MANAGER, NATIONAL INSURANCE CO. LTD. versus SAJU P. PAUL AND ANOTHER

MANAGER, NATIONAL INSURANCE CO. LTD.

SAJU P. PAUL AND ANOTHER(Civil Appeal No. 5 of 2013)

JANUARY 3, 2013

[R.M. LODHA AND ANIL R. DAVE, JJ.]

Motor Vehicles Act, 1988 - s. 147 - Motor accident ofgoods vehicle - Injury to the claimant, who was travelling inthe vehicle and claiming to be spare driver - Liability of theinsurance company - Held: Insurance company not liable topay compensation - Spare driver was not covered under thepolicy - He was admittedly not driving the vehicle nor wasengaged for driving the said vehicle - Thus he was gratuitouspassenger - In the facts of the case, Insurance Companydirected to pay the compensation and later to recover thesame from the owner-insured.

The question for consideration in the present appealwas as to whether the insurance company was liable topay compensation for the bodily injury caused to theclaimant who was travelling in goods vehicle as sparedriver, though he was employed as driver in anothervehicle owned by the vehicle owner-insured.

Allowing the appeal, the Court

HELD: 1.1 The impugned judgment is founded onmisconstruction of s. 147 of the Motor Vehicles Act, 1988.The High Court was wrong in holding that the insurancecompany was liable to indemnify the owner of the vehicleand pay the compensation to the claimant [Para 18] [15-F]

1.2 The High Court committed grave error in holdingthat s.147(1)(b)(i) takes within its fold any liability whichmay be incurred by the insurer in respect of the death orbodily injury to any person. The High Court erroneouslyassumed that the claimant died in the course of

Aemployment and overlooked the fact that the claimantwas not in any manner engaged on the vehicle that metwith an accident, but he was employed as driver inanother vehicle. The insured (owner of the vehicle) gotinsurance cover in respect of the subject goods vehicleBfor driver and cleaner only and not for any otheremployee. Therefore, second driver or for that purpose'spare driver' was not covered under the policy. As amatter of law, the claimant did not cease to be agratuitous passenger though he claimed that he was aCspare driver. [Para 16] [14-G-H; 15-A-C]

New India Assurance Co. Ltd. v. Asha Rani and Ors.(2003) 2 SCC 223:2002 (4) Suppl. SCR 543; NationalInsurance Co. Ltd. v. Cholleti Bharatamma and Ors. (2008)1 SCC 423:2007 (11) SCR 531; Oriental Insurance Co. Ltd.Dv. Devireddy Konda Reddy and Ors. (2003) 2 SCC 339:2003(1) SCR 537 - relied on.

New India Assurance Company v. Satpal Singh and Ors.(2000) 1 SCC 237:1999 (5) Suppl. SCR 149 - referred to.

1.3 The High Court misconstrued the provisoEfollowing sub-section (1) of s. 147 of the Act. What iscontemplated by proviso to s.147 (1) is that the policyshall not be required to cover liability in respect of deathor bodily injury sustained by an employee arising out ofand in the course of his employment other than liabilityFarising under the Workmen's Compensation Act, 1923.The claimant was admittedly not driving the vehicle norhe was engaged in driving the said vehicle. Merelybecause he was travelling in cabin, would not make hiscase different from any other gratuitous passenger. [ParaG17] [15-D-E]

2. In the peculiar facts of the present case, directionis issued to the insurance company to first satisfy theawarded amount in favour of the claimant and recoverthe same from the owner of the vehicle. The insuranceHcompany has already deposited the entire awarded

MANAGER, NATIONAL INSURANCE CO. LTD. v.SAJU P. PAUL AND ANOTHER

amount pursuant to the order of this Court passed on01.08.2011 and the said amount has been invested in afixed deposit account. The claimant is allowed towithdraw the amount deposited by the insurancecompany before this Court, along-with accrued interest.The insurance company thereafter may recover theamount so paid, from the owner-respondent No. 2 byfollowing the procedure as laid down by this Court in thecase of *Challa Bharathamma case . [Paras 19 and 25][15-G; 19-E-F]

National Insurance Co. Ltd. v. Baljit Kaur and Ors. (2004)2 SCC 1:2004 (1) SCR 274 ; *National Insurance Co. Ltd. v.Challa Bharathamma and Ors. (2004) 8 SCC 517: 2004 (4)Suppl. SCR 587; National Insurance Company Limited v.Kaushalaya Devi and Ors. (2008) 8 SCC 246: 2008 (8) SCR500 - relied on.

