United India Insurance Company ... vs Smt Soniya W/O Late Vinit Moyal
2022 Latest Caselaw 157 Raj/2

     HIGH COURT OF JUDICATURE FOR RAJASTHAN
                 BENCH AT JAIPUR

        S.B. Civil Miscellaneous Appeal No. 1679/2019

United India Insurance Company Ltd, Ashok Circle, Alwar
Through Divisional Manager, (Insurer Company, Vehicle Tempo
No. Rj-74-A-3768 Insured From 25.08.2014 To 24.08.2015)
Having Its Tp-Hub Officer-93, Saphire Building, Opposite Esi
Dispensary No. 4, Ajmer Road, Jaipur Through Its Constituted
Attorney.
                                                                ----Appellant
                                Versus
1.    Smt Soniya W/o Late Vinit Moyal, Aged About 23 Years,
      R/o House No. 1056 Huda Sector-1, Tehsil Narnol, District
      Mahendragarh (Haryna), At Present Multan Nagar, Dehli
      Road, Alwar (Rajasthan)
2.    Kumari Anvi D/o Late Vinit Moyal, Aged About 1 Years,
      R/o House No. 1056 Huda Sector-1, Tehsil Narnol, District
      Mahendragarh (Haryna), At Present Multan Nagar, Dehli
      Road, Alwar (Rajasthan) Minor Through Natural Guardian
      Mother Soniya.
3.    Santlal S/o Moolaram Moyal, Aged About 60 Years, R/o
      House No. 1056 Huda Sector-1, Tehsil Narnol, District
      Mahendragarh (Haryana). At Present Multan Nagar, Dehli
      Road, Alwar (Rajasthan).
4.    Mukstkeem S/o Bassir, Aged About 23 Years, R/o Village
      Mohammadpur Ahir, P.s. Tawadu, District Nuh Mewat
      (Haryana) Driver Vehicle Tempo No. Hr-74A-3768.
5.    Asraf S/o Fajruddin, R/o Village Dai, P.s. Nuh Mewat,
      District Nuh Mewat (Haryana). Driver Vehicle Tempo No.
      Hr-74A-3768.
                                                             ----Respondents

Connected With S.B. Civil Miscellaneous Appeal No. 3496/2019

1. Smt. Soniya W/o Late Vinit Moyal, Aged About 27 Years, R/o House No. 1056, Huda Sector-1, Tehsil Narnaul, District Mahendra Garh (Haryana) At Preset Resident Of Multan Nagar, Delhi Road, Alwar (Rajasthan).

2. Kumari Anvi D/o Late Vinit Moyal (Minor), Aged About 5 Years, Through His Natural Guardian And Mother Smt. Soniya Wife Of Shri Vinit Moyal, R/o House No. 1056, Huda Sector-1, Tehsil Narnaul, District Mahendra Garh (Haryana) At Preset Resident Of Multan Nagar, Delhi Road, Alwar (Rajasthan).

3. Santlal S/o Mularam Moyal, Aged About 64 Years, R/o House No. 1056, Huda Sector-1, Tehsil Narnaul, District Mahendra Garh (Haryana) At Preset Resident Of Multan Nagar, Delhi Road, Alwar (Rajasthan).

                                              (2 of 15)                 [CMA-1679/2019]


                                                                       ----Appellants
                                        Versus

1. Mustkim S/o Bassir, Aged About 27 Years, R/o Village Mohammadpur Ahir, Thana Tawadu, District Nooh, Mewat (Haryana) (Driver).

2. Ashraf S/o Fazruddin, R/o Village Dai, Thana Nooh, Mewat, District Nooh, Mewat (Haryana) (Driver).

3. United India Insurance Company Limited, Ashok Circle, Alwar Through Zonal Manager. (Insurance Company)

----Respondents

For Appellant(s) : Mr. Tripurari Sharma, through VC For Respondent(s) : Mr. Ram Sharan Sharma, through VC

HON'BLE MR. JUSTICE SUDESH BANSAL

Judgment

07/01/2022 REPORTABLE Both appeals, one by Insurance Company

No.1679/2019, and another by claimants No.3496/2019,

have been filed against the judgment and award dated 1-3-

2019 passed by the Motor Accident Claims Tribunal Alwar

(hereafter `the Tribunal'), therefore, are being decided by

this common judgment.

