Hon. Y.C. Gupta, J.
The present Appeal has been filed under Section 173 of the Motor Vehicles Act, 1988, against the Judgment and Order/Award dated 6.4.2011 passed by the Motor Accidents Claims Tribunal, Ramabai Nagar in Motor Accident Claim Case No. 410 of 2003 filed by the claimant-respondent no. 1 on account of the injuries sustained by him in an accident which took place on 28.4.2003 at about 3.00 P.M.
The case set-up in the Claim Petition was that on 28.4.2003, the claimant-respondent no. 1 was going from his village Bhadauli to Ghatampur on a Tractor; and that at about 3.00 P.M., a Truck bearing Registration No. UP 78 T/2081 (hereinafter also referred to as "the vehicle in question") coming from Hamirpur to Kanpur and being driven by its Driver rashly and negligently, came on the wrong side and hit the Tractor, as a result of which, the claimant-respondent no. 1 sustained serious injuries, and the Tractor was completely damaged.
The respondent nos. 2 and 3 were the owners of the vehicle in question while the Appellant-Insurance Company was the insurer of the vehicle in question.
After exchange of the pleadings between the parties, the Tribunal framed Issues in the said Claim Case.
Evidence was led in the said Claim Case.
Having considered the material on record, the Tribunal recorded its findings on various Issues.
The Tribunal, inter-alia, held that the accident in question took place on account of rash and negligent driving by the Driver of the vehicle in question resulting in serious injuries to the claimant-respondent no. 1 and the amputation of the right leg of the claimant-respondent no.1 during treatment.
The Tribunal further held that on the date of the accident, the Driver of the vehicle in question (Harishchandra Pal) was not having valid and effective Driving Licence for driving the vehicle in question (Heavy Goods Vehicle).
The Tribunal further held that on the date of the accident, the vehicle in question was duly insured with the Appellant-Insurance Company.
In view of the above findings, the Tribunal passed the impugned Judgment and Order/Award dated 6.4.2011, inter-alia, awarding to the claimant-respondent no. 1, compensation amounting to Rs. 1,29,500/- with interest at the rate of 6% per annum with effect from the date of decision till the date of final payment in case the entire amount of compensation was not paid within two months of the date of decision.
However, in view of the above finding recorded by the Tribunal that the Driver of the vehicle in question was not having valid and effective Driving Licence for driving the vehicle in question, the Tribunal directed that the amount of compensation would initially be paid by the Appellant-Insurance Company, and thereafter, the Appellant-Insurance Company would have right to recover the same from the owners of the vehicle in question (respondent nos.2 and 3 herein).
We have heard Sri Avanish Mishra, learned counsel for the Appellant-Insurance Company, and perused the record.
Sri Avanish Mishra, learned counsel for the Appellant-Insurance Company submits that having held that the aforesaid vehicle in question was being run against the terms and conditions of the Insurance Policy, the Tribunal erred in directing the Appellant-Insurance Company to pay the amount of compensation and thereafter recover the same from the owners of the vehicle in question, i.e., respondent nos. 2 and 3 herein.
Sri Avanish Mishra submits that in any case, the interest of the Appellant-Insurance Company as against the owners of the vehicle in question (respondent nos.2 and 3 herein) should have been properly secured so that after making the payment of compensation under the impugned award, the Appellant-Insurance Company would be able to recover the same from the owners of the aforesaid vehicle in question. Sri Avanish Mishra has relied upon the following decisions in this regard:--
1.Oriental Insurance Company Ltd. Vs. Sri Nanjappan & Others, 2004(2) TAC 12 (SC).
2.National Insurance Company Vs. Challa Bharathamma, 2005(1) TAC 4 (SC).
We have considered the submissions made by Shri Avanish Mishra, learned counsel for the Appellant-Insurance Company.
As regards the submission made by Sri Avanish Mishra that the Tribunal erred in directing the Insurance company to make the payment of compensation and thereafter recover the same from the owners of the vehicle in question, it is pertinent to refer to the relevant provisions of the Motor Vehicles Act, 1988.