Case Law Reference:

of 2013.

From the Judgment & Order dated 23.03.2011 of the HighCourt of Kerala at Ernakulam in R.P. No. 106 of 2010 inM.A.C.No. 713 of 2003.

M.K. Dua for the Appellant.

K. Radhakrishnan, Kiran Bhardwaj for the Respondents.

The Judgment of the Court was delivered by

R.M. LODHA, J. 1. Leave granted.

2. The appellant, insurance company, is in appeal by

special leave against the judgment and order dated 23.03.2011whereby the Division Bench of the Kerala High Court allowedthe review petition and reviewed its order dated 09.11.2010and held that the insurance company was liable to payBcompensation in sum of Rs. 2,88,000/- with 9% interestthereon to the claimant awarded by the Motor Accident ClaimsTribunal in its award dated 23.07.2002.

3. The question of law that arises in this appeal is as towhether having regard to the provisions of the Motor VehiclesAct, 1988 (for short, ‘1988 Act’), the insurance company is liableCto pay compensation for the bodily injury caused to the claimantwho was travelling in goods vehicle as spare driver thoughhe was employed as driver in another vehicle owned by theowner of the vehicle under the policy of insurance.

4. The above question arises in this way. Saju P. Paul,

claimant (Respondent No. 1), was heavy vehicle driver. Hewas employed with Respondent No. 2 as driver in some othervehicle. On 16.10.1993, he was travelling in goods vehiclebearing No. KL-2A/3411 in the cabin. The goods vehicle wasbeing driven by one Jayakumar. In that vehicle, many otherEpersons were also travelling. At Nilackal, due to rash andnegligent driving of the driver Jayakumar, the goods vehiclecapsized. As result of which the claimant suffered fracture andinjuries. The claimant remained under treatment for quite sometime and the injuries that he sustained in the accident renderedFhim permanently disabled. In the claim petition filed by himbefore the Motor Accident Claims Tribunal, Pathanamthitta (forshort, ‘the Tribunal’), he claimed compensation of Rs.3,00,000/-. The owner and insurer were impleaded asrespondent no. 2 and respondent no. 3 respectively in the claimpetition.

5. The insurer filed its written statement and opposed theclaimant’s claim insofar as it was concerned. The insurer setup the plea that the vehicle was goods vehicle and the riskof the passengers travelling in the goods vehicle was notcovered under the policy of insurance. It was stated in theHwritten statement that nearly 50 unauthorised passengers were

travelling at the time of accident; they were not traveling in thevehicle in pursuance of the contract of employment, such asloading and unloading nor they were travelling as the owner ofthe goods or the representative of the owner of the goods andhence the insurer could not be saddled with any liability.

6. The Tribunal, after recording the evidence and hearing

the parties, on 23.07.2002, passed an award in favour of theclaimant holding that he was entitled to total compensationof Rs. 3,00,000/-. The liability of the insurer was made joint andseveral with the owner and driver.

7. Being not satisfied with the award of the Tribunal, theinsurer filed an appeal before the Kerala High Court. TheDivision Bench of that Court by relying upon decisions of thisCourt in New India Assurance Co. Ltd. v. Asha Rani andOthers[1]and National Insurance Co. Ltd.v. CholletiBharatamma and Others[2] allowed the appeal of the insurervide judgment and order dated 09.11.2010. The Division Benchheld that insurer was not liable as gratuitous passengerstravelling in goods vehicle were not covered under the policyand the claimant shall be entitled to recover the awardedamount from the owner or driver of the vehicle.