2. On filing claim petition under Section 166 of the Motor

Vehicles Act, 1988 (hereafter `the Act of 1988') the Tribunal

awarded a compensation of Rs.47,99,536/- with interest in

favour of the claimants and while exonerating the Insurance

Company from liability, following the principle of "pay and

recover" it was directed that the Insurance Company first will

pay the compensation to claimants and then may recover the

(3 of 15) [CMA-1679/2019]

same from owner and driver of the vehicle in question. The

claim petition was filed in relation to an accident occurred on

3-7-2015 when vehicle in question bearing registration

No.HR-74A-3768 was overturned and in that accident, one

Mr.Vinit Moyal died. The vehicle in question was in the

ownership of respondent Ashraf and was being driven by

respondent Mustkim. The vehicle in question was insured with

the United India Insurance Company. The Tribunal has

recorded a finding of fact that there is breach of conditions of

insurance policy as the driver was not having a valid and

effective licence and that the vehicle was not having a route

permit and fitness certificate on the date of accident;

therefore, the Insurance Company was absolved from the

liability to indemnify the insured (owner of the vehicle),

however, under the principle of "pay and recover" the

Insurance Company was directed to pay the compensation to

claimants and then to recover the same from the owner and

driver of the vehicle.

3. In Appeal (1679/2019) filed by Insurance Company, it

has been argued that when the Tribunal itself has held that

there is breach of insurance policy then the claim petition

ought to have been dismissed against the Insurance

Company as a whole and the Tribunal committed an error of

law in directing the Insurance Company to pay the

compensation amount to claimants and then to recover from

(4 of 15) [CMA-1679/2019]

the owner of the vehicle. Counsel for the Insurance Company

has raised three points (i) the driver of vehicle was not

having a valid and effective licence on the date of accident,

(ii) vehicle in question was not having a route permit and

fitness certificate on the date of accident, and (iii) the

Tribunal has assessed the quantum of compensation on

higher side and prayed that impugned judgment be modified

suitably.

4. Appeal (3496/2019) has been preferred by claimants for

enhancement of compensation. Counsel for claimants has

submitted that the Tribunal has not committed any illegality

or jurisdictional error in applying the principle of "pay and

recover". Since it is clear from the record that the vehicle in

question was insured with the Insurance Company, therefore,

even if any breach of conditions of insurance policy is found

then also considering the beneficial object of the Act of 1988,

the Tribunal is justified and well within its jurisdiction in

directing the insurer to satisfy the award, though in law it has

no liability. The right of the insurer, to recover the amount of

award from the owner and driver of vehicle has been

protected as well. As far as the quantum of compensation is

concerned, the same is rather lower side and deserves to be

enhanced suitably, but in any case, the Insurance Company

cannot challenge the quantum of compensation as the same

travels beyond defences available to Insurance Company

(5 of 15) [CMA-1679/2019]

under Section 149(2) of the Act, 1988. Lastly, counsel for the

claimants has submitted that in case the appeal filed

Insurance Company is dismissed, the claimants would not

press their appeal.

5. Heard learned counsel for both parties and perused the

material made available on record.

6. This court is firstly examining the appeal filed by

Insurance Company. Counsel for the Insurance Company has

argued that while deciding the issue No.3, the Tribunal has

recorded a categorical finding of fact that the driver was not

having a valid and effective licence on the date of accident

i.e. 3-7-2015. A perusal of the record shows that Driver

Mustakim was driving vehicle in question having DL-

41299/PK/Prof/09, which was issued on 20-11-2009 and the

same was valid for a period from 10-8-2011 to 19-11-2015.

