Holding

The Tribunal’s direction for the insurer to pay compensation and recover from the driver/owner is a valid exercise of its inherent powers under Section 168, and the insurer is not required to file a separate suit for recovery.

Summary

The Motor Accident Claims Tribunal awarded compensation to the dependents of a deceased victim of a bus accident, finding that the driver did not possess a valid licence. The Tribunal directed the insurer, New India Assurance Co., to pay the compensation and to recover the amount from the driver and the bus owner. The executing court required the insurer to file a separate civil suit for recovery, which the insurer challenged under Article 227; the High Court dismissed the challenge. The Supreme Court held that the Tribunal’s direction was a valid exercise of its inherent powers under Section 168 of the Motor Vehicles Act, 1988, and that the insurer could recover the amount without filing a separate suit, in line with the social‑justice purpose of the Act. Consequently, the High Court’s orders were set aside and the execution of the award was directed to proceed expeditiously.

Issues considered

Whether the Motor Accident Claims Tribunal can direct the insurer to pay compensation and recover from the driver/owner when the driver lacks a valid licence.
Whether the insurer must institute a separate civil suit to recover the amount from the driver/owner or can rely on execution of the tribunal award.
Whether the High Court erred in dismissing the insurer's petition under Article 227 of the Constitution.
Interpretation of Section 168 of the Motor Vehicles Act, 1988 concerning liability of the insurer when the driver is unlicensed.

Legislation cited

Motor Vehicles Act, 1988s. 168

Subjects

Motor accidentInsurance liabilityDriver licenceSection 168Social justiceExecution of awardMotor Accident Claims TribunalCompensation recovery

Judgment

[2009] 12 S.C.R. 343

NEW INDIA ASSURANCE CO. LTD. & ANR. A
v.
KUSUM & ORS.
(Civil Appeal No. 5082 of 2009)
AUGUST 4, 2009
8
[S.B. SINHA AND DEEPAK VERMA, JJ.]

MOTOR VEHICLES ACT, 1988:
~
" s. 168 - Motor accident- Driver not holding valid driving c
licence - Tribunal's direction to Insurance Company to pay
compensation to dependants of victim and to recover the
amounts from driver and owner of offending vehicle -
Executing court directing Insurance Company to file suits for
recovery - High Court declining to interfere - HELD: Tribunal
D
~
must be held to have issued the directions in exercise of its
inherent powers, keeping in view the social justice doctrine
" and in the interest of claimants - Impugned orders are set
aside - Executing courts will proceed with the execution
expeditiously - Execution of awards made by Motor Accident
E
Claims Tribunal - Social Justice.

,. . The claim petitions filed by the dependents of the
persons killed in motor accidents were allowed by the
Motor Accident Claims Tribunals. However, as the drivers
of the offending vehicles did not hold valid licences at the F
time of accidents, the Tribunals, primarily holding drivers
and owners liable to pay the compensation, directed the
Insurance Company to pay the amounts to the claimants
and recover it from the respondent-drivers and owners
of the offending vehicles. In the execution petitions, the G
• +- executing court directed the Insurance Company to file
,,, suits for recovery. The petitions filed by the Insurance
Company under Article 227 of the Constitution, having
been dismissed by the High Court, it filed the appeals.
343 H
344 SUPREME COURT REPORTS [2009] 12 S.C.R.

A Allowing the appeals, the Court

HELD: 1. The rights and liabilities of the parties to the
contract of insurance would be governed thereby subject
to the provisions of the Motor Vehicles Act, 1988. One of
the conditions which would make the insurance
8
company liable to reimburse the owner of the vehicle in
respect of payment of the amount of compensation in
favour of a claimant is that the driver of the vehicle must
possess a valid driving licence. In the instant case, the
licence of the driver of the offending vehicle was proved
C to be invalid. The courts, however, keeping in view the
social justice doctrine wherefor the Act was enacted and
in the interest of the claimants had been passing orders
directing Insurance Company to make the payment and
recover the same from the drivers and/or owners of the
D vehicles. The directions by the Tribunal must be held to
have been issued in exercise of its inherent power. It
would be travesty of justice, if the Insurance Company,
which is directed to pay the amount, has to face immense
difficulties in executing a decree. The impugned
E judgments cannot be sustained, and are set aside. The
executing courts are directed to proceed with the
execution and dispose of the same as expeditiously as
possible. [Para 7 and 10] [348-G-H; 349-A-B; 352-C-D]

F National Insurance Co. Ltd. v. Baljit Kaur (2004) 2 SCC
1; Oriental Insurance Company Ltd. v. Shri Nanjappan & Ors.
(2004) 13 SCC 224; National Insurance Co. Ltd. v. Kusum
Rai (2006) 3 SCALE 519; Oriental Insurance Co. Ltd. v.
Zaharulnisha (2008) 12 SCC 385 and Oedappa v. National
G Insurance Co. Ltd. (2008) 2 SCC 595, relied on.
Case Law Reference:
(2004) 13 sec 224 relied on para 6
(2004J 2 sec 1 relied on para 8
H
NEW INDIA ASSURANCE CO. LTD. & ANR. v. 345
KUSUM & ORS.

