Friday, October 30, 2015

Insurance Companies Can Set Off Compensation Paid Under Mediclaim from MV Act Compensation: Kerala HC - Read Full Judgment

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                PRESENT:

            THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
                                   &
                  THE HONOURABLE MR.JUSTICE K.HARILAL

        TUESDAY, THE 8TH DAY OF SEPTEMBER 2015/17TH BHADRA, 1937

                       MACA.No. 1623 of 2013 ()
                       -------------------------


AGAINST THE AWARD IN OPMV 37/2010 of M.A.C.T.,ERNAKULAM DATED 27-03-2013
APPELLANT(S)/3RD AND 4TH RESPONDENTS:
------------------------------------------------------------------------

       THE NATIONAL INSURANCE COMPANY LTD
       DIV.NO.10, FLAT NO.101-106, N.I.BMC HOUSE
       CONNAUGHT PLACE, NEW DELHI
       REPRESENTED THROUGH THE MANAGER THIRD PARTY CLAIM OFFICE
       KOCHI, REGIONAL OFFICE, PADMA JUNCTION
       M.G.ROAD, ERNAKULAM-682 035.

       BY ADVS.SRI.A.A.ZIYAD RAHMAN
                        SRI.LAL K.JOSEPH
                        SRI.V.S.SHIRAZ BAVA

RESPONDENT(S)/PETITIONER AND THE RESPONDENTS 1 & 2:
------------------------------------------------------


          1. AKBER BADSHA, AGED 49 YEARS
       S/O.MOHAMMED, XIV/1999A, REYYAN HOUSE
       CHULLIKKAL, KOCHI-682 002.

    **    2. ROCKY.N.T, AGED 57 YEARS
       S/O.THOMAS, NADUVILETHARA HOUSE, ERMALLOOR
       CHERTHALA, ALAPPUZHA.

     (** DELETED FROM THE PARTY ARRAY AS PER ORDER DATED 19.06.2015 IN
           MACA 1623 OF 2013)

          3. THOMAS JOB
       S/O.THOMAS, XVIII/1533A, NADUVILETHARA HOUSE
       PYARRY JUNCTION, THOPPUMPADY, KOCHI-602 005.

       R3  BY ADV. SRI.C.K.SAJEEV
       R1  BY ADV. SRI.BIJU MARTIN
       R1  BY ADV. SRI.D.M.NOWFAL

       THIS MOTOR ACCIDENT CLAIMS APPEAL  HAVING BEEN FINALLY HEARD  ON
08-09-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:



                                                                                                (CR)


                      P.R. RAMACHANDRA MENON
                                                 &
                                  K. HARILAL, JJ.
              ..............................................................................
                       M.A.C.A.No.1623 OF 2013
              .........................................................................
                   Dated this the 8th September, 2015

                                  J U D G M E N T

P.R. Ramachandra Menon, J.


      This appeal is placed before us by virtue of the 'Reference

order' dated 14.07.20105 passed by the learned single judge,

doubting correctness of the decision rendered                                               by another

learned single judge reported in 2011 (2) KLT 20[National Insurance

Company Ltd. vs. .V.S. Bijumon and others, which has been relied on by

the Tribunal to decline the relief sought for by the Insurance

Company for setting off the amount obtained by the claimant

under a separate 'Mediclaim policy' in connection with the same

injuries sustained in a road traffic accident. The point to be

considered is whether reimbursement of the medical expenses

under a 'Mediclaim policy' is liable to be set off from the amount

of compensation          worked out under Section 166 of the Motor

M.A.C.A.No.1623 OF 2013

                                 2

Vehicles Act, in relation to the statutory obligation under Section

147(2) of the Act .

      2. Gist of the factual position for the purpose of deciding

this issue is that the claimant, while travelling in a car bearing

No.KL.07.AX/4114 sustained injuries on 21.01.2008, when the

said car collided with a Maruti car bearing No.KL.07.AV.7338,

parked on the side of the road, was suddenly taken to the road

without any signal. Serious injuries were caused to the claimant,

which was sought to be compensated by filing claim petition

before the Tribunal.    The owner and driver of the Maruti car

bearing No.KL.07.AV.7338, sought to remain ex parte. The claim

was resisted by the insurance company on different grounds .

