IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD FRIDAY, THE THIRTIETH DAY OF SEPTEMBER TWO THOUSAND AND ELEVEN HON’BLE SRI JUSTICE G. BHAVANI PRASAD C.M.A. No.3660 of 2003 Between: National Insurance Company Ltd., rep. by its Branch Manager, Gandinagar, Nellore, Nellore District .. Appellant AND Gangavarapu Venkateswarlu and another .. Respondents JUDGMENT: The appeal is directed against the award in O.P. No.489 of 1997 on the file of the Motor Accidents Claims Tribunal-cum-I Additional District Judge, Nellore, dated 07-11-2001. The 1st respondent herein was claimed to be a contract maistry and an agriculturist earning Rs.20,000/- per annum at the age of 28 years by the time of the accident on 26-03-1997. On that day at about 6.30 A.M., he was going on tractor No.AP 26D 3995 and trailer No.AP 26D 3994 sitting on a plank arranged over the mudguard of the tractor on the invitation of the driver of the tractor. They were going to collect earth from a mine bund and on the way, when the tractor driver tried to overtake another tractor in high speed rashly and negligently, the tractor fell into a pit/ditch. The 1st respondent was claimed to have fallen underneath a tractor wheel and to have been dragged to some distance resulting in crush injuries on the waist apart from multiple abrasions and bleeding. The urinary bladder was burst and vertebrae were fractured. In spite of surgery, fixation of nails and wiring, he became a permanently disabled person and the police registered a case in crime No.7 of 1997 about the incident. Hence, he sought for a compensation of Rs.3,50,000/- from the owner and the insurer of the tractor and trailer with interest at 18 per cent per annum and costs. While the owner of the tractor remained ex parte before the Tribunal, the insurer denied all the allegations of the claimant and alleged that the travel by the claimant by sitting on the plank over the mudguard of the tractor was in violation of law and the corresponding policy terms and conditions. The insurer contended the tractor driver to be not having a valid driving licence and the tractor to be having no valid insurance, the insurance being only for agricultural use. While the accident was not reported to it, it is not liable to pay the excessive compensation claimed. The Tribunal framed issues about the responsibility for the accident and the subsisting insurance of the tractor belonging to the 1st respondent to the claim, with the 2nd respondent to the claim and the entitlement of the 1st respondent herein for compensation. The Tribunal examined P.Ws.1 to 4 and marked Exs.A.1 to A.6, C.1 and C.2 during the course of enquiry. The Tribunal rendered the impugned award firstly referring to Ex.A.1 first information report and Ex.A.2 charge-sheet, corroborated by the evidence of the injured petitioner as P.W.1 and concluded that in the absence of any oral or documentary evidence for the respondents, the claims of P.W.1 about the rash and negligent driving of the tractor have to be accepted. The Tribunal went into the quantum of compensation and noted that P.W.2, the doctor, deposed that the claimant received a fracture of pubic rami and fracture of urethra and it became difficult for him to pass urine due to the injury requiring catheterization. The doctor also stated that the 1st respondent herein has difficulty in squatting and cannot walk across agricultural lands and supervise them and sexual disability also was suffered by the claimant and the disabilities were considered to be permanent by P.W.2. The other doctor, examined as P.W.3, also stated about the treatment given at a cost of Rs.15,000/- and the necessity for self-calibration costing Rs.500/- per month even thereafter. The certificates issued by P.W.3, who was examined on commission, specified that the claimant would require a further sum of Rs.20,000/- for future endoscopic surgery. The evidence of P.W.4, another doctor, was about the fixation of steel rods and clamps costing Rs.8,000/- and the necessity for removal of external fixtures later, which was not resorted to by the claimant. P.W.4 also stated that the fracture and rupture led to a life long permanent disability and he estimated that the total treatment would have costed about Rs.1,75,000/-. The Tribunal, therefore, found absolutely no reason to disbelieve the evidence of the three doctors as P.Ws.2 to 4, which disclosed that the 1st respondent herein was permanently disabled by the impact of the accident and towards pain and suffering it was considered reasonable to grant Rs.17,500/-. The period of treatment and disablement was also considered liable to be compensated by Rs.6,000/- and the medical bills to a tune of Rs.1,76,021/- were considered and on an analysis, the certificates issued by Dr. B.S.R. Hospital, Atmakur were excluded from computation and a sum of Rs.91,021/- were awarded under that head. The age of the injured was taken as 28 years referring to Ex.A.3 copy of the charge-sheet showing his age as 26 years and the other circumstances. With reference to the Second Schedule to the Motor Vehicles Act, the appropriate multiplier was arrived at as 18. The annual income was taken as Rs.12,000/- as