IMPORTANT POINT
In case of third party risk even if the insurer is not held liable, it may be directed to pay compensation and recover it from owner.

JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. This appeal arises out of the judgment dated 14.09.2016 passed by the High Court of Karnataka at Dharwad Bench in MFA No.24534 of 2010 in and by which the High Court reversed the award passed by the Tribunal for “pay and recover” holding that the owner of the vehicle is liable to pay the compensation to the appellants/claimants. The High Court enhanced the compensation from Rs.3,55,500/-to Rs.4,94,700/-with interest at the rate of 6% per annum.

3. On 14.04.2008, Shankareppa Pattar son of the appellants/claimants was travelling in a jeep bearing Reg.No.KA-22/M-3805. The jeep was driven negligently due to which door of the jeep suddenly opened and Shankareppa was thrown out of the vehicle and sustained grievous injuries and died in the hospital. In the claim petition filed by the appellants/parents of the deceased Shankareppa, the Tribunal awarded compensation of Rs.3,55,500/-with interest at 6% per annum from the date of claim petition till realisation. Since the driver of the jeep had no valid driving licence at the time of the accident and since there was violation of the terms of the insurance policy, the Tribunal directed the insurance company to pay the compensation to the claimants and granted liberty to the insurance company to recover the same from the owner of the offending vehicle.

4. Being aggrieved by the award directing the insurer to pay the compensation amount to the claimants and recover the same from the owner of the vehicle, the insurance company filed appeal before the High Court. The claimants have also filed appeal seeking enhancement of compensation. The High Court referred to its own judgment in the case of Oriental Insurance Co. Ltd. v. K.C. Subramanyam MANU/KA/0945/2012 : ILR 2012 KAR 5241 and held that the Supreme Court directed the insurance company to make payment to the claimants and to recover the same from the owner of the vehicle in exercise of its discretionary power under Article 142 of the Constitution of India. The High Court observed that power under Article 142 of the Constitution is vested only with the Supreme Court and such power is not vested with the High Court or the Tribunal and set aside the award passed by the Tribunal directing the insurance company to pay compensation to the claimants and recover the same from the owner of the vehicle is not sustainable. The High Court held that only the owner of the offending vehicle is liable to make the payment of the compensation amount awarded by the Tribunal. The High Court has enhanced the compensation awarded by the Tribunal from Rs.3,55,500/-to Rs.4,94,700/-. To determine the loss of dependency, the High Court has taken into consideration the age of the deceased Shankareppa and has adopted multiplier of ‘18’ instead of multiplier of ‘14’. Being aggrieved by the judgment of the High Court setting aside the direction to the insurance company to “pay and recover”, the appellants/claimants have preferred this appeal.

5. We have heard the learned counsel for the parties. We have gone through the impugned judgment and perused the materials placed on record.

6. In the case of third party risks, as per the decision in National Insurance Company Ltd. v. Swaran Singh and others (2004) 3 SCC 297, the insurer had to indemnify the compensation amount payable to the third party and the insurance company may recover the same from the insured. 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. Elaborately considering the insurer's contractual liability as well as statutory liability vis-a-vis the claims of t