2001 Supreme(Kar) 669

Karnataka High Court
Judges : R.V.RAVEENDRAN,V.G.SABHAHIT
K.G.SRINIVASAMURTHY - Appellant
Versus
HABIB KHATHUN - Respondent
M. F. A. 3557 Of 1998
Decided On : 10/19/2001

Headnote:

Insurance company is liable to satisfy the award passed against third party and the conditions imposed in the policy would not bind the third party and the amount paid by the insurance company in view of the provisions of the Motor Vehicles Act can be recovered by the insurance company from the insured before the Tribunal on proof of breach of condition of the policy.

Fact of the Case:

In M.V.C. No. 177 of 1997, a minor claimant was injured in a motor accident and the Tribunal awarded compensation of Rs. 3,10,000 with interest at 12 per cent per annum from the date of petition till payment and further held that in view of the decision of this court in Oriental Insurance Co. Ltd. v. Mohammed Sab All Sab Kaladagi, 2000 ACJ 1223 (Karnataka), the respondent nos. 1 and 2 are jointly and severally liable to pay the compensation awarded to the claimant. In M.V.C. No. 140 of 1994, the Tribunal awarded compensation of Rs. 1,64,000 with costs and current interest at 12 per cent per annum from the date of petition till realisation. The Tribunal held that the petitioner being the mother of the deceased is entitled to compensation of Rs. 1,64,000 with interest at 12 per cent per annum from the date of petition till realisation. The Tribunal held that the claim in M.V.C. No. 140 of 1994 was liable to be dismissed against the respondent no. 3 (insurer) and dismissed the petition against respondent nos. 3, 4 and 5.

Finding of the Court:

The insurance company is liable to satisfy the award passed against third party and the conditions imposed in the policy would not bind the third party and the amount paid by the insurance company in view of the provisions of the Motor Vehicles Act can be recovered by the insurance company from the insured before the Tribunal on proof of breach of condition of the policy.

Issues: 1. Whether the quantum of compensation awarded to the claimant in M.V.C. No. 177 of 1997 is inadequate as contended by the appellant in M.F.A. No. 690 of 2000 and whether the claimant is entitled to enhancement of compensation? 2. Whether the quantum of compensation awarded to the claimant in M.V.C. No. 140 of 1994 is on the lower side as contended by the cross-objector in M.F.A. No. 3557 of 1998? 3. Whether quantum of compensation awarded to the claimant in M.V.C. No. 177 of 1997 is liable to be reduced as contended by the cross-objector (owner in M.V.C. No. 177 of 1997)? 4. Whether the insurance company is liable to satisfy the award passed against a third party notwithstanding violation of any conditions of the policy by the insured; if so, whether the insurance company can recover the amount so paid from the insured on proof of breach? 5. Where there is breach of conditions of the policy on account of the driver of the vehicle not holding an effective driving licence on the date of accident, whether insurer is not liable to pay the compensation under the policy? 6. Whether the Tribunal was justified in holding that the insurance company is liable to pay the compensation jointly and severally with the owner of the lorry to the claimant in M.V.C. No. 177 of 1997? 7. Whether the Tribunal was justified in holding that the claim in M.V.C. No. 140 of 1994 was liable to be dismissed against the insurance company? 8. Whether the judgment and award passed by the Motor Accidents Claims tribunal in M.V.C. No. 177 of 1997 calls for interference in M.F.A. No. 5566 of 1999 and M.F.A. No. 690 of 2000 and Cross-objection No. 23 of 2000? 9. Whether the judgment and award passed by the Motor Accidents Claims tribunal, Chickmagalur in M.V.C. No. 140 of 1994 calls for interference in appeal M.F.A. No. 3557 of 1998 or cross-objection filed by the claimants in the said appeal?

Ratio Decidendi: The liability of the insurance company to satisfy the award passed against third party is a statutory liability and the same is not inhibited by any of the conditions imposed in the policy and any breach of conditions imposed in the policy would not bind the third party and the insurance company is bound to satisfy the award against the third party; and if the insurance company is able to prove that there was breach of conditions of the policy vis-à-vis the insured and can avoid liability under the policy, it can recover from the insured, the amount paid by it to the third party by virtue of its statutory liability under the Motor Vehicles Act.

Final Decision: M.F.A. No. 5566 of 1999 is dismissed. M.F.A. No. 690 of 2000 is allowed in part and cross-objection No. 23 of 2000 is allowed in part insofar as it relates to the rate of interest on the following terms, pass the following order: the claimant in M.V.C. No. 177 of 1997 is awarded total compensation of rs. 3,50,000 with interest at 9 per cent per annum from the date of petition to the date of payment. Out of the said compensation Rs. 3,10,000 shall be deposited in the name of the minor injured for a period of five years in the first instance and the same shall be renewed from time to time, during the minority of the injured, the guardian of the claimant shall be entitled to withdraw interest accruing on the said deposit from time to time for the upkeep and maintenance of the minor. M.F.A. No. 3557 of 1998 is allowed. Cross-objections therein is allowed in part. As a consequence the claimant in M.V.C. No. 140 of 1994 is entitled to compensation of Rs. 1,95,000 with interest at 9 per cent per annum from the date of petition to the date of payment. The insurer is jointly and severally liable with the owner and is ordered to pay the compensation amount. Out of the compensation amount awarded, rs. 1,40,000 shall be deposited in the name of the claimant in any nationalised bank for a period of five years in the first instance with liberty to the claimant to withdraw interest accruing on the said deposit from time to time and the balance amount of Rs. 55,000 shall be disbursed to the claimant. Parties to bear respective costs.