Sub-section (5) of Section 147 of the Motor Vehicles Act, 1988 lays down as under:--
"147. Requirements of policies and limits of liability--(1) to (4).........
(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."
The above-quoted provision thus provides that an insurer issuing a policy of insurance under Section 147 of the said Act, 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.
Sub-section (1) of Section 149 of the Motor Vehicles Act, 1988 provides as follows:-
" 149. Duty of insurers to satisfy judgements 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 (1) of Section 147 (being a liability covered by the terms of the policy) [ or under the provisions of Section 163-A] 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) to (7). . . . . . . . . . . . . . . . ."
The above-quoted provision thus provides that in case any judgment or award is obtained against any person insured by the policy, then the insurer shall 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 interest. This will be so even though the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy.
In view of the above provisions, we are of the opinion that the directions given by the Tribunal requiring the Appellant-Insurance Company to make the deposit of compensation awarded under the impugned award and thereafter recover the same from the owners of the aforesaid vehicle in question, is in accordance with law, and the same does not suffer from any infirmity.
The above conclusion is supported by various decisions of the Apex Court:
1.Oriental Insurance Co.Ltd. Vs. Inderjit Kaur and others, AIR 1998 SC 588.
2.National Insurance Company Ltd. Vs. Swaran Singh , 2004 (3) SCC 297: 2004 (1) T.A.C.321:AIR 2004 SC 1531.
3.National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, (2007) 3 S.C.C700: 2007(2) TAC 398 (SC).
4.Prem Kumari & Others Vs. Prahlad Dev & Others, 2008(1) T.A.C.803 (SC).
In Oriental Insurance Co. Ltd. v. Indrajit Kaur and others, AIR 1998 SC 588, their Lordships of the Supreme Court opined as under ( paragraph 7 of the said AIR):
"7. We have, therefore, this position. Despite the bar created by S.64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Ss.147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement ( upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured."
(Emphasis supplied) This decision thus supports the conclusion mentioned above on the basis of Sections 147(5) and 149(1) of the Motor Vehicles Act, 1988.
In National Insurance Co.Ltd. v. Swaran Singh, 2004(3) SCC 297: 2004 (1) T.A.C. 321: AIR 2004 SC 1531, their Lordships of the Supreme Court held as follows( paragraph 105 of the said AIR):
"105. 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, interalia, 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 vehicles;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 Sections 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 as 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 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."
(Emphasis supplied) Proposition nos.(vi) and (x), reproduced above support the conclusion that the direction given by the Tribunal in the award impugned in the present case is in accordance with law.
In National Insurance Co.Ltd. v. Laxmi Narain Dhut, 2007 (2) T.A.C. 398 ( S.C.), their Lordships of the Supreme Court considered the decision in National Insurance Co.Ltd. v. Swaran Singh ( supra) and held as under ( paragraph 35 of the said TAC):
"35. As noted above, the conceptual difference between third party right and own damage cases has to be kept in view. Initially, the burden is on the insurer to prove that the license was a fake one. Once it is established the natural consequences have to flow.
In view of the above analysis the following situations emerge:
(1)The decision in Swaran Singh's case (supra) has no application to cases other than third party risks.
(2)Where originally the license was fake one, renewal cannot cure the inherent fatality.
(3)In case of third party risks the insurer has to indemnify the amount and if so advised to recover the same from the insured.
(4)The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act.
The High Courts/Commissions shall now consider the matter afresh in the light of the position in law as delineated above.
The appeals are allowed as aforesaid with no order as to costs."
( Emphasis supplied) In view of the above decision, it is evident that in case of third party risks, the decision in National Insurance Co.Ltd. v. Swaran Singh and others (supra) would apply, and the insurer has to indemnify the amount to the third party and thereafter may recover the same from the insured.
