National Insurance Co. Ltd. Vs. Parvathneni & Anr.
EmailAppeal: SLP (C) No. 22444 of 2009
[From the Judgement and Order dated 12.12.2008 of the High Court of Judicature Andhra Pradesh at Hyderabad in M.A. Civil Misc. Appeal No. 1211 of 2007]
[From the Judgement and Order dated 12.12.2008 of the High Court of Judicature Andhra Pradesh at Hyderabad in M.A. Civil Misc. Appeal No. 1211 of 2007]
Petitioner: National Insurance Co. Ltd.
Respondent: Parvathneni & Anr.
Apeal: SLP (C) No. 22444 of 2009
[From the Judgement and Order dated 12.12.2008 of the High Court of Judicature Andhra Pradesh at Hyderabad in M.A. Civil Misc. Appeal No. 1211 of 2007]
[From the Judgement and Order dated 12.12.2008 of the High Court of Judicature Andhra Pradesh at Hyderabad in M.A. Civil Misc. Appeal No. 1211 of 2007]
Judges: Markandey Katju & Asok Kumar Ganguly, JJ.
Date of Judgment: Aug 31, 2009
Appearances:
Appearances
Mr. S.L.Gupta, Mr. Goodwill Indeevar, Mr. P.K.Singh, Advocates for the Respondent(s).
Mr. S.L.Gupta, Mr. Goodwill Indeevar, Mr. P.K.Singh, Advocates for the Respondent(s).
Head Note:
INSURANCE
Constitution of India, 1950
Article 142 – Accident on 30 November 2003 – Cheque issued towards premium for renewal of policy issued on 29 November 2003 but dishonoured – Whether insurance company liable to pay the amount of compensation as there was no insurance coverage on the date of accident – High Court directing insurance company to pay compensation to claimant with liberty to recover from owner. Held when there is no liability how a Court can direct to make payment and later on recover it from owner. Paper of the case be placed before Hon’ble Chief Justice to constitute larger bench to decide questions posed by Court.
Constitution of India, 1950
Article 142 – Accident on 30 November 2003 – Cheque issued towards premium for renewal of policy issued on 29 November 2003 but dishonoured – Whether insurance company liable to pay the amount of compensation as there was no insurance coverage on the date of accident – High Court directing insurance company to pay compensation to claimant with liberty to recover from owner. Held when there is no liability how a Court can direct to make payment and later on recover it from owner. Paper of the case be placed before Hon’ble Chief Justice to constitute larger bench to decide questions posed by Court.
Held:
If the insurance company has no liability to pay at all, then it can not be compelled by order of the Court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle. In our view, Article 142 of the Constitution of India does not cover such type of cases. When a person has no liability to pay at all how can it be compelled to pay? It may take years for the insurance company to recover the amount from the owner of the vehicle, and it is also possible that for some reason the recovery may not be possible at all. (Para 8)
Papers of this case be placed before Hon’ble the Chief Justice of India for constituting a larger bench to decide the following questions:
‘(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehcile.
(2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142 permit the Court to create a liability where there is none?’ (Para 9)
Papers of this case be placed before Hon’ble the Chief Justice of India for constituting a larger bench to decide the following questions:
‘(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehcile.
(2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142 permit the Court to create a liability where there is none?’ (Para 9)
Cases Reffered:
1. Samundra Devi v. Narendra Kaur [2008 (9) SCC 100] (Para 7)
2. National Insurance Co. Ltd. v. Yellamma & Another [2008 (7) SCC 526] (Para 7)
3. New India Insurance Co. v. Darshan Devi [JT 2008 (2) SC 430] (Para 7)
4. Oriental Insurance Co. v. Brij Mohan [JT 2007 (7) SC 472] (Para 7)
2. National Insurance Co. Ltd. v. Yellamma & Another [2008 (7) SCC 526] (Para 7)
3. New India Insurance Co. v. Darshan Devi [JT 2008 (2) SC 430] (Para 7)
4. Oriental Insurance Co. v. Brij Mohan [JT 2007 (7) SC 472] (Para 7)
JUDGEMENT:
ORDER
1. Delay of 65 days in filing the Special Leave Petition is condoned.
2. Issue notice.
3. Until further orders, the operation of the impugned order shall remain stayed.
4. In this case, the allegation of the petitioner- Insurance Company is that there was no valid insurance coverage on the date of the accident i.e. 30th November, 2003. The cheque towards premium for renewal of the policy was issued on 29th November, 2003 but the same was dishonoured. Hence, the contention of the Insurance Company is that it has no liability to pay any compensation amount to the claimants since there was no insurance coverage on the date of the accident.