8. The claimant sought review of the order dated09.11.2010 and, as noted above, by the impugned order thatreview application has been allowed. While allowing the reviewapplication, the Division Bench held as under:

“It has already been noticed that the petitioner wasadmittedly spare driver of the vehicle. It may be true thathe was not driving the vehicle at the relevant point of time;but he was directed to go to the worksite by his employeras spare driver in the vehicle. Therefore, by no stretchof imagination, it can be said that the petitioner was nottravelling in the vehicle in the course of his employment andas directed by his employer. Section 147(1)(b)(i) takeswithin its fold any liability which may be incurred by theinsurer in respect of the death or bodily injury to any person.

1.(2003) 2 SCC 223.

(2008) 1 SCC 423

ATherefore, the argument of the insurance company that nogoods were being carried in the vehicle at the time ofaccident and therefore, the petitioner was only gratuitouspassenger cannot be countenanced at all. Even otherwise,the first proviso to Section147(1) will cast liability on theinsurer to indemnify the owner in respect of the injuryBsustained by the employee of the insured arising out ofand in the course of his employment.”

9. It is appropriate to quote Section 147 of the 1988 Actas was obtaining on the date of accident, i.e., 16.10.1993,which reads as follows :

“147. Requirements of policies and limits of liability.—(1) In order to comply with the requirements of thisChapter, policy of insurance must be policy which—

(a) is issued by person who is an authorized insurer; and\D(b) insures the person or classes of persons specified inthe policy to the extent specified in sub-section (2)—

(i) against any liability which may be incurred by him inrespect of the death of or bodily injury to any person ordamage to any property of third party caused by orarising out of the use of the vehicle in public place;

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

Provided that policy shall not be required—

(i) to cover liability in respect of the death, arising out ofand in the course of his employment, of the employee ofa person insured by the policy or in respect of bodily injurysustained by such an employee arising out of and in thecourse of his employment other than liability arisingGunder the Workmen’s Compensation Act, 1923 (8 of1923), in respect of the death of, or bodily injury to, anysuch employee—

(a) engaged in driving the vehicle, or

(b) if it is public service vehicle engaged as conductor

of the vehicle or in examining tickets on the vehicle, or

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

(ii) to cover any contractual liability.

Explanation.—For the removal of doubts, it is herebydeclared that the death of or bodily injury to any person ordamage to any property of third party shall be deemedto have been caused by or to have arisen out of, the useof vehicle in public place notwithstanding that theperson who is dead or injured or the property which isdamaged was not in public place at the time of theaccident, if the act or omission which led to the accidentoccurred in public place.

(2) Subject to the proviso to sub-section (1), policy ofinsurance referred to in sub-section (1), shall cover anyliability incurred in respect of any accident, up to thefollowing limits, namely—

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

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

Provided that any policy of insurance issued with anylimited liability and in force, immediately before thecommencement of this Act, shall continue to be effectivefor period of four months after such commencement ortill the date of expiry of such policy whichever is earlier.

(3) policy shall be of no effect for the purposes of thisChapter unless and until there is issued by the insurer infavour of the person by whom the policy is effected acertificate of insurance in the prescribed form andcontaining the prescribed particulars of any conditionsubject to which the policy is issued and of any otherprescribed matters; and different forms, particulars andmatters may be prescribed in different cases.

(4) Where cover note issued by the insurer under theprovisions of this Chapter or the rules made thereunder is

Anot followed by policy of insurance within the prescribedtime, the insurer shall, within seven days of the expiry ofthe period of the validity of the cover note, notify the factto the registering authority in whose records the vehicle towhich the cover note relates has been registered or to suchother authority as the State Government may prescribe.B

(5) Notwithstanding anything contained in any law for thetime being in force, an insurer issuing policy of insuranceunder this section shall be liable to indemnify the personor classes of persons specified in the policy in respect ofany liability which the policy purports to cover in the caseCof that person or those classes of persons.”