The Tribunal has relied upon the reports Ex.NA-4 and Ex.NA-

5, wherein it was mentioned that aforesaid driving licence is

no more valid for any legal purposes as per Transport

Commissioner's note dated 28-12-2017, issued in

continuance of its earlier note dated 1-8-2014 and as per

these orders all driving licences other than Smart Card have

been nullified and cancelled. On the basis of these reports,

the Tribunal concluded that the Driver was not having a valid

and effective licence on the date of accident. It appears from

(6 of 15) [CMA-1679/2019]

the record that though the driving licence was issued to

Driver and was renewed for a period from 10-8-2011 to 19-

11-2015, nevertheless, the same seems to be nullified/

cancelled later on by the Transport Commissioner w.e.f. 1-8-

2014, for which a public notice was issued on 18-12-2017.

Thus on the date of accident i.e. 3-7-2015, the driving licence

was not treated in effect and operation. Counsel for claimants

submits that such conclusion of the Tribunal is perverse and

the licence of driver was valid on the date of accident.

7. Be that as it may, it is not in dispute that on the date of

accident i.e. 3-7-2015, the vehicle was insured and the

insurance policy was in operation from 25-8-2014 to 24-8-

2015 and covers the risk of third party. On the strength of

such factual position, counsel for the claimants has further

argued that even if it is assumed that the driving licence of

the driver was cancelled but cancellation order was never

brought to the notice of the owner and it is not proved that

the owner was guilty of negligence in following the due

exercise and reasonable care in the matter of fulfilling the

conditions of insurance policy regarding use of vehicle by a

duly licenced driver. Counsel for claimants has relied upon the

principles of law laid down by the Apex Court in National

Insurance Company Vs. Swaran Singh [(2004)3 SCC 297].

Counsel for claimants has submitted that applying the

principle of law as propounded by the Apex Court in case of

(7 of 15) [CMA-1679/2019]

Swaran Singh's case, in case of third party risk, the insurer

has to indemnify the compensation amount payable to third

party and the Insurance Company may recover the same

from the insured. It has been submitted that the doctrine of

"pay and recover" was considered by the Apex Court in

Swaran Singh's case (supra), wherein the Apex Court

examined the liability of the Insurance Company in case of

breach of conditions of policy due to disqualification of driver

or invalid driving licence of the driver and held that in case of

third party risk, the insurer is to indemnify the compensation

amount to third party and the Insurance Company may

recover the same from the insured. The Apex court

considered the insurer's contractual liability, as well as

statutory liability vis-a-vis claims of third parties and

guidelines were issued as to how and in what circumstances

principle of "pay and recover" may be applied. In para 110 of

the judgment in Swaran Singh (supra) the Apex Court has

elaborately summarised the points, wherein under the

principle of "pay and recover" the insurer is liable to

indemnify the compensation to third party and may recover

the same from the insured. According to counsel for

claimants, even if driving licence of driver is not treated as

effective and valid on the date of accident, then also the

present case falls within the scope of points (iii), (vii), (ix)

and (x) of para 110 of the judgment of Swaran Singh (supra).

(8 of 15) [CMA-1679/2019]

8. The ratio of law propounded in case of Swaran Singh

(supra) was followed by the Apex Court in case of National

Insurance Company Ltd. Vs. Laxmi Narain Dhut [(2007)3 SCC

700]. Later on the correctness of the aforesaid principle of

law was doubted by the Apex Court in case of National

Insurance Company Limited Vs. Paravathneni [(2009)8 SCC

785] and the issue was referred to Larger Bench. The Apex

Court pointed out that "if insurance company is not liable to

pay at all, then it cannot be compelled by the order of the

court in exercise of its jurisdiction under Article 142 of the

Constitution of India to pay compensation amount and later

on recover it from the owner of the vehicle". The above

reference made in case of Paravathneni (supra) has been

disposed on 17-9-2013 by Three Judge Bench keeping the

question of law open to be decided in an appropriate case.

Thus, presently, the decision in case of Swaran Singh (supra)

followed in case of Laxmi Narain Dhut (supra) and other

cases holds the field. This principle of law has further been

affirmed and followed in case of Shamanna Vs. Divisional

Manager, Oriental Insurance Company Limited [(2018)9 SCC

650].

