w w w . L a w y e r S e r v i c e s . i n



The New India Assurance Company Ltd. v/s Guljar Singh & Others

    Writ Petition Nos. 443 & 444 of 2012

    Decided On, 25 August 2021

    At, High Court of Uttarakhand

    By, THE HONOURABLE MR. JUSTICE MANOJ KUMAR TIWARI

    For the Petitioner: V.K. Kohli, Senior Advocate, I.P. Kohli, Kanti Ram Sharma, Advocates. For the Respondents: Ganesh Kandpal, Advocate.



Judgment Text

1. Since common questions of fact and law are involved in these Writ Petitions, therefore these petitions are clubbed together and are being heard & decided together. However, for the sake of convenience, facts of WPMS No. 444 of 2012 are being considered.

2. In Writ Petition (M/S) No. 444 of 2012, New India Assurance Company Ltd. has challenged the order dated 04.02.2012 passed by Motor Accident Claims Tribunal, Nainital in Misc. Case No. 06 of 2006. By the said order, petitioner was directed to pay the amount of compensation, as awarded by Tribunal to the claimants and to recover the same from the owner of the offending vehicle.

3. The facts, on which there is no dispute is that one Mr. Devkinandan Pandey, aged about 30 years, serving as Soldier in Indian Army; while going to Jawahar Nagar (Pant Nagar) in his motorcycle, in the intervening night of 12/13.05.1998, was hit by a tractor-trolley bearing registration No. USI 6374. He was taken to hospital at Haldwani for treatment; but, soon after reaching the hospital, he succumbed to the injuries. His dependents, namely, wife and two minor children filed an application under Section 166 of the Motor Accident Vehicles Act, 1988 before Motor Accident Claims Tribunal, Nainital, which was registered as Motor Accident Claim Case No. 333 of 1998.

4. Owner and insurer of the tractor-trolley, namely, Mr. Guljar Singh and M/s New India Assurance Company Ltd. were added as respondent nos. 1 & 2 respectively to the application filed by the dependents of the deceased. The owner of the tractor-trolley as well as the insurer (petitioner herein) filed their separate written statements. The owner of the tractor-trolley denied any negligence on the part of his driver and contended that it was the deceased, who was negligent and due to his own negligence, accident was caused.

5. The insurer (petitioner herein) also filed written statement, in which it was contended that the application under Section 166 filed by the claimants is not as per provisions of Motor Vehicles Act; owner and insurer of the motorcycle have not been made party and the accident was caused due to negligence on the part of the deceased, who was riding the motorcycle. The insurer further contended that the motorcycle was not being driven by a person having valid license and plea of collusion between claimants and owner of the tractor-trolley was also raised, however, the plea that insurance cover of the tractor-trolley had lapsed on the date of accident was not taken.

6. Learned Tribunal, after considering the defence taken by the respondents to the claim petition and the evidence on record, gave its award on 04.10.2002 and determined the amount of compensation to be payable to the claimants as ` 6,40,000/-, out of which, 50% was to go to the widow of the deceased and the remaining amount was to be deposited in a nationalized bank in an interest bearing security in the name of the two minor children of the deceased.

7. M/s New India Assurance Company Ltd. (petitioner herein) filed Appeal under Section 173 of the Motor Vehicles Act, 1988 before this Court, which was registered as A.O. No. 293 of 2002. In the said Appeal also, no such ground was taken that the insurance cover given to the offending tractor-trolley was not valid on the date of accident and the award was challenged on the quantum of compensation. The said Appeal was dismissed by a Division Bench of this Court vide judgment dated 27.08.2004 on the ground that the appellant had not filed any application under Section 170 of the Motor Vehicles Act, 1988 before the Tribunal, therefore, it cannot be allowed to challenge the award on quantum of compensation.

8. One year after dismissal of his Appeal, petitioner filed an application, seeking review of the judgment dated 27.08.2004 rendered in A.O. No. 293 of 2002. In the said application, for the first time, a ground was taken that on the date of accident, the insurance policy, issued in respect of the tractor-trolley had expired and owner of the tractor-trolley had made an interpolation in the insurance policy before producing it in Motor Accidents Claims Tribunal. Division Bench of this Court declined to review the judgment rendered in A.O. No. 293 of 2002, but, granted liberty to the petitioner to approach the concerned Tribunal under Sections 151/152 and 153 of Code of Civil Procedure. While disposing of the Review Application, Division Bench made it clear that if petitioner succeeds before the Tribunal, then he may recover the amount from the owner. Relevant extract of the order dated 31.03.2005 passed on petitioner’s Review Application is extracted below:-

“3. Since, it is altogether a new point/ground which was never raised before the learned Tribunal concerned and the claimant or owner of the vehicle were not afforded and in order to plead their case on these points, therefore, we feel it appropriate that the review petitioner may approach the learned Tribunal concerned under Section 151/152, AND 153 of Code of Civil Procedure. If the fraud is established, the same can be corrected in view the aforesaid sections by the learned Tribunal concerned as held by Hon’ble Apex Court in the case of “United India Insurance CO. Ltd. Vs. Rajendra Singh and others (200) 3 Supreme Court Cases 581.”

