JUDGMENT S.P. Srivastava, J.
1. Feeling aggrieved by the award of an amount of Rs. 1,41,500 in the proceeding under the Motor Vehicles Act as just compensation to the dependants of the deceased Genda Lal, who met his untimely death in an accident involving the motor vehicle, a jeep, the insurer appellant has now come up in appeal seeking redress praying for the setting aside of the impugned award.
2. We have heard learned counsel for the insurer appellant and have also perused the record.
3. The learned counsel for the insurer appellant has strenuously urged that the Motor Accidents Claims Tribunal has erred in saddling the insurer with the liability to pay the amount in question even though there was a breach of the terms and conditions subject to which the insurance policy had been issued in favour of the insured.
4. It has been urged that the motor vehicle in question (a jeep) was being driven as a taxi and the deceased was being carried as a passenger on payment of fare which was in violation of the terms and conditions subject to which the insurance policy has been issued.
5. The Tribunal has found that the deceased was a gratuitous passenger and had not paid any fare but it has also been found that the jeep in question had been allowed to be run after receiving Rs. 1,500 as rent.
6. Be what it may, even if it be assumed that there was breach of conditions subject to which the insurance policy had been issued, the deceased being a third party, the insurer appellant was bound to discharge the statutory liability cast upon it under the provisions of Motor Vehicles Act and pay the amount of compensation determined to be just compensation by the Tribunal and thereafter it could, in case there was really a breach of the terms and conditions indicated hereinabove, recover the amount from the insured either in full or to the extent paid in excess as the case may be.
7. The question in regard to the extent of the liability of the insurer under the provisions of the Motor Vehicles Act, 1939, had been considered in detail by the Apex Court in its decision in the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu, 2001 ACJ 1 (SC).
8. In its aforesaid decision, the Supreme Court had elaborately dealt with the extent of liability of an insurance company towards the third party as per Section 95 (1) (b) of the Motor Vehicles Act, 1939, and on the question as to what are its rights in case of payment of an amount in excess of the limits of the liability under the insurance policy vis-a-vis the insured.
9. In the aforesaid case, claimants had raised a claim for the sum of Rs. 2,00,000 as compensation on account of the death of their predecessor-in-interest in a road accident on 6.7.1988 involving the offending motor vehicle an autorickshaw bearing registration No. KRN 1859. The insurer had contested the claim specifically stating therein that its liability was limited to Rs. 50,000 under the policy of insurance. Claims Tribunal, however, had granted an award for an amount of Rs. 1,94,150 and had fastened the entire liability on the appellant insurance company. The insurance policy in that case was of a date prior to the coming into force of the new Motor Vehicles Act, 1988 on 1.7.1989.
10. Under the aforesaid insurance policy the limit of the insurance company's liability in respect of any one claim or series of claims arising out of one event was fixed at Rs. 50,000 only. However, the avoidance clause of the policy provided that "nothing in the said policy or the endorsement hereon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act, 1939, Section 96. But the insured shall pay to the company all sums paid by the company which the company would not have been liable to pay but for the said provisions". Section II of the policy dealt with 'liability of third party' and provided that the company will indemnify the insured against all sums including the claimants' costs and expenses which the insured become legally liable to pay in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle or damage to the property caused by such use.
11. Taking into consideration the earlier decisions of the Supreme Court in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani, 1958-65 ACJ 559 (SC) and Amrit Lal Sood v. Kaushalya Devi Thapar, 1998 ACJ 531 (SC), the Hon'ble Supreme Court came to the conclusion that despite holding the liability under the policy limited to the extent of Rs. 50,000 the Claims Tribunal and the High Court were not unjustified in directing the appellant insurance company to pay the whole of the awarded amount to the claimants on the basis of the contractual obligations contained in clauses relating to the liability of the third parties and avoidance clause. However, it was further indicated that the Claims Tribunal and the High Court were not justified in rejecting the right of the appellant insurance company to recover from the insured the excess amount paid in execution and discharge of the award of the Tribunal.
12. In the aforesaid view of the matter, the Apex Court allowed the appeal holding that the appellant insurance company was liable to pay the entire awarded amount to the claimants. Upon making such payment, appellant can recover the excess amount from the insured by executing the award against the insured to the extent of such excess as per Section 174 of the Motor Vehicles Act, 1988.
13. In its another decision in the case of New India Assurance Co. Ltd. v. Kamla, 2001 ACT 843 (SC), the Apex Court had indicated, taking into consideration the implications arising under Sub-section (4) and its proviso together with Sub-section (5) of Section 149 of the Motor Vehicles Act, 1988, that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This, it was clarified, means that the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but insurer is entitled to recover any such sum from the insured if the insurer was not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy.
14. In para 22 of the aforesaid decision, the Apex Court summarized the position in law indicating that when a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to third parties, whether or not there has been any breach or violation of the policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured.
15. In para 25 of the aforesaid decision, it was indicated that the insurer and the insured are bound by the conditions enumerated in the policy and the insurer was not liable to the insured if there was violation of any policy condition. But the insurer who was made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions.
16. In view of the aforesaid position in law and what has been indicated hereinbefore, the appeal is disposed of finally holding that the appellant insurance company is liable to pay the entire awarded amount to the claimants and upon making such payment, the appellant company can recover the excess amount from the insured by executing the award against the insured to the extent of such excess in the proceeding under Section 174 of the Motor Vehicles Act, 1988. The impugned award shall stand modified to that extent. In other respects, since the owner has submitted to the impugned award, it shall remain intact.
17. There shall, however, be no order as to costs.