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(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?” = The pendency of consideration of the above questions by a larger Bench does not mean that the course that was followed in Baljit Kaur5 and Challa Bharathamma6 should not be followed, more so in a peculiar fact situation of this case. In the present case, the accident occurred in 1993. At that time, claimant was 28 years’ old. He is now about 48 years. The claimant was a driver on heavy vehicle and due to the accident he has been rendered permanently disabled. He has not been able to get compensation so far due to stay order passed by this Court. He cannot be compelled to struggle further for recovery of the amount. The insurance company has already deposited the entire awarded amount pursuant to the order of this Court passed on 01.08.2011 and the said amount has been invested in a fixed deposit account. Having regard to these peculiar facts of the case in hand, we are satisfied that the claimant (Respondent No. 1) may be allowed to withdraw the amount deposited by the insurance company before this Court along-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 the insurance company from the owner shall be made by following the procedure as laid down by this Court in the case of Challa Bharathamma6 . 26. Appeal is allowed and disposed of as above with no order as to costs.

REPORTABLE

Insurance

Insurance (Photo credit: Christopher S. Penn)

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5 OF 2013
(Arising out of SLP(C) No. 20127 of 2011)
Manager, National Insurance Co. Ltd. …… Appellant

Vs.

Saju P. Paul and Another ……Respondents
JUDGMENT
R.M. LODHA, J.
Leave granted.
2. The appellant, insurance company, is in appeal by special
leave against the judgment and order dated 23.03.2011 whereby the Division
Bench of the Kerala High Court allowed the review petition and reviewed
its order dated 09.11.2010 and held that the insurance company was liable
to pay compensation in sum of Rs. 2,88,000/- with 9% interest thereon to
the claimant awarded by the Motor Accident Claims Tribunal in its award
dated 23.07.2002.
3. The question of law that arises in this appeal is as to whether
having regard to the provisions of the Motor Vehicles Act, 1988 (for short,
‘1988 Act’), the insurance company is liable to pay compensation for the
bodily injury caused to the claimant who was travelling in a goods vehicle
as a spare driver though he was employed as a driver in another vehicle
owned by the owner of the vehicle under the policy of insurance.
4. The above question arises in this way. Saju P. Paul, claimant
(Respondent No. 1), was a heavy vehicle driver. He was employed with
Respondent No. 2 as a driver in some other vehicle. On 16.10.1993, he was
travelling in a goods vehicle bearing No. KL-2A/3411 in the cabin. The
goods vehicle was being driven by one Jayakumar. In that vehicle, many
other persons were also travelling. At Nilackal, due to rash and
negligent driving of the driver Jayakumar, the goods vehicle capsized. As
a result of which the claimant suffered fracture and injuries. The claimant
remained under treatment for quite some time and the injuries that he
sustained in the accident rendered him permanently disabled. In the claim
petition filed by him before the Motor Accident Claims Tribunal,
Pathanamthitta (for short, ‘the Tribunal’), he claimed compensation of
Rs.3,00,000/-. The owner and insurer were impleaded as respondent no. 2
and respondent no. 3 respectively in the claim petition.
5. The insurer filed its written statement and opposed the
claimant’s claim insofar as it was concerned. The insurer set up the plea
that the vehicle was a goods vehicle and the risk of the passengers
travelling in the goods vehicle was not covered under the policy of
insurance. It was stated in the written statement that nearly 50
unauthorised passengers were travelling at the time of accident; they were
not traveling in the vehicle in pursuance of the contract of employment,
such as loading and unloading nor they were travelling as the owner of the
goods or the representative of the owner of the goods and hence 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 the claimant holding
that he was entitled to a total compensation of Rs. 3,00,000/-. The
liability of the insurer was made joint and several with the owner and
driver.
7. Being not satisfied with the award of the Tribunal, the insurer
filed an appeal before the Kerala High Court. The Division Bench of that
Court by relying upon decisions of this Court in New India Assurance Co.
Ltd. v. Asha Rani and others[1] and National Insurance Co. Ltd. v. Cholleti
Bharatamma and Others[2] allowed the appeal of the insurer vide judgment
and order dated 09.11.2010. The Division Bench held that insurer was not
liable as gratuitous passengers travelling in a goods vehicle were not
covered under the policy and the claimant shall be entitled to recover the
awarded amount from the owner or driver of the vehicle.
8. The claimant sought review of the order dated 09.11.2010 and,
as noted above, by the impugned order that review application has been
allowed. While allowing the review application, the Division Bench held as
under:
“It has already been noticed that the petitioner was admittedly
a spare driver of the vehicle. It may be true that he was not
driving the vehicle at the relevant point of time; but he was
directed to go to the worksite by his employer as a spare driver
in the vehicle. Therefore, by no stretch of imagination, it can
be said that the petitioner was not travelling in the vehicle in
the course of his employment and as directed by his employer.
Section 147(1)(b)(i) takes within its fold any liability which
may be incurred by the insurer in respect of the death or bodily
injury to any person. Therefore, the argument of the insurance
company that no goods were being carried in the vehicle at the
time of accident and therefore, the petitioner was only a
gratuitous passenger cannot be countenanced at all. Even
otherwise, the first proviso to Section147(1) will cast a
liability on the insurer to indemnify the owner in respect of
the injury sustained by the employee of the insured arising out
of and in the course of his employment.”