against the claim of the claimant about earning Rs.20,000/- per annum and taking the disability as cent percent in view of the injuries and consequences, a total of Rs.2,16,000/- was considered awardable towards loss of earning capacity. Interest was considered justified at 12 per cent per annum on the compensation awarded and the Tribunal also considered that in the absence of any evidence from the insurer or the owner, the claimant cannot be considered to be an unauthorized passenger in the tractor nor can he be considered to have violated any terms and conditions of the policy by sitting on the plank in the tractor. Therefore, as the tractor fell due to the rash and negligent driving of the driver, the Tribunal considered it just to award a total sum of Rs.3,30,521/- with interest at 12 per cent per annum from the date of the petition till the date of realization. The insurer challenged the said award in this appeal, contending that the tractor and trailer were insured for agricultural purpose, but was used at the relevant time for transport of persons in violation of the terms and conditions of the policy and when P.W.1 was a maistry under a contractor who engaged some coolies to be taken on the offending vehicle, use of the vehicle against the insurance policy is evident. When the 1st respondent herein was neither driver nor traveller engaged for loading and unloading, the policy cannot cover any responsibility for his injuries or their consequences and there is no basis for considering his disability as cent percent. Interest could not have been awarded at more than 9 per cent and therefore, the insurer desired that the impugned award be reversed. Sri S. Bhupal Reddy, learned counsel representing Sri T. Ramulu, learned standing counsel for the appellant and Sri L.J. Veera Reddy, learned counsel for the 1st respondent are heard. The 2nd respondent is unrepresented before this Court. The points that arise for consideration are about non-liability of the insurer to indemnify the owner of the tractor and trailer for the injuries and their consequences suffered by the 1st respondent herein due to the nature of his travel and the percentage of disability that could have been considered for assessing any compensation and the rate of interest that could have been adopted on the compensation. A copy of the insurance policy made available for perusal of this Court by the learned counsel for the appellant, showed the insurance to be for agricultural purpose only and premium was paid for legal liability to passengers as per the Act Endorsement 12 at Rs.120/- and for driver and/or cleaner as per Endorsement 19 at Rs.15/-. The very references in the impugned award show that the 1st respondent herein, as a contract maistry, engaged the tractor and trailer in question to take coolies on contract basis to a mud laying spot at a mine bund. The travel to the mud laying spot at a mine bund was not stated to be a purpose connected with any agricultural activity. Ex facie, the purpose of travel by the 1st respondent herein and the coolies in the tractor and trailer could not have been considered as for an agricultural purpose covered by the insurance policy and while the 1st respondent herein was neither a driver nor a cleaner, whether he could have been considered as passenger in respect of whom premium was paid under the insurance policy, was also not considered or decided. While the conclusions of the Tribunal about the rash and negligent driving of the tractor and trailer leading to the accident, were not challenged by the insurer in this appeal, the liability to indemnify the 2nd respondent herein of his liability to the 1st respondent herein was denied on the ground of violation of the terms and conditions of the policy firstly due to the vehicle being used for a purpose for which it was not insured and secondly the injured travelling by sitting on the plank placed on the mudguard, which is impermissible either under the relevant provisions of law or under the terms and conditions of the insurance policy. The nature of travel of the 1st respondent herein on the tractor and trailer needs no further probe in this adjudication, when, on the admitted facts, the travel was not for a purpose covered by the insurance policy and the manner in which the 1st respondent herein travelled on the tractor was not in a permissible manner. Therefore, the insurer can reasonably fall back upon the principle of pay and recover under such circumstances. The learned counsel for the 1st respondent herein referred to National Insurance Co. Ltd. v. Challa Bharathamma and others[1], wherein the Apex Court considered, under such circumstances, that it would be proper for the insurer to satisfy the award, though in law it has no liability, and then to recover the amount from the owner. It was, of course, also held that before release of the amount to the claimants, the owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants and the offending vehicle shall be attached, as a part of the security. The learned counsel also referred to the reference made by a two Judge Bench of the Apex Court in National Insurance Company Limited v. Parvathneni