In Prem Kumari & others vs. Prahlad Dev and others, 2008(1) T.A.C. 803 ( S.C.), their Lordships of the Supreme Court have reiterated the view expressed in National Insurance Company Limited. Vs. Laxmi Narain Dhut's case (supra) explaining the decision in National Insurance Company Limited Vs. Swaran Singh and others (supra), and held as under ( paragraphs 8 and 9 of the said TAC):
"8. The effect and implication of the principles laid down in Swaran Singh's case ( supra) has been considered and explained by one of us ( Dr.Justice Arijit Pasayat) in National Insurance Co.Ltd. v. Laxmi Narain Dhut, (2007) 3 S.C.C. 700: 2007 (2) T.A.C. 398. The following conclusion in para 38 are relevant:
"38. In view of the above analysis the following situations emerge:
(1)The decision in Swaran Singh's case (supra) has no application to cases other than third party risks.
(2)Where originally the license was a fake one, renewal cannot cure the inherent fatality.
(3)In case of third-party risks the insurer has to indemnify the amount, and if so advised, to recover the same from the insured.
(4)The concept of purposive interpretation has no application to cases relatable to Section 149 of the Act.
9. In the subsequent decision Oriental Insurance Co.Ltd v. Meena Variyal & others, (2007) 5 S.C.C. 428: 2007 (2) T.A.C. 417, which is also a two Judge Bench while considering the ratio laid down in Swaran Singh's case ( supra) concluded that in a case where a person is not a third party within the meaning of the Act, the Insurance Company cannot be made automatically liable merely by resorting to Swaran Singh's case (supra). While arriving at such a conclusion the Court extracted the analysis as mentioned in para 38 of Laxmi Narain Dhut ( supra) and agreed with the same. In view of consistency, we reiterate the very same principle enunciated in Laxmi Narain Dhut (supra) with regard to interpretation and applicability of Swaran Singh's case ( supra)."
(Emphasis supplied) In view of the above decisions, it is evident that the directions given by the Tribunal requiring the Appellant-Insurance Company to deposit the amount awarded under the impugned award in the first instance, and thereafter, recover the same from the owners of the vehicle in question, are valid and legal.
As regards the submission made by Sri Avanish Mishra that the interest of the Appellant-Insurance Company should be protected as against the owners of the vehicle in question (respondent nos. 2 and 3 herein) so that in case the Appellant-Insurance Company deposits the amount of compensation, it may be able to recover the same from the owners of the aforesaid vehicle in question, it is pertinent to refer to the decisions relied upon by Sri Avanish Mishra.
In Oriental Insurance Company Ltd. Vs. Sri Nanjappan and others, 2004(2) T.A.C.12 (SC) ( supra), their Lordships of the Supreme Court opined as under ( Paragraph 7 of the said T.A.C.):
"7. Therefore, while setting aside the judgment of the High Court we direct in terms of what has been stated in Baljit Kaur's case 2004(1) T.A.C.366(SC)( supra) that the insurer shall pay the quantum of compensation fixed by Tribunal, about which there was no dispute raised to the respondents-claimants within three months from today. For the purpose of recovering the same from the insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the insured, owner of the vehicle shall be issued a notice and he shall be required to furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the Executing Court shall take assistance of the concerned Regional Transport Authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the insured, owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realisation by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle, the insured. The appeal is disposed of in the aforesaid terms, with no order as to costs."
( Emphasis supplied) In National Insurance Company v. Challa Bharathamma, 2005 (1) T.A.C. 4 (SC)(supra), it was laid down as follows (Paragraph 13 of the said T.A.C):-
"The residual question is what would be the appropriate direction. Considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability. In some cases the insurer has been given the option and liberty to recover the amount from the insured. For the purpose of recovering the amount paid from the owner, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court as if the dispute between the insurer and the owner was the subject- matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the Executing Court shall take assistance of the concerned Regional Transport Authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realisation by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle i.e. the insured. In the instant case considering the Quantum involved we leave it to the discretion of the insurer to decide whether it would take steps for recovery of the amount from the insured."