The Tribunal arrived at a finding     that the accident was only

because of the negligence on the part of the driver of the Maruti

car insured by the appellant. The total compensation payable

was worked out        as Rs.99500/-, which was directed to be

satisfied by the appellant/insurer of the said car, with interest at

the rate of    8% per annum, which is the subject matter of

M.A.C.A.No.1623 OF 2013

                                  3

challenge in this appeal.

     3. The case of the appellant/Insurer is that, in connection

with the injuries sustained to the claimant , a sum of Rs.78500/-

was claimed as medical expenses and that the said amount was

already satisfied by the Insurance Company under a separate

'Mediclaim policy' obtained by the claimant, which was sought to

be set off . The said proposition was objected by the claimant

stating that the said amount satisfied by the insurer was under

a separate policy, by virtue of the premium paid by the claimant

to meet the eventualities and that the same did not have any

connection whatsoever with the statutory liability to be satisfied

by the insurer as envisaged under Section 147(2) of the Act.

The plea of the insurance company was rejected by the Tribunal

relying on the decision rendered by a learned single Judge of

this Court reported in 2011 (2) KLT 20   (cited supra).

     4. The present matter was argued in detail by both the

sides before the learned single Judge, who found it difficult to

agree with the proposition in 2011 (2) KLT 20. Doubting the

M.A.C.A.No.1623 OF 2013

                                    4

correctness of the said decision, it was observed that the decision

sought to be relied on by the learned single Judge in 2011(2)

KLT 20 was more with reference to the amount payable by the

Life Insurance Corporation of India, which stood entirely on a

different footing . It was also observed that the ruling rendered

by the Madhya Pradesh High Court as per the decision in MP State

Road Transport Corporation v. Priyank (2000 ACJ 701] referred to therein

was actually based on the decision rendered by a Full Bench of

the same High Court,         which in turn had dealt with the case

under a Life Insurance       Policy and as such, the matter required

a re-look.   It was further brought to the notice of the Court that

the decision rendered by the Karnataka High Court reported in

ILR   2008 Karnataka 3277 [Shaheed Ahmed v. Sanakaranarayana Bhat]

referred to in the verdict, to the effect that the amount obtained

under 'Mediclaim policy' was not liable to be set off in respect of

a claim under Section 166 of the M..V. Act, was subsequently

doubted by another learned judge of the Karnataka High Court

and it was referred to a Division Bench. Accordingly, the position

M.A.C.A.No.1623 OF 2013

                                5

of law has been made       clear by the Division Bench as per the

decision reported in 2013 (1) Karnataka Law Journal 624

(The New India Assurance Company Limited vs. Manish

Gupta      and others), declaring    that the amount     obtained

under 'Mediclaim policy' was liable to be set off, as there could

not be extension of any double benefit in respect of the same

cause of action.

     5. Reference was made to the observations of the Apex

Court in United India Insurance Company Ltd. vs. Patricia

Jean Mahajan (AIR 2002 SC 2607), pointing out that the

amount obtained under the policy, (which was a Life Insurance

Policy) could not have been set off against a claim in respect of

the accident occurred and dealt with under Section 166 of the

M.V. Act. But the said decision was found as not promoting the

case of the claimant in any manner. On the other hand, the said

decision itself was found as an authority to hold it the otherway

round, in the light of the observations in paragraphs 23, 24, 25,

26, 31 and 36. After hearing both the sides, the learned Judge

M.A.C.A.No.1623 OF 2013

                                   6

observed that the view taken by the learned single Judge in

2011 (2) KLT 20 did not appear to be the correct law and that

the same required to be referred to a Division Bench. Hence the

Reference.

