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The National Insurance Co. Ltd. v/s Tej Narain & Others

    First Appeal From Order No. 67 of 1996

    Decided On, 09 January 2019

    At, High Court Of Judicature At Allahabad Lucknow Bench

    By, THE HONOURABLE MR. JUSTICE VIKAS KUNVAR SRIVASTAV

    For the Appellant: R.C. Sharma, Advocate. For the Respondents: G.K. Singh, D.C. Lubani, P. Chandra, Pankaj Gupta, Rajesh Tewari, S. Panjwani, Tushar Gupta, Advocates.



Judgment Text

Vikas Kunvar Srivastav, J.

1. This first appeal from order, filed by The National Insurance Co. Ltd. under Section 173 of Motor Vehicle Act, 1988 is directed against the judgment and award dated 21.11.1995 of learned Motor Accident Claim Tribunal (IVth Additional District and Sessions Judge, Hardoi) in M.A.C.P. No.11 of 1994 (Tej Narain Vs. Sohanlal and Others).

2. By the impugned judgment and award under appeal, the learned Motor Accident Claims Tribunal which shall hereinafter shall be called as M.A.C.T has awarded compensation of Rs.58,000/- to the legal representative, the father of one ''Mahendra alias Raju', aged about 24 years, who died in an accident occurred on 26.10.1993 at about 6.30 p.m. due to collision between two motor vehicles i.e. between one Bus (USD 3940) wherein he was passenger and Tractor (U.P. 30/5741).

3. Consequent thereupon the claim petition for compensation was filed by Tej Narain, father of the deceased against Sohanlal, (the owner of the bus), The Oriental Insurance Company Limited (insurer of the said bus), Ishtiaq Ali (driver of the bus), Abdul Hanif, Shaida W/o Abdul Hanif (the owner's of the another motor vehicle involved in the accident i.e. tractor bearing no.UP 30/5741), the National Insurance Company, (insurer) and one M.S. Hussain (the driver of the offending tractor).

4. Passing the impugned award under appeal, learned MACT held in its judgment that both the motor vehicles namely the bus and the tractor, involved in the accident, liable as they committed contributory negligence equally and therefore, awarded compensation to father of the deceased against all opposite parties nos. 1 to 7, directing the insurers of both the offending vehicles respectively the Oriental insurance Company- opposite party no.2 and The National Insurance Company-opposite party no.6, each one, to pay separately, 50% of the awarded amount to the petitioner along with the interest at the rate of 12% p.a., from the date of filing of petition i.e 10.01.1994 within 30 days from the date of judgment.

5. Learned counsel for the appellant, The National Insurance Company (opposite party no.6 in the claim petition)-Sri R.C. Sharma has challenged the said judgment award and prayed to allow his appeal with costs, setting aside the award dated 21.11.1995, to the extent of the liability fixed on the part of National Insurance Co. Ltd.

6. Heard learned counsels, for the appellant Sri R.C. Sharma, Advocate, for the respondent no.3 (Oriental Insurance Co. Ltd.) Sri Suresh Panjwani, Advocate and for the respondent no.1 Sri Tushar Gupta, Advocate. Though, the owners of the tractor respondent nos. 4 and 5 are duly served with notice but none appeared on their behalf to argue. It is noteworthy here that the tractor involved in the accident bearing no. UP 30/5741 belonging to the said respondent nos. 4 and 5 was insured by the appellant, The National Insurance Co. Ltd subsequent to the accident.

7. Learned counsel for the respondent no.3 Sri Suresh Panjwani submits that he has satisfied his part apportioned in the award of compensation, as the 50% of amount under award is deposited before the learned MACT therefore, nothing remains for him to argue in the appeal against the impugned award.

8. Perused the record of FAFO as well as the record summoned from the learned MACT, Hardoi and the written arguments submitted by Sri R.C. Sharma, learned counsel for the appellants and Sri Tushar Gupta, Advocate learned counsel for the respondent no.1.

