In motor vehicle Accident claims,insurance company has to pay first

·         By A N Sabri

On 08^th August, 2018, Supreme Court in the matter of SHAMANNA AND ANOTHER  VERSUS THE DIVISIONAL MANAGER, THE ORIENTAL INSURANCE CO. LTD AND ORS. ( Civil Appeal No. 8144 of 2018) upheld the principle of “ pay and recover”  in the motor vehicle accident insurance claims matters.

Brief Facts of the Case:

On 14.04.20108, one Late Mr. Shankareppa Pattar was travelling in a jeep. The jeep was driven negligently due to which door of the jeep suddenly opened and Late Mr. Shankareppa was thrown out of the jeep and sustained grievous injuries and died in the hospital.

The MAC Tribunal awarded compensation of Rs. 3,55,500/- with interest @ 6% per annum from the date of claim petition till realization. Since the driver of the jeep had no valid driving licence at the time of the accident and since there was violation of the terms of the insurance policy, the Tribunal directed the insurance company to pay the compensation to the claimants and granted liberty to the insurance company to recover the same from the owner of the vehicle.

Appeals

Against the order of the Tribunal, Insurance company filed appeal in the High Court of Karnataka at Dharwad Bench . Appeal was also filed by the LRs deceased for enhancement of the compensation.

High Court Judgment  

High Court while relying on in its previous judgment in the case of Oriental Insurance Co. Ltd V K.C.Subramanyam ( ILR 2012 KAR 5241) set aside the award passed by the Tribunal directing the insurance company to pay compensation to the claimants and recover the same from the owner of the vehicle. The High Court held that only owner of the offending vehicle is liable to make payment of the compensation amount awarded by the Tribunal. High Court further enhanced the amount of compensation from Rs. 3,55,500/- to Rs. 4,94,700/- . It was observed by the High Court that where the Supreme Court directed the insurance company to make payment to the claimants and to recover the same from the owner of the vehicle in exercise of its discretionary power was under Article 142 of the Constitution of India and such power is vested only with the Supreme Court and no such power is vested with the High Court.

Judgments discussed:   

1      National Insurance Company Vs. Swaran Singh and others ( 2004) 3 SCC 297.

2      Oriental   Insurance Co. Ltd Vs. Nanjappan and Others ( 2004)13 SCC 224.

3      National insurance Co. Ltd Vs. Bommithi Subbhayamma and others ( 2005) 12 SCC 243.

4      National Insurance Co. Ltd Vs. Laxmi Narain Dhut ( 2007) 3 SCC 700

5      Oriental Insurance Co. Ltd Vs. Brit Mohan and others ( 2007) 7 SCC 56

6      Prem Kumari Vs. Prahlad Dev and others ( 2008) 3 SCC 193.

7      National Insurance Co. Ltd Vs. Parvathneni and another ( 2009) 8 SCC 785

            Findings of Supreme Court

It was held by the Supreme Court that since the reference to the larger bench in Parvathneni case has been disposed of by the keeping the question of law open to be decided in an appropriate case, presently the decision in Swaran Singh case followed in Laxmi Narain Dhut and others hold the field. The award passed by the Tribunal directing the insurance company to the compensation amount awarded to the claimant and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by the Court in Swaran Singh and Laxmi Narain Dhut cases. While so, the High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent ( Insurance Company) to pay the compensation and recovery from the owner of the vehicle.  The impugned judgment of the High Court exonerating the insurance company from its liability and directing the claimants ( Insurance company) to recover the compensation from the owner of the vehicle set aside and the award passed by the Tribunal  restored.

So far as the recovery of the amount from the owner of the vehicle, the insurance company shall recover as held in the decision of Oriental Insurance Co.Ltd V Nanjappan and others case, wherein it was held that for the purpose of recovering the same from insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executive Court as if the dispute between the insurer and the owner was subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer.    

However, the impugned judgment of the High Court insofar as enhancement of the compensation to Rs. 4,94,700/- is affirmed.

Conclusion

Supreme Court relied on Swaran Singh and Laxmi Narain Dhut case, wherein it was held that primarily it is duty of the Insurance Company to pay the compensation to the LR of deceased/ Injured person irrespective of the fact that the driver was not holding the valid licence or there was violation of the terms of the insurance policy. However, the insurance company can recover the said amount from owner. For recovery of the said amount the insurance company needs not the initiate a suit but it can initiate only the execution proceeding before the concerned Executing Court.

( Author can be contacted at azeez_nazar@rediffmail.com)