      6. We heard the matter in detail.

      7. The policy issued by the Life Insurance Corporation and

similar bodies providing coverage for life , stands entirely on a

different footing than the policy issued by General Insurance

Companies covering such other risks; whether it be a policy to

cover the statutory insurance under the M.V. Act or the policy of

insurance issued       under the     Workmen's Compensation Act

(presently the Employees' Compensation Act) or whether it be a

Mediclaim policy. In the case of the former, ( i.e. Life Insurance

Policies) life of the insured is assured and if there is any threat

to the life, it is of course    liable to be compensated    by the

Insurance Company. But satisfaction of the amount covered by

such policy does not depend upon occurrence of death/accident

and even if nothing happens to the insured, by virtue of the

M.A.C.A.No.1623 OF 2013

                                    7

terms of the policy, the sum assured ( which is inclusive of the

premium paid and the bonus assured and accrued) is liable to be

paid to the insured, once the term of the policy is over. In other

words, if a Life Insurance policy has been taken to an extent of

Rs.One lakh, paying the requisite amount of premium, during the

period of policy, say 10 years, if nothing happens to the life of the

insured, the entire amount covered by the policy, plus bonus

accrued and such amounts, if any, as per the terms of the policy

will be payable to the insured and as such, it is the vested right

of the insured to get the said amount, notwithstanding the fact

that no contingency has occurred. If any death occurs in the

meanwhile, it goes without saying that the beneficiary will be

entitled to get the amount covered by the policy without payment

of any further premium, as per the terms of the policy. It is not

the position in the case of other policies, i.e. latter group referred

to above, issued by General Insurance sector. In the case of

latter group of policies, it also is a contract of insurance, subject

to payment of premium. It is true that, for obtaining Mediclaim

M.A.C.A.No.1623 OF 2013

                                  8

policy as well, various formalities have to be completed by the

insured, as to the production of various documents and

satisfaction of the premium to the requisite extent. But, so as

to make the insured eligible to obtain the amount covered by the

policy, the 'contingency' as mentioned in the policy has

necessarily to occur, i.e., accident or illness, as the case may be

and only subject to suffering the injuries/accident, that the

damages/compensation will become due under the said policy.

In the case of policy issued under the M.V.Act or Workmen's

Compensation Act, occurrence of the accident is a 'sine quo non'

so as to make the beneficiaries entitled and eligible to get the

amount covered under the policy to the specified extent.

      8. It is worthwhile to note the observations made by the

Apex Court in Helen C. Rebello and others vs. Maharashtra

State Road Transport Corporation (AIR 1998 SC 3191) .

The main question considered by the Court was in respect of the

amount of Life Insurance, as to whether the same was to be

deducted from the amount of compensation payable under the

M.A.C.A.No.1623 OF 2013

                                            9

Motor Vehicles Act to the claimants or not. Paragraph 34 of the

said judgment reads as follows:

              "34.   Thus, it would not include that which claimant

              receives on account of other form of deaths, which he

              would have received even apart from accidental death.

              Thus, such pecuniary advantage would have no corelation

              to the accidental death for which compensation is

              computed. Any amount received or receivable not only on

              account of the accidental     death but that would have

              come to the claimant even otherwise, could not be

              construed to be the 'pecuniary advantage' liable for

              deduction.    However, where the employer insures       his

              employee, as against injury or death arising out of an

              accident , any amount received out of such insurance on

              the happening     of such incidence    may be an amount

              liable for deduction. However, our legislature has taken

              note of such contingency, through the proviso of Section

              95. Under it, the liability of the insurer is excluded in

              respect of injury or death, arising out of, in the course of

              employment of an employee.

      9. The said vital distinction, is further discernible from the

discussion made by the Apex Court in United India Insurance Co.Ltd

vs. Patricia Jean Mahajan (AIR 2002 SC 2607).              The relevant portion in

paragraph 26 of the said verdict is extracted below:

M.A.C.A.No.1623 OF 2013

                                        10

             " 26. From the above passage       it is clear that the

             deductions    are  admissible  from    the  amount   of

             compensation in case the claimant receives the benefit

             as a consequence of injuries sustained, which otherwise

             he would not have been entitlted to. It does not cover

             cases where the payment received is not dependent upon

             an injury sustained on meeting with an accident.



