ORIENTAL INSURANCE CO. Vs. SANGEETA

JUDGEMENT

(1.) WHAT is the true nature of an insurer's liability under the Motor Vehicles Act ? Does he incur the liability independent of the liability of the insured or is it dependent and conditional on the later ? In other words, is the insurer liable to indemnify a claimant who has not impleaded the insured as respondent and has not obtained a judgment against him?

(2.) THIS is precisely the controversy in this appeal which arises out of a Car - Truck collision. The Car belonged to a partnership Firm called M/s. Dharm Steel Industries and was also insured in its name. Claimant's husband, one Romesh Kumar was a partner of the firm. The couple was travelling in the ill-fated car with the driver Chhote Lal at the wheel when it collided with a Truck on Jammu-Pathankot National Highway. Romesh Kumar died in the accident and so did Chhote Lai. Sangeeta, however, survived suffering multiple injuries in the process.

(3.) WHETHER the Company can be held liable is the question. The answer calls for an examination of the genesis and nature of a contract of insurance. It is elementary that the principle of indemnity constitutes the very foundation of such contract, wherein the insurer promises to indemnify the insured for any loss or liability caused to him by his own conduct or the conduct of any other persons. The privity of contract exists only between the insurer and the insured who mutually bind themselves and no rights or liability accrue thereunder to any third party. An insurer has no direct liability qua the claimant. His liability springs from that of the insured and is secondary and conditional to it. Where no liability is imposed upon the insured, it cannot be fastened on the insurer either. To put it in the words of Sandhawalia (CJ) as he then was, speaking for a Full Bench of Punjab and Haryana High Court (1982 ACJ 211): It can now be said as a dictum that no judgment against the insured no judgment against the insurer.