High Court · 2024

reference to which FIR No. 98/2007 was registered at Police Station, Kulgam for the commission of offences punishable under Sections 279, 304-A, 379 and 109 of the erstwhile Ranbir Penal Code (RPC), filed a Claim Petition before the Tribunal.

03. The said Claim Petition was disposed of by the Tribunal vide Award dated 9th of June, 2014, holding the Petitioners entitled to an amount of Rs.7,08,000/-, including interim relief, whereas, the Respondent No.3- New India Assurance Company Limited, Srinagar was saddled with the liability to pay the compensation to the Petitioners by depositing the amount within two months before the Tribunal, along with interest @ 6% per annum from the date of filing of the Claim Petition, i.e., 9th of April, 2008, till the amount is deposited. Mac App No. 24 of 2023 CM No. 5507 of 2023

04. The Respondent Nos. 3 and 4 (Insurance Company), however, filed a Review Petition against the aforesaid Award passed by the Tribunal, which came to be dismissed by the Tribunal vide Order dated 10th of September, 2015 by holding that there is no mistake or error apparent on the face of the record which would warrant indulgence of the Tribunal by invoking the provisions of review.

05. The aforesaid Order dated 10th of September, 2015 passed by the Tribunal in the Review Petition came to be called in question by the Respondent Nos. 3 and 4 (Insurance Company) before this Court by way of an appeal registered as CMAM No. 02/2018. The said appeal came to be disposed of by this Court vide Judgment dated 10th of October, 2018, whereby the appeal was allowed and the Award dated 9th of June, 2014 as also the Order dated 10th of September, 2015 passed by the learned Tribunal were set aside, and the matter was remanded to the learned Tribunal for determining the issue as to whether the policy on which the Respondents acted and relied was or was not the outcome of a fraud and, if so, what shall be its effect.

06. The aforesaid Judgment passed by this Court came to be assailed by the Appellants herein before the Supreme Court of India, by way of a Special Leave Petition (SLP) seeking leave to appeal as against the aforesaid Order/ Judgment dated 10th of October, 2018 passed by this Court which was dismissed by the Apex Court vide Order dated 13th of July, 2022, however, with a direction to the MACT (Tribunal), to which the matter had been remanded by this Court, that it will make an effort to dispose of the matters at the earliest and at any date within a period of six months from the date of production of the copy of the Order. It was also observed by the Apex Court that the MACT (Tribunal) will consider the matters untrammeled by any observations in the impugned Orders, by the High Court. Mac App No. 24 of 2023 CM No. 5507 of 2023

07. Thereafter, the Tribunal took up the matter as directed by the Apex Court and appears to have framed an additional issue, which reads as follows: “Whether the policy on which the respondent/ petitioner herein acted and relied was or was not the outcome of the fraud and, if so, what be its effect?”

08. After hearing the Counsel for the parties and on the basis of the evidence led by the parties with respect to the aforesaid additional issue, the Tribunal, on 15th of July, 2023, passed a fresh Award, whereby the Respondent No.1 (registered owner) and Respondent No.2 (attorney of Respondent No.1) came to be jointly and severally held liable for payment of compensation to the tune of Rs. 7,08,000/-, along with interest @ 6% per annum, from the date of filing of the Claim Petition, i.e., 9th of April, 2008, already awarded by the Tribunal vide Order/ Award dated 9th of June, 2014.

09. It is this fresh Award dated 15th of July, 2023 that has been challenged by the Appellants in the present appeal before this Court, primarily, on the ground that the learned Tribunal ought not have absolved the Respondent Nos. 3 and 4 of their liability and that, in view of the aim and object of the Motor Vehicles Act, 1988, it was incumbent upon the Tribunal to first ask the Insurance Company to satisfy the award and then recover it from the registered owner or any other person liable to satisfy the awarded amount.

10. Mr J. H. Reshi, the learned Counsel, appearing on behalf the Appellants, argued that after framing of the additional issue by the Tribunal, the registered owner of the vehicle, despite deemed service in a Daily Newspaper ‘Hindustan Times’, did not respond to the notice and had been proceeded ex-parte. He submitted that the Respondent-Insurance Company had produced two of its employees, namely, Irshad Ahmad Bhat (RW-1) and Mohammad Yaqub Malik (RW-2), whereas, the Appellants had Mac App No. 24 of 2023 CM No. 5507 of 2023 examined their witnesses, including the father of the deceased as their own witness in the case. It is argued that the Insurance Company had admitted that the offending vehicle was insured with them for the year 2005-06 and premium was also paid, but alleged that it was not renewed for the year 2006-07, during the course of which accident had taken place viz. 6th of May, 2007, as such, it was not liable.

