REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2009

(Arising out of SLP (C) No.3372 of 2007)

New India Assurance Co. Ltd. … Appellant

Versus

Kusum & Ors. … Respondents

WITH

CIVIL APPEAL NO. OF 2009

(Arising out of SLP (C) No.4176 of 2007)

United India Insurance Co. Ltd. …. Appellant

Versus

Darshan Singh and others …. Respondents

J U D G M E N T

S.B. Sinha, J.

1.Leave granted.

2.These appeals involving common questions of law and fact were

taken up for hearing together and are being disposed of by this common

judgment.

3.We would, however, notice the fact of the matter from CA @ Special

Leave Petition (C) No.3372 of 2007.

On or about 14.7.1999, respondent No.3 was traveling in a bus

bearing Registration No.PB-23-0189 which met with an accident as a result

of which the deceased, Sanjay Kumar, got injured and while being taken to

the hospital, he succumbed thereto. The said bus was owned by New Patiala

Bus Service (Regd.) Sirhind, the respondent No.4 herein.

Legal representatives of the deceased filed a claim petition before the

Motor Accidents Claim Tribunal which by its order dated 4.12.2001

awarded a sum of Rs.2,68,800 by way of compensation. The learned

Tribunal held that the driver of the bus had not been possessing a valid

driving licence. The primary liability to pay the said amount was held to be

that of respondent No.3 and 4, the driver and owner of the bus. The

appellant was directed to deposit the amount directing that the company

may recover the same from respondent Nos.3 and 4. Pursuant to the said

observations, the appellant company made payments to the claimants on or

about 15.3.2002 by depositing a sum of Rs.3,03,552/- by cheque.

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4.On or about 8.5.2002 in terms of the order of the Tribunal, an

Execution Petition was filed, stating :

“11.That in the claim petition No.82-

T/99/26.9.2000 titled as Kusum widown of Sanjay

Kumar and others Vs. Raghbir Singh alias Prince

and others, the Hon’ble Court was pleased to allow

the claim petition partly on 4.12.2001 that the

claimants are held entitled to Rs.2,68,800/- as

compensation to be shared equally by them. The

claimants are also entitled to interest at the rate of

9 per cent per annum from the date of claim

application till its actual realization. Though the

primary liability to pay the amount of

compensation is that of respondent No.1 and 2

jointly and severally, however, it will also be open

to the Claimants to recover the same from

Respondent No.3 Insurance Company. As already

held above, the insurance company would be at

liberty to recover the same from Respondent No.1

and 2 in terms already mentioned in the preceding

paragraphs.

12.That as per the directions of this Hon’ble

Court, the DH/Applicant. Insurance Company has

deposited Rs.3,03,552/- in the Hon’ble Court on

30.3.2002 and DRO of this amount has also been

issued by this Hon’ble Court.

13.That as per the terms and conditions of the

award, the DH/Applicant is entitled to recover the

deposited amount of Rs.3,03,552/- along with 9%

interest on the deposited amount from 31.3.2002

onwards.

14.That the JDs/Respondents have not paid

even single penny to the Claimants or to the

DH/Applicant so far.

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15.Hence, this execution application and it is

prayed that the execution application may please

be accepted. The JDs/Respondents may kindly be

directed to pay the amount of Rs.3,03,552/- along

with future interest at the rate of 12% on the

deposited amount till its actual realization failing

which the property of the JDs/Respondents may be

attached, auctioned to satisfy the award amount

and/or JDs/Respondents in the civil person as per

law.”

5.On receiving the said notice, the respondent No.3 by filing an

objection to the said Execution Petition raised a question that the said

Execution Petition was not maintainable and, in fact, a civil suit is required

to be filed for recovery of the amount. The said objection of Respondent

No.4 was sustained by the Executing Court by a judgment and order dated

12.6.2003, holding :

“I have considered the aforesaid case law cited at

the bar. Authority cited as un-reported Judgment

of the Hon’ble Delhi High Court, cited by the

learned counsel for Insurance Company – knows

decree-holder is not applicable to the facts of the

case in hand. In this case, liability of insurance

company was limited to the extent of Rs.15,000/-

which was ordered to be recovered from the owner

and it was observed that on the application of the

insurer the claim tribunal is supposed to issue a

certificate for recovery of the excess amount paid

by the Insurance Company to the collector and

collector is supposed to recover the same in the

same manner as arrears of land revenue from the

insured. Award passed in favour of the LRs of the

deceased can’t be treated as decree in favour of

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Insurance Company. Insurance Company can

effect recover of the amount from the objector

through a regular civil suit as per the observations

of our own Hon’ble High Court reported in 2002-

1) PLR Page 39 and (2001-3) PLR Page 813 –

Supra by the learned counsel for the objector.

Further, proceedings in claim cases are of

summary nature for which no strict proof was

required but in the regular suit procedure for

providing document is strictly as per law. Thus,

execution application being not maintainable

stands dismissed. However, Insurance Company

has an independent right to recover the amount

from insured (Owner and Driver) as per award

through regular civil suit. File be consigned.”