9. After discussion of case law as above, the legal position

emerges that till date the principle propounded in case of

Swaran Singh (supra) has not been upset in any subsequent

decision and still holds the field. Although, prima facie it

(9 of 15) [CMA-1679/2019]

appears that the driving licence issued to Driver and renewed

for a period from 10-8-2011 to 19-11-2015, the same was

later on informed to be cancelled/ nullified vide public notice

date 28-12-2017, should not have been treated as invalid and

ineffective on the date of accident i.e. 3-7-2015, however, the

findings passed by the Tribunal in this regard have not been

put to challenge by the claimants, therefore, this court is not

inclined to interfere with such findings. Nevertheless,

following the principle of law set forth in Swaran Singh's case,

it is observed that the Insurance Company has miserably

failed to prove that the declaration of cancellation/ nullifying

the driving licence of the Driver was ever brought to the

knowledge of the owner of vehicle and it is not proved that

the owner was guilty of negligence in not following the due

care and caution to fulfill the conditions of the insurance

policy, therefore, the Tribunal has not committed any error of

law in following the principle of "pay and recover". The

principle of law propounded in case of Swaran Singh (supra)

squarely apply to the present case. Accordingly, the first point

is turned down.

10. The second point raised by counsel for Insurance

Company regarding not having route permit and fitness

certificate of vehicle in question is concerned, counsel for

Insurance Company has drawn attention of this court to the

findings of issue No.3, wherein the Tribunal has observed that

(10 of 15) [CMA-1679/2019]

vehicle in question was not having effective route permit and

fitness certificate. Counsel has submitted that vehicle in

question is a transport vehicle and the accident was occurred

on 3-7-2015 when the vehicle was plying in periphery of

village Falsa, Police Station Chopanki District Alwar. It has

been argued that the owner was duly served with notices of

claim petition as also of this appeal, but he has not appeared

and has not produced the permit of vehicle in question. This

court also finds that nothing has been brought on record by

the insured (owner of vehicle) to prove that he had a valid

permit of vehicle on 3-7-2015. The prayer is that for this

breach of policy condition, the claim petition be dismissed

qua Insurance Company.

11. In the Act of 1988, the term "motor vehicle" or

"vehicle" is defined under Section 2(28); the term "permit" in

Section 2(31), and "transport vehicle" is defined in Section

2(47) of the Act of 1988. Section 66 of the Act of 1988

stipulates the necessity of "permit". Sub-section (1) thereof

provides that no owner of a motor vehicle shall use or permit

the use of vehicle as a transport vehicle in any public place,

whether or not, such vehicle is actually carrying passengers

or goods save in accordance with conditions of a permit

granted or countersigned by a Regional or State Transport

Authority or any Prescribed Authority. Various provisos have

been appended to the main provisions stipulating conditions

(11 of 15) [CMA-1679/2019]

for use of vehicle, and carriage goods vehicle. It is apt to note

here that sub-section 3 of Section 66 of the Act of 1988

carves out actions to sub-section (1). Section 149(2)(a)(i)

relates to a vehicle not covered by a permit for hire or

reward. Section 149(2) provides statutory defences to the

insurer to contest claim petitions. Sub-section 7 of Section

147 provides that insurer to whom notice referred to sub-

section 2 or 3 has been given shall be entitled to avoid the

liability to pay any person any benefit. No such judgment and

award as is referred in sub-section 1 or no such judgment

and award as referred in sub-section 3 otherwise than in the

manner provided for in sub-section 4 or any corresponding

law can be passed. It is clear that in case the insured vehicle

does not have a valid permit, the same falls within breach of

conditions of policy as enumerated under Section 149(2) of

the Act of 1988.

12. In case at hand, nothing has been brought on record by

the insured to prove that he had a valid permit of vehicle and

the Tribunal has recorded findings in favour of the insurer

holding that in absence of a valid route permit/ permit the

insured has committed a breach of conditions of policy and as

such the insurer has been absolved to indemnify the insured.

Nevertheless, the Tribunal has considered the fact that

vehicle in question was insured with the insurer and

insurance policy is valid for a period from 25-8-2014 to 24-8-

(12 of 15) [CMA-1679/2019]

2015 (accident occurred on 3-7-2015). Considering the

beneficial object of the Act, the insurer was directed to satisfy

the award to claimants giving him option and liberty to

recover the amount from the insured.

