All these appeals involve common questions of fact and law and, hence, are being decided by a common judgment. For the sake of convenience, First Appeal From Order No. 1780 of 2024 shall ...
No Acts & Articles mentioned in this case
Neutral Citation No. - 2025:AHC:14110
Reserved on 09.01.2025
Delivered on 31.01.2025
A.F.R.
Court No. - 36
Case :- FIRST APPEAL FROM ORDER No. - 1780 of
2024
Appellant :- ICICI Lombard General Insurance Co Ltd
Respondent :- Smt. Arti Devi and 8 Others
Counsel for Appellant :- Rahul Sahai
Counsel for Respondent :- Abhinav Trivedi, Adarsh
Kumar, Shreesh Srivastava
Connected with
Case :- FIRST APPEAL FROM ORDER No. - 1776 of
2024
Appellant :- ICICI Lombard General Insurance Co Ltd
Respondent :- Smt Arti Devi and 4 others
Counsel for Appellant :- Abhinav Trivedi, Adarsh
Kumar, Rahul Sahai
Counsel for Respondent :- Shreesh Srivastava
and
Case :- FIRST APPEAL FROM ORDER No. - 1777 of
2024
Appellant ICICI Lombard General Insurance Co. Ltd.
Respondent :- Smt. Rajeshwari and 8 others
Counsel for Appellant :- Rahul Sahai
Counsel for Respondent :- Abhinav Trivedi, Adarsh
Kumar,
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Shreesh Srivastava
and
Case :- FIRST APPEAL FROM ORDER No. - 1789 of
2024
Appellant :- ICICI Lombard General Insurance Co Ltd
Respondent :- Smt Guddi and 10 others
Counsel for Appellant :- Rahul Sahai
Counsel for Respondent :- Abhinav Trivedi, Adarsh
Kumar, Shreesh Srivastava
Hon'ble Kshitij Shailendra,J.
EFFECT OF MOTOR VEHICLES (AMENDMENT) ACT,
2019 (32 of 2019) ON INSURER’S RIGHT TO RECOVER
COMPENSATION FROM OWNER
1. Heard Shri Aditya Singh Parihar, learned
counsel for the appellant-Insurance Company, Shri S.D.
Ojha, and Shri Shreesh Srivastava, learned counsel for
the claimant-respondents and Shri Abhinav Trivedi as
well as Shri Adarsh Kumar, learned counsel for vehicle
owner and driver in all the connected appeals.
2. All these appeals involve common questions of
fact and law and, hence, are being decided by a
common judgment. For the sake of convenience, First
Appeal From Order No. 1780 of 2024 shall be treated as
leading case.
3. The present appeal at the instance of Insurance
Company challenges the award dated 01.06.2024,
whereby the Presiding Officer, Motor Accident Claims
Tribunal, Kanpur Dehat has allowed M.A.C. No. 186 of
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2022 (Smt. Aarti Devi and others vs. Manager I.C.I.C.I.
Lombard General Insurance Company Limited and
others) in part awarding a sum of Rs.20,11,800/-
towards compensation against the owner and driver of
the offending vehicle with an observation that vehicle
being insured with the appellant-Company, the
appellant shall have right to recover the amount of
compensation from the owner and the driver. Initial
liability to pay compensation has been fastened upon
the appellant-Insurance Company.
4. Brief facts giving rise to the instant appeal are
that a road accident took place on 29.05.2022 in which
one Pradeep Kumar, who was sitting in Eco Car No.
U.P. 90 U-9831, suffered injuries and succumbed to the
same on the spot. The accident was caused by Bus No.
U.P. 77 T-5052, which was insured with the appellant-
Insurance Company. A claim petition was filed by the
legal representatives of the deceased claiming
compensation. The Tribunal, after framing issues as
regards rash and negligent driving of the bus driver and
the car driver and as to whether the drivers were
having valid driving license on the date of accident,
factum of insurance and liability to pay compensation by
which party and to what extent, decided the claim
petition by the impugned judgment and order.
5. When the appeal came up for consideration on
the first date, this Court, after noting down submissions
advanced by the appellant including a legal plea raised
in the light of omission of proviso to sub-section (4) of
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Section 149 of the Motor Vehicles Act, 1988 (herein
after referred to as Act, 1988) by way of Motor
Vehicles (Amendment) Act, 2019 (32 of 2019) ,
admitted the appeal on 27.09.2024 and issued notices
to the unrepresented respondents. After the parties
were represented, the Court, by an order dated
08.11.2024, summoned the record of the Tribunal. The
appeal was heard at length on 09.01.2025 and judgment
was reserved.
THE LEGAL ISSUE INVOLVED
6. The decision in these appeals raises a very
significant question of law in the light of Motor
Vehicles (Amendment) Act, 2019 (32 of 2019 ) and
not yet decided in India, as informed to the Court. Vide
notification dated 25.02.2022 issued in exercise of
powers under Section 1(2) of the Amending Act, 2019,
various sections including Section 51 of the Amending
Act came into force w.e.f. 01.04.2022. It is Section 51
that replaces Chapter XI of the Act of 1988 by a new
Chapter XI that is relevant for the instant case. When
read with Section 166 (3) of the Act where limitation to
present a claim petition within 6 months from the
occurrence of accident has been prescribed, it infers
that the provisions of newly substituted Chapter XI
would deal with cases arising from accidents taking
place after 01.04.2022. The question is as to whether
mere omission of proviso attached to sub-section (4) of
Section 149 of Act, 1988 after its replacement by
Section 150 by Amendment Act, 2019 would mean that
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the liability of the insurer to pay and its right to recover
the amount from the owner has been taken away and
does not survive in relation to accidents occurring after
01.04.2022.
ARGUMENTS ON BEHALF OF INSURER
7. Learned counsel for the appellant has
vehemently argued that since the accident took place
after coming into force of the Amendment Act, the
Tribunal was not justified in issuing a direction to the
appellant to pay compensation to the claimants with a
right to recover. Elaborating his submissions, it is urged
that Insurance Company’s right to recover
compensation from the owner of the offending vehicle
flows from the proviso attached to sub-section (4) of
Section 149 of Motor Vehicles Act, 1988, however, the
said proviso has been omitted by Act of 2019 and,
therefore, in case of a breach of policy, it is only the
owner against whom award can be directly made and
Insurer is liable to be relieved from any liability to
indemnify the owner. It is further submitted that
language used in the statute being plain and simple,
nothing can be read which the statute does not contain
and, hence, earlier judgments laying down proposition
to first pay compensation to the claimants and then
have right to recover the same from the owner, would
have no application as in none of the authorities so far,
the effect of amendments made by the Act of 2019 has
been examined. Entire Chapter XI of the Act of 1988
has been replaced by new Chapter XI and in place of
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Section 149 of the Act of 1988, Section 150 has been
substituted, which does not contain any
provision/proviso as was earlier attached to sub-section
(4) giving right to the Insurer to recover the amount in
case of breach of policy. Placing reliance upon
Statement of Objects and Reasons behind enactment of
Act of 2019, it is urged that after considering numerous
representations and recommendations in the form of
grievances and suggestions from various stake-holders,
legislature has, in its wisdom, brought into existence
the Amendment Act to minimize road accidents and
disregard traffic rules and regulations and to improve
road safety and transport system. There is flood of cases
where either fake claims are raised or the claimants
collude with the owners of the offending vehicle and
proceed in such a manner so that ultimately, though
breach of insurance policy is found, liability to pay
compensation at the first instance is enforced against
the Insurance Company, knowing well that owner’s role
would come into picture when the recovery is issued
against him by which time the claimants would have
been compensated and a situation would arise where
for years together, owners would remain absolved of
liability.
