Conflicting observations in previous decisions regarding the circumstances under which the direction for recovery from the vehicle owner can be made led to the decision to place the petition before a larger Bench for consideration.

ORDER

1. In the instant case, the finding recorded by the High Court FAO No. 60 of 2002, order dated 9-11-2005 (HP) is that the Insurance Company is not liable to pay the compensation but a direction has been made that the amount deposited by the Insurance Company shall be paid to the claimants and the Insurance Company may recover the amount deposited by it together with interest from the owner of the vehicle by initiating appropriate proceedings before the Motors Accidents Claims Tribunal without being required to file separate suit or proceedings. The legality and validity of this direction made by the High Court is challenged before us.

2. It is submitted that a three-Judge Bench of this Court did direct in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 :

“110. (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 Section 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 of 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.”

It is, therefore, submitted that in an appropriate case the Court may direct the Insurance Company which has already paid the amount to the claimant to recover the same from the owner of the vehicle by following the procedure prescribed for recovery of arrears of land revenue. He submits that this direction was made with a view to aid the Insurance Company to make quick recovery of the amount paid by it to the claimants, though it was later found that it had in fact incurred no liability to pay the compensation. It is submitted that such a discretion cannot be made in all cases and that the courts will not be justified in making such a direction in each case regardless of the fact whether the Insurance Company has already paid the compensation. This principle must be confined in its application only to cases where the Insurance Company has already been compelled to pay the compensation and has discharged the liability, so to say, of the owner. A direction ought not to be issued to the Insurance Company to pay the compensation even in a case where the compensation has not been paid, otherwise the right conferred upon the insurer under sub-section (2) of Section 149 will be rendered meaningless. He therefore submits that the decisions of this Court rendered by a Bench of two Hon'ble Judges of this Court in New India Assurance Co. v. Kamla, (2001) 4 SCC 342 National Insurance Co. Ltd. v. Challa Upendra Rao, (2004) 8 SCC 517 and Pramod Kumar Agrawal v. Mushtari Begum, (2004) 8 SCC 667 require reconsideration so as to confine the application of the principle only to cases where the liability had already been discharged by the insurance company which is later found not to be liable. He further submits that it is only in cases which relate to fake licence that this principle may be applied, and not in cases governed by the decision of this Court in National Insurance Co. Ltd. v. Baljit Kaur, (2004) 2 SCC 1.

3. 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