9. Learned counsel for the appellant, Sri R.C. Sharma in his oral and written argument has emphasized that the tractor in question was not insured on the relevant date i.e. 26.10.1993 when the accident in question took place, wherein the deceased, ''Mahendra @ Raju' suffered injuries and succumbed to death. He further elaborated his argument by saying that the insurance coverage by The National Insurance Company Ltd. was effective from 01.11.1993 to 31.10.1994 whereas the accident took place on 26.10.1993. In the course of argument he further asserts that before the accident, earlier policy of insurance coverage was effective from 30.9.1992 to 29.9.1993 which was lapsed on 29.9.1993.

10. Learned counsel argues that prior to and after the date of accident, during the period from 30.9.1992 up to 29.9.1993 and then from 01.11.1993 up to 31.10.1994 the offending tractor was insured by the same insurer- The National Insurance Company L

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td. There was a gap period between these two effective periods of the insurance coverage from 30.9.1993 to 31.10.1993 during which on 26.10.1993 the accident took place. On this ground, learned counsel for the appellant argues that national insurance company is not responsible to pay any amount of compensation to the claimant as there was no contract of insurance with the owners of the offending vehicle, existing in respect of any risk in use of the same.

11. Learned counsel quoted Section 6-VB of the Insurance Act, 1938 which provides that no insurer shall assume any risk till the premium is received in advance. In other words, the insurance cover becomes available only on payment of premium and in the present case premium was paid on 01.11.1993, five days after the accident. Learned counsel for the appellant has relied on the case laws (New India Assurance Company Ltd. Vs. Smt. Sita Bai and Ors.) reported in [2000 (1) TAC 3 (SC)] and another case law (New India Assurance Company Ltd. Vs. Bhagwati Devi & Ors.) reported in [1999 (2) TAC 441 (SC)].

12. Learned counsel Sri Tushar Gupta on behalf of respondent no.1-claimant of the claim petition argued that the award is of 16 years old but no fruits are reaped till now for the claim-petitioner who has sustained an irreparable loss by loosing his young son in the incident which occurred due to rash and negligent driving by the drivers of the vehicles namely bus and tractor. Both the vehicles are responsible and as such their insurers too are responsible to pay compensation because of their being under the contract of insurance coverage. He argued that insurer of the tractor, the appellant-National Insurance Company is liable to satisfy his part under the award, even in absence of any substantive policy of insurance. He also relied on the judgments of Hon'ble Supreme Court in the case of (Manager, National Insurance Company Limited Vs. Saju P. Paul & Anr.) reported in [(2013) 2 Supreme Court Cases 41] and in another case of (National Insurance Company Limited Vs. Parvathneni) reported in [(2009) 8 (SCC) 785], (National Insurance Company Limited Vs. Challa Upendra Rao) reported in [(2004) 8 SCC 517] and (National Insurance Company Limited Vs. Baljeet Kaur) reported in [(2004) 2 SCC (1)].

13. This would be pertinent to mention that neither appellant nor any respondent has raised any question about factual finding recorded by the M.A.C.T as to the motor accident which occurred on 26.10.1993 by collision of two vehicles namely the offending bus and the tractor, the death of the deceased passenger of bus, ''Mahendra @ Raju', the contributory negligence of both the offending vehicles and the quantum of compensation under the award. The only finding questioned in the appeal is whether the insurer of the tractor is liable to pay compensation awarded against the owners even in absence of a contract of insurance.

14. In view of the aforestated facts and circumstances argued by the learned counsel for the parties to the appeal, when the pleadings in written statement of the National Insurance Co. are looked into, at Para 10 there is a clear denial of insurance coverage to the owners of tractor No. UP 30 / 5741 on the date of accident in question on 26.10.1993.

15. The tractor owners opposite party nos. 4 and 5 in the claim petition neither pleaded in their written statement of defence nor have led evidence to establish insurance coverage on 26.10.1993. To the contrary while they cross examined as witness, their son Abdul Hanif stated as OPW-1 stated on oath that mistakenly he did not get the tractor insured on termination of first insurance and could only obtained subsequent insurance after a lapse of 10 to 12 days. Even he stated that he forgot the date of termination of earlier insurance. The owner of tractor as such failed to discharge his burden to prove existence of insurance coverage on the date of accident. On the other hand an insurance coverage certificate issued by National Insurance Co. Ltd. paper no.18Ga/4 filed before MACT is showing insurance coverage in respect of tractor no.UP 30/5741 in favor of the said owners w.e.f. 01.11.1993 to 31.10.1994. All these tend to establish that on the date of accident i.e. 26.10.1993 the owner of the offending tractor no.UP 30/5741 were not insured by the National Insurance Co. Ltd.