8. Elaborating his submissions, it is urged by Shri
Parihar as under:-
(a) Section 149 (4) and amended provision section
150 (4) reflect that the unamended section 149 (2)
provided two defences to the Insurance Co.:
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i. Case of breach of policy mentioned section
149 (2)(a) of the Act and
ii. policy being void as per section 149 (2) (b) of
the Act.
(b) The unamended provision laid down that except
under the situation provided by section 149 (2)(b),
the insurer would not be in a position to avoid the
liability because it has got right against the owner
under the above provision. So, in a situation of
breach of policy as provided u/s 149 (2)(a), the
Insurance Co. would be held liable and it can
recover the same in light of the proviso to Section
149(4).
(c) The amended Section 150 (2) provides three
defences to the Insurance Co.:
i. Case of breach of policy-mentioned u/s 150
(2)(a) of the Act,
ii. Policy being void as per sec. 150 (2)(b) of the
Act, and
iii. Non-receipt of premium.
(d) The amended provision, i.e. Section 150(4)
provides that except under the situations provided
by S.150(2), the insurer would not be in a position to
avoid the liability. Meaning thereby that if the case
falls under any of the defences reflected in Section
150(2) of the Act, the Insurer can avoid the liability.
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(e) All the earlier precedents lose their precedential
value as they relate to earlier unamended provision
and, hence, do not contemplate the new amended
provision and its implication. If the arguments of
claimants are accepted that even after deletion of
proviso by way of amendment Act, Insurance
Company would be liable to pay compensation,
permitting it to raise grounds of challenge would be
a redundant provision and in no case, defence of
Insurance Company would be entertainable.
(f) The power under Article 142 of the Constitution
of India is in the exclusive domain of the Apex Court
and can be exercised by the Apex Court alone to
serve the ends of justice in the peculiar facts and
circumstances of a case. Hence all the judgements of
the Hon'ble Supreme Court invoking its power under
Article 142 of the Constitution of India cannot be
relied upon.
(g) The leading judgment in relation to Insurance
Company’s right to recover from the owner, i.e.,
National Insurance Company Limited vs.
Swaran Singh and others, JT 2004 (1) SC 109,
was pronounced when the proviso to sub-section (4)
of Section 149 existed in the Statute Book and the
matter before the Supreme Court had arisen out of
interpretation of Section 149 vis-a-vis the proviso
and once the proviso does not find place after
amendment, any law laid down by the Supreme
Court or this Court would not be read in relation to
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those cases where accident took place after the
Amendment Act has come into operation.
(h) The doctrine of “Stare decisis” directs courts to
follow prior decisions of higher courts when
resolving cases involving similar facts and law. The
argument of the respondents and the judgments
relied upon by them presented as examples of stare
decisis suggesting that insurers cannot avoid
liability and that 'Pay and Recover' still remains
where liability is disputed, hold no ground as they
are based on the now-deleted provisions of the Act,
1988.
(i) The amendments in Act are prospective in nature
and, hence, the mandate of Swaran Singh's case
would hold ground for all cases wherein the
occurrence of accident predates the coming into
force of the amendment, i.e. 1.4.2022, but not
otherwise.
(j) It is a trite law that primary rule of interpretation/
construction is that the intention of the legislature
must be found in the words used by the legislature
itself. The Hon'ble Apex Court, in the case of
Satheedevi vs Prasanna, (2010) 5 SCC 622 , has
held that if the words used are capable of one
construction only then it would not be open to the
courts to adopt any other hypothetical construction
on the ground that such hypothetical construction is
more consistent with the alleged object and policy of
the Act. The words used in the material provisions of
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the statute must be interpreted in their plain
grammatical meaning and it is only when such
words are capable of two constructions that the
question of giving effect to the policy or object of the
Act can legitimately arise.
(k) In the case of Union of India vs. Deoki
Nandan Aggarwal,1991 AIR SCW 2754, the
Hon'ble Apex Court has held that court cannot
rewrite recast or reframe the legislation. A court
cannot add words to a statute or read words which
are not there in it. Even if there is a defect or an
omission in the statute, the court cannot correct the
defect or supply the omission.
(l) The Supreme Court has upheld the Causus
Omissus maxim in several judgments, explicitly
stating that such omissions cannot be addressed by
judicial interpretation. In M/s Unique Butyle Tube
Industries Pvt. Ltd. vs. UP Financial
Corporation and Others, AIR 2003 SC 2103 , it
was held that the legislature's omissions (if any)
cannot be filled by judicial interpretation. If a statute
leaves out a particular situation, the courts cannot
insert words to address that omission. In such a
circumstance, reading something into a provision
when the legislature in its wisdom has specifically
omitted, deleted or repealed a provision or its part,
would amount to doing violence to the statute and
the same should not be done to the clear and plain
language of the statute.
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(m) Even laws that are beneficial must follow the
constraints of statutory language ensuring a balance
between legislative intent and literal interpretation
The principle that "the law is what the text says"
underlines court judgments. While beneficial
legislation plays an important role, it cannot
override the clear and specific language of statutes
as drafted by the legislature. The court cannot go
beyond the framework established by the
legislature.
9. In support of his submissions, learned counsel
for the appellant has placed reliance upon the following
authorities:-
(1) New India Assurance Co., Shimla vs. Kamla
and others, 2001(4) SCC 342
(2) National Insurance Co. Ltd. vs. Swaran
Singh and others, JT 2004 (1) SC 109
(3) S. Iyyapan vs. United India Insurance Co.
Ltd. And another, 2013 (7) SCC 62
(4) M/s Unique Butyle Tube Industries Pvt. Ltd.
vs. U.P. Financial Corporation and others, AIR
2003 SC 2103
(5) Satheedevi vs. Prasanna and another, 2010
(5) SCC 622
(6) Union of India vs. Deoki Nandan Aggarwal,
1991 AIR SCW 2754
(7) ICICI Lombard General Insurance Co. Ltd.
vs. Suresh and 2 others, 2024 (2) ADJ 576.
