JUDGMENT V.R. Kingaonkar, J.
Page 1789
1. By this common Judgment, these appeals are being disposed of together. For, a short common question involved in all these appeals is as to whether the insurer can be directed to pay compensation amount determined by Motor Accident Claims Tribunal, though not liable to pay due to breach of the policy condition, and thereafter to recover the same from owner of the offending vehicle.
Page 1790
2. The Motor Accident Claims Tribunal held that a Matador bearing Registration No. MH-18-C-7189 and truck bearing Registration No. DL-1-GB-0314 were involved in the vehicular accident. The accident occurred due to collision of the two vehicles on Bombay-Agra road on 3.1.2000. There is no dispute about the fact that the vehicular accident was so ghastly that 10 persons died and 4 were injured as a result thereof. All of them were travelling in the matador vehicle at the relevant time. The matador vehicle was insured with the appellant. The deceased persons and injured claimants were travelling in the metador vehicle as gratuitous passengers. The Tribunal held that the insurance company (appellant) was not liable to pay compensation to the legal representatives of the deceased and the injured claimants. In spite of such finding, the Tribunal directed that the compensation shall be paid by the owner and the insurer, jointly and severally. The Tribunal further directed that the appellant would be entitled to recover the said amount paid towards satisfaction of the award from owner of the matador vehicle.
3. The question involved in the group of these appeals is as below:
Whether the Tribunal has any statutory power to direct insurer to pay amount of compensation for which it is exonerated from liability in view of fundamental breach of the policy conditions, and direct that it may be subsequently recovered from the insured?
My finding thereon is in the negative. The reasons are discussed hereinafter.
4. Mr.Gatne, learned Advocate appearing for the appellant (insurer), strenuously contended that such directions are given by the Apex Court in some of the cases, particularly in case of "National Insurance Co.Ltd. v. Baljit Kaur and Ors." 2004 AIR SCW 212, in the exercise of its extra ordinary jurisdiction but the same cannot be so adopted by the Tribunal in the exercise of the statutory powers available under the Motor Vehicles Act, 1988. He would submit that the ratio of National Insurance Co.Ltd. v. Baljit Kaur and Ors. (supra) cannot be outstretched to the extent that in all the similar cases, such direction can be issued by the Tribunal. He would further submit that the power of the Tribunal is circumscribed by the statutory provisions of the Motor Vehicles Act and the claim petitions are required to be tried as per the procedure enumerated in Chapter XII of the said Act. He contended that the Tribunal committed patent error while giving such directions in the group of present appeals, when it has been held that the goods vehicle (matador) was being used against the carriage permit, in breacnh of terms of the insurance policy. He pointed out that the matador vehicle could not be used for transportation of gratuitous passengers or transportation of passengers for hire or reward. Mr.Gatne referred to various authorities and contended that the directions given by the Tribunal are improper and illegal. He urged, therefore, to set aside such part of the impugned award. As against this, learned Advocates Mr.Mukul Kulkarni, Mr.P.S.Patil, Mr.V.D.Jomde, Mr.R.C.Patil, Mr.S.K.Shinde, Mr.V.B.Patil and Mr.S.D.Katkar would argue that the directions are quite legal and proper. It is contended that the Tribunal could ensure that the claimants were not required to unnecessarily wait for long time to get the due compensation.Page 1791 Mr. Kulkarni seeks to rely on "National Insurance Co.Ltd. v. Prakash Sakharam Dudhankar and Ors." I(2006) ACC 628, "Oriental Insurance Co.Ltd. v. Shri Nanjappan and Ors." 2004 (1) Supreme Court 1061 and "National Insurance Co.Ltd. v. Challa Barathamma and Anr." .
5. In case of National Insurance Co.Ltd. v. Challa Bharathamma and Anr. (supra), 'insurer' called in question legality of the Judgment rendered by a Single Judge of the Andhra Pradesh High Court holding insurer liable to indemnify for the award of compensation. The three persons involved in the vehicular accident were travelling in an auto rickshaw, which met with accident on 9.5.1992. Two of them had lost their lives while one was seriously injured. The Apex Court held that there was infraction of the terms of the insurance policy. The Apex Court held that the High Court was not justified in holding the insurer liable. The Apex Court proceeded to observe as follows:
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 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 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 concerned Regional Transport Authority. 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 realization 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.
6. A plain reading of the aforementioned observations would go to show that such directions were given in view of the conclusion that purport of beneficial legislation could be considered and the claimant's award can be satisfied at the earliest by giving such directions. Still, however, the Apex Court has not held that in each and every case, such directions could be given by the Tribunal as a matter of course. There is no observation of the Apex Court, pointed out to me, which can be said to lay down law in this behalf.