(Emphasis supplied) In our opinion, the directions contemplated in the above decisions may be sought by the Appellant-Insurance Company before the Executing Court when the Appellant-Insurance Company, after depositing the amount awarded under the impugned award, moves appropriate application before the Executing Court to recover the said amount from the insured person, i.e. the owners of the vehicle in question (respondent nos.2 and 3 herein), while the claimant files an application for the execution of the award or for the release of the amount deposited by the Appellant-Insurance Company. We are refraining from expressing any opinion in this regard.
We may, however, refer to two decisions of this Court wherein the above decisions of the Supreme Court have been considered.
In Smt. Bhuri and others Vs. Smt. Shobha Rani and others, 2007 (1) T.A.C. 20 (All.), a learned Single Judge of this Court held as under (paragraph 5 of the said T.A.C.):-
"5. From the aforesaid case law, as referred to by the learned Counsel for the parties, it would be evident that in spite of the fact that the insurer is not made liable to compensate the claimants under the policy under Section 149 of the Motor Vehicles Act, still the liability of payment, under the law as developed by the Apex Court in this context, has been assigned to the Insurance Company. At the same time, the Insurance Company has also been given liberty to recover the said amount from the insured within the provisions of the Motor Vehicles Act itself and without taking the burden of filing a suit for that purpose. This principle of law was initially propounded in Baljit Kaur's case (supra) and it has been followed in the aforesaid cases referred to by the parties concerned. But in the subsequent cases more especially in Nanjappan's case (supra) it has also been observed that before releasing the amount under deposit before the Court the insured/owner of the vehicle shall be issued a notice and he shall be required to furnish security for the entire amount which the Insurance Company will pay to the claimants. After that notice the Court may direct the attachment of the offending vehicle as part of the security and could also pass appropriate orders in accordance with law. In case of default it shall be open to the Court to direct realisation of the amount from the insured/owner by disposal of security or from any other property or properties of the owner of the vehicle. Therefore, all these modes have been provided by the Apex Court for the insurer to make recovery from the insured. But from all these directions as given by the Apex Court, the purport is that the Court shall not undermine the interest of the claimants for whose welfare the Supreme Court has been developing this law through all these cases even by interpreting otherwise the liability of the insurer with Section 149 of the Motor Vehicles Act. Thus, what is the crux of the matter in the present case is that the revisionists-claimants cannot be made to suffer even if the insured/owner of the vehicle does not furnish security or does not appear before the Court in pursuance to the notice issued to him. The burden of recovering the amount within the provisions of the Act itself has been placed upon the insurer in the aforesaid judgments of the Apex Court. The claimants who have obtained the award in their favour have not been made to suffer through any observation made by the Supreme Court in these cases. Thus, in the aforesaid view of the matter, what I feel is that it would be just and proper if the Court below is directed to first take resort to the issuance of notice to the insured/owner of the vehicle and thereafter only the money under deposit before the Court should be released in favour of the claimants."
(Emphasis supplied) In National Insurance Company Limited Vs. Smt. Khursheeda Bano and others, 2009 (1) A.W.C. 355, a Division Bench of this Court laid down as follows (paragraph 4 of the said A.W.C.):
"4. Learned counsel has cited the judgment of the Supreme Court in National Insurance Company Ltd. v. Challa Bharathamma and others, (2004) 8 SCC 517, to establish that the claim of the insurance company should be secured by the owner. We have no quarrel with such proposition. What we want to say is that unless and until an appropriate application in the selfsame proceeding is made by the insurance company for the purpose of recovery, the question of furnishing security by the owner cannot arise. Such situation is yet to ripe. At this stage, we are only concerned with the payment of compensation to the claimants which cannot be stalled and has got nothing to do with the dispute regarding liability between the owner and the insurance company. The sufferer is a third party. Moreover, in such judgment, the Division Bench of the Supreme Court has categorically held " considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability." In effect it is a stop-gap arrangement to satisfy the award as soon as it is passed. The judgment of 3 Judges' Bench of the Supreme Court in National Insurance Co,Ltd v. Swaran Singh and others, (2004) 3 SCC 297, also speaks in para 110 that the Tribunal can direct that the insurer is liable to be reimbursement 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. Therefore, the intention of the Legislature as well as the interpretation by the Supreme Court and different High Courts is well settled to the extent that under no circumstances payment of compensation to the claimants will be stalled. Even at the cost of the repetition we say, it has nothing to do with the dispute with regard to liability of owner or insurer, which can be considered in the separate application in the selfsame cause or in an execution application in connection thereto to be initiated by the insurance company."