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ARGUMENTS ON BEHALF OF CLAIMANTS AND
OWNER
10. Per contra, learned counsel for the claimants-
respondents as well as owner and driver of offending
vehicle submit as under:-
(a) Amendments incorporated by the Act of 2019
would not absolve the liability of the Insurer to
first pay compensation and irrespective of deletion
of proviso to sub-section (4) of Section 149 by
virtue of newly substituted Section 150, the
Insurer shall have to pay compensation and right
to recover compensation so paid from the owner
would still remain intact.
(b) Requirements of issuance of insurance policy
and limiting liability as per section 147 of Act of
1988 has to be read in the light of various sub-
sections especially sub-section (1) (a), (b) and (5)
thereof and a conjoint reading of the said provision
with the previous sub-section (4) in Section 149
and newly substituted sub-section (4) of Section
150 would reveal that there is no change as far as
indemnifying the owner of the vehicle by the
Insurance Company is concerned.
(c) Even as on today, the Supreme Court has
passed certain judgments whereby right to recover
has been given to the Insurance Company and
considering the fact that the Act is a beneficial
legislation having benevolent object, the argument
of Insurance Company that the award has to be
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made against the owner and the Insurance
Company has to be completely freed from
indemnifying the owner cannot be accepted.
(d) Claimants being dependents of the deceased or
themselves injured would not be in a position to
recover the amount from the owner of the vehicle
and, therefore, keeping in view the object of the
Act, immediate compensation has to be paid to the
claimants by the Insurance Company.
(e) If the Insurance Company keeps on issuing
insurance policy and renew it without examining
the requirements such as existence of a valid
driving license or permit or other such
components, in case breach of policy comes into
light during the course of proceedings before
Tribunal, the Company being at fault, it cannot
absolve itself from liability to pay compensation
and then recover from the owner.
(f) Despite replacement of Section 149 by
substituted Section 150, liability of Insurance
Company to indemnify the risk as provided under
Section 147(5) of the Act of 1988 prior to
amendment has not been taken away, rather the
said sub-section has now been reintroduced as sub-
section (6) of the Act after amendment and,
therefore, liability of Insurance Company to first
pay the amount to the claimants does not vanish.
(g) Insurance policy is a contract between insurer
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and the owner and third party being alien to the
contract, in case of breach of policy, claimants
cannot suffer and beneficial legislation and object
behind it containing provision of indemnifying the
risk would stand frustrated if mere non-inclusion of
proviso in sub-section (4) of Section 150 is
interpreted to absolve the Insurance Company to
first pay the amount to the claimants.
11. In support of their submissions, reliance has
been placed upon the following authorities:-
(1) Praveenbhai S. Khambhayata vs. United
India Insurance Company Ltd. & others 2015
(11) SCC 417
(2) National Insurance Co. Ltd. vs. Santro Devi
and others, 1997 (9) Supreme 458
(3) Amrit Paul Singh and another vs. Tata AIG
General Insurance Company Limited and others,
2018 (7) SCC 558
(4) National Insurance Co. Ltd. vs. Swaran
Singh and others, 2004 (3) SCC 297
(5) S. Iyyapan vs M/s United India Insurance
Company Ltd. and another, 2013 (7) SCC 62
(6) Shivawwa and another vs. The Branch
Manager, National India Insurance Co. Ltd. And
another, 2018 (5) SCC 762
(7) Balu Krishna Chavan vs. The Reliance
General Insurance Company Ltd. And others,
2023 ACJ 1546.
(8) Pappu and others vs. Vinod Kumar Lamba
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and another, 2018 (3) SCC 208
(9) Dhondubai vs. Hanmantappa Bandappa
Gandigude (since deceased) through his LRs
and others, 2023 ACJ 1979.
(10) Oriental Insurance Company Ltd. Allahabad
vs. Smt. Chandra Devi and another, 2010 (5)
AWC 4607
(11) Oriental Insurance Co. Ltd. vs. Sunita Rathi
and others, AIR 1998 SC 257
(12) V. Ravi vs. M/s New India Assurance
Company Ltd. 1998 ACJ 598
(13) Uttar Pradesh State Road Transport
Corporation vs. Kulsum and others, 2011 (8)
SCC 142.
(14) Manuara Khatun and others vs. Rajesh
Kumar Singh and others, 2017 (4) SCC 796.
(15) Shamanna and another vs. The Divisional
Manager, The Oriental Insurance Co. Ltd. and
others, 2018 (9) SCC 650.
(16) Rishi Pal Singh vs. New India Assurance
Co. Ltd. And others, 2022 (3) ACC 556.
ANALYSIS OF RIVAL CONTENTIONS
12. Having heard learned counsel for the parties,
this Court proceeds to deal with some relevant
provisions of Act of 1988, both before and after
amendments made in the year 2019.
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Motor Vehicles Act, 1988
“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 authorised
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, including
owner of the goods or his authorized
representative carried in the vehicle 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
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(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
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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.
……………………………….
“149. Duty of insurers to satisfy judgments
and awards against persons insured in
respect of third party risks.—
(1) If, after a certificate of insurance has been
issued under sub-section (3) of section 147 in
favour of the person by whom a policy has been
effected, judgment or award in respect of any
such liability as is required to be covered by a
policy under clause (b) of sub-section (1) of
section 147 (being a liability covered by the
terms of the policy) or under the provisions of
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section 163A is obtained against any person
insured by the policy, then, notwithstanding
that the insurer may be entitled to avoid or
cancel or may have avoided or cancelled the
policy, the insurer shall, subject to the
provisions of this section, pay to the person
entitled to the benefit of the decree any sum not
exceeding the sum assured payable thereunder,
as if he were the judgment debtor, in respect of
the liability, together with any amount payable
in respect of costs and any sum payable in
respect of interest on that sum by virtue of any
enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under
sub-section (1) in respect of any judgment or
award unless, before the commencement of the
proceedings in which the judgment or award is
given the insurer had notice through the Court
or, as the case may be, the Claims Tribunal of
the bringing of the proceedings, or in respect of
such judgment or award so long as execution is
stayed thereon pending an appeal; and an
insurer to whom notice of the bringing of any
such proceedings is so given shall be entitled to
be made a party thereto and to defend the
action on any of the following grounds,
namely:—
(a) that there has been a breach of a specified
condition of the policy, being one of the
following conditions, namely:—
(i) a condition excluding the use of the
vehicle—
(a) for hire or reward, where the
vehicle is on the date of the contract of
insurance a vehicle not covered by a
permit to ply for hire or reward, or
(b) for organized racing and speed
testing, or
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(c) for a purpose not allowed by the
permit under which the vehicle is
used, where the vehicle is a transport
vehicle, or
(d) without side-car being attached
where the vehicle is a motor cycle; or
(ii) a condition excluding driving by a
named person or persons or by any
person who is not duly licensed, or by
any person who has been disqualified for
holding or obtaining a driving licence
during the period of disqualification; or
(iii) a condition excluding liability for
injury caused or contributed to by
conditions of war, civil war, riot or civil
commotion; or
(b) that the policy is void on the ground that it
was obtained by the non-disclosure of a
material fact or by a representation of fact
which was false in some material particular.