10. By the Motor Vehicles (Amendment) Act, 1994 (forshort, ‘1994 Amendment Act’), Section 147 came to beamended. The expression “including owner of the goods or hisauthorised representative carried in the vehicle” was added inDSection 147. The amended Section 147 has been consideredby this Court in various decisions, some of which we intend torefer little later.

11. In New India Assurance Company v. Satpal Singhand Others[3], this Court with reference to the provisions in theEMotor Vehicles Act, 1939 and the provisions in 1988 Act,particularly Section 147, held that under the 1988 Act aninsurance policy covering third party risk was not required toexclude gratuitous passengers in vehicle no matter that thevehicle is of any type or class. It was also held that the earlierFdecisions of this Court rendered under the 1939 Act vis-à-visgratuitous passengers were of no avail while considering theliability of the insurance company in respect of any accidentwhich occurred or would occur after the 1988 Act came intoforce.

G12. The correctness of the judgment in Satpal Singh[3]wasdoubted, inter alia, in Asha Rani[1]. It was felt that Satpal Singh3needed re-look insofar as cases covered under the 1988 Actprior to its amendment in 1994 were concerned. three-JudgeBench in Asha Rani[1]noticed Section 147 of the 1988 Act prior

H3.(2000) 1 SCC 237.

to its amendment in 1994 and after its amendment in 1994 andheld in paragraph 9 of the Report (Pgs. 231-232) as follows :

“In Satpal case [(2000) 1 SCC 237] the Court assumedthat the provisions of Section 95(1) of the Motor VehiclesAct, 1939 are identical with Section 147(1) of the MotorVehicles Act, 1988, as it stood prior to its amendment. Buta careful scrutiny of the provisions would make it clear thatprior to the amendment of 1994 it was not necessary forthe insurer to insure against the owner of the goods or hisauthorised representative being carried in goods vehicle.On an erroneous impression this Court came to theconclusion that the insurer would be liable to paycompensation in respect of the death or bodily injurycaused to either the owner of the goods or his authorisedrepresentative when being carried in goods vehicle theaccident occurred. If the Motor Vehicles Amendment Actof 1994 is examined, particularly Section 46, by which theexpression “injury to any person” in the original Act stoodsubstituted by the expression “injury to any person includingowner of the goods or his authorised representativecarried in the vehicle”, the conclusion is irresistible thatprior to the aforesaid Amendment Act of 1994, even if thewidest interpretation is given to the expression “to anyperson” it will not cover either the owner of the goods orhis authorised representative being carried in the vehicle.The objects and reasons of clause 46 also state that itseeks to amend Section 147 to include owner of the goodsor his authorised representative carried in the vehicle forthe purposes of liability under the insurance policy. It is nodoubt true that sometimes the legislature amends the lawby way of amplification and clarification of an inherentposition which is there in the statute, but plain meaningbeing given to the words used in the statute, as it stoodprior to its amendment of 1994, and as it standssubsequent to its amendment in 1994 and bearing in mindthe objects and reasons engrafted in the amendedprovisions referred to earlier, it is difficult for us to construethat the expression “including owner of the goods or his

Aauthorised representative carried in the vehicle” which wasadded to the pre-existing expression “injury to any person”is either clarificatory or amplification of the pre-existingstatute. On the other hand it clearly demonstrates that thelegislature wanted to bring within the sweep of Section 147Band making it compulsory for the insurer to insure even incase of goods vehicle, the owner of the goods or hisauthorised representative being carried in goods vehiclewhen that vehicle met with an accident and the owner ofthe goods or his representative either dies or suffers bodilyinjury. The judgment of this Court in Satpal case thereforeCmust be held to have not been correctly decided and theimpugned judgment of the Tribunal as well as that of theHigh Court accordingly are set aside and these appealsare allowed. It is held that the insurer will not be liable forpaying compensation to the owner of the goods or hisDauthorised representative on being carried in goodsvehicle when that vehicle meets with an accident and theowner of the goods or his representative dies or suffersany bodily injury.”