16. Here the question arises whether the MACT is correct in holding responsible the appellant-National Insurance Company Ltd. for paying compensation for and on behalf of the owners of the offending motor vehicle the tractor no.UP 30 / 5741 even in the absence of the contract of insurance on the date of accident?

17. Learned counsel for the appellant relied on the verdict of Hon'ble The Supreme Court of India by a three judges Bench (Hon'ble J.S. Verma, C.J.I., Hon'ble S.P. Bharucha, J and Hon'ble A.P. Misra, J) in the case of Oriental Insurance Company Ltd. Vs. Sunita Rathi and Ors. reported in [1998 (1) TAC 697 (SC)]. The case before the Hon'ble Supreme Court was similar to this case where insurance policy was subsequent to the accident. Hon'ble the Supreme Court held that when the insurance policy and cover note was obtained by the insured subsequent to the accident even though on the same date the liability will have to be of the owner of the vehicle. In the context of the fact as established by the evidence on record that the accident took place on 26.10.1993 during the gap period of two insurance policies issued by the appellant-The National Insurance Company Ltd. It is argued that the learned M.A.C.T. was in error in directing the appellant to pay the compensation for and on behalf of the owners of offending vehicle.

18. It would be relevant to have a reference of the following provision of Indian Insurance Act:-

Section 64-VB in Insurance Act, 1938 "64-VB. No risk to be assumed unless premium is received in advance.-- (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.

(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.

Explanation.--Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.

(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.

(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.

(5) The Central Government may, by rules, relax the requirements of sub-section (1) in respect of particular categories in insurance policies."

[(6) The Authority may, from time to time, specify, by the regulations made by it, the manner of receipt of premium by the insurer.]

19. The aforesaid provision of the Insurance Act makes it clear that no insurer shall assume any risk in respect of any insurance policy unless and until the premium payable is received by him from the insured in such manner and within such time as may be prescribed in advance and as such the insured Tractor owners in the present case cannot be benefited from the insurance cover certificate obtained subsequent to the date of accident by paying premium on a date later to the accident.

20. Learned counsel for the appellant-The National Insurance Company Ltd. before the MACT has extracted from cross examination of the witness (O.P.W.1) for the owners of the offending tractor that mistakenly a gap of few days occasioned between two policies of insurance. This is also an established law that Court has to look into the contract of insurance to discern whether any particular time has been specified for commencing or expiry, as the case may be, of the policy of the insurance. The copy of the insurance policy has been produced for the perusal of the tribunal which has never questioned before the tribunal nor in the appeal before this Court.

21. Section 146 of the Motor Vehicle Act, 1988 which opens with the heading "necessity" for insurance against third party risk provides in its sub-section (1) that no person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force, in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter. Further, Section 147 of the Act opens with heading "Requirements of policies and limits of liability". For the easy reference, Section 147 of the Motor Vehicle Act, 1988 cited as under:-

147 Requirements of policies and limits of liability. --

(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--

(a) is issued by a person who is an authorised insurer; and

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)--

(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:

Provided that a policy shall not be required--

(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923) in respect of the death of, or bodily injury to, any such employee--

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged as conductor of the vehicle or in examining tickets on the vehicle, or

(c) if it is a goods carriage, being carried in the vehicle, or

(ii) to cover any contractual liability.

Explanation. --For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.

(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:--

(a) save as provided in clause (b), the amount of liability incurred;

(b) in respect of damage to any property of a third party, a limit of rupees six thousand:

Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.

(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.

(4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.

(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."

22. Section 149 of the Act assigns a duty to the insurer to satisfy judgments and award against persons insured in respect of third party risk in following conditions:-

"(i) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (i) of section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."