(3) ……………..
(4) Where a certificate of insurance has been
issued under sub-section (3) of section 147 to
the person by whom a policy has been effected,
so much of the policy as purports to restrict
the insurance of the persons insured thereby
by reference to any conditions other than
those in clause (b) of sub-section (2) shall, as
respects such liabilities as are required to be
covered by a policy under clause (b) of sub-
section (1) of section 147, be of no effect:
Provided that any sum paid by the insurer
in or towards the discharge of any liability
of any person which is covered by the
policy by virtue only of this sub-section
shall be recoverable by the insurer from
that person.
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Motor Vehicles Act, 1988 [As amended by Motor
Vehicles (Amendment) Act, 2019]
“150. Duty of insurers to satisfy judgments
and awards against persons insured in
respect of third party risks.-
(1) If, after a certificate of insurance has been
issued under sub-section (3) of section 147 in
favour of the person by whom a policy has been
effected, judgment or award in respect of any
such liability as is required to be covered by a
policy under clause (b) of sub-section (1) of
section 147 (being a liability covered by the
terms of the policy) or under the provisions of
section 164 is obtained against any person
insured by the policy, then, notwithstanding
that the insurer may be entitled to avoid or
cancel or may have avoided or cancelled the
policy, the insurer shall, subject to the
provisions of this section, pay to the person
entitled to the benefit of the award any sum not
exceeding the sum assured payable thereunder,
as if that person were the decree holder, in
respect of the liability, together with any
amount payable in respect of costs and any sum
payable in respect of interest on that sum by
virtue of any enactment relating to interest on
judgments.
(2) No sum shall be payable by an insurer
under sub-section (1) in respect of any
judgment or award unless, before the
commencement of the proceedings in which the
judgment or award is given the insurer had
notice through the court or, as the case may be,
the Claims Tribunal of the bringing of the
proceedings, or in respect of such judgment or
award so long as its execution is stayed
pending an appeal; and an insurer to whom
notice of the bringing of any such proceedings
is so given shall be entitled to be made a party
thereto, and to defend the action on any of
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the following grounds, namely: —
(a) that there has been a breach of a
specified condition of the policy, being one
of the following conditions, namely:––
(i) a condition excluding the use of the
vehicle—
(A) for hire or reward, where the
vehicle is on the date of the contract
of insurance a vehicle not covered
by a permit to ply for hire or reward;
or
(B) for organised racing and speed
testing; or
(C) for a purpose not allowed by the
permit under which the vehicle is
used, where the vehicle is a
transport vehicle; or
(D) without side-car being attached
where the vehicle is a two-wheeled
vehicle; or
(ii) a condition excluding driving by a
named person or by any person who is
not duly licenced or by any person who
has been disqualified for holding or
obtaining a driving licence during the
period of disqualification or driving
under the influence of alcohol or drugs as
laid down in section 185; or
(iii) a condition excluding liability for
injury caused or contributed to by
conditions of war, civil war, riot or civil
commotion; or
(b) that the policy is void on the ground that it
was obtained by nondisclosure of any material
fact or by representation of any fact which was
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false in some material particular; or
(c) that there is non-receipt of premium as
required under section 64VB of the Insurance
Act, 1938.
(3) ………...
(4) Where a certificate of insurance has
been issued under sub-section (3) of section
147 to the person by whom a policy has been
effected, so much of the policy as purports
to restrict the insurance of the persons
insured thereby, by reference to any
condition other than those in sub- section
(2) shall, as respects such liabilities as are
required to be covered by a policy under
clause (b) of sub-section (1) of section 147,
be of no effect.
FEW AUTHORITIES ON COMPULSORY INSURANCE
13. The Supreme Court, in United India
Insurance Company Limited v. Santro Devi and
Ors., (2009) 1 SCC 558 observed that the provisions
of compulsory insurance have been framed to advance a
social object. It is in a way part of the social justice
doctrine. When a certificate of insurance is issued, in
law, the insurance company is bound to reimburse the
owner. There cannot be any doubt whatsoever that a
contract of insurance must fulfill the statutory
requirements of formation of a valid contract but in
case of a third- party risk, the question has to be
considered from a different angle. It was further held
that section 146 of the Act gives complete protection to
Third Party in respect of death or bodily injury or
damage to the property while using the vehicle in public
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place. For that purpose, insurance of the vehicle has
been made compulsory to the vehicles or to the owners.
This would further reflect that compulsory insurance is
obviously for the benefit of Third Parties. The judgment
in Santro Devi (supra) was followed by Supreme
Court in Uttar Pradesh State Road Transport
Corporation vs. Kulsum and other, 2011 (8) SCC
142.
14. In G. Govindan vs. New India Assurance
Co. Ltd. and others, 1999 (3) SCC 754, the Supreme
Court, dealing with mandatory requirement of statute
governing insurance qua third party risks, observed in
paragraph Nos. 12, 13 and 15 as under:-
“12. The heading of Chapter VIII of the old Act
reads as "Insurance of Motor Vehicles against
Third Party Risks". A perusal of the provisions
under Chapter VIII makes it clear that the
Legislature made insurance of motor vehicles
compulsory against third-party (victims) risks.
This Court in New Asiatic Insurance Co. Ltd. v.
Pessumal Dhanamal Aswani & Ors., AIR (1964)
SC 1736 after noticing the compulsory
nature of insurance against third- party
observed that once the company had
undertaken liability to third parties
incurred by the persons specified in the
policy, the third parties' right to recover
any amount under or by virtue of the
provisions of the Act is not affected by any
condition in the policy.
13. In our opinion that both under the old act
and under the new Act the Legislature was
anxious to protect the third party (victim)
interest. It appears that what was implicit in
the provisions of the old Act is now made
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explicit, presumably in view of the conflicting
decisions on this aspect among the various
High Courts.