13. S.B. Sinha, J. in his supplementary judgment in AshaERani[1], while concurring with the above, observed as follows (Pg.235):

“26. In view of the changes in the relevant provisions in the1988 Act vis-à-vis the 1939 Act, we are of the opinion thatthe meaning of the words “any person” must also beFattributed having regard to the context in which they havebeen used i.e. “a third party”. Keeping in view theprovisions of the 1988 Act, we are of the opinion that asthe provisions thereof do not enjoin any statutory liabilityon the owner of vehicle to get his vehicle insured for anypassenger travelling in goods vehicle, the insurers wouldGnot be liable therefor.

27. Furthermore, sub-clause (i) of clause (b) of sub-section(1) of Section 147 speaks of liability which may be incurredby the owner of vehicle in respect of death of or bodilyinjury to any person or damage to any property of thirdH

party caused by or arising out of the use of the vehicle ina public place, whereas sub-clause (ii) thereof deals withliability which may be incurred by the owner of vehicleagainst the death of or bodily injury to any passenger of apublic service vehicle caused by or arising out of the useof the vehicle in public place.

28. An owner of passenger-carrying vehicle must paypremium for covering the risks of the passengers. If aliability other than the limited liability provided for under theAct is to be enhanced under an insurance policy, additionalpremium is required to be paid. But if the ratio of thisCourt’s decision in New India Assurance Co.v.SatpalSingh [(2000) 1 SCC 237] is taken to its logical conclusion,although for such passengers, the owner of goodscarriage need not take out an insurance policy, they wouldbe deemed to have been covered under the policywherefor even no premium is required to be paid.

14. Asha Rani[1]has been relied upon in Oriental InsuranceCo. Ltd.v. Devireddy Konda Reddy and Others[4]wherein itwas held as under (Pgs. 342-343):

“….The difference in the language of “goods vehicle” asappearing in the old Act and “goods carriage” in the Actis of significance. bare reading of the provisions makesit clear that the legislative intent was to prohibit goodsvehicle from carrying any passenger. This is clear from theexpression “in addition to passengers” as contained in thedefinition of “goods vehicle” in the old Act. The positionbecomes further clear because the expression used is“goods carriage” is solely for the carriage of “goods”.Carrying of passengers in goods carriage is notcontemplated in the Act. There is no provision similar toclause (ii) of the proviso appended to Section 95 of theold Act prescribing requirement of insurance policy. EvenSection 147 of the Act mandates compulsory coverageagainst death of or bodily injury to any passenger of “publicservice vehicle”. The proviso makes it further clear that

compulsory coverage in respect of drivers and conductorsof public service vehicle and employees carried in goodsvehicle would be limited to liability under the Workmen’sCompensation Act, 1923 (in short “the WC Act”). There isno reference to any passenger in “goods carriage”.

14.1. Then in paragraphs 10 and 11 of the Report (Pg.

343), this Court held in Devireddy Konda Reddy[4]as under :

“10. The inevitable conclusion, therefore, is that provisionsof the Act do not enjoin any statutory liability on the ownerof vehicle to get his vehicle insured for any passengerCtravelling in goods carriage and the insurer would haveno liability therefor.

11. Our view gets support from recent decision of athree-Judge Bench of this Court in New India AssuranceCo. Ltd. v. Asha Rani [(2003) 2 SCC 223] in which it hasDbeen held that Satpal Singh case [(2000) 1 SCC 237]was not correctly decided. That being the position, theTribunal and the High Court were not justified in holdingthat the insurer had the liability to satisfy the award.”

15. In Cholleti Bharatamma2, this Court was concerned

Ewith the question about the liability of the insurance companyto indemnify the owner of the vehicle in respect of death ofpassengers travelling in goods vehicle. The Court consideredthe applicability of Section 147 as it originally stood under 1988Act and after its amendment in 1994. In relation to the accidentthat occurred on 16.12.1993 i.e., prior to the 1994 amendmentFin SLP(C) 7237-39/2003, this Court set aside the judgment ofthe High Court and allowed the appeal of the insurancecompany by observing as follows (Pg. 430):

“14. The date of accident being 16-12-1993, theamendment carried out in the year 1994 in Section 147of the Motor Vehicles Act would not be applicable.