11. He has further argued that the Appellants had specifically stated before the Tribunal that the copy of the insurance policy, showing the same to be effective during 2006-07, was provided to them by the police concerned and same had also been produced before the Court of learned Chief Judicial Magistrate, Kulgam on 9th of May, 2007 and, accordingly, they had produced the same before the Tribunal at the time of filing of the Claim Petition, without knowing whether it was fiddled with, in any manner whatsoever and that a similar copy thereof was also produced before the Tribunal by the Respondent-Attorney holder along with Objections/ Written Statement filed by him in the case.

12. It is also submitted that the witnesses examined by the Respondent-Insurer, on showing of the aforesaid copy of insurance on record with the Court, had admitted that the same was on the printed format of the Company under its seal usually affixed on the original policies and identified the signatures of the then Development Officer on it, showing the validity of the aforesaid policy bearing No. 3235120400897 w.e.f. 14th of September, 2006 to 14th of September, 2007, i.e., the period during the course of which the accident had taken place on 6th of May, 2007, however, despite that, the learned Tribunal, by the impugned Award, had chosen to ignore the same and returned a finding that the insurance policy in question had been fiddled with, without there being any evidence on record, whatsoever, to connect the Appellants herein with it and regardless of the law laid down by this Court as well as the Supreme Court on the subject Mac App No. 24 of 2023 CM No. 5507 of 2023 and thereby proceeded in the matter against the direction of the Supreme Court in the instant case which had observed that it may proceed in the matter uninfluenced by the observations of this Court in the Judgments and orders impugned before it by the Appellants in the case.

13. It is next argued by the learned Counsel for the Appellants that the driver of the vehicle, who is expected to have the original policy, or the owner of the vehicle, who is actually covered by the policy in question, had not been brought as witness before the Tribunal nor has the then Development Officer, whose signatures have been identified by the aforesaid witnesses of the Company before the Tribunal, been examined so as to prove the aforesaid issue either way.

14. Mr Reshi further argued that the Tribunal, while passing the impugned Award, had not followed the law laid down by the Apex Court as well as this Court with respect to grant of compensation on account of future income prospects of the deceased, as cited and pointed out at the Bar by the learned Counsel appearing for the Appellants before it and proceeded ahead to grant compensation in favour of the Claimants which had been granted to them earlier in point of time by the Tribunal, prior to filing of appeal before this Court and the Supreme Court.

15. Mr Manzoor Ahmad Dar, the learned Counsel appearing on behalf of the Respondent-Insurance Company (Respondent Nos. 3 and 4 herein), on the other hand, argued that the Appellants, in their appeal, had prayed that the appeal be allowed and the Award impugned passed by the Tribunal may be modified and the Insurance Company be directed to satisfy the modified award in the first instance and then recover the same from the registered owner or any other person, whosoever may be, found liable to pay the same under law and, therefore, it is clear that the Appellants had restricted their prayer for enforcement of ‘pay and recover’ principle, hence, in that view of the matter, the Appellants cannot be said to be Mac App No. 24 of 2023 CM No. 5507 of 2023 aggrieved about the finding recorded by the Tribunal qua the policy of insurance relied upon by them being fake and procured upon commission of fraud. He has further argued that since the commission of fraud is a very serious matter and that the Courts have always frowned upon such persons who try to seek benefit from the commission of fraudulent acts on the ground that fraud vitiates the most solemn proceedings in any civilized system of jurisprudence, as such, a solemn duty is cast upon all Courts to keep the stream of justice unpolluted and no person, whosoever he or she may be, can be permitted to take umbrage, refuge or shelter under a fraudulent document.