15. As between the two conflicting views of the
full bench judgments noticed above, we prefer
to approve the ratio laid down by the
Andhra Pradesh High Court in Kondaiah's
case (Madineni Kondaiah v. Yaseen
Fatima: AIR 1986 AP 62) as it advances the
object of the Legislature to protect the
third party interest. We hasten to add that
the third party here will not include a
transferee whose transferor has not followed
procedure for transfer of policy. In other words
in accord with the well- settled rule of
interpretation of statutes we are inclined to
hold that the view taken by the Andhra
Pradesh High Court in Kondaiah's case is
preferable to the contrary views taken by
the Karnataka ( National Insurance Co.
Ltd. v. Mallikarjun: AIR 1990 Kant 166)
and Delhi (Anand Sarup Sharma v. P.P.
Khurana: 1989 ACJ 577 (Del) (FB) High
Courts (supra) even assuming that two
views are possible on the interpretation of
relevant sections as it promotes the object
of the Legislature in protecting the third
party (victim) interest. The ratio laid down in
the judgment of Karnataka & Delhi High Courts
(supra) differing from Andhra Pradesh High
Court is not the correct one.”
LEADING AUTHORITIES ON ‘PAY AND
RECOVER’
15. In Kamla (supra), the Supreme Court dealt
with the then existing Chapter XI of the Act of 1988 and
held as under:-
“21. A reading of the proviso to sub-section (4)
as well as the language employed in sub-section
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(5) would indicate that they are intended to
safeguard the interest of an insurer who
otherwise has no liability to pay any amount to
the insured but for the provisions contained in
Chapter XI of the Act. This means, the insurer
has to pay to the third parties only on
account of the fact that a policy of
insurance has been issued in respect of the
vehicle, but the insurer is entitled to recover
any such sum from the insured if the
insurer were not otherwise liable to pay
such sum to the insured by virtue of the
conditions of the contract of insurance
indicated by the policy.
22. To repeat, the effect of the above provisions
is this: When a valid insurance policy has been
issued in respect of a vehicle as evidenced by a
certificate of insurance the burden is on the
insurer to pay to third parties, whether or not
there has been any breach or violation of the
policy conditions. But the amount so paid by the
insurer to third parties can be allowed to be
recovered from the insured if as per the policy
conditions the insurer had no liability to pay such
sum to the insured.”
16. Indisputably, the Supreme Court in Kamla
(supra), Swaran Singh (supra) and other
judgments cited on that line was dealing with
unamended provisions which, had not come into
light by that time as the amending Act was enacted
in 2019. First paragraph of Swaran Singh (supra)
reads as under:-
“Interpretation of Section 149(2)(a)(ii) vis-a-vis
the proviso appended to sub-sections (4) and (5)
of the Motor Vehicles Act, 1988 is involved in
this batch of special leave petitions filed by the
National Insurance Company Limited
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(hereinafter referred to as Insurer) assailing
various awards of the Motor Vehicle Claims
Tribunal and judgments of the High Courts.”
The relevant ratio of Swaran Singh (supra) in the form
of summary of findings is as under:-
“108. The summary of our findings to the various
issues as raised in these petitions are as follows:
(i) Chapter XI of the Motor Vehicles Act,
1988 providing compulsory insurance of
vehicles against third party risks is a social
welfare legislation to extend relief by
compensation to victims of accidents caused
by use of motor vehicles. The provisions of
compulsory insurance coverage of all
vehicles are with this paramount object and
the provisions of the Act have to be so
interpreted as to effectuate the said object.
(ii) ...............................
(iii) The breach of policy condition e.g.,
disqualification of driver or invalid driving licence
of the driver, as contained in sub-section (2)(a)(ii)
of section 149, have to be proved to have been
committed by the insured for avoiding liability by
the insurer. Mere absence, fake or invalid driving
licence or disqualification of the driver for driving
at the relevant time, are not in themselves
defences available to the insurer against either
the insured or the third parties. To avoid its
liability towards insured, the insurer has to prove
that the insured was guilty of negligence and
failed to exercise reasonable care in the matter of
fulfilling the condition of the policy regarding use
of vehicles by duly licensed driver or one who was
not disqualified to drive at the relevant time.
(iv) The insurance companies are, however, with
a view to avoid their liability must not only
establish the available defence(s) raised in the
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said proceedings but must also establish 'breach'
on the part of the owner of the vehicle; the
burden of proof wherefor would be on them.
(v) ..............................
(vi) Even where the insurer is able to prove
breach on the part of the insured concerning the
policy condition regarding holding of a valid
licence by the driver or his qualification to drive
during the relevant period, the insurer would not
be allowed to avoid its liability towards insured
unless the said breach or breaches on the
condition of driving licence is/ are so fundamental
as are found to have contributed to the cause of
the accident. The Tribunals in interpreting the
policy conditions would apply "the rule of main
purpose" and the concept of "fundamental
breach" to allow defences available to the insured
under section 149(2) of the Act.
(vii) .............................
(viii) ............................
(ix) ..............................
(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
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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.
(xi) ………………………...
17. The Court, in the light of judicial precedents
referred above, now proceeds to deal with the object of
the Act, spirit of relevant provisions, both before and
after amendments and to answer the core question
involved.
18. Section 147 of the Act, after amendment,
remains unchanged except renumbering of one or the
other sub-section. According to it, a policy of insurance
insures the person or classes of persons specified in the
policy to the extent specified in sub-section (2) against
any liability which may be incurred by him in respect of
the death of or bodily injury to any person including
owner of the goods or his authorised representative
carried in the motor vehicle or damage to any property
of a third party caused by or arising out of the use of
the motor vehicle in a public place; against the death of
or bodily injury to any passenger of a transport vehicle,
except gratuitous passengers of a goods vehicle, caused
by or arising out of the use of the motor vehicle in a
public place. It is, therefore, apparent that insurance
policy covers third party risks in case of death of or of
bodily injury.
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19. Sub-section (2) of Section 149, before
amendment, contemplates grounds on which an
Insurance Company can defend its liability to pay
compensation and one of the grounds is that there has
been a breach of specified condition of the policy. The
conditions have also been specifically enumerated. The
question is as to whether in a case of breach of policy,
the Insurance Company would be liable to pay
compensation or to indemnify the owner at the first
instance and as to whether right to recover is still
available available to the insurer.
20. It is clear that when conditions other than
those mentioned in clause (b) of sub-section (2) of
Section 149 exist, the policy shall be of no effect. In
such event, though the sum is initially payable by the
insurer towards discharge of liability covered by the
policy, the same shall be recoverable by the insurer
from the person, who is actually liable to pay
compensation, i.e. owner of the offending vehicle. The
substituted Section 150 does not contain any such
provision giving right of recovery. As a matter of fact
the proviso has been omitted and sub-section (2) of
Section 150 clearly lays down that Insurance Company
can defend the action on any of the grounds mentioned
therein which include breach of a specified condition of
the policy, specifying the conditions of breach also.
