Page 1 REPORTABLE

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

1

Page 2 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.

2

Page 3 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

1

(2003) 2 SCC 223

2

(2008) 1 SCC 423

3

Page 4 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;

4

Page 5 (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

5

Page 6 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

3

(2000) 1 SCC 237

6

Page 7 any accident which occurred or would occur after the 1988 Act came into

force.

12. The correctness of the judgment in Satpal Singh

3

was doubted,

inter alia, in Asha Rani

1

. It was felt that Satpal Singh

3

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 Rani

1

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

7

Page 8 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 Rani

1

,

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

8

Page 9 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 Rani

1

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”.

4

(2003) 2 SCC 339

9

Page 10 14.1. Then in paragraphs 10 and 11 of the Report (Pg. 343), this

Court held in Devireddy Konda Reddy

4

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 Bharatamma

2

, 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:

1

Page 11 “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 Bharatamma

2

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

1

Page 12 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 Rani

1

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

1

Page 13 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

1

Page 14 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:

5

(2004) 2 SCC 1

6

(2004) 8 SCC 517

1

Page 15 “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

7

(2008) 8 SCC 246

1

Page 16 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.

1

Page 17 (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

Kaur

5

and Challa Bharathamma

6

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

Bharathamma

6

.

1

Page 18 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