The Apex Court has made a reference to the judgment in Helen C.

Rebello and others vs. Maharashtra State Road Transport

Corporation (cited supra) and has extracted paragraph 34 (as

extracted already) in paragraph 35 of the said verdict as well

       10. The judgment rendered by a Division Bench of the

Madhya Pradesh High Court in MP State Road Transport Corporation

vs. Priyank (2000 ACJ 701) which was relied on by the learned Judge

of this Court in        2011(2) KLT 20 (cited supra) ( which is

doubted and referred to) came to be passed placing reliance on

the verdict passed by a Full Bench of the Madhya Pradesh High

Court in 1983 ACJ 152 ( Kashiram Mathur and others vs.

Sardar Rajendra Singh and another). The Division Bench of

the Madhya Pradesh High Court unfortunately omitted to note the

M.A.C.A.No.1623 OF 2013

                                 11

vital distinction between the nature of policy involved (Mediclaim

policy) and the policy considered by the Full Bench of the said

Court (Life Insurance Policy)and simply held that no deduction of

the amount obtained under the Mediclaim policy was justified .

In fact, in the verdict passed by the Full Bench of the Madhya

Pradesh High Court, it was held that there shall not be any

deductions in respect of the amount, which is received         under

the (1) Life Insurance Policy; (2)     Provident Fund; (3) Family

pension; and (4) Gratuity. In respect of 'Ex-gratia' payment,,

the Full Bench held that the same was deductible . The amounts

under the above 'four' heads stand on a different footing and it

is not an advantage by reason of death/accident.

      11.   These aspects were infact considered by a Division

Bench of the Karnataka High Court pursuant to the reference

made , doubting the decision rendered by a Single Bench of the

Karnataka High Court in Shaheed Ahmed vs. Sankaranarayana Bhat

(ILR 2008 Karnataka 3277) . It was accordingly held by the Bench

in the New India Assurance Company Limited vs. Manish Gupta and others

M.A.C.A.No.1623 OF 2013

                                      12

[2013 (1)  Karnataka Law Journal         624] explaining the significant

difference in between and observing that the very concept of

insurance is not      to      extend      any unlawful enrichment     to

anybody in     respect of the very same cause of action.            The

purpose of insurance is only to place the party to the same level

from where he suffered the downfall because of the contingency

occurred. The observations made by the Division Bench of the

Karnataka High Court in paragraphs 18, 19,20 and 22 are in the

following terms:

                 18. The tests to be applied for dertermining
                 "

           the 'pecuniary advantage' which has to be deducted

           from the amount of compensation in a case of death

           are :

                      (1) Onus is on the insurer to

               establish that some pecuniary benefit or

               reasonable    expectation   of   pecuniary

               benefit to the claimants, is resulting from

               the death of the deceased.

                      (2) Damages to be awarded to the

               claimants are compensatory and not

               punitive.   Therefore, the test that no

               advantage    should accrue to the wrong

M.A.C.A.No.1623 OF 2013

                                  13

           doer would not be applicable.

                  (3)   Where     death   has  merely

           accelerated the receipt of benefits, which

           the claimants would have in any case,

           received at some future date in such cases

           pecuniary benefits come to the claimants

           not by reason of the death. The pecuniary

           advantage received by the claimants is the

           advantage gained by acceleration of their

           interest.

                  (4) Benefits received from the

           employer in some cases may be held to

           come to the claimants by reason of death.

           But, if the benefits are shown to have

           been received merely out of consideration

           for these claimants, e.g., contributions by

           co-workers to relieve the needs of the

           claimants, then such benefits cannot be

           held to have been received merely by

           reason of death of the deceased.

