ORDER
1. Civil Miscellaneous Appeals 1528, 1581, 1529 and 1538 of 1997 were tiled by the owner of the vehicle bearing No. APS 4237, the second respondent in the original petitions, bearing Nos. 194, 161, 246 and 28 of 1991 respectively, involved in the accident, assailing the finding of the learned Chairman (Additional District Judge), Motor Accident Claims Tribunal, Srikakulam, fastening the liability of the decreetal amount, excluding a sum of Rs.25,000/- from the total compensation awarded by the Tribunal, ordered to be paid by the insurer – the appellant in Civil Miscellaneous Appeal Nos. 1922, 2267, 1529 and 1974 of 1997 respectively under Section 140 of the Motor Vehicles Act, for the ultimately death of the deceased persons, in a motor vehicle accident which was occurred on 8-12-1990 at about 3.30 p.m., when the deceased and others who were students, boarded the said lorry. The deceased persons travelled in the said lorry to attend to the meeting at Visakhapatnam. After attending the meeting they boarded the same lorry to reach Srikakulam on the next day in the early hours, the first respondent, driver of the said lorry drove it in a rash and negligent manner as a result of which it turned turtle.
2. To appreciate the contentions raised by both the Counsel, a few facts of the cases are narrated as under:
On 8-12-1990 at about 3.30 p.m., the deceased persons and others who were students boarded the lorry bearing No.APS-4237 so as to go over to Visakhapatnam to attend a meeting and on the next day they boarded the same lorry to reach Srikakulam and in the early hours they reached Srikakulam and the first respondent-driver drove the lorry in a rash and negligent manner and when the lorry crossed Budhumuru and was proceeding towards Chilakapalem junction at about 7.00 a.m., on National High Way No.5, the lorry turned
to the left side or the road in a rash and negligent manner and again to the right side of the road and some of the persons travelling in the lorry sustained injuries and the deceased persons died on the spot. The driver of the vehicle escaped from the scene of accident. On information given by Singuru Ramanarao, one of the injured persons, the Station House Officer, Town II Police Station, registered a case in Crime No.227 of 1990 under Sections 337, 338 and 304-A of Indian Penal Code and transferred the same to J.R. Puram Police Station on the point of jurisdiction, which was again numbered as Crime No.160 of 1990. The deceased persons in all the original petitions were all teenage students and therefore, the claimants, who are their parents filed the claim petitions claiming a sum ranging from Rs.1,00,000/- to Rs. 1,25,000/- for the untimely death of their sons.
3. The second respondent-insured of the crime vehicle filed written statement stating that the lorry at the relevant time was insured with the third respondent and the first respondent had a valid driving licence, that the driver was neither negligent nor rash in driving the vehicle and it was an unexpected event which occurred due to the bad conditions of the road and inspite of diligent driving of the first respondent, the accident occurred and therefore, the Engineering Department of the National High Way is liable for not keeping the road in good condition as a result of which the accident occurred. As such the petitioners-claimants should have made claim against the Government. He, however, admitted that the Democratic Students Organisation has taken the vehicle from the first respondent without his knowledge and consent and the vehicle involved in the accident. As such the owner is not liable to pay the compensation. As the crime vehicle was insured with the third respondent for third party risks and the deceased in
all the cases are third parties, the insurer is liable to indemnify the owner in the event of fastening of any liability on the insured. He denied that the deceased persons were brilliant students and their age. He ultimately submitted that the quantum of compensation claimed by the claimants is exorbitant and excessive and liable to be dismissed.
4. The insurer-third respondent filed written statement denying any sort of liability on it, inasmuch as the deceased persons were gratuitous and unauthorised passengers in a goods vehicle and thus the insured has violated the terms and conditions of the insurance policy and the permit issued by the Road Transport Authority, as per which the vehicle was categorised as Heavy Motor Vehicle ‘goods’ and private carrier and as such it can not carry unauthorised passengers.
5. On the basis of the pleadings, the Tribunal framed the following three issues for consideration:
(1) Whether the petitioners are entitled for any compensation and if so, to what amount and from which of the
respondents?
(2) Whether the petitioners are entitled for any interest and if so, what rate and from what period?
(3) To what relief?
On behalf of the petitioners parents were examined and also documents were marked. The owner of the vehicle-insured was also examined as RW1 and copies of the driving licence of first respondent and the insurance policy were marked.
6. The main contention of the owner of the vehicle is that the volunteers of the Democratic Students Organisation forcibly took away the crime vehicle from first
respondent driver without his knowledge and consent and they travelled as unauthorised passengers in the said lorry and as he had no knowledge that the driver took the students in the said lorry to the meeting and inasmuch as he did not receive any consideration, he is not liable to pay the compensation.
7. On the other hand, the contention of the third respondent-insurer is that the lorry being a heavy goods vehicle, the owner should not allow the students to travel in the said lorry in violation of the terms and conditions of the policy, that the students including the deceased persons are gratuitous and unauthorised passengers, and therefore, the Insurance Company is not liable to pay the compensation.
