Compensation: Motor Vehicles Accident – Third party risk – Liability of insurer – Son of appellants/claimants was travelling in a Jeep which was driven in a negligent manner due to which he sustained injuries and died in the hospital – Claim petition – Tribunal directed the insurance company to pay the compensation to claimants and granted liberty to the insurance company to recover the same from the owner of the offending vehicle – Tribunal awarded compensation of Rs.3,55,500/-– High Court set aside the award passed by the Tribunal and held that only the owner of the offending vehicle was liable to make the payment of the compensation awarded by the Tribunal, and enhanced the compensation awarded by the Tribunal from Rs.3,55,500/- to Rs.4,94,700/- – On appeal, held: The award passed by the Tribunal directing the insurance company to pay the compensation amount awarded to the claimants and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the Judgment passed by Supreme Court in Swaran Singh and Laxmi Narain Dhut cases – High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent to pay and recover from the owner of the vehicle – The impugned judgment of the High Court exonerating the insurance company from its liability and directing the claimants to recover the compensation from the owner of the vehicle set aside – However, order of the High Court enhancing the compensation from Rs.3,55,500/- to Rs.4,94,700/- affirmed – Award passed by the Tribunal restored.
Partly allowing the appeal, the Court
HELD: 1. Doctrine of “pay and recover” was considered by the Supreme Court in Swaran Singh case wherein the Supreme Court examined the liability of the insurance company in cases of breach of policy condition due to disqualifications of the driver or invalid driving licence of the driver and held that in case of third party risks, the insurer has to indemnify the compensation amount to the third party and the insurance company may recover the same from the insured. [Para 6] [490-D-E]
2. In the instant case, to deny the benefit of ‘pay and recover’, what seems to have substantially weighed with the High Court is the reference to larger Bench made by the two-Judge Bench in National Insurance Co. Ltd. v. Parvathneni and another. In Parvathneni case, the Supreme Court pointed out that Article
142 of the Constitution of India does not cover such type of cases and that “if the insurance company has no liability to pay at all, then, 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”. The above reference in Parvathneni case was disposed of by the three-Judges Bench keeping the questions of law open to be decided in an appropriate case. Since the reference to the larger bench in Parvathneni case was disposed of by keeping the questions of law open, therefore the decision in Swaran Singh case followed in Laxmi Narain Dhut and other cases hold the field. [Paras 11 and 12] [494-B-F]
3. Thus, the award passed by the Tribunal directing the insurance company to pay the compensation amount awarded to the claimants and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by this Court in Swaran Singh and Laxmi Narain Dhut cases. The High Court wrongly interfered with the award passed by the Tribunal directing the first respondent to pay and recover from the owner of the vehicle. The impugned judgment of the High Court exonerating the insurance company from its liability and directing the claimants to recover the compensation from the owner of the vehicle is set aside and the award passed by the Tribunal is restored. [Para 12] [494-F-H]
National Insurance Company Ltd. v. Swaran Singh and Others (2004) 3 SCC 297 : [2004] 1 SCR 180 ; National Insurance Co. Ltd. v. Laxmi Narain Dhut (2007) 3 SCC
700 : [2007] 3 SCR 579 – relied on.
Oriental Insurance Co. Ltd. v. K.C. Subramanyam MANU/KA/0945/2012 ; Prem Kumari v. Prahlad Dev and Others (2008) 3 SCC 193 : [2008] 1 SCR 874 ; National Insurance Co., Ltd. v. Bommithi Subbhayamma and Others (2005) 12 SCC 243 ; Oriental Insurance Co. Ltd. v. Brij Mohan and Others (2007) 7 SCC 56 : [2007] 6 SCR 843 ; National Insurance Co. Ltd. v. Parvathneni and Another (2009) 8 SCC 785 ; Oriental Insurance Co. Ltd. v. Nanjappan and Others (2004) 13 SCC 224 : [2004] 2 SCR 365 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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