23. Section 149 of the Motor Vehicles Act, 1988 is relevant, however for the purpose of easy reference the entire Section 149 of the said Act is quoted below:-

"149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.--

(1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (l) of section 147 (being a liability covered by the terms of the policy) 1[or under the provisions of section 163A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:--

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:--

(i) a condition excluding the use of the vehicle--

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

(b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or

(d) without side-car being attached where the vehicle is a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or

(b) that the policy is void on the ground that it was obtained by the non- disclosure of a material fact or by a representation of fact which was false in some material particular."

(3) Where any such judgment as is referred to in sub-section (1) is obtained from a Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in sub-section (1), as if the judgment were given by a Court in India: Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub-section (2).

(4) Where a certificate of insurance has been issued under sub-section (3) of section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any condition other than those in clause (b) of sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub-section (1) of section 147, be of no effect: Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.

(5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.

(6) In this section the expression "material fact" and "material particular" means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression "liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.

(7) No insurer to whom the notice referred to in sub-section (2) or sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (3) otherwise than in the manner provided for in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be.

Explanation.--For the purposes of this section, "Claims Tribunal" means a Claims Tribunal constituted under section 165 and "award" means an award made by that Tribunal under section 168."

24. On bare reading of these provisions, it becomes clear that compulsorily an insurance before the use of motor vehicle is necessary as provided under Section 147 of the Motor Vehicles Act, 1988. Thereafter only, the insurer have a liability which may be incurred by him in respect of death or bodily injury to any person including owner of the goods or his authorized representative, candidate in the vehicle or admitted to any property of third party caused by, arisen out of the use of the vehicle in a public place. For the purpose of this Section, the owner of the vehicle is insured who enters into the contract of insurance to cover the aforesaid third party risk with the insurer. Section 149 which assigns a duty to the insurer as a liability under the statute to satisfy the judgment and awards against the person insured in respect of third party risk though he might not have any liability arising out of the contract of insurance existing between him and the insurer. This statutory obligation of insurer is thus by virtue of the mandatory contract of insurance under Section 147 of the Act between the insurer and insured. This statutory obligation above and beyond the obligation under the terms of existing contract of insurance is imposed by reason of the beneficient scheme of the Act provided in favour of the accident victims. Though Sub-Section (2) of Section 149 of the Motor Vehicle Act provides some defences to the insurer in case of any breach of a specified conditions of the policy on the ground that the policy is void, it was obtained by non-disclosure of a material fact or by a representation of fact which was false in some material particular. Section 149 (4) even in the case of breach of any condition specified in the terms of policy which has been issued under Sub-Section (3) of Section 147. Section 147 burdens the insurance company first to pay the damages as awarded by the Court against the insured to the third person and then to recover from the insurer. As such all these provisions pre-supposes existence of a contract of insurance necessary between the insurer and the insured at the time when the death or bodily injury occurred to a third party in the use of motor vehicle.

25. On the other hand, the argument advanced by learned counsel for the claimant-respondent that appellant-insurance company (The National Insurance Company) has rightly been burdened by the Motor Accident Claims Tribunal to pay the damages compensation awarded to the claimant-appellant against his insured, owner of the offending vehicle Tractor (U.P. 30/5741) is also needed to be considered. He has relied on the case of (National Insurance Company Ltd. Vs. Swaran Singh & Ors.) reported in [(2004) 3 SCC 297].

26. In the reported judgment of Swaran Singh (supra), the interpretation of Section 149 (2)(a)(ii) vis-a-vis the proviso appended to Sub-Section (4) & (5) of the Motor Vehicles Act, 1988, was the issue, in a bunch of Special Leave Petitions filed by the insurance companies, assailing various decisions of the Motor Accident Claims Tribunal and High Courts. The contentions raised before the Hon'ble Supreme Court by the insurance companies as summarized in paragraph-11 of the judgment, are as follows:-

"(1) The insurer in terms of sub-section (2) of Section 149 of the Act has an absolute right to raise a defence specified, inter alia, in sub-clause (ii) of clause (a) thereof;

(2) Such a right being clear and unequivocal having regard to the judgment of this Court in National Insurance Company Ltd., Chandigarh Vs. Nicolletta Rohtagi and Others [(2002) 7 SCC 456] must be allowed to be invoked by the insurer to its full effect. In the proceedings before the Tribunal, the insurers, thus, were entitled to show that the vehicle involved in the accident at the material point of time was driven by a person who was not 'duly licensed' or was 'disqualified to hold a licence'.