4. The review petition is accordingly disposed of. However, it is made clear that if the petitioner succeeds before the learned Tribunal, he may recover the amount from owner”.

9. Petitioner, thereafter, filed an application before the Tribunal, in which following prayer was made:-

“it is therefore respectfully prayed that judgment/award dated October 4, 2002, passed by Hon’ble Tribunal in above referred Motor Accident Claim case be quashed and fresh Trial be ordered.

Prayed further that Applicant Respondent be given fresh opportunity to bring additional evidence in support of alleged fraud and manipulation/fabrication of evidence by Owner of Vehicle Respondent No. 1.

Prayed further that such other orders, which the Hon’ble Tribunal deem fit and proper, in the circumstances of the Case, be passed in favour of Applicant/Respondent No.2.”

10. Learned Tribunal, vide order dated 04.02.2012, partly allowed the application made by the petitioner and held that the offending tractor-trolley owned by Mr. Guljar Singh was not insured with the petitioner at the time of accident, therefore, owner of the tractor-trolley is liable to pay the amount of compensation to the claimants in terms of award dated 04.10.2002. Petitioner is aggrieved by that part of the order passed by learned Tribunal, whereby he has been directed to pay the amount of compensation to the claimants and recover the amount so paid from Mr. Guljar Singh (Respondent No.1). Feeling aggrieved by the order dated 04.02.2012 passed by learned Tribunal on his application, petitioner has filed this Petition under Article 227 of the Constitution.

11. Learned Senior Counsel appearing for the petitioner submits that learned Tribunal erred in directing the petitioner to pay the amount of compensation to the claimants after holding that the tractor-trolley was not insured with the petitioner at the time of accident. Thus, according to him, the order impugned in this writ petition, is unsustainable to the extent of direction issued to the petitioner for payment of compensation.

12. This Court does not find any reason to interfere with the order passed by learned Tribunal on petitioner’s application. Division Bench of this Court, while, disposing of the Review Application of the petitioner, had made it clear that “if petitioner succeeds before the learned Tribunal, he may recover the amount from the owner”. In view of such observation in the order passed by Division Bench of this Court, the direction issued by learned Tribunal to the petitioner, cannot be faulted.

13. Chapter XI of the Motor Vehicles Act, 1988 dealing with insurance of motor vehicles against third party risks is beneficent statute intended to provide succor to victims of road accidents. A beneficent statute, as is well known, must receive a liberal interpretation. In the case of National Insurance Co. Ltd., Chandigarh Vs. Nicolletta Rohtagi and others reported in (2002) 7 SCC 456 Hon’ble Supreme Court has made the following observations regarding object of enacting Chapter XI of the aforesaid Act:-

“27. This matter may be examined from another angle. The right of appeal is not an inherent right or common law right, but it is a statutory right. If the law provides that an appeal can be filed on limited grounds, the grounds of challenge cannot be enlarged on the premise that the insured or the persons against whom a claim has been made have not filed any appeal. Section 149(2) of the 1988 Act limits the insurer’s appeal on those enumerated grounds and the appeal being a product of the statute, it is not open to an insurer to take any plea other than those provided in Section 149(2) of the 1988 Act. The view taken in United India Insurance Co. Ltd. v. Bhushan Sachdeva that a right to contest would also include the right to file an appeal is contrary to well-established law that creation of a right to appeal is an act which requires legislative authority and no court or tribunal can confer such right, it being one of limitation or extension of jurisdiction. Further, the view taken in United India Insurance that since the insurance companies are nationalised and are dealing with public money/fund and to deny them the right of appeal when there is a collusion between the claimants and the insured would mean draining out or abuse of public fund is contrary to the object and intention of Parliament behind enacting Chapter XI of the 1988 Act. The main object of enacting Chapter XI of the 1988 Act was to protect the interest of the victims of motor vehicle accidents and it is for that reason the insurance of all motor vehicles has been made statutorily compulsory. Compulsory insurance of motor vehicle was not to promote the business interest of the insurer engaged in the business of insurance. Provisions embodied either in the 1939 or the 1988 Act have been purposely enacted to protect the interest of the travelling public or those using the road from the risk attendant upon the user of motor vehicles on the roads. If law would have provided for compensation to dependants of victims of a motor vehicle accident, that would not have been sufficient unless there is a guarantee that compensation awarded to an injured or dependant of the victims of a motor accident shall be recoverable from the person held liable for the consequences of the accident.”

