NEW INDIA ASSURANCE COMPANY Vs. MANNU LAL

JUDGEMENT

(1.) This first appeal from order, on behalf of the New India Assurance Company, is directed against an award of the Claims Tribunal awarding a sum of Rs. 20,000 by way of compensation in connection with the death of one Raj Kumar, son of Mannu Lal, respondent No. 1, in an accident on September 23, 1974, by Motor Vehicle No. UPU 6578. The said vehicle, admittedly, stood insured against third party risk with the appellant company. The important question that arose for consideration is as to whether the insurance company can assail the findings of the Claims Tribunal as regards the negligence and the amount of compensation awarded to the claimant in view of Section 96(2) of the M.V. Act.

(2.) Sri M.P. Singh, appearing on behalf of the appellant, has submitted that in this case both the owner and the driver of the vehicle have kept away from the proceedings and did not even file a written statement. The insurance company was further handicapped in its defence on account of failure of the owner of the vehicle in informing the company about the accident immediately after it had taken place as per clause of the insurance contract which is on record. His contention, therefore, was that since the owner had failed to inform the insurance company about the occurrence of the accident, the insurance company could not try to find as to who was the driver of the vehicle at the time of accident and whether he had any valid driving licence with him. If this opportunity had not been denied to it, on account of failure of the owner of the vehicle, the company would have been able.to take up any of these pleas in defence and could have avoided its liability of payment of the compensation awarded. His only argument, therefore, was that due to lapse on the part of the insured to serve the requisite notice on the insurer as per contract, the company can avoid its liability regarding compensation awarded. The award, in such cases, can only be executed against the insured.

(3.) In order to judge the correctness of the argument, it would be proper to first examine the purpose behind the Act. It cannot be gainsaid that Chapter VIII of the M.V. Act which deals with insurance of the motor vehicles against third party risk was amended in the recent past with a view to cover the risk incurred by the public while getting involved in any accident involving use of motor vehicle and to ensure that after obtaining an order for payment of compensation, the claimant may immediately recover the same without having to run from pillar to post. It is a benefac-tory provision introduced for helping the dependants of helpless victims of such accidents who are usually left unprovided for. In this background, Section 95 of the M.V. Act becomes relevant. This section lays down the necessary conditions which must be incorporated in every policy of insurance and Sub-clause (b) of Sub-section (1) of Section 95 of the Act lays down that insurance shall be provided "against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place ". It further provides that the liability of the insurer would be such as is laid down in Sub-clause (2) of the section. Sub-section (2) provides the minimum limit up to which the risk must be covered by the insurer in respect of various kinds of vehicles. In the case of vehicles carrying passengers without any hire or reward, the liability of the insurer is unlimited. In order to make the insurance company liable for the compensation awarded, the only pre-requisite is that a certificate of insurance ought to have been issued by the insurance company to the insured in respect of the vehicle in question. Even where only a cover note has been issued and it is not followed by a policy of insurance within the prescribed time, the insurer would still be liable unless this fact had been notified by the insurance company to the registering authority. The main thrust in the language of this section, therefore, is to make the insurance company liable in all events for payments of the amount of compensation awarded even in cases where only a cover note had been issued without being followed by issue of a regular policy in favour of the insured. This liability cannot be avoided. Sub-section (5) of Section 95 also casts a duty on the insurance company to indemnify the third party who is the victim of accident involving the use of motor vehicle insured by it. This provision also signifies that primarily it is the responsibility of the insurance company first to satisfy the award and then only it may seek indemnification in respect thereof from the insured, if the terms of the policy so warrant.