(3) A person cannot be said to be 'duly licensed' unless he has been granted a permanent licence for driving a particular vehicle in terms of the provisions of Chapter II of the Motor Vehicles Act and, thus, a vehicle cannot be held to be driven by a person duly licensed therefor if : (a) he does not hold a licence; (b) he holds a fake licence; (c) he holds a licence but the validity thereof has expired; or (d) he does not hold a licence for the type of vehicle which he was driving in terms of Chapter II of the Motor Vehicles Act, 1988, or (e) he holds merely a learner's licence.

(4) Once the defence by the insurer is established in the proceedings before the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle.

(5) Once it is held that the insurer has been able to establish its defence, the Tribunal or the Court cannot direct the insurance companies to pay the awarded amount to the claimant and in turn recover the same from the owner and the driver of the vehicle."

27. Dealing with all these issues Hon'ble Supreme Court with respect to the defenses taken by the insurance companies with a view to avoid liability in its paragraph 42 to 45 as follows:-

"The question as to whether an insurer can avoid its liability in the event it raises a defence as envisaged in Sub-section (2) of Section 149 of the Act corresponding to sub-section (2) of Section 96 of the Motor Vehicles Act, 1939 had been the subject matter of decisions in a large number of cases.

It is beyond any doubt or dispute that under Section 149 (2) of the Act an insurer, to whom notice of the bringing of any proceeding for compensation has been given, can defend the action on any of the grounds mentioned therein.

However, Clause (a) opens with the words "that there has been a breach of a specified condition of the policy", implying that the insurer's defence of the action would depend upon the terms of the policy. The said sub-clause contains three conditions of disjunctive character, namely, the insurer can get away from the liability when (a) a named person drives the vehicle; (b) it was being driven by a person who did not have a duly granted licence; and (c) driver is a person disqualified for holding or obtaining a driving licence.

We may also take note of the fact that whereas in Section 3 the words used are 'effective licence', it has been differently worded in Section 149 (2) i.e. ' duly licensed'. If a person does not hold an effective licence as on the date of the accident, he may be liable for prosecution in terms of Section 149 of the Act but Section 149 pertains to insurance as regard third party risks."

28. The judgment of Hon'ble Supreme Court thus deals with the defenses taken by the insurance companies in common regarding a contract of insurance falls with relating the contract and thus like any other contract the intention of the parties must be gathered from the expressions used therein. In most of the contract of insurances there is specific condition that the insured should not allowed the vehicle to be driven by a person, without a valid or effective driving license and therefore if there is any breach of the terms and condition of the contract, which could be deduced from the policy the companies are not liable to pay.

29. In the aforesaid backdrop the provisions of Sub-Section (4) & (5) of 149 of the Motor Vehicles Act, 1988 may be considered as the liability of the insurer to specify the decree at the first instance having regard to the beneficial institute. As Hon'ble the Supreme Court has held that the liability of the insurer is statutory and he should satisfy the decree passed in favour of the third party.

30. In the present case the award of M.A.C.T. is not challenged on any ground as enumerated under Section 149 (2) regarding the breach of policy by reason or under circumstances considered in the case of Swaran Singh (supra) before Hon'ble the Apex Court. Furthermore, the term ''breach' used in the provisions referred to hereinabove, the Motor Vehicles Act has its dictionary meaning ''an act of breaking promise, agreement or relationship'. This also indicates that there must be some agreement of which violation may attract the application of defences provided in Section 149 (2) of the Motor Vehicles Act, and then only despite the breach on the part of insured has been established the duty to satisfy the judgment or award against the insured arise with right to recover thereafter from him as provided under Section 149 (4) and (5) of the Act. It is one thing to say that the insurer will be entitled to avoid its liability owing to breach of terms of a contract of insurance policy but it is another thing to say that the vehicle is not insured at all. If the submission of learned counsel for the appellant is to this effect that at the relevant time the offending vehicle tractor (U.P. 30/5741) was not insured is considered, the same would render the proviso of Sub-Section (4) as well as Sub-Section (5) of Section 149 of the Act otiose.