14. In the case of National Insurance Co. Ltd. Vs. Swaran Singh and others reported in (2004) 3 SCC 297, Hon’ble Supreme Court has observed as under:-

“18. Chapter XI of the Motor Vehicles Act, 1988, inter alia, provides for compulsory insurance of vehicles in relation to the matters specified therefor. The provision for compulsory insurance indisputably has been made, inter alia, with a view to protect the right of a third party.

19. This Court in Sohan Lal Passi noted:

“10. The road accidents in India have touched a new height. In majority of cases because of the rash and negligent driving, innocent persons become victims of such accidents because of which their dependants in many cases are virtually on the streets. In this background, the question of payment of compensation in respect of motor accidents has assumed great importance for public as well as for courts. Traditionally, before the Court directed payment of tort compensation, it had to be established by the claimants that the accident was due to the fault of the person causing injury or damage. Now from different judicial pronouncements, it shall appear that even in western countries fault is being read and assumed as someone’s negligence or carelessness. The Indian Parliament, being conscious of the magnitude of the plight of the victims of the accidents, has introduced several beneficial provisions to protect the interest of the claimants and to enable them to claim compensation from the owner or the insurance company in connection with the accident.”

20. The intention of Parliament became further evident when in the Motor Vehicles Act, 1939, a new chapter being Chapter VII-A dealing with insurance of motor vehicles against third-party risks was introduced and the beneficent provisions contained in the Motor Vehicles Act, 1939 were further made liberal by reason of the Motor Vehicles Act, 1988 and the amendments carried out therein from time to time in aid of the third-party claims by way of grant of additional or new rights conferred on the road accident victims.

83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does not mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid liability in terms of sub-section (2) of Section 149 is restricted as has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading.”

15. Hon’ble Supreme Court in the case of National Insurance Col. Ltd. Vs. Swaran Singh (supra) has approved the ‘Principle of Pay and Recover’ in paragraph nos. 104 to 107 of the judgment, which are reproduced below:-

“104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time.

105. Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle.

106. It is a well-settled rule of law and should not ordinarily be deviated from. (See Bengal Immunity Co. Ltd. v. State of Bihar, SCR at pp. 630-32, Keshav Mills Co. Ltd. v. CIT, SCR at pp. 921-22, Union of India v. Raghubir Singh, SCR at pp. 323, 327, 334, Gannon Dunkerley and Co. v. State of Rajasthan, Belgaum Gardeners Coop. Production Supply and Sale Society Ltd. v. State of Karnataka and Hanumantappa Krishnappa Mantur v. State of Karnataka.)

107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.”

16. The legal principles deduced by Hon’ble Supreme Court in the case of National Insurance Co. Ltd. Vs. Swaran Singh (supra) have been summarized in para no. 110 of the judgment, which is reproduced below:-

“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 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 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, 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 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.”

17. In the case of Pappu and others Vs. Vinod Kumar Lamba and another, reported in (2018) 3 SCC 208, Hon’ble Supreme Court applied the Principle of Pay and Recover. Paragraph No. 197 of the said judgment is reproduced below:-

“19. In the present case, the owner of the vehicle (Respondent 1) had produced the insurance certificate indicating that Vehicle No. DIL 5955 was comprehensively insured by Respondent 2 (insurance company) for unlimited liability. Applying the dictum in National Insurance Co. Ltd., to subserve the ends of justice, the insurer (Respondent 2) shall pay the claim amount awarded by the Tribunal to the appellants in the first instance, with liberty to recover the same from the owner of the vehicle (Respondent 1) in accordance with law.”

18. Now coming back to the facts of the present case. The accident had occurred in the intervening night of 12/13.05.1998, in which, a young man serving in the Indian Army died. His dependents are yet to receive the amount of compensation as determined by the Tribunal. Fraud, if any, has been committed by the owner of the tractor-trolley and not by the deceased or his dependents, therefore they cannot be made to suffer for a wrong committed by the owner of the tractor-trolly.

19. Denying compensation to the dependents of the deceased on the ground of fraud played by owner of the offending vehicle will amount to travesty of justice. Hon’ble Supreme Court has repeatedly held that Chapter XI of Motor Vehicles Act, 1988 is a beneficent legislation, therefore, it has to be interpreted in such a manner, which will advance the purpose of legislation, namely to provide succour to the victims of motor accidents.

