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Supreme Court of India

NATIONAL INSURANCE CO. LTD. versus PARVATHNENI & ANR.

Decided
31 August 2009
Judges listed
MARKANDEY KATJU, A.K. GANGULY (as the open data lists them; this may not name the whole bench)
Disposal
Matter referred to larger bench

Citations

Official
[2009] 13 S.C.R. 1034 · 2009 INSC 1093
Also cited as
  • (2009) 8 SCC 785 (49 citing judgments)
  • (2009) 3 SCC(CIV) 568 (14 citing judgments)
  • (2009) 3 SCC(CRI) 943 (12 citing judgments)

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The Court's text

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Delay of 65 days in filing the Special Leave Petition is condoned.

p. 1035

Issue notice. ~ Until further orders, the operation of the impugned order D .. shall remain stayed.

p. 1035

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 E 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

p. 1035

to pay any compensation amount to the claimants since there 1 was no insurance coverage ·on the date of the accident.

p. 1035

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.

p. 1035

Prima facie, we are of the opinion if the Insurance G ~ 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.

p. 1035

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 (2007) 7 SCC 56 (vide para 13), New India Insurance Co. v. Darshan Devi (2008) 7 SCC 416 (vide para 21), etc.].

p. 1036, margin A

We have some re~ervations 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.

p. 1036, margin B

Hence, we direct that the papers of this case be placed before Hon'ble the Chief Justice of India for constituting a larger ·bench io decide the following questions:

p. 1036, margin E

"(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 vehicle. (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~ liability where there

p. 1036, margin E

is none?" R.P. Matter referred to larger Bench.

p. 1036, margin G