13. As far as this direction issued against the Insurance

Company to first pay the compensation to claimants and then

to recover from the insured/ driver of vehicle are concerned,

the issue has examined by the Hon'ble Supreme Court in

detail in National Insurance Co. Ltd. Vs. Challa Bharathamma

[(2004)8 SCC 517].

14. The issue as to when Insurance Company is entitled to

be absolved from the liability to pay compensation due to

having no valid permit of vehicle in question, then whether it

can be directed to indemnify the compensation first to

claimants and then to recover from the insured. The Hon'ble

Supreme Court observed that plying vehicle without a permit

is a infraction and same is breach of conditions of insurance

policy in view of Section 66 of the Act of 1988. For such

breach, defence is available to the insurer in terms of Section

149(2) of the Act fo 1988. The Hon'ble Supreme Court while

allowing payment of compensation by Insurance Company

first and giving liberty/ right to Insurance Company to

recover the same from owner/ driver of vehicle has opined as

under:-

(13 of 15) [CMA-1679/2019]

"The residual question is what would be the appropriate direction. Considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability. In some cases the insurer has been given the option and liberty to recover the amount from the insured. For the purpose of recovering the amount paid from the owner, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court 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. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the Executing Court shall take assistance of the concerned Regional Transport Authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realization by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle i.e. the insured. In the instant case considering the quantum involved we leave it to the discretion of the insurer to decide whether it would take steps for recovery of the amount from the insured."

15. The judgment in the case of Challa Bharathamma

(supra) has been followed in case of Amrit Paul Singh Vs. Tata

AIG General Insurance Company [(2018)7 SCC 558].

16. In present case the insurance policy was in operation for

a period from 25-8-2014 to 24-8-2015 and accident occurred

on 3-7-2015. Thus the Tribunal has directed the Insurance

Company to pay the compensation to claimants who are

covered under the policy. The Tribunal has also observed in

clear terms that Insurance Company would deposit the

compensation amount payable to claimants and then would

be entitled to recover the compensation amount from the

(14 of 15) [CMA-1679/2019]

owner and driver of vehicle in question. This court makes it

clear that as far as such recovery rights given to Insurance

Company against owner/ driver of vehicle are concerned

would be treated in context of principles of law laid down in

case of Challa Bharathamma (supra). Thus, insurer is not

required to file a separate suit, in order to certify his right to

recover the amount from owner and driver of vehicle and

may directly initiate proceedings before the Executing Court

concerned, as the dispute between the insurer and owner/

driver of vehicle was subject matter of determination before

the Tribunal and the issue has been decided against the

owner and driver in favour of the insurer. Thus on second

point also the prayer of the Insurance Company to dismiss

claim petition as a whole against the claimants due to having

no valid permit of vehicle is not acceptable and same is

turned down.

17. As far as quantum of compensation is concerned, the

Tribunal has assessed the compensation after considering

material on record and after due application of relevant rules

and law. The compensation awarded by the Tribunal is just

and proper. The Insurance Company has failed to point out

any illegality or perversity in this regard. Thus, there is no

force in third point raised by the Insurance Company.

(15 of 15) [CMA-1679/2019]

18. The upshot of aforesaid discussion is that appeal filed by

Insurance Company fails and deserves to be dismissed.

According dismissed.

19. Since, this court has not find any merit in the appeal

filed by Insurance Company and has dismissed the same,

therefore, counsel for the claimants does not press the appeal

of claimants for enhancement of compensation. Accordingly,

the appeal filed by claimants is dismissed as not press.

20. A perusal of record reveals that Insurance Company has

deposited entire compensation amount before the Tribunal

pursuant to interim order dated 12-4-2019, out of which 50%

amount of compensation has been disbursed to claimants

according to order dated 5-8-2021 and therefore, remaining

amount so deposited be also disbursed to claimants in terms

of the award.

21. Stay application, application for vacations of stay order

and other applications, if pending, are also disposed of

accordingly. There is no order as to costs.

22. Record of the case be sent back forthwith.

(SUDESH BANSAL),J

Arn/81

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