6.An application under Article 227 of the Constitution of India filed

thereagainst by the appellant has been dismissed by the High Court by the

impugned judgment upon considering the decision of this Court in Oriental

Insurance Company Ltd. v. Shri Nanjappan & Ors. [(2004) 13 SCC 224],

stating :

“The reading of the judgment shows that the

Hon’ble Supreme Court in the facts and

circumstances of that case had directed that the

Insurance Company can recover the amount from

the insured and the Insurance Company shall not

be liable to file a separte suit. This cannot be said

to be laying down a precedent that in all cases

where the liability is fixed on the Insurance

Company, it can always recover the amount from

the owner/driver. In the given case, it is still open

to the owner to dispute the liability on the plea that

he had taken all necessary steps to see that the

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driver had a licence and he had no means to find

out that the same was fake.”

7.An owner of a vehicle in terms of the provisions of the Motor

Vehicles Act is legally obligated to get the vehicle insured. The rights and

liabiltis of the parties to the contract of insurance would be governed thereby

subject to the provisions of the Motor Vehicles Act. One of the conditions

which would make the insurance company liable to reimburse the owner of

the vehicle in respect of payment of the amount of compensation in favour

of a claimant is that the driver of the vehicle must possess a valid driving

licence. The owner has a duty to see that a vehicle is driven by a person

having a valid driving licence. The licence of the driver of the said bus was

proved to be invalid. The owner did not raise any contention that he has

used due diligence in allowing the driver to drive the vehicle.

8.The courts, however, keeping in view the social justice doctrine in

mind wherefor the Act was enacted and in the interest of the claimants had

been passing such orders. The High Court has noticed the decision of this

Court in Nanjappa (supra), wherein it was held :

“8. Therefore, while setting aside the judgment of

the High Court we direct in terms of what has been

stated in Baljit Kaur case that the insurer shall pay

the quantum of compensation fixed by the

Tribunal, about which there was no dispute raised,

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to the respondent claimants within three months

from today. For the purpose of recovering the

same from the insured, 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 vehicle shall

be issued a notice and he shall be required to

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 insured, 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 realization by disposal of the securities to

be furnished or from any other property or

properties of the owner of the vehicle, the insured.

The appeal is disposed of in the aforesaid terms,

with no order as to costs.”

As noticed hereinbefore, similar directions were also issued in

National Insurance Co. Ltd. v. Baljit Kaur [(2004) 2 SCC 1] in the following

terms :

“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

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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

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. The said decision has

been overruled only in Asha Rani2. 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.”

Yet again, in National Insurance Co. Ltd. v. Kusum Rai [2006) 3

SCALE 519], it was held :

“Thus, although we are of the opinion that the

appellant was not liable to pay the claimed amount

as the driver was not possessing a valid licence and

the High Court was in error in holding otherwise,

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we decline to interfere with the impugned award,

in the peculiar facts and circumstances of the case,

in exercise of our jurisdiction under Article 136 of

the Constitution but we direct that the appellant

may recover the amount from the owner in the

same manner as was directed in Nanjappan

(supra).”

Yet again in Oriental Insurance Co. Ltd. v. Zaharulnisha [(2008) 12

SCC 385], this Court held :

“22. In the result, the appeal is allowed to the

limited extent and it is directed that the appellant

Insurance Company though not liable to pay the

amount of compensation, but in the nature of this

case it shall satisfy the award and shall have the

right to recover the amount deposited by it along

with interest from the owner of the vehicle viz.

Respondent 8, particularly in view of the fact that

no appeal was preferred by him nor has he chosen

to appear before this Court to contest this appeal.

This direction is given in the light of the judgments

of this Court in National Insurance Co. Ltd. v.

Baljit Kaur and Deddappa v. National Insurance

Co. Ltd.”

Again in Dedappa v. National Insurance Co. Ltd. [(2008) 2 SCC 595],

it was held :

“26. However, as the appellant hails from the

lowest strata of society, we are of the opinion that

in a case of this nature, we should, in exercise of

our extraordinary jurisdiction under Article 142 of

the Constitution of India, direct Respondent 1 to

pay the amount of claim to the appellants herein

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and recover the same from the owner of the

vehicle viz. Respondent 2, particularly in view of

the fact that no appeal was preferred by him. We

direct accordingly.”

9.Whenever, thus, a direction has been issued by the Tribunal, it must

be held to have been done in exercise of its inherent power. It would be

travesty of justice, if the Insurance Company which is directed to pay the

amount and then face immense difficulties in executing a decree.

10We, therefore, are of the opinion that the impugned judgments cannot

be sustained. They are set aside accordingly. Appeals are allowed, the

executing courts are directed to proceed with the execution and dispose of

the same as expeditiously as possible.

.……………………….J.

[S.B. Sinha]

……………………..…J.

[Deepak Verma]

New Delhi;

August 4, 2009

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