MACT Can't Withhold Compensation Even If Vehicle Owner Failed To Furnish Security; Didn't Meet Apex Court Guidelines: Madhya Pradesh High Court

The Madhya Pradesh High Court recently criticised a Motor Accidents Claims Tribunal at Tikamgarh for not disbursing the claim amount citing the non-furnishing of security by the owner of the offending vehicle.

The single-judge bench of Justice Vivek Agarwal held that the law, as it stands, prevents the tribunal from withholding the award amount deposited by the insurance company even if there are infractions of the terms and conditions of the insurance policy by the driver or owner of the offending vehicle. In such scenarios, the insurance company can always recover the said amount from the latter without making the claimant suffer, the court clarified.

Referring to the three-judge bench decision of the Supreme Court in Pappu & Ors. v. Vinod Kumar Lamba & Anr., (2018). Justice Agarwal took the stand that it will have more persuasive value over the two-judge bench decision in National Insurance Co. Ltd. v. Challa Bharathamma & Ors, (2004) highlighted by the respondent insurer. The respondents had argued that the amount deposited by the insurance company, Shriram General Insurance, can be disbursed only upon furnishing the security by the offending vehicle's owner. They also submitted that the dictum in Challa Bharathamma has been followed by a co-ordinate bench of the High Court as well.

“…since the owner insured has already appeared and he has failed to satisfy the requirement of the orders of the Coordinate Bench of this Court and the judgment of Hon'ble Supreme Court and has not furnished the security, then the course open to the Tribunal is as prescribed in the judgment of three Judges in Pappu and others (supra) and by no stretch of imagination, that amount can be withheld by the Tribunal…”, the bench sitting at Jabalpur noted in the order.

Additionally, the court reprimanded the tribunal for not paying attention to the three-judge bench judgment that was delivered in 2018. The court reminded that all district court judges have been given access to software of SCC by the High Court.

“…Thus, this judgment was available to the concerned Additional Judge of the Tribunal”, the court added.

The apex court judgment in Pappu & Ors only allows the Tribunal to issue a certificate against the insured which can be executed as a Revenue Recovery Certificate, the court observed.

“…But, instead of applying himself to the said judgment of Hon'ble Court… Tribunal became a tool in the hands of the insurance company causing further damage to the claimants by not disbursing the amount by giving narrow interpretation to the judgment of the High Court”, the court concluded.

The court also felt that the insurance company acted delinquently by not seeking attachment of the offending vehicle even as per Challa Bharathamma & Ors.

“…by no stretch of imagination, for the complacency of the insurance company, the claimants can be made to suffer. If this interpretation as has been given by the Tribunal or the Coordinate Bench of this High Court is allowed to stand, then it will frustrate the basic purpose of the socially beneficial legislation i.e. in the Motor Vehicles Act…”, the single judge bench elucidated in the order about the flawed argument that claim amount cannot be disbursed until security is furnished by the insured himself.

Stating the above reasons, the court set aside the order of the Claims Tribunal and directed that the amount of the claim along with interest be disbursed in favour of the claimants immediately. The court also made it clear that the insurer can either seek attachment of the offending vehicle or obtain an RRC certificate as per the apex court judgments in Challa Bharathamma and Pappu respectively.

Earlier, the tribunal had directed the owner of the offending vehicle to furnish a bank guarantee for the sum that had been deposited by the insurance company and refused to disburse the awarded amount in favour of the claimants till such security was furnished by the owner.

Advocate Sneh Misra appeared for the petitioners. Advocate Aditya Narayan Sharma represented the Insurance Company.

Case Title: Smt. Sampat Devi & Ors v. Branch Manager Shriram General Insurance Co. Ltd. & Anr.

Case No: Misc. Petition No. 4050 of 2018

Citation: 2024 LiveLaw (MP) 60

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