(Emphasis supplied) Before parting with the case, certain other submissions made by Shri Avanish Mishra, learned counsel for the Appellant-Insurance Company may be considered.
Shri Avanish Mishra submits that in National Insurance Co. Ltd. Vs. Parvathneni and another, 2009 (4) TAC 382 (S.C.), a Bench consisting of two Hon'ble Judges of the Supreme Court while dealing with a case wherein a cheque towards premium for renewal of the Insurance Policy was dishonoured, have referred certain questions for decision by a Larger Bench. The order passed in the said case is reproduced below:
"Delay of 65 days in filing the Special Leave Petition is condoned.
2. Issue notice.
3. Until further orders, the operation of the impugned order shall remain stayed.
4. In this case, the allegation of the petitioner Insurance Company is that there was no valid Insuance coverage on the date of the accident i.e. 30th November, 2003. The cheque towards premium for renewal of the policy was issued on 29th November, 2003 but the same was dishonoured. Hence, the contention of the Insurance Company is that it has no liability to pay compensation amount to the claimants since there was no insurance coverage on the date of the accident.
5. Despite this, the High Court has directed the Insurance Company to pay the compensation amount to the claimants with liberty to the Insurance Company to recover the same from the owner of the vehicle.
6. Prima facie, we are of the opinion if the Insurance Company proves that it has no liability to pay compensation to the claimants, the Insurance Company cannot be compelled to make payment and later on recover it from the owner of the vehicle.
7. No doubt, there are some decisions which have taken the view that even if the Insurance Company has no liability, yet it must pay and later on recover it from the owner of the vehicle. (See for example National Insurance Co. Ltd. v. Yellamma & Another (2008) 7 S.C.C. 562, Samundra Devi v. Narendra Kaur (2008) 9 S.C.C. 100 : 2008 (4) T.AC. 746 (vide para 16), Oriental Insurance Co. v. Brij Mohan (2007) 7 S.C.C. 56 : 2007 (3) T.A.C. 20 (vide para 13), New India Insurance Co. v. Darshan Devi (2008) 7 S.C.C. 4162 (vide para 21), etc.).
8. We have some reservation about the correctness of the aforesaid decisions of this Court. If the Insurance Company has no liability to pay at all, then, in our opinion, it cannot be compelled by order of the Court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle. In our view, Article 142 of the Constitution of India does not cover such type of cases. When a person has no liability to pay at all how can it be compelled to pay? It may take years for the Insurance Company to recover the amount from the owner of the vehicle, and it is also possible that for some reason the recovery may not be possible at all.
9. Hence, we direct that the papers of this case be placed before Hon'ble the Chief Justice of India for constituting a larger bench to decide the following question :
"(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act 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.
2. Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142 permit the Court to create a liability where there is none?"
It has not been brought to our notice that the said questions have been answered by the Larger Bench of the Supreme Court. In the circumstances, we have decided the question of liability of the Appellant-Insurance Company in regard to the payment of compensation by applying the Doctrine of Pay and Recover on the basis of the legal position as it has been hitherto existing in the light of the decisions of the Supreme Court, which are binding on this Court.
Reference in this regard may be made to a decision of the Supreme Court in Harbhajan Singh and another Vs. State of Punjab and another, (2009) 13 SCC 608.
