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CASE NO.: Appeal (civil)  1012 of 2004

PETITIONER: Oriental Insurance Co. Ltd.  

RESPONDENT: Shri Nanjappan and Ors.  

DATE OF JUDGMENT: 13/02/2004

BENCH: DORAISWAMY RAJU & ARIJIT PASAYAT.

JUDGMENT: J U D G M E N T

(Arising out of SLP (C)No. 6631/2003)

ARIJIT PASAYAT,J

       Leave granted.

       Oriental Insurance Company Limited (hereinafter  referred to as an ’insurer’) calls in question legality of  the judgment rendered by a Division Bench of the Madras High  Court holding that the respondents (hereinafter referred to  as the ’claimants’) were entitled to compensation from the  owner of the vehicle (described hereinafter as ’insured’)  which was the subject matter of insurance with the appellant  and that the insurer had the liability to pay the  compensation by way of indemnification.

       The Motor Accident Claims Tribunal and Subordinate  Court, Tirupur (hereinafter referred to as the ’Tribunal’)  had held that the liability was of the insured alone, and  the insurer had no liability. In appeal, for accepting the  case of the respondents-claimants the High Court held that  the decision of this Court in New India Assurance Company v.  Satpal Singh and Ors. (2000 (1) SCC 237)  was applicable. It  has to be noted that the accident took place on 15.9.1990  and the Claim Petition was filed under the Motor Vehicles  Act, 1988 (in short the ’Act’).

       In support of the appeal, learned counsel for the  insurer submitted that the judgment in Satpal Singh’s case  (supra) has been reversed in New India Assurance Co. Ltd. V.  Asha Rani (2003 (2) SCC 223) and the said decision was  followed in Oriental Insurance Co. Ltd. V. Devireddy Konda  Reddy (2003 (2) SCC 339).   

       Learned counsel for the respondents-claimants on the  other hand submitted that though the view in Satpal Singh’s  case (supra) has been reversed, yet in a recent decision in  M/s National Insurance Co. Ltd. V. Baljit Kaur and Ors.  (2004 (1) SCALE 124) it has been held that it would be  equitable if the insurance company pays the amount of  compensation to the claimant and recovers it from the  insured.  

       It has to be noted that the insured did not appear  before the High Court and also has not appeared in this  Court in spite of service of notice.

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       The view of the High Court cannot be maintained in view  of what has been stated in Asha Rani’s case (supra) and  Devireddy’s case (supra). To that extent the judgment of the  High Court is unsustainable. At the same time, the  observations of this Court in Baljit Kaur’s case (supra)  also need to be noted. In para 21 of the judgment, it was  observed as follows:

       "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 (supra). The said decision  has been overruled only in Asha Rani  (supra). We, therefore, are of the  opinion that the interest of justice  will be sub-served 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 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."

       Therefore, while setting aside the judgment of the High  Court we direct in terms of what has been stated in Baljit  Kaur’s case (supra) that the insurer shall pay the quantum  of compensation fixed by the Tribunal, about which there was  no dispute raised, to the respondents-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 concerned  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

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favour of the insurer. Before release of the amount to the  insured, 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 concerned Regional Transport authority.  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.