15. The Motor Accidents Claims Tribunal, Nalgonda, by ajudgment and award dated 13-11-1997 awarded varioussums overruling the defence of the appellant herein thatthey were unauthorised passengers. The High Court,

however, by reason of the impugned judgment, relying onor on the basis of decision of this Court in Satpal Singh[(2000) 1 SCC 237]directed as under:

“The learned counsel for the Insurance Companysubmitted that the issue involved in these appealsis squarely covered by the decision of the SupremeCourt in New India Assurance Co. Ltd.v. SatpalSingh [(2000) 1 SCC 237], wherein Their Lordshipsheld that under the Motor Vehicles Act, 1988 allinsurance policies covering third-party risks are notrequired to exclude gratuitous passengers in thevehicle though vehicle is of any type or class.

In view of the proposition of law laid down by theSupreme Court in the decision stated supra, theseappeals are dismissed. No costs.”

16. Following the aforementioned principles, the impugnedjudgment cannot be sustained which is set aside. Theappeals are allowed accordingly.”

15.1. With reference to the accident that took place on24.12.1993 (prior to 1994 amendment) in SLP(C) Nos. 7241-43/2003, this Court in Cholleti Bharatamma[2]in paragraphs17,18,19,20 and 21 (Pgs. 430-431) held as under :

“17. In the aforementioned case, accident took place on24-12-1993. The respondents herein filed claim petitionclaiming compensation for the death of one KotaVenkatarao who had allegedly paid sum of Rs 20 fortravelling in the lorry. The Tribunal held:

“In the absence of rebuttal evidence from thedeceased and some others who travelled in thesaid vehicle in the capacity of owner of the luggagewhich was carried by them at the time of accident,it cannot be said that it is violation of the policy,since it is not fundamental breach so as to affordto the insurer to eschew the liability altogether asper the decision in B.V. Nagaraju v. OrientalInsurance Co. Ltd. [(1996) 4 SCC 647 : AIR 1996SC 2054]”

18. The High Court, however, relying upon Satpal Singh[(2000) 1 SCC 237] opined:

“This issue raised in this appeal is covered by thedecision of the Supreme Court in New IndiaAssurance Co. Ltd.v. Satpal Singh wherein TheirLordships held that under the Motor Vehicles Act,1988 all insurance policies covering third-party risksare not required to exclude gratuitous passengersin the vehicles though the vehicle is of any type orclass. Following the same, the appeal is dismissed.No order as to costs.”

19. It is now well settled that the owner of the goods meansonly the person who travels in the cabin of the vehicle.

20. In this case, the High Court had proceeded on thebasis that they were gratuitous passengers. The admittedplea of the respondents themselves was that the deceasedhad boarded the lorry and paid an amount of Rs 20 astransport charges. It has not been proved that thedeceased was travelling in the lorry along with the driveror the cleaner as the owner of the goods. Travelling withthe goods itself does not entitle anyone to protection underSection 147 of the Motor Vehicles Act.

21. For the reasons aforementioned, this appeal isallowed.”

16. In the present case, Section 147 as originally existedin 1988 Act is applicable and, accordingly, the judgment of thisCourt in Asha Rani[1]is fully attracted. The High Court was clearlyin error in reviewing its judgment and order delivered on09.11.2010 in review petition filed by the claimant by applyingSection 147(1)(b)(i). The High Court committed grave error inholding that Section 147(1)(b)(i) takes within its fold any liabilitywhich may be incurred by the insurer in respect of the death orbodily injury to any person. The High Court also erred in holdingthat the claimant was travelling in the vehicle in the course ofhis employment since he was spare driver in the vehicle

although he was not driving the vehicle at the relevant time buthe was directed to go to the worksite by his employer. The HighCourt erroneously assumed that the claimant died in the courseof employment and overlooked the fact that the claimant wasnot in any manner engaged on the vehicle that met with anaccident but he was employed as driver in another vehicleowned by M/s. P.L. Construction Company. The insured (ownerof the vehicle) got insurance cover in respect of the subjectgoods vehicle for driver and cleaner only and not for any otheremployee. There is no insurance cover for the spare driver inthe policy. As matter of law, the claimant did not cease to bea gratuitous passenger though he claimed that he was sparedriver. The insured had paid premium for one driver and onecleaner and, therefore, second driver or for that purpose ‘sparedriver’ was not covered under the policy.