(2006) 3 SCALE 519 relied on para 8 A

(2008) 12 sec 385 relied on para 8
,..
(2008) 2 sec 595 relied on para 8
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. B
5082 of 2009.

From the Judgment & Order dated 25.09.2006 of the High
,I. Court of Punjab & Haryana at Chandigarh in C.R. No. 3231 of
2004.
c
WITH

C.A. No. 5083 of 2009.

Nanita Sharma, Satbir Pillaina, M.K. Bhardwaj, Ashok K.
Mahajan, AK. De, Rajesh Dwivedi, R.C. Kaushik, Madhuri D
~
Gupta, Rani Chhabra for the appearing parties.
'!

The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.
E
2. These appeals involving cortimon questions of law and
fact were taken up for hearing together and are being disposed
t J..
of by this common judgment.

3. We would, however, notice the fact of the matter from F
CA@ Special Leave Petition (C) No.3372 of 2007.

On or about 14.7.1999, respondent No.3 was traveling in
a bus bearing Registration No.PB-23-0189 which met with an
accident as a result of which the deceased, Sanjay Kumar, got
G
' i- injured and while being taken to the hospital, he succumbed
thereto. The said bus was owned by New Patiala Bus Service
(Regd.) Sirhind, the respondent No.4 herein.

Legal representatives of the deceased filed a claim
petition before the Motor Accidents Claim Tribunal which by its H
346 SUPREME COURT REPORTS [2009] 12 S.C.R.

A order dated 4.12.2001 awarded a sum of Rs.2,68,800 by way
of compensation. The learned Tribunal held that the driver of
the bus had not been possessing a valid driving licence. The
primary liability to pay the said amount was held to be that of
respondent No.3 and 4, the driver and owner of the bus. The
B appellant was directed to deposit the amount directing that the
company may recover the same from respondent Nos.3 and
4. Pursuant to the said observations, the appellant company
made payments to the claimants on or about 15.3.2002 by
depositing a sum of Rs.3,03,552/- by cheque.
c 4. On or about 8.5.2002 in terms of the order of the
Tribunal, an Execution Petition was filed, stating :

"11. That in the claim petition No.82-T/99/26.9.2000 titled
as Kusum widown of Sanjay Kumar and others Vs.
D Raghbir Singh alias Prince and others, the Hon'ble Court
was pleased to allow the claim petition partly on 4.12.2001
that the claimants are held entitled to Rs.2,68,800/- as
compensation to be shared equally by them. The claimants
are also entitled to interest at the rate of 9 per cent per
E annum from the date of claim application till its actual
realization. Though the primary liability to pay the amount
of compensation is that of respondent No.1 and 2 jointly
and severally, however, it will also be open to the Claimants
to recover the same from Respondent No.3 Insurance
F Company. As already held above, the insurance company
would be at liberty to recover the same from Respondent
No.1 and 2 in terms already mentioned in the preceding
paragraphs.

12. That as per the directions of this Hon'ble Court, the DH/
G Applicant. Insurance Company has deposited
Rs.3,03,552/- in the Hon'ble Court on 30.3.2002 and ORO
of this amount has also been issued by this Hon'ble Court.

13. That as per the terms and conditions of the award, the
H DH/Applicant is entitled to recover the deposited amount
NEW INDIA ASSURANCE CO. LTD. & ANR. v. 347
KUSUM & ORS. [S.B. SINHA, J.]

~
of Rs.3,03,552/- along with 9% interest on the deposited A
amount from 31.3.2002 onwards.

14. That the JDs/Respondents have not paid even single
penny to the Claimants or to the DH/Applicant so far.

15. Hence, this execution application and it is prayed that B
the execution application may please be accepted. The

-
JDs/Respondents may kindly be directed to pay the
amount of Rs.3,03,552/- along with future interest at the
~
rate of 12% on the deposited amount till its actual
realization failing which the property of the JDs/ c
Respondents may be attached, auctioned to satisfy the
award amount and/or JDs/Respondents in the civil person
as per law."