16. Learned Counsel for the Respondent-Insurance Company has further argued that the principle of ‘pay and recover’ cannot be applied in the instant case due to non-existence of the insurance contract, inasmuch as, in all the Judgments of the Apex Court and the High Courts, the principle of ‘pay and recover’ had been applied in respect of breach of policy conditions, however, since in the present case, there was no insurance contract in existence, which is the sine qua non for applying the “pay and recover” principle, hence, in absence of there being any insurance contract in existence, such a direction can be ordered; that in absence of there being any insurance contract between the owner/s of the vehicle involved in the accident, there exists no occasion for enforcement of the contract and that no assumption of risk for want of payment of premium, as provided under Section 64 (VB) of the Insurance Act of 1938, as payment/ receipt of payment of premium, which is the sine quo non for the existence of a valid insurance contract, was produced and, instead, on tampering with the date of validity, the policy issued for the year 2005-06 vide No. 3235120400897 based on premium receipt No. 06338717 was upon manipulation shown valid for the year 2006-07 and this aspect of the matter stands elaborately dealt with by the Tribunal, as such, the policy of insurance relied upon was a result of commission of fraud, hence, no pay and recover can be resorted Mac App No. 24 of 2023 CM No. 5507 of 2023 to. He has further argued that since the finding regarding commission of fraud has not been called in question by the judgment debtors, therefore, same has assumed finality, as such, cannot be disturbed in an appeal filed by the Claimants. Lastly, it is submitted that in absence of there being any contract of indemnity, as provided under Section 124 of the Indian Contract Act, the appeal under consideration deserves to be dismissed.

17. Heard learned Counsel for the parties, perused the pleadings on record and considered the matter. I have also gone through the Record of the Tribunal.

18. The Tribunal, vide the impugned Award, has decided the limited issue with regard to liability for payment of compensation in view of Order dated 10th of December, 2018 passed by this Court in the earlier appeal which was challenged before the Apex Court and the Apex Court, vide Order dated 13th of July, 2022, dismissed the SLP and remanded the matter to the Tribunal as per the directions of this Court. The Tribunal maintained the quantum of compensation calculated in terms of Order dated 9th of June, 2014 by the Tribunal, being not disputed and considered the matter with regard to the alleged fake insurance policy and liability of the owner.

19. The Tribunal, after discussing the testimonies of the witnesses examined for and against, while appreciating the evidence, observed that the photocopy of the insurance policy had been produced by the Claimants with regard to the Claim Petition indicating that the offending vehicle was insured vide insurance policy No. 3235120400897 valid w.e.f. 14th of September, 2005 to 13th of September, 2006, however, no new insurance policy had been issued as no premium had been received by the Insurance- Company and that the insurance policy was fake because risk date of the said policy had been changed by fraud in order to cover the date of accident. The Tribunal has observed that the validity of the insurance policy Mac App No. 24 of 2023 CM No. 5507 of 2023 in question had been changed from 14th of September, 2006 to 13th of September, 2007, as against the original validity of 14th of September, 2005 to 13th of September, 2006 and the accident, as pleaded by the Claimants/ Appellants herein, took place on 6th of May, 2007, that is after the expiry of the insurance policy No. 3235120400897. In such circumstances, the Tribunal came to the conclusion that the Claimants/ Appellants herein had produced a fake insurance policy along with the Claim Petition, though the offending vehicle was not insured with the Insurance Company at the time of accident, as such, the Insurance Company was not liable for payment of any compensation.

20. The Tribunal, accordingly, disposed of the Petition holding the owner of the vehicle liable for compensation awarded by the Tribunal vide Order dated 9th of June, 2014 and held the Respondent No.1, the registered owner and Respondent No.2, his Power of Attorney, jointly and severally liable for payment of compensation to the tune of Rs.7,08,000/- along with interest @ 6% per annum and absolved the Respondent-Insurance Company from its liability as it was held not liable to indemnify the insured.

21. Since, the Appellants had not filed any appeal against the quantum of compensation before this Court against the original Award dated 9th of June, 2014 passed by the Tribunal and this Court, in CMAM No. 02/2018 filed by the Insurer, vide Order dated 10th of October, 2018, had allowed the appeal remanding the case to the Tribunal for determining the issue whether the policy on which the Respondents acted and relied was or was not the outcome of a fraud and if so, what shall be its effect. Thereafter, the Appellants herein had moved the Apex Court against the aforesaid Order passed by this Court, however, the Apex Court dismissed their Special Leave Petition (SLP) bearing Diary No. 25540/2021 vide Order dated 13th of July, 2022, thereby directing the Tribunal to dispose of the matter at the earliest with further observation that the Tribunal shall Mac App No. 24 of 2023 CM No. 5507 of 2023 consider the matter untrammeled by any observations made in the impugned Orders. Therefore, the contention of the learned Counsel for the Appellants to the extent of re-opening of the issue of the quantum of compensation is not permissible in this second round of litigation, when the said quantum of compensation had not been challenged by the Claimants earlier, as such, no interference on that count can be made by this Court at this stage, especially when there was no direction from this Court or from the Apex Court to re-open the issue of the quantum of compensation. Therefore, the contention of the learned Counsel for the Appellants with regard to enhancement of the compensation is hereby rejected, being misplaced.