31. Learned counsel for the claimant-respondent further relying on the decision of (National Insurance Company Ltd Vs. Baljeet Kaur) reported in [(2004) 2 SCC Page 1], (National Insurance Company Ltd. Vs. Saju P. Paul & Anr.) reported in [(2013) 2 SCC 41] to argue that if an insurance company can prove that it does not have any liability to pay any amount in law to the claimant under Motor Vehicles Act or any other enactment, the Court can yet compel it to pay the amount in question giving it liberty to later on to recover the same from the owner of the vehicle. He further submits that a direction be given under Article 142 of the Constitution of India, elaborating the scope of Article 142.

32. Learned counsel by citing the case of (National Insurance Company Ltd. Vs. Parvathneni) reported in [(2009) 8 SCC 785] argued that direction to the insurance company to pay compensation even though insurance company is not liable under law may be given with liberty to recover the amount from owner of vehicle. This is relevant to note that validity of such direction was doubted, propriety of such direction given in earlier case also doubted. Matter was then referred to a larger bench.

33. As argued by learned counsel for the claimant-respondent and on perusal of the case laws cited by him, passed by Hon'ble the Supreme Court of India, this would be material point to be considered that whether in absence of any contract of insurance, the insurer/appellant may be burdened with liability to first pay and then to recover under Section 149 (4) of the Act from the insured. A reading of the proviso of Sub-Section (4) as well as language employed in Sub-Section (5) would indicate that they are intended to safeguard the interest of an insurer, otherwise has no liability to pay any amount but for the provision contained in Chapter XI of the Act. This means, the insurer has to pay to the third party only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but also as an statutory obligation in case of any breach or violation of any condition specified in the contract, however, the insurer is entitled to recover any such sum from the insured if the insurer was not otherwise liable to pay such sum to the insured by virtue of the condition of the contract of insurance indicating by the policy. In other words, the effect of the aforesaid provision is that when an insurance policy validly issued in respect of a motor vehicle through a certificate of insurance, the burden is on the insurer to pay to the third parties, whether there has been any breach or violation of the policy conditions or not. He is further entitled to recover the amount from the insured if according to policy conditions the insurer had not liability to pay such amount to the insured.

34. In Parvathneni's Case (Supra) there was a situation of no insurance coverage for the vehicle on the date of accident and it was argued by insurance company that for this reason it is not liable to pay compensation. The High Court directed to pay compensation to the claimants with liberty to the insurance company to recover the same from the owner. Earlier an appeal having been filed against the decisions in (National Insurance Company Ltd Vs. Yellamma & Anr.) reported in [(2008) 7 SCC 527], (Samundra Devi Vs. Narendra Kaur) reported in [(2009) SCC 104] and some other cases, exercising the powers under Article 142 of the Constitution of India, The Supreme Court of India has directed the Insurance Companies to pay and recover it from the owner of the vehicle.

35. The Hon'ble Supreme Court while dealing with Parvathneni's Case (Supra) felt that Article 142 does not cover such type of cases and therefore, directed the record of the case be placed before Hon'ble The Chief Justice of India, for constituting a larger bench to decide the following questions:-

(i) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under Motor Vehicle Act, 1988 or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehicle?

(ii) Can such a direction be given under Article 142 of the Constitution of India and what is the scope of Article 142? Does Article 142 permits the Court to create a liability whether there is none?

36. The judgment in Parvathneni's Case (Supra) is not similar to the other cases of no license but it was a case where there was no insurance coverage on the date of accident. The question referred by Hon'ble The Supreme Court is kept open by the Larger Bench vide its order dated 17.09.2013 in petition for Special Leave to Appeal (Civil) No.22444 of 2009 (The National Insurance Company Ltd. Vs. Parvathneni), Hon'ble the three judges bench disposed of the petition saying that the question of law raised in this petition are kept open to be decided in an appropriate case.