9. It is appropriate to quote Section 147 of the 1988 Act as 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 this Chapter, a policy
of insurance must be a policy which—
(a) is issued by a person who is an authorized insurer; and
(b) insures the person or classes of persons specified in the
policy to the extent specified in sub-section (2)—
(i) against any liability which may be incurred by him in
respect of the death of or bodily injury to any person or damage
to any property of a third party caused by or arising out of the
use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a
public service vehicle caused by or arising out of the use of
the vehicle in a public place:
Provided that a policy shall not be required—
(i) to cover liability in respect of the death, arising out of
and in the course of his employment, of the employee of a person
insured by the policy or in respect of bodily injury sustained
by such an employee arising out of and in the course of his
employment other than a liability arising under the Workmen’s
Compensation Act, 1923 (8 of 1923), in respect of the death of,
or bodily injury to, any such employee—
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as a conductor of
the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation.—For the removal of doubts, it is hereby declared
that the death of or bodily injury to any person or damage to
any property of a third party shall be deemed to have been
caused by or to have arisen out of, the use of a vehicle in a
public place notwithstanding that the person who is dead or
injured or the property which is damaged was not in a public
place at the time of the accident, if the act or omission which
led to the accident occurred in a public place.
(2) Subject to the proviso to sub-section (1), a policy of
insurance referred to in sub-section (1), shall cover any
liability incurred in respect of any accident, up to the
following limits, namely—
(a) save as provided in clause (b), the amount of liability
incurred;
(b) in respect of damage to any property of a third party, a
limit of rupees six thousand:
Provided that any policy of insurance issued with any limited
liability and in force, immediately before the commencement of
this Act, shall continue to be effective for a period of four
months after such commencement or till the date of expiry of
such policy whichever is earlier.
(3) A policy shall be of no effect for the purposes of this
Chapter unless and until there is issued by the insurer in
favour of the person by whom the policy is effected a
certificate of insurance in the prescribed form and containing
the prescribed particulars of any condition subject to which the
policy is issued and of any other prescribed matters; and
different forms, particulars and matters may be prescribed in
different cases.
(4) Where a cover note issued by the insurer under the
provisions of this Chapter or the rules made thereunder is not
followed by a policy of insurance within the prescribed time,
the insurer shall, within seven days of the expiry of the period
of the validity of the cover note, notify the fact to the
registering authority in whose records the vehicle to which the
cover note relates has been registered or to such other
authority as the State Government may prescribe.
(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.”

