# The Oriental Insurance Co. Ltd v. Smt. Nirala Shukla & Ors

- **Citation:** (2014) 1 ILRA 422
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2014-04-23
- **Case number:** First Appeal from Order No. 1135 of 2010
- **Bench:** Devi Prasad Singh, Ashwani Kumar Mishra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-oriental-insurance-co-ltd-v-smt-nirala-shukla-ors-42821
- **Pages:** 5

## Headnote

Act-1989-Section-173-
Appeal against award of claim Tribunal
fastened liability of Insurance Company to
pay the awarded amount-with liberty to
recover from vehicle owner-subject to
validity of insurance policy-submission
that instead of giving liberty to recover
from owner of vehicle-directly liability
should be cost upon vehicle owner itselfheld-misconceived-in
view
of
specific
provision under section 149(c) of Act
coupled with judgment of Apex CourtTribunal rightly issued direction-warrant
no interference-appeal dismissed.

Held:Para-13
Keeping in view the statutory mandate
as contained in Section 149 of the Motor
Vehicles Act, coupled with the judgment of
Hon'ble Supreme Court, we are of the view
that
the Tribunal has
committed
no
illegality
in
directing
the
appellant
Insurance
Company
to
pay
the
compensation and thereafter, recover the
same from the owner of the vehicle. Apart
from the above, Section 174 provides to
recover the compensation as arrears of land
revenue. The procedure prescribed under
Section 174 Motor Vehicles Act, is not
applicable
to
the
cases
where
compensation is sought to be recovered
from the owner of the vehicle. In case the
Insurance Company after satisfying the
award proceed to recover the outstanding
dues from the owner, then the provisions
contained in Section 174 of the Motor
Vehicles Act shall equally be applicable to
recover the outstanding dues as arrears of
land revenue from the owner of the vehicle.
It shall speed up the recovery process and
satisfy the award within reasonable period.

Case Law Discussed:
2013(3) T.A.C. 29(S.C.); 2009(4) T.A.C. 382(S.C.);
2013 ACJ 1944(S.C.).

## Text

422 INDIAN LAW REPORTS ALLAHABAD SERIES

13. In view of the above, we are of the
view that the petitioner is entitled for the
interest under Section 11BB of the Act on
the refunded amount, if the amount has
been refunded after three months from the
date of receipt of the application. Having
regard to the facts and circumstances, of the
present case, we are not impressed with the
argument of learned counsel for the
petitioner that the petitioner is entitled for
interest on interest.

14. In the result, the writ petition is
allowed in part. The authority concerned
is directed to calculate the amount of
interest under Section 11BB of the Act
within a period of one month and pay the
same within another period of one month
in accordance to law.
--------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 23.04.2014

BEFORE
THE HON'BLE DEVI PRASAD SINGH, J.
THE HON'BLE ASHWANI KUMAR MISHRA, J.

First Appeal from Order No. 1135 of 2010
Alongwith FAFO No. 977 of 2010 and FAFO
No. 1004 of 2010

The Oriental Insurance Co. Ltd. ..Appellant
Versus
Smt. Nirala Shukla & Ors. ...Respondents

Counsel for the Appellant:
Sri Vashu Deo Mishra, Sri Sandeep Kumar
Agarwal, Sri Vishal Tahlani

Counsel for the Respondents:
--

Motor
Vehicle
Act-1989-Section-173-
Appeal against award of claim Tribunal
fastened liability of Insurance Company to
pay the awarded amount-with liberty to
recover from vehicle owner-subject to
validity of insurance policy-submission
that instead of giving liberty to recover
from owner of vehicle-directly liability
should be cost upon vehicle owner itselfheld-misconceived-in
view
of
specific
provision under section 149(c) of Act
coupled with judgment of Apex CourtTribunal rightly issued direction-warrant
no interference-appeal dismissed.

