Case Note & Summary
The appeal was filed by the Oriental Insurance Company Limited challenging the order of the Motor Accident Claims Tribunal which directed the insurer to pay compensation to the claimant and then recover the amount from the owner of the offending vehicle. The Tribunal had held that the insurance company was not liable to pay compensation due to a breach of policy conditions, but nevertheless directed the insurer to pay first and recover later. The insurer appealed, arguing that the Tribunal lacked the power to issue such a direction. The High Court examined the Division Bench judgment in Traders Pvt. Ltd. v. Sunanda, which had considered various Supreme Court precedents. The Court noted that the Division Bench had refused to lay down a broad proposition that in all cases the insurer must pay and recover, but had recognized that in appropriate cases, such a direction is permissible. The Court found that the observations in paragraphs 56 and 59 of that judgment, when read in entirety, supported the view that the Tribunal has the power to issue a pay-and-recover direction. The Court held that the Tribunal's direction was consistent with the principles laid down in Traders Pvt. Ltd. and dismissed the appeal, upholding the Tribunal's order.
Headnote
A) Motor Accident Claims - Pay-and-Recover Direction - Power of Tribunal - Motor Vehicles Act, 1988, Section 168 - The issue was whether the Tribunal can direct the insurer to pay compensation first and recover from the owner even after holding the insurer not liable. The Court held that the Tribunal has such power, relying on the Division Bench decision in Traders Pvt. Ltd. v. Sunanda, which clarified that no broad proposition exists that insurer must always pay and recover, but in appropriate cases, such direction is permissible. (Paras 4-7)
Issue of Consideration
Whether the Motor Accident Claims Tribunal has the power to issue a direction to the insurer to pay compensation first and recover later from the owner of the offending vehicle after holding that the insurance company is not liable to pay any compensation.
Final Decision
Appeal dismissed. The Tribunal's direction to pay and recover is upheld.
Law Points
- Motor Accident Claims Tribunal has power to direct insurer to pay compensation first and recover from owner even if insurer is not liable due to policy breach
- pay-and-recover direction is permissible under Motor Vehicles Act
- 1988
- Tribunal's power under Section 168 includes ancillary powers to issue such directions.
Case Details
2017 LawText (BOM) (06) 186
First Appeal No. 857 of 2014
Shri M.N. Ahmed for appellant; Mrs. Vrishali Bhoyar holding for Shri P.S. Mirache for respondent no.1; None for respondent no.2.
The Divisional Manager, Oriental Insurance Company Limited, Baleshwar, through Nagpur D.O.Palm Road, Civil Lines, Nagpur.
Sindhubai W/o Manikrao Nidhan and Prabhati W/o Madhusudan Prusti
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Nature of Litigation
Appeal by insurance company against order of Motor Accident Claims Tribunal directing pay-and-recover.
Remedy Sought
Appellant sought setting aside of the direction to pay compensation first and recover later from the owner.
Filing Reason
Insurer challenged the Tribunal's power to issue pay-and-recover direction after holding insurer not liable.
Previous Decisions
Tribunal held insurer not liable but directed pay-and-recover.
Issues
Whether the Motor Accident Claims Tribunal has power to direct insurer to pay compensation first and recover later from the owner after holding insurer not liable.
Submissions/Arguments
Appellant argued that Tribunal has no power to issue such direction, relying on Traders Pvt. Ltd. v. Sunanda. Respondent no.1 argued that the Division Bench in the same case clarified that no broad proposition exists and such direction is permissible in appropriate cases.
Ratio Decidendi
The Motor Accident Claims Tribunal has the power to issue a direction to the insurer to pay compensation first and recover later from the owner of the offending vehicle, even after holding that the insurance company is not liable to pay compensation, as such power is ancillary to the Tribunal's jurisdiction under Section 168 of the Motor Vehicles Act, 1988, and is consistent with the principles laid down by the Division Bench in Traders Pvt. Ltd. v. Sunanda.
Judgment Excerpts
The appeal is only on the point as to whether or not the Tribunal has power to issue direction to insurer to pay first and recover later after holding that the insurance company is not liable to pay any compensation.
On going through the judgment of Traders Private Limited, I find that submission of learned counsel for the respondent no.1 is consistent with the principles of law laid down in that case.
In my view, the observations made in the judgment are to be considered in their entirety and if one does so one would find what has been canvassed on behalf of respondent no.1 is what ratio of Traders Private Limited is.
Procedural History
The Motor Accident Claims Tribunal passed an order directing the insurer to pay compensation to the claimant and recover from the owner. The insurer filed First Appeal No. 857 of 2014 before the Bombay High Court challenging that direction. The High Court heard the appeal and dismissed it on 19 June 2017.
Acts & Sections
- Motor Vehicles Act, 1988: Section 168