10. By the Motor Vehicles (Amendment) Act, 1994 (for short, ‘1994
Amendment Act’), Section 147 came to be amended. The expression
“including owner of the goods or his authorised representative carried in
the vehicle” was added in Section 147. The amended Section 147 has been
considered by this Court in various decisions, some of which we intend to
refer a little later.
11. In New India Assurance Company v. Satpal Singh and others[3],
this Court with reference to the provisions in the Motor Vehicles Act,
1939 and the provisions in 1988 Act, particularly Section 147, held that
under the 1988 Act an insurance policy covering third party risk was not
required to exclude gratuitous passengers in a vehicle no matter that the
vehicle is of any type or class. It was also held that the earlier
decisions of this Court rendered under the 1939 Act vis-à-vis gratuitous
passengers were of no avail while considering the liability of the
insurance company in respect of any accident which occurred or would occur
after the 1988 Act came into force.
12. The correctness of the judgment in Satpal Singh3 was doubted,
inter alia, in Asha Rani1 . It was felt that Satpal Singh3 needed re-look
insofar as cases covered under the 1988 Act prior to its amendment in 1994
were concerned. A three-Judge Bench in Asha Rani1 noticed Section 147 of
the 1988 Act prior to its amendment in 1994 and after its amendment in 1994
and held in paragraph 9 of the Report (Pgs. 231-232) as follows :
“In Satpal case [(2000) 1 SCC 237] the Court assumed that the
provisions of Section 95(1) of the Motor Vehicles Act, 1939 are
identical with Section 147(1) of the Motor Vehicles Act, 1988,
as it stood prior to its amendment. But a careful scrutiny of
the provisions would make it clear that prior to the amendment
of 1994 it was not necessary for the insurer to insure against
the owner of the goods or his authorised representative being
carried in a goods vehicle. On an erroneous impression this
Court came to the conclusion that the insurer would be liable to
pay compensation in respect of the death or bodily injury caused
to either the owner of the goods or his authorised
representative when being carried in a goods vehicle the
accident occurred. If the Motor Vehicles Amendment Act of 1994
is examined, particularly Section 46, by which the expression
“injury to any person” in the original Act stood substituted by
the expression “injury to any person including owner of the
goods or his authorised representative carried in the vehicle”,
the conclusion is irresistible that prior to the aforesaid
Amendment Act of 1994, even if the widest interpretation is
given to the expression “to any person” it will not cover either
the owner of the goods or his authorised representative being
carried in the vehicle. The objects and reasons of clause 46
also state that it seeks to amend Section 147 to include owner
of the goods or his authorised representative carried in the
vehicle for the purposes of liability under the insurance
policy. It is no doubt true that sometimes the legislature
amends the law by way of amplification and clarification of an
inherent position which is there in the statute, but a plain
meaning being given to the words used in the statute, as it
stood prior to its amendment of 1994, and as it stands
subsequent to its amendment in 1994 and bearing in mind the
objects and reasons engrafted in the amended provisions referred
to earlier, it is difficult for us to construe that the
expression “including owner of the goods or his authorised
representative carried in the vehicle” which was added to the
pre-existing expression “injury to any person” is either
clarificatory or amplification of the pre-existing statute. On
the other hand it clearly demonstrates that the legislature
wanted to bring within the sweep of Section 147 and making it
compulsory for the insurer to insure even in case of a goods
vehicle, the owner of the goods or his authorised representative
being carried in a goods vehicle when that vehicle met with an
accident and the owner of the goods or his representative either
dies or suffers bodily injury. The judgment of this Court in
Satpal case therefore must be held to have not been correctly
decided and the impugned judgment of the Tribunal as well as
that of the High Court accordingly are set aside and these
appeals are allowed. It is held that the insurer will not be
liable for paying compensation to the owner of the goods or his
authorised representative on being carried in a goods vehicle
when that vehicle meets with an accident and the owner of the
goods or his representative dies or suffers any bodily injury.”
13. S.B. Sinha, J. in his supplementary judgment in Asha Rani1 ,
while concurring with the above, observed as follows (Pg. 235):
“26. In view of the changes in the relevant provisions in the
1988 Act vis-à-vis the 1939 Act, we are of the opinion that the
meaning of the words “any person” must also be attributed having
regard to the context in which they have been used i.e. “a third
party”. Keeping in view the provisions of the 1988 Act, we are
of the opinion that as the provisions thereof do not enjoin any
statutory liability on the owner of a vehicle to get his vehicle
insured for any passenger travelling in a goods vehicle, the
insurers would not be liable therefor.
27. Furthermore, sub-clause (i) of clause (b) of sub-section (1)
of Section 147 speaks of liability which may be incurred by the
owner of a vehicle in respect of death of or bodily injury to
any person or damage to any property of a third party caused by
or arising out of the use of the vehicle in a public place,
whereas sub-clause (ii) thereof deals with liability which may
be incurred by the owner of a vehicle against the death of or
bodily injury to any passenger of a public service vehicle
caused by or arising out of the use of the vehicle in a public
place.
28. An owner of a passenger-carrying vehicle must pay premium
for covering the risks of the passengers. If a liability other
than the limited liability provided for under the Act is to be
enhanced under an insurance policy, additional premium is
required to be paid. But if the ratio of this Court’s decision
in New India Assurance Co. v. Satpal Singh [(2000) 1 SCC 237] is
taken to its logical conclusion, although for such passengers,
the owner of a goods carriage need not take out an insurance
policy, they would be deemed to have been covered under the
policy wherefor even no premium is required to be paid.

