Sri Lanka Law Reports
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SRI LANKA INSURANCE CORPORATION LTDv
PERERA AND OTHERSCOURT OF APPEALAMARATUNGA, J.
C. KULIYAPITIYA 10281/MJULY 11,2002OCTOBER 17, 2002NOVEMBER 5, 2002
Motor Traffic Act, No. 14 of 1951 – Section 105 and 106-Damages -Accident- Insurance Corporation not a defendant – Notice of action given – Decreeentered – can it be enforced against the Insurer who is not a party? Steps inexecution proceedings – Interlocutory or Final Order?
The Insurer's liability under section 105 does not arise if the plaintiff hasnot given notice of action to the Insurer either before or within 7 days ofthe filing of action – section 106.
In this instance the plaintiff had given notice to the Corporation about theplaintiff’s intention to file action. Therefore the Corporation cannot relyon section 106 exception.
A money decree obtained by a plaintiff in an action for damages formotor accident against a defendant whose vehicle was involved in theaccident can be enforced against the Insurer without making the latter aparty to the action. The addition of the insurer was not at all necessaryand that the Insurer is legally bound to satisfy the decree enteredagainst the insured – Subject to section 106.
A step in execution procedure is an interlocutory order and not a finalorder.
APPLICATION in revision from the Order of the District Court of Kuliyapitiya.
Sri Lanka Insurance Corporation Ltd. v Perera and others
Cases referred to :
Chitty v Parameswary – CALA 40/79 CAM 25.2.83
Fernando v de Silva and Others – 2000 3 Sri LR 29 (followed)
Wijayadasa Rajapaksa P.C. with Rasika Dissanayake for theIntervenient-defendant-petitioner
J.Joseph for the respondent.
April 02, 2003
GAMINI AMARATUNGA, J.This is a revision application filed by the Sri Lanka Insurance 01Corporation Ltd which is the intervenient defendant in D.C.Kuliyapitiya case No. 10281/M. This is an action filed by the plain-tiff-respondent to obtain damages sustained by her as a result of amotor vehicle accident caused due to the alleged negligence of the1st defendant-respondent who was the driver of the vehicle at thetime of the accident. The vicarious liability of the 2nd defendant-respondent who is the owner of the vehicle depended on the neg-ligence of the driver. The petitioner, Sri Lanka InsuranceCorporation Ltd was not a defendant to the action but later became 10the intervenient defendant.
According to the plaint, the accident which gave rise to thisaction occurred on 9/1/1990. The action had been instituted on19/11/1991. After the service of summons, the defendants haveappeared and have obtained a date to file answer. According to thejournal entry dated 25/8/92 the answer had been filed. The peti-tioner has not filed a copy of the answer with this application but thefailure to produce it is immaterial and what is material is what hap-pened in Court on 26/7/93 which was the 4th day fixed for the trial.
On that day both defendants were absent and the Attorney-at-Law 20appearing for them said that she had no instructions from thedefendants and as such she could not appear for the defendants.
The Court thereafter took up the trial ex parte and after leading theevidence of the plaintiff her case was closed. The Court entered
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judgment in favour of the plaintiff for a sum of Rs. one million asdamages with costs. On 14/11/1995 an application was made onbehalf of the plaintiff for the inclusion of the Sri Lanka InsuranceCorporation Ltd as the 3rd defendant to obtain satisfaction of thedecree. On 31/10/1996 this application was withdrawn and on thatday the Judge made order that the plaintiff has the right to executewrit against the Insurance Corporation Ltd.
On 29/4/1998, Counsel for the plaintiff, having produced detailsof the insurance policy issued by the Insurance Corporation Ltd inrespect of the vehicle No 26 Sri 6874, which was involved in theaccident, and having produced proof of notice to the InsuranceCorporation Ltd about.the action to be filed, moved to have the writissued against the Insurance Corporation Ltd. The learned DistrictJudge, for the reasons set out in his order dated 29/4/1998 direct-ed writ to be issued against the Insurance Corporation Ltd. The writwas accordingly issued to the fiscal of the District Court of Colombowho returned the writ with a report which states that when theFiscal went to execute the writ the officials of the InsuranceCorporation informed him that the Court having accepted the cor-poration's objection has discharged the Corporation from the caseand accordingly the Corporation objects to the execution of the writ.Having considered this report the Court directed to re issue the writ.The Court also directed notice under section 219 of the CivilProcedure Code to be issued on the General Manager of theInsurance Corporation. Thereafter Counsel for the InsuranceCorporation appeared in Court and moved Court to recall noticeissued on the General Manager of the Corporation under section219 of the Civil Procedure Code and also to dismiss the applicationof the plaintiff for an order directing the execution of the writ againstthe Corporation and to discharge the Corporation from the pro-ceedings.