Held:Para-13
Keeping in view the statutory mandate
as contained in Section 149 of the Motor
Vehicles Act, coupled with the judgment of
Hon'ble Supreme Court, we are of the view
that
the Tribunal has
committed
no
illegality
in
directing
the
appellant
Insurance
Company
to
pay
the
compensation and thereafter, recover the
same from the owner of the vehicle. Apart
from the above, Section 174 provides to
recover the compensation as arrears of land
revenue. The procedure prescribed under
Section 174 Motor Vehicles Act, is not
applicable
to
the
cases
where
compensation is sought to be recovered
from the owner of the vehicle. In case the
Insurance Company after satisfying the
award proceed to recover the outstanding
dues from the owner, then the provisions
contained in Section 174 of the Motor
Vehicles Act shall equally be applicable to
recover the outstanding dues as arrears of
land revenue from the owner of the vehicle.
It shall speed up the recovery process and
satisfy the award within reasonable period.

Case Law Discussed:
2013(3) T.A.C. 29(S.C.); 2009(4) T.A.C. 382(S.C.);
2013 ACJ 1944(S.C.).

(Delivered by Hon'ble Devi Prasad Singh, J.)

1. These three appeals under Section
173 of Motor Vehicles Act, contain the
same controversy and the impugned
award dated 7.5.2010 delivered by the
Motor Accident Claims Tribunal in Claim
Petition No.282 of 1997 and judgment
and award dated 7.5.2010 in Claim
Petition
No.377
of
1997.
1 All] The Oriental Insurance Co. Ltd. Vs. Smt. Nirala Shukla & Ors.

423

2. The appellant Oriental Insurance
Company Limited, Lucknow, is aggrieved by
the directions issued by the Tribunal to
recover the compensation from the owner of
the vehicle whereas, the claimant respondents
while preferring appeal, make prayer for
enhancement of compensation. Since all the
three appeals relate to same award, hence they
are decided by the present common judgment
with the consent of parties counsel.

3. In brief, when on 26.4.1997, when
the deceased Amit Kumar Shukla along
with his father Pradeep Kumar Shukla,
and mother Smt. Nirala Shukla as well as
sister Km. Arjita, was on way to residence
on
Scooter
No.UAG-277,
from
Jankipuram to Daliganj, in the night at
about 8:45 p.m., a Mahindra Jeep No.UP41-A/4435 coming from reverse direction
driven rashly and negligently, hit the
scooter resulting into accident in question.
Deceased Ajit Kumar Shukla and others
suffered grievous injuries. All were
admitted to Medical College, Lucknow
but the life of deceased Amit Kumar
Shukla could not be saved and on
27.4.1997, he succumbed to injuries.

4.

The
claimant
respondents
approached the Tribunal by preferring claim
petitions for payment of compensation.
Deceased Amit Kumar Shukla was aged
about 4 years and a student of Class-I. The
Tribunal framed requisite issues during the
pendency of proceedings and recorded
finding that accident occurred on account of
rash and negligent driving of the vehicle and
awarded compensation to the tune of
Rs.4,18,000/-

5. The solitary argument advanced
by the learned counsel for the appellant is
that the Tribunal has not considered the
factual averments made before it that the
driving license was fake one. However,
right to recover the compensation has
been given to the appellant on the ground
that there was breach of policy condition
since the Jeep in question was not having
permit. Accordingly, the submission of
the
appellant's
counsel
representing
Oriental Insurance Company Limited is
that instead of giving right of recovery,
the compensation should have been
recovered from the owner straight way.

6. Learned counsel for the appellant
relied upon the case reported in 2013 (3)
T.A.C. 29 (S.C.): United India Insurance
Co. Ltd., through its Divisional Manager
Vs. Sujata Arora and others, and one
other case reported in 2009 (4) T.A.C.
382 (S.C.): National Insurance Co. Ltd.
Vs. Parvathneni and another.

7. On the other hand, learned
counsel for the respondents claimants
submits that exercise of power with
regard to right of recovery is discretionary
power exercised by the Tribunal and
should not be interfered with. Learned
counsel for the respondents claimants
relied upon the case reported in 2013 ACJ
1944 (SC): S. Iyappan Vs. U.I.I.Co. Ltd.
[Three Judges Bench D/o 01.07.2013].

