REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
O R D E R
Delay of 65 days in filing the Special Leave
Petition is condoned.
Issue notice.
Until further orders, the operation of the impugned
order shall remain stayed.
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.
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
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the same from the owner of the vehicle.
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.
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. vs. Yellamma & Another (2008) 7 SCC 526, Samundra
Devi vs. Narendra Kaur (2008) 9 SCC 100 (vide para 16),
Oriental Insurance Co. vs. Brij Mohan (2007) 7 SCC 56 (vide
para 13), New India Insurance Co. vs. Darshan Devi (2008) 7
SCC 416 (vide para 21), etc.].
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.
-3-
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 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 a liability where there is
none?"
...........................J.
[MARKANDEY KATJU]
NEW DELHI; ...........................J.
AUGUST 31, 2009. [ASOK KUMAR GANGULY]