The Court having heard the submissions of both parties refusedthe application of the Corporation and directed to re issue the writagainst the Corporation. The Corporation then filed an appealagainst the said decision and when the plaintiff submitted that therewas no right of appeal available to the Corporation against thedecision to issue writ the Court accepted the submission and madeorder on 26/4/2001 rejecting the appeal. This revision applicationhas been filed to have the order dated 26/4/2001 set aside.
Sri Lanka Insurance Corporation Ltd. v Perera and others
The first question to be decided is whether the order made bythe learned Judge rejecting the Corporation's appeal is correct inlaw. It has been held in Chittyv Parameswary!^ a step in executionproceedings is an interlocutory order and not a final order.Therefore there was no right of appeal and the learned Judge wascorrect in rejecting the petition of appeal. There is another reasonon which the learned Judge's order is supportable. Although theInsurance Corporation sought itself to be added as an intervenient-defendant the Court has not made an order adding the Corporationas a defendant. Thus the Corporation was not a party to the actionand as such it had no right of appeal. Its remedy is by way of revi-sion which it now seeks in these proceedings.
The next question is whether the order made by Court directingwrit to be issued without making the Insurance Corporation Limiteda party to the action is correct in law. In considering this I have torefer to section 105 of the Motor Traffic Act, No. 14 of 1951 asamended, which reads as follows:
105. "If after a certificate of insurance has been issued undersection 100(4) to persons by whom a policy has been effect-ed, a decree in respect of any such liability as is required bysection 100( 1 )(b) to be covered by a policy of insurance (beinga liability covered by the terms of the policy) is obtainedagainst any person insured by the policy, then notwithstandingthat the insurer may be entitled to avoid or cancel, or mayhave avoided or cancelled, the policy the insurer shall, subjectto the provisions of sections 106 to 109, pay to the personsentitled to the benefit of the decree any sum payable there-under in respect of that liability including any amount payablein respect of costs and any sum payable in respect of inter-est on that sum under such decree."
This provision was considered by this Court in Fernando v DeSilva and others!1>. It was held in that case that the word ‘shall’ insection 105 of the Motor Traffic Act which enacts that ‘the insurershall pay to the person entitled to the benefit of the decree the sumpayable thereunder’ denotes an absolute obligation and that theaddition of the insurer was not at all necessary for executionagainst the insurer of the money decree that had been entered infavour of the plaintiff.
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The question that was in issue in that case was whether amoney decree obtained by a plaintiff in an action for damages for amotor accident against a defendant whose vehicle was involved inthe accident can be enforced against the insurer of the vehicle with-out making the latter a party to the action. The Court answered thisquestion in the affirmative. The court's decision completely restedon the interpretation of section 105 of the Motor Traffic Act. TheCourt held that the addition of the insurer was not at all necessaryand that the insurer is legally bound to satisfy the decree enteredagainst the insured.
In the course of the judgment the Court has discussed the doc-trine of subrogation but this was not the real basis on which thejudgment was based. In the written submissions it was submittedthat subrogation is not relevant and does not arise on the facts ofthe case. As I have pointed out the decision in Fernando v de Silvaand others <2)(supra) was based on the interpretation of section105 of the Motor Traffic Act. The Court's observations regarding thedoctrine of subrogation and constructive trust do not form a part ofthe ratio decidendi of the case. Those observations cannot obscurethe real decision of the case. I am in agreement with the interpre-tation of section 105 of the Motor Traffic Act given byGunawardena, J. in Fernando v de Silva and others (supra).
In this case there is no denial by the Insurance Corporation ofSri Lanka Limited that at the time vehicle No 26 Sri 6874 wasinvolved in the accident which was the subject matter of action No10281/ Money in the District Court of Kuliyapitiya there was a validinsurance policy issued by it in respect of the said vehicle. Whenthe plaintiff sought a writ of execution against the InsuranceCorporation the plaintiff has produced the notice the plaintiff hassent to the Corporation on 1/11/1991 giving notice to theCorporation about the plaintiff's intention to file action. Registeredpostal article receipt too had been produced before Court. Vide pro-ceedings of 29/4/1998. The action had been filed on 19/11/1998.The insurer's liability under section 105 of the Motor Traffic Act doesnot arise if the plaintiff has not given notice of action to the insurereither before or within seven days of the filing of the action. VideSection 106 of the Motor Traffic Act. In this case notice of actionhad been given before filing the action. Therefore the Corporationcannot rely on the exception contained in section 106.
Abdul Majeed v Gunasekera, Secretary, Ministry of Justice and
CAothers (Shiranee Tilakawardena, J. (P/CA))237
Accordingly the learned District Judge has rightly issued the writagainst the Insurance Corporation Limited. This revision applicationhas no merit. Accordingly I dismiss the revision application withcosts in a sum of Rs. 10,000/-.
BALAPATABENDI, J.Application dismissed.
SRI LANKA INSURANCE CORPORATION LTD v. PERERA AND OTHERS