                  (5) Lastly, if there is any doubt as

           to whether the balancing principle extends

           to any class of benefit not covered by any

           binding authoriity, the doubt has to be

           resolved in favour of the claimants

M.A.C.A.No.1623 OF 2013

                                  14

             inasmuch as in such a case the defendant

             must be held to have failed to discharge

             the burden placed on him to justify such

             deduction

         19.   With reference to the deductions under the

         Mediclaim, a Division Bench of the Madhya Pradesh

         High Court in the case of Madhya Pradesh State

         Road Transport Corporation V/s. Priyank reported

         in 2000 ACJ 701, placing reliance on the full Bench

         decision has observed that the amount received by

         the insured under the Mediclaim Policy is not

         deductible inasmuch as the claimant has received

         these amount under the contract of insurance, for

         which had paid premium. We are unable to persuade

         ourselves agree to the    opinion rendered by the

         Division Bench of the Madhya Pradesh High Court,

         moreso having regard to the fact that the Full Bench

         had ruled and classified as to what are the amounts,

         which are deductible and the amounts which are not

         deductible.

                20. Indeed an injured person cannot claim

         benefit out of his own misfortune. He cannot claim

         medical expenses under the Mediclaim policy and

         also calim damages in the nature of amount expended

         for medical treatment under the claim petition, which

M.A.C.A.No.1623 OF 2013

                                     15

         is filed under the Motor Vehicles Act. In similar, if

         not identical circumstances, a Division Bench of this

         court in the case of Karnataka State Road Transport

         Corporations V/s. Anantharam Singh reported in ILR

         1996 KAR 1088 has observed that once a claim is

         satisfied with repsect to the damages caused to the

         car by the insurer, the question of the owner of the car

         claiming damages as against the tort -feasor before

         the Claims Tribunal does not arise inasmuch as the

         cost of repair having been already recovered through

         the insurer, the claimant or the owrner of the case

         cannot claim compensation under the claim petition

         filed under the Act.     It is useful   to extract   the

         observatuiobs made by tbe Division Bench, which

         would read as under:

             (xx xx xxx--omitted)

                22. In the case on hand, the facts are almost

         similar.  It is not in dispute that in all the claim

         petitions, the claimants had taken the Mediclaim

         Policies and they have claimed the amount under the

         policy. We are of the view that the question of the

         claimants claiming compensation in the claim

         petition, which is filed under the Act for the amount

         expended by them for the treatment, certainly cannot

         be granted. The medical expenses as observed, is

M.A.C.A.No.1623 OF 2013

                                     16

           classified as a pecuniary loss. Pecuniary loss in its

           context means that the     actual amount, which is

           expended by the claimant for treatment. If the said

           amount has been paid by the insurer under the

           Mediclaim policy, the question of the claimant

           claiming the very same amount for the very same

           purpose, which is inclusive of the expenses, which are

           incurred by him for the hospitalization and for his

           treatment does not arise.       Undoubtedly,, if the

           amount, which is received by the claimant under the

           Mediclaim policy falls short of the actual expenses

           expneded by him, it is always open for him to claim

           the difference of amount spent from the Tribunal. But

           however he cannot claim compensation under both

           the Mediclaim policy as well as the claim petition

           filed under the Act. The decision of the Apex Court

           in Hellen C. Rebello's case was in respect of the Life

           Insurance Policy and not in respect of a Mediclaim

           Policy    and   therefore   the   said   decision   is

           distinguishable. "

     12. We are in full agreement with the views expressed by

the Division Bench of the Karnataka High Court, and hold that

the very purpose of insurance is to see that un-anticipated risk

M.A.C.A.No.1623 OF 2013

                                   17

is covered to the extent necessary, lest there should be any loss

to the party concerned because of the unforeseen contingency

which occured during the policy period. As it stands so, if a

party sustains damage in respect of a vehicle or was made to

spend a certain amount for availing treatment in connection

with the injuries and if the said amount is satisfied by the insurer

under a separate policy issued in this regard ( of course based

on premium collected separately for the sum assured) the same

is liable to be reckoned for fixing the quantum of compensation

payable under the M.V. Act and if only a finding is rendered that

loss is still there, could it be compensated to the requisite extent.