21. When the language used in sub-Section (4) of
Section 149 prior to amendment as replaced by sub-
Section (4) of Section 150 by the Amendment Act of
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2019, is carefully examined, the words “shall, as
respects such liabilities as are required to be
covered by a policy under clause (b) of sub-section
(1) of section 147, be of no effect” would only mean
that under the circumstances covered by sub-Section
(4), either of Section 149 or Section 150, the insurer
would be well within its rights to avoid liability flowing
from the insurance policy. Meaning thereby that the
insurer would be absolved of bearing liability to pay
compensation to the claimants. It does not mean that
the insurer would also be absolved from its liability to
indemnify the owner’s risk. Such indemnification will
still continue to remain alive and the insurer shall have
to first pay the compensation through indemnification
and, then, it shall have a right to recover from the
owner the amount paid as the ultimate liability shall
have to be borne by the owner and not by insurer. In
such an event, there would be no financial loss to the
insurer as it would be compensated through recovery
from the owner. The aforesaid provisions are
expressly to give defence to the insurer and have
to be read to that extent only and not to interpret
as if the liability to indemnify stands washed away.
It therefore follows that even if the proviso to sub-
Section (4) would not have been there before the
amendment, the indemnification concept would have
still remained alive and operative and, hence, mere
omission of the proviso by the Amendment Act of 2019
would be of no avail.
22. Therefore, when Shri Parihar urges that if, in
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every case, liability to pay compensation has to be
borne by the Insurance Company, there would be no
effect of providing grounds for defence either under
sub-section (2) of the Act prior to amendment or under
sub-section (2) of the Act after amendment, this Court
finds no force in the submission. The reason is that
providing grounds of defence under the said provisions
would be read so as to give an opportunity to the
Insurance Company to avoid passing of award against
it, i,e, holding it liable to bear the award. The said
liability to have an award against the Insurance
Company is distinct from the situation where award is
against the owner and insurer is made liable to pay
compensation to the claimants and then recover the
same from the owner. Non-receipt of premium as
required under Section 64(V)B of the Insurance Act,
1938 has now been added in Section 150(2). It reflects
that even in a case where premium is not received by
the Insurance Company, it can raise a ground of
challenge so as to avoid passing of award against it and,
in that event also, award would be drawn against the
owner. When payment or non-payment of premium is
significant after amendment and has been made a
ground of defence, the Court observes that a third party
risk is covered under the policy which is a contract and
premium qua third party risk is received by the insurer
in relation to the contract. Therefore, policy continues
to subsist to cover third party risk so long the premium
is received and non-payment thereof would absolve the
Insurance Company from its liability of an award being
passed against it.
32 of 47
CONCEPT OF 'PAY AND RECOVER'
23. To better understand as to whether 'PAY AND
RECOVER' aspect is still left after amendment, words
“any sum paid by the insurer in or towards the
discharge of any liability of any person which is
covered by the policy ” used in proviso attached to
section 149(4) need to be read and understood with
great caution. The words used are “paid by the
insurer” and not “payable by the insurer” . There is a
distinction between “paid” and “payable” as per the
scheme of the Act. The sum shall become payable by the
insurer when the award is passed against it holding it
liable to bear the award on its shoulders for all time to
come without any further shift in such liability. The
proviso existed earlier gives the insurer a right to
recover the amount from the owner which has been
paid by it and not payable by it.
24. Award is made under Section 168 of the Act.
Sub section (3) of Section 168 reads as under:-.
“168 – Award of the Claims Tribunal-
(3)When an award is made under this
section, the person who is required to
pay any amount in terms of such
award shall, within thirty days of the
date of announcing the award by the
Claims Tribunal, deposit the entire
amount awarded in such manner as
the Claims Tribunal may direct.”
Words “a person who is required to pay any amount
in terms of such award” mentioned in sub-section (3)
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of Section 168 not only mean a person who has to finally
satisfy the award but also include a person, who has
been directed to pay any amount in terms of the award.
The said person may also be insurer and that is why
whenever the insurer is directed to pay any amount in
terms of award and the right of recovery is also given to
it, the insurer has to deposit the amount before the
Tribunal within thirty days. In such situation, it does not
mean that if the insurer deposits the amount, its right to
recover stands vanished, rather such right is specifically
conferred upon the insurer under the award itself. The
said provision does not mean that it is the liability
of the Insurance Company to bear the award for all
time to come but it only means that it has to pay
the amount only for transitional period and the
chapter is not closed forever as the right to
recover is very much there. The award has to be
read as a whole and not in piece-meal.
25. The Court cannot overlook an aspect that
Section 147(5) of the Act, prior to amendment has been
replaced by Section 147(6) of the Act after amendment
but there are no qualifying words referable to section
150. Sub-section (6) of section 147 reads as under:-
“(6) Notwithstanding anything contained
in any other 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.”
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From renumbering of the sub-section, as above, it
follows that once the liability to indemnify the person
specified in the policy, as per sub-section (6) of Section
147, even after amendment, continues to exist in the
Statute book and it excludes applicability of any other
law for the time being in force, indemnification by the
insurer does not vanish even after amendments
incorporated by the Act of 2019. The right to recover
the amount paid to the claimants as per conditions
mentioned in section 150 would still be available to the
insurer as indemnification has not been taken away by
the legislature nor has it been explained by adding
words to section 147 or anywhere else.
26. This Court also finds that since the contract of
insurance is between insurer and the owner and has no
concern with the claimants who are in fact victims of
the accident, language used in Section 149 (prior to
amendment) and Section 150 (after amendment) would
show that notwithstanding the fact that the insurer may
be entitled to avoid or cancel the policy on account of
breach of terms thereof, it shall pay to the person
entitled to the benefit of the award. Therefore, whether
Insurance Company cancels or does not cancel an
insurance policy, the same has nothing to do with the
claimants and they are entitled to get the amount from
insurer. It means that claimants' right to receive
compensation from the insurer at the first instance is
unaffected by the inter-se rights and liabilities arising
out of contract between the insurer and the owner.
35 of 47
27. Words “no sum shall be payable by the
insurer under sub-section (1) ” used either in Section
149 of the Act of 1988 (prior to amendment) in Section
150 (after amendment) would mean that if the grounds
of defence set-forth in sub-section (2) of Section 149 or
Section 150, as the case may be, exist, no sum shall be
payable by the insurer. It does not mean that the
sum shall not be paid by the insurer if the award
contains a direction to the insurer to pay and
recover. Liability to pay the amount has to be
segregated from actual payment made by the insurer in
case of survival and existence of insurance policy issued
under Section 147 of the Act. Word “liability” has to be
understood as the “final liability to bear the award
for all time to come” separate from concept of
indemnification by the insurer by making immediate
payment.