20. Even otherwise also, it was incumbent upon the insurer (petitioner herein) to bring the fraud played by owner of tractor-trolley to the notice of the Motor Accident Claims Tribunal at the earliest stage. In the present case, petitioner contested the proceedings before the Tribunal and various defences were taken in his written statement filed in Claim Petition No. 333 of 1998, however, the plea of fraud or interpolation in the insurance policy was never taken in his written statement. In his appeal filed under Section 173 of the Act also, no ground regarding fraud or interpolation was taken. It is only after dismissal of the Appeal that petitioner woke up and in his Review Application, plea of fraud was taken for the first time. Thus, petitioner was not vigilant in the matter and due to his negligence in raising the issue of fraud at an appropriate stage, claimants cannot be made to suffer.

21. Even otherwise also, petitioner had not denied his liability in his written statement filed before the Tribunal, consequently, learned Tribunal had fastened liability upon the petitioner to compensate the dependents of the deceased. On account of discovery of some new material, family members of the deceased cannot be denied of the just compensation, as determined by the Tribunal. Therefore, the direction issued by learned Tribunal to the petitioner to pay the compensation with right to recover the same from the owner, cannot be said to be illegal. Since right to recover the amount from the owner has been given to the petitioner by learned Tribunal, therefore, petitioner is not left remediless and he can recover the amount from the owner.

22. Even otherwise also, this Court while exercising power of superintendence under Article 227 of the Constitution cannot sit in appeal over the orders passed by Courts/Tribunals. It is well settled by now that while exercising power under Article 227 of the Constitution, this Court is not supposed to re-appreciate facts. The scope is limited to an enquiry as to the existence of some perversity or grave error in the order passed by Court or Tribunal that would call for rectification, as observed by Hon’ble Supreme Court in India Pipe Fitting Co. Vs. Fakruddin M.A. Baker and another, reported in (1977) 4 SCC 587. Paragraph no.5 of the said judgment is reproduced below:

“5. The limitation of the High Court while exercising power under Article 227 of the Constitution is well-settl

Please Login To View The Full Judgment!

ed. Power under Article 227 is one of judicial superintendence and cannot be exercised to upset conclusions of facts however erroneous those may be. It is well-settled and perhaps too late in the day to refer to the decision of the Constitution Bench of this Court in Waryam Singh v. Amarnath where the principles have been clearly laid down as follows: “This power of superintendence conferred by Article 227 is, as pointed out by Harries, C.J., in Dalmia Jain Airways Ltd. v. Sukumar Mukherjee to be exercised most sparingly and only in appropriate cases in order to keep the Subordinate Courts within the bounds of their authority and not for correcting mere errors.” The same view was reiterated by another Constitution Bench of this Court in Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam. Even recently in Bathutmal Raichand Oswal v. Laxmibai R. Tarta dealing with a litigation between a landlord and tenant under Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, this Court relying on its earlier decisions observed as follows: “If an error of fact, even though apparent on the face of the record, cannot be corrected by means of a writ of certiorari it should follow a fortiori that it is not subject to correction by the High Court in the exercise of its jurisdiction under Article 227. The power of superintendence under Article 227 cannot be invoked to correct an error of fact which only a superior court can do in exercise of its statutory power as a court of appeal. The High Court cannot in guise of exercising its jurisdiction under Article 227 convert itself into a court of appeal when the Legislature has not conferred a right of appeal and made the decision of the subordinate court or tribunal final on facts.” 23. In the case of K.V.S. Ram v. Banglore Metropolitan Transport Corpn., reported in (2015) 12 SCC 39, Hon’ble Supreme Court has held that, while exercising power of superintendence under Article 227 of Constitution, High Court can interfere with the order of Tribunal only when there has been a patent perversity in the order of the Tribunal or where there has been gross and manifest failure of justice or the basic principles of natural justice have been flouted. 24. Similarly, in the case of Ishwar Lal Mohan Lal Thakkar v. Paschim Gujarat Vij Co. Ltd. and others, reported in (2014) 6 SCC 434, it has been held by Hon’ble Supreme Court that interference with findings of Labour Court/Tribunal would be warranted only in case of error of jurisdiction or serious error of law apparent on record or judgment based on no evidence. It has been further held that, in the absence of such defect, High Court has no jurisdiction to re-appreciate evidence to form its own view and record findings on contentious issues. 25. In such view of the matter, any interference with the impugned order would be unwarranted. Accordingly, the writ petitions fail and are dismissed. No order as to costs.
O R