Page 1792
7. In "New India Assurance Co.Ltd. v. Asha Rani" 2003 (2) SCC 223, Hon'ble Supreme Court overruled its earlier decision in New India Assurance Co. v. Satpal Singh holding that the Insurance Company would not be liable for paying compensation to passenger in a goods vehicle, whether he was travelling as an owner of the goods when that vehicle meets with an accident.
The decision of Asha Rani's case was followed by Hon'ble Supreme Court in "Oriental Insurance Company Co.Ltd. v. Devireddy Konda Reddy and Ors." holding that, the provisions of the Act do not enjoin any statutory liability on a 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. Hon'ble Supreme Court also referred the case of National Insurance Co.Ltd. v. Ajit Kumar and Ors. 2003 (4) All M.R.758 (SC) in this regard. Similarly in "National Insurance Co.Ltd., Chandigarh v. Micolletta Rohtagi and Ors." , the scope of Section 149(2) of the Act is elaborately considered.
8. At this juncture, I may usefully quote relevant Sub-clause (2) of Section 149 for ready reference.
149. Duty of insurer to satisfy judgments and awards against persons insured in respect of third party risks:
(1) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxx (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: (1) 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 Page 1793
(b) for testing, or organised racing and speed
(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."
9. What is the meaning of expression "third party" under the Motor Vehicles Act, 1988 ? Is it that anyone who is not the insurer and insured can be regarded as a third party ?' That does not appear to be the true meaning of the expression "third parties" as envisaged under the relevant provisions of the Act. In "Dr.T.V. Jose v. Chacko P.M.alias Thankachan and Ors." (2001) 8 Supreme Court Cases 748, the Apex Court considered the Clause (1) of Section II of the Insurance Policy produced in the given case. That was the third party policy. The Apex Court observed:
19. This clearly shows that the policy is a third-party policy. The terms and conditions governing this policy are not on record. What was shown to the Court were terms and conditions of a comprehensive policy relating to private cars. These cannot apply to this policy. In the absence of terms and conditions governing this policy it is not possible to accept the submission of Mr Iyer that this policy covered liability to occupants of the car. As has been set out hereinabove, the law on this subject is clear, a third-party policy does not cover liability to gratuitous passengers who are not carried for hire or reward. The 8th respondent company will, therefore, not be liable to reimburse the appellant.
The exprssion "third party" needs to be determined in each case with reference to the terms of the insurance policy. If the risk of a person is covered under the contract of insurance, then he/she would be the third party regarding whom the insurance cover can be used and the insurer will be liable to indemnify such a person or his legal representatives/ dependents. However, the person, who is not covered under terms of the insurance policy cannot be treated as "third party" within the meaning of the provisions of Section 147 and Section 149 of the Motor Vehicles Act, 1988.
10. It is amply clear that Sub-clause (2) carves out an exception in respect of the liability of the insurer, which is enumerated in Sub-clause (1) of Secton 149. The immunity available to the insurer is under special circumstances. It is also manifest that the insurer has a duty to satisfy the Page 1794 award against persons insured in respect of third party risk. Obviously, a question is as to whether gratuitous passengers or passengers allowed to travel in a goods vehicle for hire or reward can be regarded as "third parties" vis-a-vis, the insurer. They are not the persons, who are totally unconnected with the insurance contract. They travel in the insured vehilce with connivance or consent of the owner or representative of the owner, viz., the authorised driver. So, their rights stem from their oral or written agreement, as the case may be, with the owner. In other words, they are vicariously concerned with the insurance agreement through the owner. They are not third parties as such. The gratuitous passenger cannot be regarded as third party only because he is not signatory to the insurance contract. For this reason, the insurer would be placed outside the purview of Section 149(2) of the Motor Vehicles Act. Hence, the insurer cannot be held liable even for the purpose of satisfying the award in respect of the gratuitous passengers, who are not third parties qua the owner (insured). The necessary corollary would be that in such a case, M.A.C.T. cannot give direction to indemnify the gratuitous passenger or the dependents of such a passenger, who was travelling in the goods vehicle.
11. In "Oriental Insurance Co.Ltd. v. Brij Mohan and Ors." 2007 AIR SCW 3734, the Apex Court held that insurer was not liable to pay compensation in respect of passenger, who was travelling on tractor. The Apex Court held that the tractor was insured only for carrying out agricultural work which would not include digging of earth and taking it in trolley to brick kiln and, therefore, there was no liability to the insurer to pay the compensation. It is worthwhile to note that the Apex Court gave directions to pay compensation in favour of insured - respondent therein in the exercise of its extra ordinary jurisdiction under Article 142 of the Constitution of India. The Apex Court observed:
It is well settled that in a situation of this nature this Court in exercise of its jurisdiction under Article 142 of the Constitution of India read with Article 136 thereof can issue directions for doing complete justice to the parties.