28. Whenever a claim petition is decided by the
Tribunal, thirty days’ time is granted under section
168(3) by the Tribunal for depositing the amount, failing
which recovery proceedings in terms of Section 174 of
the Act would be initiated. Section 174 is quoted for a
ready reference:-
“174. Recovery of money from insurer
as arrear of land revenue. —Where any
amount is due from any person under an
award, the Claims Tribunal may, on an
application made to it by the person
entitled to the amount, issue a certificate
for the amount to the Collector and the
Collector shall proceed to recover the same
36 of 47
in the same manner as an arrear of land
revenue.”
Certainly, recovery as arrears of land revenue in the
State of U.P. would then be ensured as per Chapter X of
the Uttar Pradesh Zamindari Abolition & Land
Reforms Rules, 1952 . Now suppose Tribunal issues a
recovery certificate on account of non-deposit of amount
by the insurer in terms of the award towards
indemnification and if, during the period of limitation
for filing the appeal under Section 173 of the Act, the
insurer approaches the High Court where on one or the
other ground, an interim order is passed, the insurer, in
almost all cases, barring few exceptions, is put to
financial terms in such a way that the claimants get
some financial relief even during the pendency of
appeal. This is done as per the legislative mandate
contained under sub-Rule (5) of Rule 5 of Order XLI of
the Code of Civil Procedure (as applicable in the State
of U.P.), which reads as under:-
“(5) Notwithstanding anything contained in
the foregoing sub-rules where the appeal is
against the decree for payment of money,
the Appellate Court shall not make an
order staying the execution of the decree,
unless the appellant shall, within such time
as the Appellate Court may allow, deposit
the amount disputed in the appeal or
furnish such security in respect thereof as
the Appellate Court may think fit.”
29. Therefore, when the provisions of the Act of
1988 are read with C.P.C., it becomes clear that as soon
as an award is passed, the claimants become entitled to
37 of 47
get the amount of compensation and they get financial
relief even during the pendency of the appeal filed by
the insurer.
30. At this juncture, this Court also thinks it
appropriate to make a reference of the Statement of
Objects and Reasons behind introducing the
Amendment Act, 2019. The relevant clauses of the same
are quoted hereunder:-
Statement of Objects and Reasons
“The Motor Vehicles Act, 1988 (the Act), was
enacted with a view to consolidate and amend
the laws relating to motor vehicles. The Act
was enacted to give effect to the suggestions
made by the Supreme Court in M.K.
Kunhimohammed Vs P. A. Ahmedkutty (1987)
4 SCC 284.
2. The Act was amended several times to adapt
to the technological up gradation emerging in
road transport, passenger and freight
movement and in motor vehicle management.
With rapidly increasing motorisation, India is
facing an increasing burden of road traffic
injuries and fatalities. The emotional and
social trauma caused to the family which
loses its bread winner, cannot be
quantified. India is signatory to the Brasilia
Declaration and is committed to reduce the
number of road accident fatality by fifty per
cent. by the year 2020. The road transport
sector also plays a major role in the economy
of the country.
3. Numerous representations and
recommendations in the form of grievances
and suggestions from various stakeholders
have been received in the Ministry, citing
38 of 47
cases of increase in road accidents, delay in
issue of driving licences, the disregard of
traffic rules and regulations, etc. Therefore, in
order to improve road safety and transport
system, certain amendments are required to
be made in the Motor Vehicles Act, 1988 to
address safety and efficiency issues in the
transport sector.
4. In view of the above, it has become
necessary to amend certain provisions of the
said Act. The proposed Motor Vehicles
(Amendment) Bill, 2019 seeks to address the
issues relating to road safety, citizen
facilitation, strengthening public transport,
automation and computerisation.
5. The Motor Vehicles (Amendment) Bill, 2019,
inter alia, provides for the following, namely:—
(a) to facilitate grant of online
learning licence;
(b) to replace the existing
provisions of insurance with
simplified provisions in order to
provide expeditious help to
accident victims and their
families;
(c) to increase the time limit for
renewal of driving licence from one
month to one year before and after
the expiry date;
(d) to increase the period for renewal
of transport licence from three years
to five years;
(e) to enable the licensing authority
to grant licence even to the
differently abled persons;
(f) to enable the States to promote
39 of 47
public transport, rural transport and
last mile connectivity by relaxing any
of the provisions of the Act pertaining
to permits;
(g) to increase the fines and penalties
for violation of provisions of the Act;
and
(h) to make a provision for protection
of Good Samaritans.
6. The Notes on clauses explain in detail the
various provisions contained in the Bill.
7. The Bill seeks to achieve the above objectives.”
..............................
“Clause 51 seeks to substitute Chapter XI of
the Act with a new Chapter XI. This Chapter
aims to simplify the third party insurance
for motor vehicles. It empowers the Central
Government to
prescribe the minimum premium and the
corresponding liability of the insurer for such a
policy. It also provides for compensation
on the basis of no-fault liability, scheme
for the treatment of accident victims
during the golden hour and provides for
increase in the compensation to accident
victims to five lakh rupees in the case of
death and two and a half lakh rupees in
the case of grievous hurt. It also provides
a scheme for interim relief to be given to
claimants.”
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31. A bare perusal of clause 2 read with clause 5 (b)
and clause 51 reflects that the intention of the
legislature was never to withdraw protection and reliefs
as regards compensation ensured by the previous
existing provisions. Rather, the Bill strives more towards
ensuring expeditious help to the accident victims and
their families. The emotional and social trauma
caused to the family which loses its bread winner,
is still one of the special considerations as set
forth in the Statement above, The Bill was brought
with an object to replace the existing provisions of
insurance with simplified provisions in order to
provide expeditious help to accident victims and
their families. There is nothing in the Statement of
Objects and Reasons which may, either directly or
indirectly, infer withdrawal of insurer’s liability to pay
compensation as soon as the award is declared, even in
case of occurrence of breach of policy or other existence
of similar grounds of defence available to the insurer.
Therefore, the purpose behind bringing amendments in
the Act of 1988 was clearly to provide immediate
financial help to the accident victims and their
dependents and not to create a situation where they are
made to run from pillar to post even after an award is
declared in their favour.
PURPOSIVE INTERPRETATION OF STATUTE
32. Jurisprudence of statutory interpretation has
moved from literal interpretation to purposive
interpretation, which advances the purpose and object
41 of 47
of a legislation. The Supreme Court in catena of
judgments has dealt with the issue of literal
interpretation vis-a-vis purposive interpretation. The
Apex Court, in Central India Spinning and Weaving
Manufacturing Comp. versus Municipal
Committee, Wardha, AIR 1958 SC 341 has held that
it is a recognized principle of construction that general
words and phrases however wide and comprehensive
they may be in their literal sense must usually be
construed as being limited to the actual objects of the
Act.