8. The judgment relied upon by the
learned counsel for the appellant as well
as learned counsel for the respondents
claimants, seem to contain different ratio
based on facts and circumstances of each
case. In the case of S. Iyappan (supra) in
para 25, their lordships of Hon'ble
Supreme Court after considering the
earlier judgments, observed as under:-

"(25) The position can be summed
up thus: The insurer and the insured are
bound by the conditions enumerated in
424 INDIAN LAW REPORTS ALLAHABAD SERIES

the policy and the insurer is not liable to
the insured if there is violation of any
policy condition. But the insurer who is
made
statutorily
liable
to
pay
compensation to third parties on account
of the certificate of insurance issued shall
be entitled to recover from the insured the
amount paid to the third parties, if there
was any breach of policy conditions on
account of the vehicle being driven
without a valid driving licence. Learned
counsel for the insured contended that it is
enough if he establishes that he made all
due inquiries and bona fidely believed
that the driver employed by him had a
valid driving licence, in which case there
was no breach of the policy condition. As
we have not decided on that contention it
is open to the insured to raise it before the
Claims Tribunal. In the present case, if
the insurance company succeeds in
establishing that there was breach of the
policy condition, the Claims Tribunal
shall direct the insured to pay that amount
to the insurer. In default the insurer shall
be allowed to recover that amount (which
the insurer is directed to pay to the
claimant third parties) from the insured
person."

9. Thus, it appears that in some of
the
cases
Hon'ble
Supreme
Court
expressed view that compensation should
be recovered from the owner straight
away instead of directing the Insurance
Company to deposit the compensation
and thereafter recover the same from the
owner of the vehicle. However, in other
case conflicting view has been expressed
where in the event of breach of policy,
Insurance Company has been required to
pay
compensation
which
may
be
recovered from the owner of the vehicle.
It appears that the right of recovery is an
issue which is to be dealt with on the
basis of facts and circumstances of each
case. In appropriate cases, in case
Tribunal exercises discretion directing
Insurance
Company
to
recover
the
compensation from the owner in the event
of breach of policy condition, then the
direction issued by the Tribunal should
ordinarily, be not interfered with.

10. The Motor Vehicles Act is a
welfare legislation. We cannot close our eyes
on the ground realities and where the
dependant of deceased run from pillar to
post. It is the statutory duty of the Insurance
Company to recover compensation from the
owner of the vehicle keeping in view the
longevity involved in the judicial process.
Insurance
Companies
are
discharging
welfare statutory burden in public interest. In
case the burden is shifted over them to
recover the compensation from the the owner
of the vehicle, it shall be comparatively better
steps on the part of the courts instead of
relegating the duty on the part of the claimant
to recover dues from the owner of the
vehicle. In this country where substantial
population is below poverty line and
illiterate, it is not easy to recover from owner
by indulging in litigation.

11 . Apart from the above, Section
149 of Motor Vehicles Act, contains
statutory mandate assigning duty to the
ensurer to satisfy the judgment and award
against the person ensured for of third
party risk. For convenience, relevant
portion of Section 149 of the Motor
Vehicles Act is reproduced as under:-

149. Duty of insurers to satisfy
judgments and awards against persons
insured in respect of third party risks.

1. If, after a certificate of insurance
has been issued under sub-section (3) of
1 All] The Oriental Insurance Co. Ltd. Vs. Smt. Nirala Shukla & Ors.

425
section 147 in favour of the person by
whom a policy has been effected,
judgment or award in respect of any such
liability as is required to be covered by a
policy under clause (b) of sub-section (1)
of section 147 (being a liability covered
by the terms of the policy) is obtained
against any person insured by the policy,
then, notwithstanding that the insurer may
be entitled to avoid or cancel or may have
avoided or cancelled the policy, the
insurer shall, subject to the provisions of
this section, pay to the person entitled to
the benefit of the decree any sum not
exceeding the sum assured payable
thereunder, as if he were the judgment
debtor, in respect of the liability, together
with any amount payable in respect of
costs and any sum payable in respect of
interest on that sum by virtue of any
enactment
relating
to
interest
on
judgments.