In the said decision, their Lordships of the Supreme Court opined as under (paragraphs 12,13,14, and 15 of the said SCC):
"12. In Mohd. Shafi, (2007) 14 SCC 544, an application under Section 319 of the Code was filed by a witness. He was not the complainant. He had no locus standi to file the application. In that case, the trial Judge had refused to pass an order on the application filed by the complainant under Section 319 of the Code stating that the matter would be considered only after the cross-examination of the witnesses is over. The State was not aggrieved by that order and in that situation this Court refused to interfere with the inference that such an order by the High Court at that stage was not held to be correct.
13. Our attention, however, has been drawn to a decision of this Court in Hardeep Singh v. State of Punjab, (2009) 16 SCC 785 : JT (2008) 12 SC 7 wherein the following questions have been referred for consideration by a larger Bench by an order dated 7-11-2008:
"79. We, therefore, refer the following two questions for the consideration of a Bench of three Hon'ble Judges:
(1) When the power under sub-section (1) of Section 319 of the Code of addition of an accused can be exercised by a Court? Whether application under Section 319 is not maintainable unless the cross-examination of the witness is complete?
(2) What is the test and what are the guidelines of exercising power under sub-section (1) of Section 319 of the Code? Whether such power can be exercised only if the court is satisfied that the accused summoned in all likelihood would be convicted?"
We would assume that in all cases the court may not wait till cross-examination is over for the purpose of exercising its jurisdiction.
14. In the aforementioned decision in Hardeep Singh, the learned Judges had referred to a judgment of this Court in Rakesh v. State of Haryana, (2001) 6 SCC 248 : 2001 SCC (Cri) 1090 wherein it was held that even without cross-examination on the basis of a prima facie material which would enable the Sessions Court to decide whether the power under Section 319 of the Code should be exercised or not stating that at that stage evidence as used in Section 319 of the Code would not mean evidence which is tested by cross-examination.
15. Even if what is contended by the learned counsel is correct, it is not for us to go into the said question at this stage; herein cross-examination of the witnesses had taken place. The Court had taken into consideration the materials available to it for the purpose of arriving at a satisfaction that a case for exercise of jurisdiction under Section 319 of the Code was made out. Only because the correctness of a portion of the judgment in Mohd Shafi has been doubted by another Bench, the same would not mean that we should wait for the decision of the larger Bench, particularly when the same instead of assisting the appellants runs counter to their contention."
(Emphasis supplied) This decision, thus, lays down that only because the correctness of a judgment has been doubted by another Bench and the matter has been referred to a Larger Bench, it does not mean that the current Bench should wait for the decision of the Larger Bench.
This decision, thus, supports the conclusion drawn above that even though certain questions have been referred for decision to the Larger Bench of the Supreme Court by the order passed in National Insurance Co. Ltd. Vs. Parvathneni and another, 2009(4) TAC 382 (supra), this Court is required to decide the controversy on the basis of the legal position hitherto existing in the light of the decisions of the Supreme Court, which are binding on this Court.
In view of the above discussion, we are of the opinion that the Tribunal did not commit any illegality in directing the Appellant-Insurance Company to make deposit of the amount of compensation, and recover the same from the insured person i.e. the owners of the vehicle in question-respondent nos.2 and 3 herein.
After making deposit of the amount awarded under the impugned award, it will be open to the Appellant-Insurance Company to initiate appropriate proceedings for recovery of the amount from the owners of the aforesaid vehicle in question (respondent nos.2 and 3 herein), and seek appropriate directions in such proceedings.
It is made clear that in case any appeal is filed by the claimant-respondent no. 1 or by the owners of the aforesaid vehicle in question (respondent nos.2 and 3 herein), it will be open to the Appellant-Insurance Company to contest the same on the grounds legally open to the Appellant-Insurance Company.
The amount of Rs.25,000/- deposited by the Appellant-Insurance Company while filing the present appeal, will be remitted to the Tribunal for being adjusted towards the amount to be deposited by the Appellant-Insurance Company, as per the directions given in the impugned award.
Subject to the above observations, the Appeal filed by the Appellant-Insurance Company is dismissed.
However, on the facts and in the circumstances of the case, there will be no order as to costs.
Dated :23.12.2011 Ajeet