The aforementioned observations of the Apex Court would clarify nature of the directions given in particular set of fact situation. The Apex Court came to the conclusion that the injured was a poor labour and had suffered grievous injury. The Apex Court further found that the amount of compensation awarded in his favour appeared to be on a lower side. The directions given in exercise of extra ordinary jurisdiction, by the Apex Court, cannot to be construed as ratio laid down in this behalf. It is well settled that the Sub-ordinate courts and the Tribunal cannot exercise such extra ordinary power.
12. Once it is noticed that the directions to indemnify the claimants who are not entitled otherwise to claim from insurer would fall in the domain of the extra ordinary powers of the Apex Court, then it follows that the same cannot be treated as a binding precedent. In "Ram Prakash Singh and Ors. v. State of Bihar and Ors." 2006 AIR SCW 5312, the Apex Court clarified such legal position. The Apex Court observed:
Page 1795 The tenor of the said order, which is not preceded by any reasons or consideration of any principle, demonstrates that it was an order made under Article 142 of the Constitution on the peculiar facts of that case. Law declared by this Court is binding under Article 141. Any direction given on special facts, in exercise of jurisdiction under Article 142, is not a binding precedent. Therefore, the decision in Govindarajulu cannot be the basis for claiming relief similar to what was granted in that case. A similar contention was negatived by the Constitution Bench in Umadevi (supra)
The fact that in certain cases, the Court directed regularization of the employees involved in those cases cannot be made use of to found a claim based on legitimate expectation".
I need not dialate on this aspect anymore. The legal position is that when the directions of the Apex Court are given in a particular case, in the exercise of its extra ordinary jurisdiction, the same cannot be treated as binding precedent as such.
13. In "Oriental Insurance Co.Ltd. v. Meena Variyal and Ors." 2007 AIR SCW 2362, the Apex Court held that the insurance company was not liable to indemnify owner of the car vehicle involved in the accident because, the deceased, who was Regional Manager of the Company and owner of the vehicle, was himself driving the vehicle of the company and the accident occurred due to his own negligence. The Apex Court observed:
7. We must say that one would have expected the high Court to apply its mind to the question arising, in a better manner and to specifically answer the question that arose for decision in the case. For instance, we may observe that it has not reversed the finding of the Tribunal that the deceased was himself driving the vehicle. Then, what was the position? The position was that a Regional Manager of the Company, which was owner of the vehicle, was himself driving the vehicle of the Company and during the course of it, he died in an accident, whether the accident occurred due to his negligence or otherwise. It appears to us that mere going by some decision or other, without appreciating the facts in a given case, in the light of the law, if any, declared by this Court, does not lead a court or Tribunal to a correct conclusion in the normal course.
The Apex Court held that the ratio in case of "National Insurance Co. Ltd. v. Swaran Singh and Ors" , and that in case of "Malla Prakasarao v. Malla Janaki and Ors." could not be applied to the case of "Meena Variyal". The Apex Court observed:
It is difficult to apply the ratio of this decision to a case not involving a third party. The whole protection provided by Chapter XII of the Act is against third party risk. Therefore, in a case where a person is not Page 1796 a third party within the meaning of the Act, the insurance company cannot be made automatically liable merely by resorting to the Swaran Singh (supra) ratio.
It was held, therefore, that the insurance company was not liable to indemnify the insured and is also not obliged to satisfy the award of the Tribunal/Court and then have recourse to the insured, the owner of the vehicle. The Apex Court held that the High Court committed error in modifying the award of the Tribunal in the context.
14. In "National Insurance Co.Ltd. v. Bommithi Subhayamma and Ors." 2005 (2) ACJ 721, the Apex Court had occasion to consider the award rendered by the Motor Accident Claims Tribunal, in which the deceased was travelling in a lorry as a gratuitous passenger. The Apex Court held that the insurer was not liable to pay the compensation to gratuitous passenger travelling in the goods vehicle. The Apex Court categorically directed that the claimants would be entitled to recover the amount of compensation granted in their favour by the Motor Accident Claims Tribunal from the owner of the vehicle. This case may be usefully referred to say that the view of the Apex Court is that in each case the insurer need not be directed to satisfy the award and then proceed to recover the amount from the insured (owner).
15. Mr.Kulkarni invited my attention to observations in "Oriental Insurance Co.Ltd. v. Nanjappan and Ors." (supra). In the given case, the Apex Court set out the procedure to be followed while effecting recovery of the awarded amount by the insurer in the same proceedings. The question herein is not concerning procedure to be followed while effecting the recoveries from the insured when the direction is issued to the insurer to first satisfy the award. In "Sri Pramod Kumar Agrawal and Ors. v. Smt. Mushtari Begum and Ors." , the Apex Court held that directions could be given in accordance with observations in Baljt Kaur's case (supra). The directions were accordingly given to the insurer to first satisfy the award and lateron to recover the amount from the insured.