22. Insofar as the second contention of the learned Counsel for the Appellants with regard to the fact that whether the Insurance-Company should have been directed to initially pay the compensation to the Claimants/ Appellants herein and then recover the same from the insured, such a recourse in terms of Section 149 (4) of the Motor Vehicles Act is impermissible, particularly in view of the Judgments of the Apex Court and various High Courts, the insured can be ordered to pay compensation even if it is not liable to indemnify, but that can only be possible when there is a breach of any of the terms/ conditions of the insurance policy.

23. In the case on hand, it is not a case of breach of any of the policy conditions, but it is a clear case where there was no policy of insurance of the offending vehicle as on the date of accident. The copy of the insurance policy, which had been produced by the Claimants/ Appellants before the Tribunal, was found by the Tribunal, on the basis of the evidence led for and against, as having been prepared in a fraudulent manner by maintaining the same number of the insurance policy for which the offending vehicle had been insured by the Respondent-insurer for the previous year, but by simply changing the dates of the validity of the Mac App No. 24 of 2023 CM No. 5507 of 2023 insurance policy for the next year, when the vehicle in question had met an accident, thereby causing death of the deceased. The Officers of the Insurance Company examined by the insured had clearly stated that no premium had been received from the insured with regard to any policy for insuring the offending vehicle for the year in which the accident had taken place.

24. In this fact situation of the case, it emerges that the insurance policy of the offending vehicle had not been insured by the Respondent- Insurance Company, but manipulated, either by the registered owner of the vehicle or his Attorney by fraudulently tampering the dates of validity period corresponding to the time period of previous year’s policy of the insurance of the offending vehicle, without any change of the policy number and without payment of any premium. Thus, in absence of any contractual obligation between the insurer and the insured/ owner, there cannot be any direction to the insurer to pay the compensation to the Claimants and then recover the same from the insured, as is applicable in the cases of contravention of the terms and conditions of the insurance policy. In taking this view, I am fortified by the law laid down by the Apex Court in the following cases: i. Shivaraj v. Rajendra & Anr. 2018 (4) TAC 1; ii. Manuara Khatun & Ors. v. Rajesh Kr. Singh & Ors. 2017 (2) TAC 5; and iii. Shamanna & Anr. v. Divisional Manager, Oriental Insurance Co. Ltd. & Ors. 2018 (3) TAC 677.

25. The next contention raised by the learned Counsel for the Appellants is that the Tribunal, in order to give effect to its Award, ought to have ordered the Insurance Company to initially pay the amount of compensation to the Claimants/ Appellants herein and then recover the Mac App No. 24 of 2023 CM No. 5507 of 2023 same from the registered owner in view of the welfare legislation of the Motor Vehicles Act and also having regard to the enormous difficulties faced by the Claimants/ Appellants, as the registered owner, who was Delhi based, had not appeared before the Tribunal, as such, recovery of the awarded amount from him is a mirage for the Claimants. This contention, however, seems to be untenable in view of the fact that the offending vehicle seems to have been transferred to some Mushtaq Ahmad Malla R/O Qaimoh, Anantnag and the Attorney Holder of the registered owner was also one Tariq Ahmad Dar S/O Abdul Salam Dar R/O Mehman Mohalla, Old Eidgah, Anantnag. The Claimants/ Appellants herein can recover the amount of compensation from the Attorney holder, as well, in view of the Award having been passed against him also, along with the registered owner, as both of them had been held to be jointly and severally liable for payment of compensation to the Claimants/ Appellants herein.

26. For the foregoing reasons and observations made hereinabove, the present appeal is found to be devoid of any merit and substance, as a sequel thereto, the same is dismissed. The impugned Award dated 15th of July, 2023 passed by the Tribunal is hereby upheld. Interim direction(s), if any subsisting as on date, shall stand vacated. Pending application(s), if any, shall stand disposed of accordingly. No order as to costs.

27. The Record of the Tribunal be returned, along with a copy of this Judgment, for information and record. JUDGE (M. A. CHOWDHARY) SRINAGAR September 12th, 2024 “TAHIR” i. Whether the Judgment is speaking? ii. Whether the Judgment is reporting? Yes. Yes. Tahir Manzoor Bhat I attest to the accuracy and authenticity of this document