5. On receiving the said notice, the respondent No.3 by D
filing an objection to the said Execution Petition raised a
-+ question that the said Execution Petition was not maintainable
"' and, in fact, a civil suit is required to be filed for recovery of the
amount. The said objection of Respondent No.4 was sustained
by the Executing Court by a judgment and order dated
E
12.6.2003, holding :

"I have considered the aforesaid case law cited at the bar.
~ ~
Authority cited as un-reported Judgment of the Hon'ble
Delhi High Court, cited by the learned counsel for Insurance
Company - knows decree-holder is not applicable to the F
facts of the case in hand. In this case, liability of insurance
company was limited to the extent of Rs.15,000/- which
was ordered to be recovered from the owner and it was
observed that on the application of the insurer the claim
tribunal is supposed to issue a certificate for recovery of G
• 1.. the excess amount paid by the Insurance Company to the
collector and collector is supposed to recover the same
in the same manner as arrears of land revenue from the
insured. Award passed in favour of the LRs of the
deceased can't be treated as decree in favour of Insurance H
348 SUPREME COURT REPORTS [2009] 12 S.C.R.
:-

A Company. Insurance Company can effect recover of the ~
amount from the objector through a regular civil suit as per
the observations of our own Hon'ble High Court reported
in 2002-1) PLR Page 39 and (2001-3) PLR Page 813 -
Supra by the learned counsel for the objector. Further,
B proceedings in claim cases are of summary nature for
which no strict proof was required but in the regular suit
procedure for providing document is strictly as per law.
Thus, execution application being not maintainable stands
dismissed. However, Insurance Company has an
independent right to recover the amount from insured "'"
-
c (Owner and Driver) as per award through regular civil suit.
File be consigned."

6. An applicatlon under Article 227 of the Constitution of i;-

India filed thereagainst by the appellant has been dismissed
D by the High Court by the impugned judgment upon considering
the decision of this Court in Oriental Insurance Company Ltd. .. .,
v. Shri Nanjappan & Ors. [(2004) 13 SCC 224], stating :

"The reading of the judgment shows that the Hon'ble
E Supreme Court in the facts and circumstances of that case
had directed that the Insurance Company can recover the
amount from the insured and the Insurance Company shall
not be liable to file a separte suit. This cannot be said to ~ •
be laying down a precedent that in all cases where the
F liability is fixed on the lnrnrance Company, it can always
recover the amount from the owner/driver. In the given
(;ase, it is still open to the owner to dispute the liability on
the plea that he had taken all necessary steps to see that
the driver had a licence and he had no means to find out
that the same was fake."
G
.) '
7. An owner of a vehicle in terms of the provisions of the
Motor Vehicles Act is legally obligated to get the vehicle
insured. The rights and liabiltis of the parties to the contract of
insurance would be governed thereby subject to the provisions
H of the Motor Vehicles Act. One of the conditions which would
NEW INDIA ASSURANCE CO. LTD. & ANR. v. 349
KUSUM & ORS. [S.B. SINHA, J.]
make the insurance company liable to reimburse the owner of A
the vehicle in respect of payment of the amount of
compensation in favour of a claimant is that the driver of the
vehicle must possess a valid driving licence. The owner has a
duty to see that a vehicle is driven by a person having a valid
driving licence. The licence of the driver of the said bus was B
proved to be invalid. The owner did not raise any contention
that he has used due diligence in allowing the driver to drive
the vehicle.
~ -.;.
8. The courts, however, keeping in view the social justice
doctrine in mind wherefor the Act was enacted and in the
c
interest of the claimants hat! been passing such orders. The
High Court has noticed the decision of this Court in Nanjappa
(supra), wherein it was held:

"8. Therefore, while setting aside the judgment of the High D
.
'
~
Court we direct in terms of what has been stated in Baljit
Kaur case that the insurer shall pay the quantum of
compensation fixed by the Tribunal, about which there was
no dispute raised, to the respondent claimants within three
months from today. For the purpose of recovering the E
same from the insured, the insurer shall not be required to
file a suit. It may initiate a proceeding before the executing
~ 1
court concerned as if the dispute between the insurer and
the owner was the subject-matter of determination before
the Tribunal and the issue is decided against the owner F
and in favour of the insurer. Before release of the amount
to the claimants, owner of the vehicle shall be issued a
notice and he shall be required to furnish security for the
~
entire amount which the insurer will pay to the claimants.