14. Asha Rani1 has been relied upon in Oriental Insurance Co. Ltd.
v. Devireddy Konda Reddy and Others[4] wherein it was held as under (Pgs.
342-343):
“….The difference in the language of “goods vehicle” as
appearing in the old Act and “goods carriage” in the Act is of
significance. A bare reading of the provisions makes it clear
that the legislative intent was to prohibit goods vehicle from
carrying any passenger. This is clear from the expression “in
addition to passengers” as contained in the definition of “goods
vehicle” in the old Act. The position becomes further clear
because the expression used is “goods carriage” is solely for
the carriage of “goods”. Carrying of passengers in a goods
carriage is not contemplated in the Act. There is no provision
similar to clause (ii) of the proviso appended to Section 95
of the old Act prescribing requirement of insurance
policy. Even Section 147 of the Act mandates compulsory coverage
against death of or bodily injury to any passenger of “public
service vehicle”. The proviso makes it further clear that
compulsory coverage in respect of drivers and conductors of
public service vehicle and employees carried in goods vehicle
would be limited to liability under the Workmen’s Compensation
Act, 1923 (in short “the WC Act”). There is no 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 Reddy4 as under :
“10. The inevitable conclusion, therefore, is that provisions of
the Act do not enjoin any statutory liability on the owner of a
vehicle to get his vehicle insured for any passenger travelling
in a goods carriage and the insurer would have no liability
therefor.
11. Our view gets support from a recent decision of a three-
Judge Bench of this Court in New India Assurance Co. Ltd. v.
Asha Rani [(2003) 2 SCC 223] in which it has been held that
Satpal Singh case [(2000) 1 SCC 237] was not correctly decided.
That being the position, the Tribunal and the High Court were
not justified in holding that the insurer had the liability to
satisfy the award.”

15. In Cholleti Bharatamma2, this Court was concerned with the
question about the liability of the insurance company to indemnify the
owner of the vehicle in respect of death of passengers travelling in goods
vehicle. The Court considered the applicability of Section 147 as it
originally stood under 1988 Act and after its amendment in 1994. In
relation to the accident that occurred on 16.12.1993 i.e., prior to the
1994 amendment in SLP(C) 7237-39/2003, this Court set aside the judgment
of the High Court and allowed the appeal of the insurance company by
observing as follows (Pg. 430):
“14. The date of accident being 16-12-1993, the amendment
carried out in the year 1994 in Section 147 of the Motor
Vehicles Act would not be applicable.
15. The Motor Accidents Claims Tribunal, Nalgonda, by a judgment
and award dated 13-11-1997 awarded various sums overruling the
defence of the appellant herein that they were unauthorised
passengers. The High Court, however, by reason of the impugned
judgment, relying on or on the basis of a decision of this Court
in Satpal Singh [(2000) 1 SCC 237] directed as under:
“The learned counsel for the Insurance Company submitted
that the issue involved in these appeals is squarely covered
by the decision of the Supreme Court in New India Assurance
Co. Ltd. v. Satpal Singh [(2000) 1 SCC 237], wherein Their
Lordships held that under the Motor Vehicles Act, 1988 all
insurance policies covering third-party risks are not
required to exclude gratuitous passengers in the vehicle
though vehicle is of any type or class.
In view of the proposition of law laid down by the Supreme
Court in the decision stated supra, these appeals are
dismissed. No costs.”
16. Following the aforementioned principles, the impugned
judgment cannot be sustained which is set aside. The appeals are
allowed accordingly.”
15.1. With reference to the accident that took place on 24.12.1993
(prior to 1994 amendment) in SLP(C) Nos. 7241-43/2003, this Court in
Cholleti Bharatamma2 in paragraphs 17,18,19,20 and 21 (Pgs. 430-431) held
as under :
“17. In the aforementioned case, accident took place on 24-12-
1993. The respondents herein filed a claim petition claiming
compensation for the death of one Kota Venkatarao who had
allegedly paid a sum of Rs 20 for travelling in the lorry. The
Tribunal held:
“In the absence of rebuttal evidence from the deceased and
some others who travelled in the said vehicle in the capacity
of owner of the luggage which was carried by them at the time
of accident, it cannot be said that it is a violation of the
policy, since it is not fundamental breach so as to afford to
the insurer to eschew the liability altogether as per the
decision in B.V. Nagaraju v. Oriental Insurance Co. Ltd.
[(1996) 4 SCC 647 : AIR 1996 SC 2054]”
18. The High Court, however, relying upon Satpal Singh [(2000) 1
SCC 237] opined:
“This issue raised in this appeal is covered by the decision
of the Supreme Court in New India Assurance Co. Ltd. v.
Satpal Singh wherein Their Lordships held that under the
Motor Vehicles Act, 1988 all insurance policies covering
third-party risks are not required to exclude gratuitous
passengers in the vehicles though the vehicle is of any type
or class. Following the same, the appeal is dismissed. No
order as to costs.”
19. It is now well settled that the owner of the goods means
only the person who travels in the cabin of the vehicle.
20. In this case, the High Court had proceeded on the basis that
they were gratuitous passengers. The admitted plea of the
respondents themselves was that the deceased had boarded the
lorry and paid an amount of Rs 20 as transport charges. It has
not been proved that the deceased was travelling in the lorry
along with the driver or the cleaner as the owner of the goods.
Travelling with the goods itself does not entitle anyone to
protection under Section 147 of the Motor Vehicles Act.
21. For the reasons aforementioned, this appeal is allowed.”