5. Despite this, the High Court has directed the insurance company to pay the compensation amount to the claimants with liberty to the Insurance Company to recover the same from the owner of the
vehicle.
6. Prima facie, we are of the opinion if the Insurance Company proves that it has no liability to pay compensation to the claimants, the Insurance Company can not be compelled to make payment and later on recover it from the owner of the vehicle.
7. No doubt, there are some decisions which have taken the view that even if the insurance company has no liability, yet it must pay and later on recover it from the owner of the vehicle. [See for example National Insurance Co. Ltd. v. Yellamma & Another [2008 (7) SCC 526], Samundra Devi v. Narendra Kaur [2008 (9) SCC 100] (vide para 16), Oriental Insurance Co. v. Brij Mohan [JT 2007 (7) SC 472 : 2007 (7) SCC 56] (vide para 13), New India Insurance Co. v. Darshan Devi [JT 2008 (2) SC 430 : 2008 (7) SCC 416] (vide para 21), etc.].
8. We have some reservations about the correctness of the aforesaid decisions of this Court. If the insurance company has no liability to pay at all, then, in our opinion, it can not be compelled by order of the Court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle. In our view, Article 142 of the Constitution of India does not cover such type of cases. When a person has no liability to pay at all how can it be compelled to pay? It may take years for the insurance company to recover the amount from the owner of the vehicle, and it is also possible that for some reason the recovery may not be possible at all.
9. Hence, we direct that the papers of this case be placed before Hon’ble the Chief Justice of India for constituting a larger bench to decide the following questions:
‘(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehcile.
(2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142 permit the Court to create a liability where there is none?’
**********
1. Delay of 65 days in filing the Special Leave Petition is condoned.
2. Issue notice.
3. Until further orders, the operation of the impugned order shall remain stayed.
4. In this case, the allegation of the petitioner- Insurance Company is that there was no valid insurance coverage on the date of the accident i.e. 30th November, 2003. The cheque towards premium for renewal of the policy was issued on 29th November, 2003 but the same was dishonoured. Hence, the contention of the Insurance Company is that it has no liability to pay any compensation amount to the claimants since there was no insurance coverage on the date of the accident.
5. Despite this, the High Court has directed the insurance company to pay the compensation amount to the claimants with liberty to the Insurance Company to recover the same from the owner of the
vehicle.
6. Prima facie, we are of the opinion if the Insurance Company proves that it has no liability to pay compensation to the claimants, the Insurance Company can not be compelled to make payment and later on recover it from the owner of the vehicle.
7. No doubt, there are some decisions which have taken the view that even if the insurance company has no liability, yet it must pay and later on recover it from the owner of the vehicle. [See for example National Insurance Co. Ltd. v. Yellamma & Another [2008 (7) SCC 526], Samundra Devi v. Narendra Kaur [2008 (9) SCC 100] (vide para 16), Oriental Insurance Co. v. Brij Mohan [JT 2007 (7) SC 472 : 2007 (7) SCC 56] (vide para 13), New India Insurance Co. v. Darshan Devi [JT 2008 (2) SC 430 : 2008 (7) SCC 416] (vide para 21), etc.].
8. We have some reservations about the correctness of the aforesaid decisions of this Court. If the insurance company has no liability to pay at all, then, in our opinion, it can not be compelled by order of the Court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle. In our view, Article 142 of the Constitution of India does not cover such type of cases. When a person has no liability to pay at all how can it be compelled to pay? It may take years for the insurance company to recover the amount from the owner of the vehicle, and it is also possible that for some reason the recovery may not be possible at all.
9. Hence, we direct that the papers of this case be placed before Hon’ble the Chief Justice of India for constituting a larger bench to decide the following questions:
‘(1) If an Insurance Company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty to later on recover the same from the owner of the vehcile.
(2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142 permit the Court to create a liability where there is none?’
**********