17. The High Court misconstrued the proviso following sub-section (1) of Section 147 of the 1988 Act. What iscontemplated by proviso to Section 147 (1) is that the policyshall not be required to cover liability in respect of death orbodily injury sustained by an employee arising out of and in thecourse of his employment other than liability arising under theWorkmen’s Compensation Act, 1923. The claimant wasadmittedly not driving the vehicle nor he was engaged in drivingthe said vehicle. Merely because he was travelling in cabinwould not make his case different from any other gratuitouspassenger.

18. The impugned judgment is founded on misconstructionof Section 147. The High Court was wrong in holding that theinsurance company shall be liable to indemnify the owner of thevehicle and pay the compensation to the claimant as directedin the award by the Tribunal.

19. The next question that arises for consideration iswhether in the peculiar facts of this case direction could beissued to the insurance company to first satisfy the awardedamount in favour of the claimant and recover the same from theowner of the vehicle (respondent no. 2 herein).

20. In National Insurance Co. Ltd. v. Baljit Kaur and

AOthers[5], this Court was confronted with similar situation. Athree-Judge Bench of this Court in paragraph 21 of the Report(Pg. 8) held as under :

“21. The upshot of the aforementioned discussions is thatinstead and in place of the insurer the owner of the vehicleBshall be liable to satisfy the decree. The question, however,would be as to whether keeping in view the fact that thelaw was not clear so long such direction would be fairand equitable. We do not think so. We, therefore, clarifythe legal position which shall have prospective effect. TheTribunal as also the High Court had proceeded in termsCof the decision of this Court in Satpal Singh. The saiddecision has been overruled only in Asha Rani. We,therefore, are of the opinion that the interest of justice willbe subserved if the appellant herein is directed to satisfythe awarded amount in favour of the claimant, if not alreadyDsatisfied, and recover the same from the owner of thevehicle. For the purpose of such recovery, it would not benecessary for the insurer to file separate suit but it mayinitiate proceeding before the executing court as if thedispute between the insurer and the owner was theEsubject-matter of determination before the Tribunal and theissue is decided against the owner and in favour of theinsurer. We have issued the aforementioned directionshaving regard to the scope and purport of Section 168 ofthe Motor Vehicles Act, 1988, in terms whereof, it is notonly entitled to determine the amount of claim as put forthFby the claimant for recovery thereof from the insurer, owneror driver of the vehicle jointly or severally but also thedispute between the insurer on the one hand and theowner or driver of the vehicle involved in the accidentinasmuch as can be resolved by the Tribunal in such aGproceeding.”

21. The above position has been followed by this Court inNational Insurance Co. Ltd. v. Challa Bharathamma & Ors.[6],

5.(2004) 2 SCC 1.

(2004) 8 SCC 517.

wherein this Court in paragraph 13 (Pg. 523) observed asunder:

“13. The residual question is what would be theappropriate direction. Considering the beneficial object ofthe Act, it would be proper for the insurer to satisfy theaward, though in law it has no liability. In some cases theinsurer has been given the option and liberty to recover theamount from the insured. For the purpose of recovering theamount paid from the owner, the insurer shall not berequired to file suit. It may initiate proceeding beforethe executing court concerned as if the dispute betweenthe insurer and the owner was the subject-matter ofdetermination before the Tribunal and the issue is decidedagainst the owner and in favour of the insurer. Beforerelease of the amount to the claimants, owner of theoffending vehicle shall furnish security for the entire amountwhich the insurer will pay to the claimants. The offendingvehicle shall be attached, as part of the security. Ifnecessity arises the executing court shall take assistanceof the Regional Transport Authority concerned. Theexecuting court shall pass appropriate orders inaccordance with law as to the manner in which the ownerof the vehicle shall make payment to the insurer. In casethere is any default it shall be open to the executing courtto direct realisation by disposal of the securities to befurnished or from any other property or properties of theowner of the vehicle i.e. the insured. In the instant case,considering the quantum involved, we leave it to thediscretion of the insurer to decide whether it would takesteps for recovery of the amount from the insured.”