16. In the present case, Section 147 as originally existed in 1988
Act is applicable and, accordingly, the judgment of this Court in Asha
Rani1 is fully attracted. The High Court was clearly in error in reviewing
its judgment and order delivered on 09.11.2010 in review petition filed by
the claimant by applying Section 147(1)(b)(i). The High Court committed
grave error in holding that Section 147(1)(b)(i) takes within its fold any
liability which may be incurred by the insurer in respect of the death or
bodily injury to any person. The High Court also erred in holding that the
claimant was travelling in the vehicle in the course of his employment
since he was a spare driver in the vehicle although he was not driving the
vehicle at the relevant time but he was directed to go to the worksite by
his employer. The High Court erroneously assumed that the claimant died in
the course of employment and overlooked the fact that the claimant was not
in any manner engaged on the vehicle that met with an accident but he was
employed as a driver in another vehicle owned by M/s. P.L. Construction
Company. The insured (owner of the vehicle) got insurance cover in
respect of the subject goods vehicle for driver and cleaner only and not
for any other employee. There is no insurance cover for the spare driver
in the policy. As a matter of law, the claimant did not cease to be a
gratuitous passenger though he claimed that he was a spare driver. The
insured had paid premium for one driver and one cleaner and, therefore,
second driver or for that purpose ‘spare driver’ 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 is contemplated by proviso to
Section 147 (1) is that the policy shall not be required to cover
liability in respect of death or bodily injury sustained by an employee
arising out of and in the course of his employment other than a liability
arising under the Workmen’s Compensation Act, 1923. The claimant was
admittedly not driving the vehicle nor he was engaged in driving the said
vehicle. Merely because he was travelling in a cabin would not make his
case different from any other gratuitous passenger.
18. The impugned judgment is founded on misconstruction of Section
147. The High Court was wrong in holding that the insurance company shall
be liable to indemnify the owner of the vehicle and pay the compensation to
the claimant as directed in the award by the Tribunal.
19. The next question that arises for consideration is whether in
the peculiar facts of this case a direction could be issued to the
insurance company to first satisfy the awarded amount in favour of the
claimant and recover the same from the owner of the vehicle (respondent no.
2 herein).
20. In National Insurance Co. Ltd. v. Baljit Kaur and others[5],
this Court was confronted with a similar situation. A three-Judge Bench of
this Court in paragraph 21 of the Report (Pg. 8) held as under :
“21. The upshot of the aforementioned discussions is that
instead and in place of the insurer the owner of the vehicle
shall be liable to satisfy the decree. The question, however,
would be as to whether keeping in view the fact that the law was
not clear so long such a direction would be fair and equitable.
We do not think so. We, therefore, clarify the legal position
which shall have prospective effect. The Tribunal as also the
High Court had proceeded in terms of the decision of this Court
in Satpal Singh. The said decision has been overruled only in
Asha Rani. We, therefore, are of the opinion that the interest
of justice will be subserved if the appellant herein is directed
to satisfy the awarded amount in favour of the claimant, if not
already satisfied, and recover the same from the owner of the
vehicle. For the purpose of such recovery, it would not be
necessary for the insurer to file a separate suit but it may
initiate a proceeding before the 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. We have issued
the aforementioned directions having regard to the scope and
purport of Section 168 of the Motor Vehicles Act, 1988, in terms
whereof, it is not only entitled to determine the amount of
claim as put forth by the claimant for recovery thereof from the
insurer, owner or driver of the vehicle jointly or severally but
also the dispute between the insurer on the one hand and the
owner or driver of the vehicle involved in the accident inasmuch
as can be resolved by the Tribunal in such a proceeding.”