33. In Girdhari Lal & Sons versus Balbir Nath
Mathur); 1986 (2) SCC 237 , it was held that the
primary and foremost task of a Court in interpreting a
statute is to ascertain the intention of the legislature,
actual or imputed. Having ascertained the intention, the
Court must then strive to so interpret the statute as to
promote and advance the object and purpose of the
enactment. For this purpose, where necessary the Court
may even depart from the rule that plain words should
be interpreted according to their plain meaning. There
need no meek and mute submission to the plainness of
the language. To avoid patent injustice, anomaly or
absurdity or to avoid invalidation of a law, the court
would be well justified in departing from the so-called
golden rule of construction so as to give effect to the
object and purpose of the enactment by supplementing
the written word if necessary. Ascertainment of
legislative intent is a basic rule of statutory construction
and that a rule of construction should be preferred
42 of 47
which advances the purpose and object of a legislation
and that though a construction, according to plain
language, should ordinarily be adopted, such a
construction should not be adopted where it leads to
anomalies, injustices, or absurdities, vide K.P.
Varghese v. ITO, (1981) 4 SCC 173, State Bank of
Travancore v. Mohd. M. Khan, (1981) 4 SCC 82, Som
Prakash Rekhi v. Union of India (1981) 1 SCC 449,
Ravula Subba Rao v. CIT, AIR 1956 SC 604,
Govindlal V Agricultural Produce Market
Committee, (1975) 2 SCC 482 and Babaji Kondaji v.
Nasik Merchants Co-op Bank Ltd. (1984) 2 SCC 50.
34. Utkal Contractors & Joinery Pvt. Ltd.
versus State of Orissa ; 1987 (3) SCC 279 is an
authority holding that a statute is best understood if we
know the reason for it. The reason for a statute is the
safest guide to its interpretation. The words of a statute
take their colour from the reason for it. There are
external and internal aids. The external aids are
Statement of Objects and Reasons when the Bill is
presented to Parliament, the reports of Committees
which preceded the Bill and the reports of
Parliamentary Committees. Occasional excursions into
the debates of Parliament are permitted. Internal aids
are the Preamble, the scheme and the provisions of the
Act. Having discovered the reason for the statute and so
having set the sail to the wind, the interpreter may
proceed ahead. No provision in the statute and no word
of the statute may be construed in isolation. Every
provision and every word must be looked at generally
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before any provision or word is attempted to be
construed. The setting and the pattern are important. It
is again important to remember that Parliament does
not waste its breath unnecessarily. Just as Parliament is
not expected to use unnecessary expressions,
Parliament is also not expected to express itself
unnecessarily. Even as Parliament does not use any
word without meaning something, Parliament does not
legislate where no legislation is called for. Parliament
cannot be assumed to legislate for the sake of
legislation; nor can it be assumed to make pointless
legislation. [See- Eera (through Dr. Manjula
Krippendorf) v. State (NCT of Delhi) and Anr
2017(15) SCC 133].
35. The Apex Court, in Reserve Bank of India Vs.
Peerless General Finance and Investment Co. Ltd.
& Ors. (1987) 1 SCC 424, held that Interpretation must
depend on the text and the context. They are the bases
of interpretation. One may well say if the text is the
texture, context is what gives the colour. Neither can be
ignored. Both are important. That interpretation is best
which makes the textual interpretation match the
contextual. A statute is best interpreted when we know
why it was enacted. With this knowledge, the statute
must be read, first as a whole and then section by
section, clause by clause, phrase by phrase and word by
word. If a statute is looked at, in the context of its
enactment, with the glasses of the statute-maker,
provided by such context, its scheme, the sections,
clauses, phrases and words may take colour and appear
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different than when the statute is looked at without the
glasses provided by the context. With these glasses we
must look at the Act as a whole and discover what each
section, each clause, each phrase and each word is
meant and designed to say as to fit into the scheme of
the entire Act. No part of a statute and no word of a
statute can be construed in isolation. Statutes have to
be construed so that every word has a place and
everything is in its place.
36. Same view has been reiterated in S. Gopal
Reddy Vs. State of Andhra Pradesh , (1996) 4 SCC
596, Prakash Kumar Alias Prakash Bhutto Vs.
State of Gujarat, (2005) 2 SCC 409, Anwar Hasan
Khan Vs. Mohd. Shafi & Ors. (2001) 8 SCC 540,
Union of India & Ors. Vs. Filip Tiago De Gama of
Vedem Vasco De Gama , (1990) 1 SCC 277, Reserve
Bank of India v. Peerless General Finance and
Investment Co. Ltd., (1987) 1 SCC 424: (AIR 1987 SC
1023) and N. K. Jain v. C. K. Shah (1991) 2 SCC 495:
(AIR 1991 SC1289).
37. From the over all discussion made above, it is
crystal clear that the object of the Motor Vehicles Act,
1988, either before the amendment or thereafter,
particularly covered by Chapter XI thereof, is to
compensate victims of accidents in case of an insurance
policy being in existence. In view of the interpretation
made, holding that omission of the proviso would
exonerate the insurer of its liability to indemnify at the
first instance would be too wild a proposition and would
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result in creating a situation where the insurer would
be out of scene despite an insurance policy being there
and the claimants would have to again fight for getting
the amount of compensation through execution
proceedings in one way or the other, searching the
owner through the process of Court. In such an event,
the claimants would face further harassment and
nobody knows that despite a money decree in the
nature of an award being there in their favour, as to
whether the claimants would ever be able to get the
compensation realized through recovery proceedings
directly from the owner. Accordingly, the legislative
intent becomes clear and there is nothing to support the
insurer’s arguments flowing from interpretation of
Statute or Causus Omissus. The contention advanced on
behalf of insurer stands discarded.
CONCLUSION
38. The Court, therefore, holds that mere omission
of proviso attached to sub-section (4) of Section 149 of
Motor Vehicles Act, 1988 after its replacement by
Section 150 of Motor Vehicles (Amendment) Act, 2019
(32 of 2019), neither takes away the liability of the
insurer to pay the claimants nor its right to recover the
said amount from the owner. The law to this effect
remains intact and unaffected by Amendment Act, 2019
and, hence, insurer shall continue to indemnify the
owner’s risk in relation to accidents taking place after
01.04.2022 and “PAY & RECOVER” principle will still
continue to govern the field advancing social object of
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the Statute protecting third party interest. Principle of
law laid down by the Supreme Court in National
Insurance Company Limited vs. Swaran Singh and
others, JT 2004 (1) SC 109 has not lost its
significance and binding effect despite omission of
proviso. Held accordingly.
39. Consequently, all the appeals fail and are
dismissed.
Order Date :- 31.01.2025
Sazia
(Kshitij Shailendra, J.)
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