16. Much emphasis was laid on Single Bench Judgment of this Court in "National Insurance Co.Ltd. v. Prakash Sakharam Dudhankar and Ors." (supra). Mr.Kulkarni would submit that this Court has taken a view in the above case that such kind of directions can be given. The learned Single Judge (Kharche, J.) held that since the deceased was travelling in goods vehicle, the insurance company was not statutorily liable to pay compensation. The learned Single Judge further held that in view of Baljit Kaur's case, "the interest of justice will be served, if the insurance company is directed to satisfy the award and then recover the same from the owner of the vehicle." The specific observations of the learned Single Judge may be reproduced:
The question whether the Insurance Company is liable to satisfy the award in view of Section 168 of the Motor Vehicles Act was not the Page 1797 subject for consideration of the Supreme Court in the case of National Insurance Co.Ltd., v. Boomithi (supra) and thus the decision of the Larger Bench in the case of National Insurance Co.Ltd. v.Baljit Kaur (supra), is occupying the field as on today and, therefore, it is obvious that the interest of justice will be served if the Insurance Company is directed to satisfy the award and then recover the same from the owner of the vehicle and 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.
17. Significantly, in another case of "National Insurance Co.Ltd., v. Diwakar s/o Daulatrao Rohankar and Ors." 2005 (4) Mh.L.J.773, the same learned Judge (Kharche, J.) clearly held that the claimant would be entitled to recover the amount only from the owner. It is observed:
12. The learned Counsel for the Insurance Company has rightly contended that in view of the decision of the Apex Court in National Insurance Co.Ltd. v. Bommithi Subbhayamma, cited supra the Insurance Company is not liable to pay compensation first to claimant and then to get it recovered from the owner as it is the owner of the goods vehicle who alone is liable to pay compensation.
Thus two conflicting views of the Single Bench are available. In my view, the view expressed in "National Insurance Company v. Diwakar s/o Daulatrao Rohankar and Ors." (supra) reflects correct position of Law and is acceptable. This is so since the directions in Baljit Kaur's case (supra) appear to have been issued in exercise of extra ordinary jurisdicti9on available only to the Apex Court and could not be, therefore, basis of Prakash Sakharam Dudhankar's case (supra).
18. Clinching question is whether really the Apex Court, in "National Insurance Co. Ltd. v. Baljitkaur and Ors." 2004 ACJ 428 has laid down any ratio in the context of desirability to issue directions that the amount of compensation, even when the insurer is not liable to indemnify the claimant, ought to be deposited by the insurer and lateron it may be recovered in the same proceeding from the insurer. The relevant observations are enumerated in paragraph 21 of the Judgment, rendered by the Apex Court. It is observed:
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 Page 1798 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 decisions of this Court in Satpal Singh 2000 ACJ 1 (SC). The said decision has been overruled only in Asha Rani 2003 ACJ 1 (SC). 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 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.
19. It is conspicuous that the directions were given in respect of the procedure for recovery in the same proceedings having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988. The directions in the context of determination of such a dispute after depositing the amount by the insurer are subject matter of the scope of Section 168 of the Motor Vehicles Act, 1988. The Apex Court did not, however, lay down that in all such cases, the insurer shall first be liable to pay and then to recover it from the insured. The directions in Baljit Kaur's case are given when the Apex Court came to the conclusion that the interest of justice would be subserved if the appellant (insurer) would be 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. Needless to say, in a particular case, when such directions are given to meet ends of justice, then same are given in exercise of extra ordinary jurisdiction of the Apex court. The same powers, which are available to the Apex Court under Article 136 and under Article 142 of the Constitution, are not available to the Tribunal or High Court.
20. The purposive interpretation of Section 168 of the Motor Vehicles Act would make it manifest that the provision relates to power of the Tribunal to determine the question of justness of the award and quantum of compensation. It may be said that Section 168 is enabling provision but it does not empower the Tribunal to issue direction to the insurer to pay the amount of compensation, though a finding is reached that the insurer is not liable to pay such amount on account of fundamental breach of the Page 1799 terms of insurance policy. Considering all the relevant aspects of the matter and having regard to the case law referred to above, I have no hesitation in holding that the directions given by the Tribunal in the bunch of present appeals are incorrect, improper and illegal. The impugned order is, therefore, unsustainable.
21. In the result, the appeals are allowed to the extent of the directions issued by the Tribunal in each of the award, whereby the insurer is directed to pay/deposit the awarded amount and then to recover the same from the insured. The relevant part of the directions under the final order of the award is set aside. The final order holding the insurer jointly and severally liable is also set aside. It is made clear that the merits of the award are otherwise not considered.