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 Singh1. 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.

10 We, 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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