22. In National Insurance Company Limitedv.Kaushalaya Devi and Others[7]. In paragraph 15 of the Report

(pg. 250), the Court observed as follows:

“15. For the reasons aforementioned, civil appeal arisingout of SLP (C) No. 10694 is allowed and civil appealarising out of SLP (C) No. 9910 of 2006 is dismissed. If

the amount deposited by the Insurance Company hassince been withdrawn by the first respondent, it would beopen to the Insurance Company to recover the same in themanner specified by the High Court. But if the same hasnot been withdrawn the deposited amount may be refundedBto the Insurance Company and the proceedings forrealisation of the amount may be initiated against theowner of the vehicle. In the facts and circumstances of thecase, however, there shall be no order as to costs.”

23. We are informed that by an order dated 19.01.2007in National Insurance Co. v. Roshan Lal and Another [SLP(C) No. 5699/2006] in light of the argument raised before two-Judge Bench that the direction ought not to be issued to theinsurance company to discharge the liability under the awardfirst and then recover the same from the owner, the matter hasbeen referred to the larger Bench by the following order:

“Having regard to the submissions urged before us, we areof the view that this petition may be placed forconsideration before larger Bench. We notice that insome of the decisions such direction was made in caseswhere the compensation had already been paid by theinsurer, but there are observations therein which supportthe view that such direction can be made in all caseswhere the owner has insured his vehicle against third partyrisks. In Baljit Kaur’s case (supra) which is judgmentrendered by three Hon’ble Judges, such direction wasmade in the special circumstances noticed by the Courtin paragraph 21 of the report. There are observations inOriental Insurance Co. Ltd. Vs. Ranjit Saikia and Ors.(2002) 9 SCC 390 which may support the contention ofthe petitioners before us.”

24. In National Insurance Company Ltd. v. Parvathneni

& Another [SLP(C)….CC No. 10993 of 2009], the following twoquestions have been referred to the larger Bench forconsideration:

(1) If an Insurance Company can prove that it does nothave any liability to pay any amount in law to the claimants

under the Motor Vehicles Act or any other enactment, canthe Court yet compel it to pay the amount in question givingit liberty to later on recover the same from the owner of thevehicle.

(2) Can such direction be given under Article 142 of the

Constitution, and what is the scope of Article 142? DoesArticle 142 permit the Court to create liability where thereis none?”

25. The pendency of consideration of the above questionsby larger Bench does not mean that the course that wasfollowed in Baljit Kaur[5]and Challa Bharathamma[6]should notbe followed, more so in peculiar fact situation of this case. Inthe present case, the accident occurred in 1993. At that time,claimant was 28 years’ old. He is now about 48 years. Theclaimant was driver on heavy vehicle and due to the accidenthe has been rendered permanently disabled. He has not beenable to get compensation so far due to stay order passed bythis Court. He cannot be compelled to struggle further forrecovery of the amount. The insurance company has alreadydeposited the entire awarded amount pursuant to the order ofthis Court passed on 01.08.2011 and the said amount hasbeen invested in fixed deposit account. Having regard to thesepeculiar facts of the case in hand, we are satisfied that theclaimant (Respondent No. 1) may be allowed to withdraw theamount deposited by the insurance company before this Courtalong-with accrued interest. The insurance company (appellant)thereafter may recover the amount so paid from the owner(Respondent No. 2 herein). The recovery of the amount by theinsurance company from the owner shall be made by followingthe procedure as laid down by this Court in the case of ChallaBharathamma[6].

26. Appeal is allowed and disposed of as above with noorder as to costs.

Appeal allowed.