37. In the light of discussions made here-in-above, the impugned judgment and award is obviously erroneous because the learned M.A.C.T. did not traversed into the pleadings and evidences as to the existence of contract of insurance between the National Insurance Company and the owners of the offending vehicle, the tractor (U.P. 30/5741). The appellant- The National Insurance Company (opposite party no.6 in the claim petition) has asserted in its written statement of defence that there was no contract of insurance coverage with the owners of the offending vehicle, the tractor (U.P. 30/ 5741) at the relevant date of accident. Moreover, the owners of the offending vehicle (tractor) did not discharge their initial burden of proving the existence of contract of insurance, at the relevant date of accident and death of the accident victim. On the other hand, The National Insurance Company succeeded in proving, the fact of entering the contract of insurance coverage, by the owners of the vehicle in question, with the company on a date subsequent to the accident, by producing the insurance coverage certificate, which remained unrebutted. Even, the learned M.A.C.T. did not frame any issue as to the existence of contract of insurance between the owners of offending tractor and the appellant- ''The National Insurance Company' or as to the, ''liability of The National Insurance Company', towards a risk, occurred in use of motor vehicle, on the relevant date of accident, in absence of any insurance coverage certificate against such risks. The learned M.A.C.T. without reaching at any conclusion regarding the above relevant questions, held the National Insurance Company liable to pay compensation for and on behalf of the owners of offending vehicle (tractor), to the claimant in motor accident claim petition for the loss of his son who died in the said accident.

38. The learned M.A.C.T. was not justified, in directing the National Insurance Co. Ltd. to pay all the amount of compensation, to the motor accident claim petitioner, under the award passed against the owner of the offending vehicle, particularly, in the circumstances of the present case, there was no contract of insurance coverage existing between the Insurance Company and the owner of the offending motor vehicle, at the relevant date, when the accident occurred and the claimant's son was died therein. Furthermore, the learned Motor Accident Claims Tribunal misconstrued the beneficient scheme legislated with safeguard to the interest of Insurance Companies, under Section 147 and 149 of the Motor Vehicles Act, 1988, in cases where the Insurance Company and motor vehicle owner are under a contract of insurance coverage regarding risks to person or property of a third party, which may occur in use of motor vehicle in the absence of any established law, in situation of ''no contract of insurance coverage' at all, with the motor vehicle owner. Despite the established law given by Hon'ble the three judges Bench of the Apex Court in Oriental Insurance Company Ltd. Vs. Sunita Rathi and Ors. (Supra) (in cases of motor vehicle owner entering contract of insurance with insurance company, subsequent to the accident) that the liability will have to be of owner of the vehicle, the learned M.A.C.T was in error, in issuing direction to the appellant-The National Insurance Company Limited in the impugned award under appeal, to pay all the compensation awarded against the owners of the offending vehicle for and on their behalf to the claimant.

39. Therefore, I hold that learned M.A.C.T erred in directing the appellant-The National Insurance Company Limited in the award to pay compensation for and on behalf of the owners of the offending vehicle (tractor) against whom the compensation was awarded, in the absence of any contract of insurance coverage.

The appeal of the appellant-National Insurance Company is allowed. The part of impugned judgment and award is set aside, by which, the appellant (The National Insurance Co. Ltd.), is directed to pay 50% of the total compensation to the claimant for and on behalf of the opposite parties no.4 and 5 in the claim petition (respondent nos. 4 and 5 in the appeal), the owner of offending vehicle.

Further, the award is modified partly to the extent that 50% of the amount of the award shall be paid by, and recoverable through the process of execution, from respondent nos. 4 and 5 [(the owners of the tractor (U.P. 30/5741)] with interest at the rate, awarded by the learned M.A.C.T. (i.e. 12% per annum), chargeable from the date of petition till the date of actual payment to the claimant.

The executing court (learned M.A.C.T. concerned) is directed to execute the award as modified in the appeal within a period of two months for recovery from respondent nos. 4 and 5-the owner of the offending vehicle tractor (U.P. 30/5741), if they fail to pay the awarded amount within a period of 30 days, from the date of judgment.

The amount, if any deposited by the appellant in the appeal, shall be returned to the appellant.

Lower court record be sent back to the M.A.C.T. concerned.

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