To put it more clear, if the party has obtained only a lesser

amount under the         'Mediclaim policy' taken by   him (paying

premium separately), the balance amount, if any, could very

well be claimed in the claim petition to be preferred before the

Tribunal with reference to the statutory coverage.

      13. Then a question may arise, whether this by itself will be

sufficient to make up the loss. It is important to note that the

M.A.C.A.No.1623 OF 2013

                                 18

'Mediclaim policy' was obtained by the party after paying the

premium. If a portion of the sum assured under the Mediclaim

Policy has already been satisfied, he will be entitled to coverage

only in respect of the balance sum assured during the remaining

period/tenure of the policy. If he meets with any other accident

or suffers from any other disease in the meanwhile, he cannot

aspire anything more. At the same time, the Insurance Company

who has issued policy to cover the statutory risk under the M.V.

Act becomes a gainer .

     14. In the instant case, both the policies have been issued

by one and the same Insurance Company. According to the

learned Counsel for the Insurance Company, the mischief was

brought to light only when the claimant was required to produce

the original bills before the Tribunal so as to sustain the claim;

when he had to produce a certificate issued by the Insurer as

Ext.A8, to the effect that a sum of Rs.78418/- ( as claimed in

the claim petition before the MACT) had already been obtained by

him on producing the original         bills before the Insurance

M.A.C.A.No.1623 OF 2013

                                 19

Company under the Mediclaim Policy.          It was in the said

circumstance that the said amount was sought to be set off.

      15. The amount actually spent by the insured and the loss,

if any, sustained because of the accident is the cause of action to

be considered.     It is true that a sum of Rs.78418/- had to be

spent by the party towards medical expenses because of the

injuries sustained in the accident, which however           stands

compensated by the Insurance Company, though under a

separate policy. This being the position, there is no other

instance, which is liable to be compensated with regard to the

injuries sustained in the accident, but for the expenses incurred

by the party in having satisfied the premium for obtaining the

Mediclaim Policy. Nothing prevented the party from retaining the

Mediclaim Policy intact and to have claimed the entire benefit in

respect of the injuries sustained in the accident under the policy

issued in respect of the offending vehicle, before the Tribunal.

But having chosen to obtain the due amount under the 'Mediclaim

policy'; thus making him       to be placed   back on the same

M.A.C.A.No.1623 OF 2013

                                20

pedestal, where he was standing before sustaining the accident,

the insured    is not liable to be heard to say that amount is

liable to be paid under other policies as well, in respect of the

same cause of action; which otherwise will         only amount to

unlawful enrichment.

      16. The remaining aspect is with regard to the 'premium'

already satisfied by the party for obtaining the 'Mediclaim Policy'

as mentioned above.        The learned Counsel for the appellant

Insurance Company submits that no contingency, as apprehended

has taken place as there was no case for the claimant at any

point of time during the subsistence of the policy, that any claim

preferred before the Insurance Company           was   declined or

restricted to a lesser extent, referring to satisfaction of the

amount towards medical bills in respect of the injuries sustained

in the   road traffic accident. Still, it is stated by the learned

Counsel for the Insurance Company that the Company is ready

to give credit to the 'premium'      satisfied by the claimant for

obtaining the 'Mediclaim policy' during the relevant year    which

M.A.C.A.No.1623 OF 2013

                                    21

amount could be treated as an expense and claimed before the

Tribunal.

     17. In the said circumstance, this Court declares that the

Insurance Company is entitled to 'set off' the amount in respect

of the medical bills with regard to the same injuries under the

Mediclaim Policy, except to the extent of 'premium' satisfied

under   the    Mediclaim    Policy.    Reference    stands  answered

accordingly. The award passed by the Tribunal is modified and

the liability of the Insurance Company is scaled down         to the

above extent.     Judgment passed by the learned single Judge ,

as reported in 2011 (2) KLT 20 (cited supra) stands overruled.

     Appeal stands allowed. No cost.




                                    P.R. RAMACHANDRA MENON,
                                                 JUDGE


                                             K. HARILAL,
                                                 JUDGE

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