and another[2], wherein the two Judge Bench referred to the decisions of the Apex Court which have taken the view that even if the insurance company has no liability, yet it must pay and later on recover it from the owner. Though the Bench expressed some reservations as to the correctness of the said decisions of the Supreme Court and referred the matter to be placed before a Larger Bench, admittedly, the answer to the reference from the Larger Bench of the Apex Court has not so far been rendered and the binding precedents referred to in para 4 of the judgment of the Apex Court laying down the principle of pay and recover, continued to be binding in this regard. Therefore, though the insurer appears to be entitled to claim absence of any responsibility for indemnifying the 2nd respondent herein in respect of the liability under the claim, it has to be also noted that while granting interim stay herein in C.M.P. No.23547 of 2003, the insurer was directed to deposit half of the amount to the credit of the matter, which was permitted to be withdrawn by the 1st respondent herein without furnishing any security. To that extent, in any view, the amount has to be recovered from the owner and even regarding the remaining half of the amount, it will be in the interests of justice to apply the principle laid down in the decisions cited in the second decision referred to above and also the first decision cited above, in which also the insurer was found to have no liability to pay at all, but was still required by the Court to first pay and then recover the amount from the owner. In so far as seeking any security for the amount of compensation from the owner by attaching the offending vehicle or otherwise is considered, it will be open to the insurer to approach the Tribunal concerned for appropriate directions in this regard and also for taking steps to recover the compensation paid to the 1st respondent herein without the necessity of being referred to any separate legal proceeding and no directions need or can be given in this appeal. The application of the principle of pay and recover should, therefore, make the insurer liable for paying the entire amount awarded to the 1st respondent herein and take steps to recover the same from the owner in accordance with law. Coming to the quantum of compensation fixed by the Tribunal so far as the medical expenses are concerned, the analysis was clear and cogent in rejecting the certificates issued by Dr. B.S.R. Hospital, Atmakur as disclosing no expenditure and in permitting only the actual expenditure incurred as seen from Exs.A.4 to A.6 medical bills. The amounts awarded towards pain and suffering and loss of earnings during the period of hospitalization and disablement are, in fact, conservative and not liberal and the calculation of the loss of future earning capacity was based on the age stated in Ex.A.2 charge-sheet in the absence of any other material and the multiplier applied was 18 for the age of 28 years by the time of the accident, which is in accordance with the Second Schedule to the Motor Vehicles Act, 1988 in respect of the petition filed under Section 163-A. The probable income of the injured was also taken at the minimum of Rs.1,000/- per month, which appears to be even lesser than the statutory minimum wages that would have been payable to an unskilled labourer at about the relevant time, while the injured claimed to be a maistry and also an agriculturist by his occupation, which claims of P.W.1 on oath before the Tribunal were uncontroverted. In fact, the Second Schedule presumes even a non-earning person to be notionally earning Rs.15,000/- per annnum. Therefore, the amount of compensation arrived at Rs.3,30,521/- does not appear susceptible to any interference. However, coming to the award of interest at 12 per cent per annum, it may be noted that the precedents from superior Courts during the relevant period generally varied in grant of interest between 9 per cent and 7.5 per cent per annum and it has also to be kept in view that the insurer also is a custodian of public funds and has liability to pay interest from the date of the petition in 1997 till full satisfaction of the award. Therefore, reducing the interest payable to 7.5 per cent per annum will be in the interests of justice. Therefore, while the award has to be modified with reference to the rate of interest, the principle of pay and recover should be applied between the insurer and the owner of the vehicle. Accordingly, the award, dated 07-11-2001 in O.P. No.489 of 1997 on the file of the Motor Accidents Claims Tribunal-cum-I Additional District Judge, Nellore is modified by reducing the rate of interest payable on the compensation from the date of the petition till the date of realization, to 7.5 per cent per annum from 12 per cent per annum and by further directing the insurer to pay the compensation awarded in full to the claimant and recover the same from the owner of the vehicle/the 2nd respondent to the claim. The civil miscellaneous appeal is ordered accordingly without costs. _____________________ G. BHAVANI PRASAD, J Date: 30-09-2011 Svv [1] 2004 ACJ 2094 [2] (2009) 8 SCC 785