21. The above position has been followed by this Court in National
Insurance Co. Ltd. v. Challa Bharathamma & Ors.[6], wherein this Court in
paragraph 13 (Pg. 523) observed as under:
“13. 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 executing court concerned 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 Regional Transport
Authority concerned. 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.”
22. In National Insurance Company Limited v. 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 arising out of
SLP (C) No. 10694 is allowed and civil appeal arising out of SLP
(C) No. 9910 of 2006 is dismissed. If the amount deposited by
the Insurance Company has since been withdrawn by the first
respondent, it would be open to the Insurance Company to recover
the same in the manner specified by the High Court. But if the
same has not been withdrawn the deposited amount may be refunded
to the Insurance Company and the proceedings for realisation of
the amount may be initiated against the owner of the vehicle. In
the facts and circumstances of the case, however, there shall be
no order as to costs.”

23. We are informed that by an order dated 19.01.2007 in National
Insurance Co. v. Roshan Lal and Another [SLP (C) No. 5699/2006] in light of
the argument raised before a two-Judge Bench that the direction ought not
to be issued to the insurance company to discharge the liability under the
award first and then recover the same from the owner, the matter has been
referred to the larger Bench by the following order:
“Having regard to the submissions urged before us, we are of the
view that this petition may be placed for consideration before a
larger Bench. We notice that in some of the decisions such a
direction was made in cases where the compensation had already
been paid by the insurer, but there are observations therein
which support the view that such a direction can be made in all
cases where the owner has insured his vehicle against third
party risks. In Baljit Kaur’s case (supra) which is a judgment
rendered by three Hon’ble Judges, such a direction was made in
the special circumstances noticed by the Court in paragraph 21
of the report. There are observations in Oriental Insurance Co.
Ltd. Vs. Ranjit Saikia and Ors. (2002) 9 SCC 390 which may
support the contention of the petitioners before us.”

24. In National Insurance Company Ltd. v. Parvathneni & Another
[SLP(C)….CC No. 10993 of 2009], the following two questions have been
referred to the larger Bench for consideration:
(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?”
25. The pendency of consideration of the above questions by a
larger Bench does not mean that the course that was followed in Baljit
Kaur5 and Challa Bharathamma6 should not be followed, more so in a
peculiar fact situation of this case. In the present case, the accident
occurred in 1993. At that time, claimant was 28 years’ old. He is now
about 48 years. The claimant was a driver on heavy vehicle and due to
the accident he has been rendered permanently disabled. He has not been
able to get compensation so far due to stay order passed by this Court. He
cannot be compelled to struggle further for recovery of the amount. The
insurance company has already deposited the entire awarded amount pursuant
to the order of this Court passed on 01.08.2011 and the said amount has
been invested in a fixed deposit account. Having regard to these peculiar
facts of the case in hand, we are satisfied that the claimant (Respondent
No. 1) may be allowed to withdraw the amount deposited by the insurance
company before this Court along-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 the
insurance company from the owner shall be made by following the procedure
as laid down by this Court in the case of Challa Bharathamma6 .
26. Appeal is allowed and disposed of as above with no order as to
costs.

…………………….J.
(R.M. Lodha)

..…………………….J.
(Anil R. Dave)
NEW DELHI.
JANUARY 3, 2013.
———————–
[1] (2003) 2 SCC 223
[2] (2008) 1 SCC 423
[3] (2000) 1 SCC 237
[4] (2003) 2 SCC 339
[5] (2004) 2 SCC 1
[6] (2004) 8 SCC 517
[7] (2008) 8 SCC 246

———————–
18

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