Case Note & Summary
The judgment concerns two first appeals filed by Bajaj Allianz General Insurance Co. Ltd. against awards of the Motor Accident Claims Tribunal. In both cases, the Tribunal had directed the insurer to pay compensation to the claimants and then recover the amount from the owner of the offending vehicle, despite holding that the insurer was not liable to indemnify the insured due to breach of policy conditions. The common issue was whether the Tribunal had jurisdiction to issue such a 'pay and recover' direction. The High Court, after considering the provisions of the Motor Vehicles Act, 1988, particularly Sections 149 and 168, held that the Tribunal does have the power to direct the insurer to pay compensation to third party claimants and recover it from the owner, even if the insurer is not liable under the contract of insurance. The court reasoned that the Tribunal's power under Section 168 to make an award includes all ancillary powers necessary to effectuate the award, and that the statutory liability of the insurer towards third parties is not limited to contractual indemnity. The court dismissed both appeals, upholding the Tribunal's orders.
Headnote
A) Motor Vehicles Act - Jurisdiction of Claims Tribunal - Pay and Recover Direction - Section 168 Motor Vehicles Act, 1988 - The Tribunal has jurisdiction to direct the insurer, even if not liable to indemnify the insured, to pay compensation to third party claimants and recover it from the owner, as the power under Section 168 includes ancillary powers to effectuate the award. Held that the Tribunal can issue such directions to ensure just compensation is paid to victims. (Paras 1-10)
B) Motor Vehicles Act - Third Party Risks - Statutory Liability of Insurer - Section 149 Motor Vehicles Act, 1988 - The insurer's liability to third parties is statutory and not limited to contractual indemnity; the Tribunal can direct pay and recover even if the insurer has a valid defence against the insured. (Paras 1-10)
Issue of Consideration
Whether the Motor Accident Claims Tribunal has jurisdiction to direct the insurer, who is not found liable to indemnify the insured, to pay compensation to the claimants and then recover it from the owner of the vehicle?
Final Decision
Both appeals dismissed. The Tribunal's direction to the insurer to pay compensation and recover from the owner is upheld.
Law Points
- Motor Accident Claims Tribunal has jurisdiction to direct insurer to pay compensation and recover from owner even if insurer is not held liable
- Section 168 Motor Vehicles Act
- 1988
- pay and recover
- third party risks
- statutory liability
Case Details
2014 LawText (BOM) (07) 151
First Appeal No. 1043 of 2011 with First Appeal No. 244 of 2013
Mr. D.N. Kukday for appellant; Ms. S.M. Saware for respondents 1-3 in FA 1043/11; Mr. Asghar Hussain for respondents 1-3 in FA 244/13; Mr. S.M. Prasad for respondent 7 in FA 244/13
Bajaj Allianz General Insurance Co. Ltd.
Smt. Sangita wd/o Bhagwan Raut and others (in FA 1043/11); Smt. Kavita wd/o Vinod Nikhare and others (in FA 244/13)
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Nature of Litigation
Appeals by insurance company against awards of Motor Accident Claims Tribunal directing pay and recover despite no liability.
Remedy Sought
Insurance company sought to set aside the direction to pay compensation and recover from owner.
Filing Reason
Insurance company challenged the Tribunal's jurisdiction to issue pay and recover direction when insurer was not held liable.
Previous Decisions
Motor Accident Claims Tribunal had awarded compensation to claimants and directed insurer to pay and recover from owner.
Issues
Whether the Motor Accident Claims Tribunal has jurisdiction to direct the insurer to pay compensation and recover it from the owner when the insurer is not held liable to indemnify the insured?
Submissions/Arguments
Appellant (Insurance Company) argued that the Tribunal has no power to direct pay and recover when the insurer is not liable under the policy.
Respondents (Claimants) supported the Tribunal's order, arguing that the Tribunal has inherent powers to ensure just compensation.
Ratio Decidendi
The Motor Accident Claims Tribunal, while making an award under Section 168 of the Motor Vehicles Act, 1988, has the jurisdiction to direct the insurer to pay compensation to third party claimants and recover it from the owner of the vehicle, even if the insurer is not liable to indemnify the insured, as such direction is ancillary to the power to award just compensation.
Judgment Excerpts
Both these appeals are being disposed of by this common judgment as they involve an identical issue relating to jurisdiction of the Motor Accident Claims Tribunal to direct the insurer not found liable to indemnify the insured to pay compensation to the claimants and then recover it from the owner of the vehicle.
Procedural History
The Motor Accident Claims Tribunal passed awards in two claim petitions directing the insurer to pay compensation and recover from the owner. The insurer filed two first appeals before the High Court challenging the jurisdiction of the Tribunal to issue such directions. The appeals were heard together and disposed of by this common judgment.
Acts & Sections
- Motor Vehicles Act, 1988: Section 149, Section 168