. (
The offending vehicle shall be attached, as a part of the
security. If necessity arises the executing court shall take
assistance of the Regional Transport Authority concerned.
G

The executing court shall pass appropriate orders in
accordance with law as to the manner in which the insured,
owner of the vehicle shall make payment to the insurer. In
H
350 SUPREME COURT REPORTS [2009) 12 S.C.R.

A case there is any default it shall be open to the executing >
court to direct realization by disposal of the securities to
be furnished or from any other property or properties of the
owner of the vehicle, the insured. The appeal is disposed
of in the aforesaid terms, with no order as to costs."
B
As noticed hereinbefore, similar directions were also
issued in National Insurance Co. Ltd. v. Baljit Kaur [(2004) 2
sec 1] in the following terms :
-==
"21. The upshot of the aforementioned discussions is that "'"
c instead and in place of the insurer the owner of the vehicle
shall be liable to satisfy the decree. The question, however,
would be as to whether keeping in view the fact that the
law was not clear so long such a direction would be fair
and equitable. We do not think so. We, therefore, clarify
D the legal position which shall have prospective effect. The
j.
Tribunal as also the High Court had proceeded in terms
of the decision of this Court in Satpal Singh1. The said
decision has been overruled only in Asha Rani2. We,
therefore, are of the opinion that the interest of justice will
E be subserved if the appellant herein is directed to satisfy
the awarded amount in favour of the claimant, if not already
satisfied, and recover the same from the owner of the
vehicle. For the purpose of such recovery, it would not be • 1

necessary for the insurer to file a separate suit but it may
F initiate a proceeding before the executing court as if the
dispute between the insurer and the owner was the
subject-matter of determination before the Tribunal and the
issue is decided against the owner and in favour of the
insurer. We have issued the aforementioned directions
having regard to the scope and purport of Section 168 of
G ~• '
the Motor Vehicles Act, 1988, in terms whereof, it is not
only entitled to determine the amount of claim as put forth
by the claimant for recovery thereof from the insurer, owner
or driver of the vehicle jointly or severally but also the
dispute between the insurer on the one hand and the
H
NEW INDIA ASSURANCE CO. LTD. & ANR. v. 351
KUSUM & ORS. [S.B. SINHA, J.]
owner or driver of the vehicle involved in the accident A
"' inasmuch as can be resolved by the Tribunal in such a
' proceeding."

Yet again, in National Insurance Co. Ltd. v. Kusum Rai
[2006) 3 SCALE 519], it was held :
B
"Thus, although we are of the opinion that the appellant
was not liable to pay the claimed amount as the driver was
not possessing a valid licence and the High Court was in
'JI_
error in holding otherwise, we decline to interfere with the
impugned award, in the peculiar facts and circumstances c
of the case, in exercise of our jurisdiction under Article 136
of the Constitution but we direct that the appellant may
recover the amount from theI owner in the same manner
as was directed in Nanjappan (supra)."
D
Yet again in Oriental Insurance Co. Ltd. v. Zaharulnisha
[(2008) 12 SCC 385], this Court held :

"22. In the result, the appeal is allowed to the limited extent
and it is directed that the appellant Insurance Company
though not liable to pay the amount of compensation, but E
in the nature of this case it shall satisfy the award and shall
have the right to recover the amount deposited by it along
)· ~-
with interest from the owner of the vehicle viz. Respondent
8, particularly in view of the fact that no appeal was
preferred by him nor has he chosen to appear before this F
Court to contest this appeal. This direction is given in the
light of the judgments of this Court in National Insurance
Co. Ltd. v. Baljit Kaur and Deddappa v. National
Insurance Co. Ltd."
G
f '"- Again in Dedappa v. National Insurance Co. Ltd. [(2008)
2 sec 595], it was held :

"26. However, as the appellant hails from the lowest strata
of society, we are of the opinion that in a case of this nature,
we should, in exercise of our extraordinary jurisdiction H
352 SUPREME COURT REPORTS (2009] 12 S.C.R.

A under Article 142 of the Constitution of India, direct
Respondent 1 to pay the amount of claim to the appellants
herein and recover the same from the owner of the vehicle
viz. Respondent 2, particularly in view of the fact that no
appeal was preferred by him. We direct accordingly."
B
9. Whenever, thus, a direction has been issued by the
Tribunal, it must be held to have been done in exercise of its
inherent power. It would be travesty of justice, if the Insurance
Company which is directed to pay the amount and then face
immense difficulties in executing a decree.
c
10. We, therefore, are of the opinion that the impugned
judgments cannot be sustained. They are set aside accordingly.
Appeals are allowed, the executing courts are directed to
proceed with the execution and dispose of the same as
O expeditiously as possible.
R.P. Appeal allowed.