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:--

i. 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

b. For organised racing and speed
testing, or

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 nondisclosure of a material fact or by a
representation of fact which was false in
some material particular."

12. Sub-Section 1 of Section 149 is the
statutory mandate with regard to payment of
compensation under Motor Vehicle Act.
Whereas Section 2 deals with the situation
where insurer may defend itself from sharing
the liability to pay compensation. The
finding recorded by the court or tribunal to
pay compensation possessed element of
positivity.
Whereas
non
payment
of
compensation under certain condition as
provided by Sub-Section 2 of Section 149
deals with the situation where insurance
company may not held to be responsible
Sub-section 2 in any case does not deprive
the claimant to claim compensation in the
event of fatal accident by an insured vehicle.
426 INDIAN LAW REPORTS ALLAHABAD SERIES

In case, insurance company is not liable
under certain conditions then owner of the
vehicle
shall
be
responsible
to
pay
compensation. Keeping in view the mandate
as contained in Sub-section 1 of section 149
in case the insurance company is directed to
pay compensation with right of recovery it
shall fulfill the statutory obligation and intent
of legislation. Once vehicle is insured the
first charge shall be on the insurance
company to pay compensation and only in
the event of breach of permit condition the
owner may be held responsible to pay
compensation
or
satisfy
award.
Accordingly, the insurance company may
be directed to pay compensation in terms
of award to satisfy its statutory obligation
and then recover the same from owner in
the event of breach of policy conditions in
view of sub-section (2) of Section 149.

13. Keeping in view the statutory
mandate as contained in Section 149 of the
Motor Vehicles Act, coupled with the
judgment of Hon'ble Supreme Court, we are
of the view that the Tribunal has committed
no illegality in directing the appellant
Insurance Company to pay the compensation
and thereafter, recover the same from the
owner of the vehicle. Apart from the above,
Section 174 provides to recover the
compensation as arrears of land revenue. The
procedure prescribed under Section 174
Motor Vehicles Act, is not applicable to the
cases where compensation is sought to be
recovered from the owner of the vehicle. In
case the Insurance Company after satisfying
the award proceed to recover the outstanding
dues from the owner, then the provisions
contained in Section 174 of the Motor
Vehicles Act shall equally be applicable to
recover the outstanding dues as arrears of
land revenue from the owner of the vehicle.
It shall speed up the recovery process and
satisfy the award within reasonable period.

14. The claimant respondents while
preferring the cross appeal has made prayer
for enhancement of compensation. The
Tribunal awarded the compensation after
considering
the
relevant
acts
and
circumstances as well as the injuries caused
and expenses incurred thereon. The attention
of the Court has not been invited to any
perversity in the impugned award delivered
by
the
Tribunal
while
awarding
compensation. Well reasoned order has been
passed by the Tribunal.

15. In view of the above, the appeal
preferred by the Insurance Company as
well as the claimant respondents fails. Let
entire compensation be deposited before the
Tribunal within three months and shall be
released to the claimant respondents in terms
of award by Tribunal within two months.
Any application moved by the Insurance
Company for recovery, that shall be
processed by the Tribunal expeditiously
keeping in view the observations made in the
body of the judgments. The amount
deposited in this Court shall be remitted to
the Tribunal forthwith.

The appeals are dismissed. Costs
easy.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 02.04.2014

BEFORE
THE HON'BLE DEVI PRASAD SINGH, J.
THE HON'BLE ASHOK PAL SINGH, J.

Service Bench No. 1527 of 2000

State of U.P............................ .Petitioner
Versus
Har Pal Singh. .......................Respondent

Counsel for the Petitioner:
C.S.C.