules, 1991."

12) Again this Court in Oriental Insurance Co. Ltd. v. Kamlesh Devi

& Ors. 2012 ACJ 1769, while relying upon the ratio laid down in Som

Raj's case (supra), has observed as under:

"7. The Tribunal, as pointed out in the afore reported case, is not to treat the claim under section 140 of the act as an interim relief and postpone the enquiry to a later stage when the claim under section 166 of the Act is dealt with after going into the rival stands taken by the claimant(s) and the insurance company. Claim under section 140 of the Act is for all purposes and intents and independent and separate claim. As laid down in Som Raj's case. "There must be a pronouncement that the defence put forward by the insurer in terms of section 149(2) of the Act is not available or that the case set up in opposition to the claim, is devoid of any substance. The Tribunal, as held in the aforementioned case, has to make effort to look into " all facts" and even take the evidence, if necessary, though it may not be necessary in all the cases to go for an elaborate enquiry while dealing with the claim under section 140 of the Act it needs to be emphasized that the Tribunal while allowing claim under Section 140 of the Act, over-ruling the defence set up by the insurance company under Section 149(2) of the Act, in effect holds the defence to be without merit and if at conclusion of proceedings in claim under Section 166 of the Act, the Tribunal arrives at a different conclusion, the insurance company would be left without any remedy to undo the conclusion drawn by the tribunal while disposing of claim under Section 140 of the Act."

13) The Supreme Court in the case of United India Insurance

Company Limited Vs. Serjerao and Ors., 2008 ACJ 254, while MOHAMMAD ALTAF BHAT 2021.03.05 14:28 I attest to the accuracy and integrity of this document

considering the same question, set aside the interim award passed under

Section 140 of the Motor Vehicles Act in favour of the claimants who

were found to be travelling as labourers in the Trolly attached to the

Tractor, on the ground that their liability was not covered under the

policy of insurance.

14) From the forgoing discussion of law on the subject, it is

clear that even at the stage of considering an application under

Section 140 of the Motor Vehicles Act, a Claims Tribunal has to

adjudicate upon the defences that may be taken by the insurer,

particularly when the insurer takes the plea that the offending

vehicle was not covered by the insurance policy at the time of the

accident. Though the enquiry to be conducted by the Tribunal at

this stage may not be of elaborate nature.

15) Coming to the facts of the instant case, the appellant has

taken a definite plea before the learned Tribunal that the offending

vehicle was not insured with it at the relevant time. Therefore,

without dealing with the said issue, it was not open to the learned

Tribunal to pass an order of interim compensation in favour of the

claimant. In this view of the matter, the impugned award is not

sustainable in the eyes of law and, therefore, the same deserves to

be set aside.

16) For the foregoing reasons, the appeal is allowed and the

MOHAMMAD ALTAF BHAT impugned interim award is set aside with a direction to the learned 2021.03.05 14:28 I attest to the accuracy and integrity of this document

Tribunal to take a prima facie view on the plea with regard to the

cancellation of the insurance policy pertaining to the offending

vehicle, as has been raised by the appellant insurance company,

and thereafter pass a fresh order in accordance with the law.

17) A copy of this order be sent to the learned Tribunal for

information and compliance.

(Sanjay Dhar) Judge Srinagar 05.03.2021 "Bhat Altaf, PS"

                                           Whether the order is speaking:          Yes/No
                                           Whether the order is reportable:        Yes/No




MOHAMMAD ALTAF BHAT
2021.03.05 14:28
I attest to the accuracy and
integrity of this document