8. Though the parents are not the eyewitnesses to the accident, but they have proved the accident in question, to have occurred due to the rash and negligent driving of the driver of the lorry, the first respondent. But the owner of the vehicle-insured has deposed that the lorry went to Sompeta on 7-12-1990. The driver, respondent No.l, had a valid driving licence and route permit, that thereafter the lorry did not return back, that on 9-12-1990 at about 12 noon he came to know about the occurrence of the accident and he went to the place of accident. He further deposed that nobody contacted him for transporting the students in his lorry to Visakhapatnam. He also stated that the driver was authorised to take load from the place of his destination, if he could secure load to any other place, whenever he transports goods, that he has specifically instructed his driver not to take passengers in the lorry except the owner of the goods, who is entitled to travel in the cabin. He asserted that he did not permit the driver to carry passengers and that he did not know who engaged the lorry for taking the students to Visakhapatnam.
9. Ex.A1, copy of First Information Report, is the statement given by one of the students travelled in the said lorry and who sustained injuries in the accident, on the strength of which the First Information was registered, shows that the students of the Junior College, High Schools and Degree Colleges were approached by two male persons and two females, requesting them to attend the meeting at Visakhapatnam stating that they need not pay any bus charges and they will provide food and on 8-12-1990 some students got into the lorry at Sedepannaidupeta Junction which was brought by the Organisers and when the lorry reached Srikakulam where some more students got into the lorry and all the four lorries started from Srikakulam and all the lorries went to Visakhapatnam and after attending the meeting the lorries started and that the said injured and some other students numbering about 100 got into the crime lorry and the first respondent drove it in a rash and negligent manner in high speed after passing Budumuru it jolted towards left side and again turned towards right side and turned turtle as a result of which the accident occurred. The police after investigation filed charge-sheet against the respondent No.l under Ex.A5 finding the respondent No.l responsible for the rash and negligent driving resulting in four deaths and injuries to several other students, for not rendering first aid to the injured, for not reporting the accident in the police station and for carrying the passengers in the lorry which is a goods vehicle.
10. After considering the above facts and circumstances of the case, the learned Chairman, found that the accident was the result of rash and negligent driving of the respondent No.l at high speed near Budumuru, inasmuch as there is no evidence to rebut the version of the petitioners put forth before the Tribunal, especially when the driver of the vehicle i.e., the first respondent remained ex parte.
11. It is contended by the learned Counsel for the second respondent-insured that the first respondent-driver took the vehicle to Sompeta and did not meet the second respondent subsequently till the occurrence of the accident and without his knowledge and consent, if the driver has taken the vehicle, the owner is not liable to pay the compensation, particularly when the students never contacted the second respondent to engage the lorry through him. He farther argued that it is the driver who carried the passengers in the goods, vehicle without the consent of the owner. Therefore, it is an unauthorised trip and hence, there is no contract between the victims and the second respondent. There is no proper evidence to show who has engaged the lorry and who paid hire charges. The quantum of hire charges does not find place in the petition, but it was first introduced in the evidence as Rs.2,000/- paid to the owner and the owner has not passed any receipt to the students organisation. It is further argued that the Democratic Students Organisation who alleged to have engaged the lorry is a not student. Therefore, the risk is on the persons who boarded the lorry and there is no evidence that they contacted the owner. Thus there is no link between the owner of the vehicle and the driver and as the act of the driver was unauthorised, the owner is absolutely not liable to pay the compensation. The Tribunal after considering the contention of the owner of the vehicle that the lorry went to Sompeta on a load on 7-12-1990 and did not return back till he came to know of the accident, is an invention as afterthought, as can be seen from the fact that there is no such plea in his counter. Therefore, even if it is assumed that the lorry went to Sompeta, one can find than PW2 stated that all the four lorries started from Srikakulam at one and the same time. The owner is resident of Srikakulam and when the lorries came to Srikakulam and left from there to Visakhapatnam, it can not be believed that without the knowledge of
the owner, the driver has transported the students as passengers in the lorry.
12. From the above discussion, it is manifest that the lorry involved in the accident was engaged by the volunteers of the Democratic Students Organisation to transport the students from Srikakulam to Visakhapatnam to attend a meeting.
13. The Tribunal finally came to the conclusion that as the lorry was engaged by the volunteers of the Democratic Students Organisation, to transport the students to Visakhapatnam, which is an admitted fact, and the owner who has taken the licence of the driver has not chosen to examine him in the Court to give the details about the volunteers of the Democratic Students Organisation engaging the lorry on payment of hire or otherwise. In the event of the owner not filing any documentary evidence to establish that he strictly instructed the driver not to carry any passenger in his lorry, the Tribunal held that the Insurance Company is liable to pay the compensation under the head of “No Fault Liability” and the balance amount has to be paid by the owner of the vehicle.
14. Against that finding the above batch of appeals are filed both by the owner and the Insurance Company.
15. The main contention of Sri S.A. Chart, the learned Counsel for the owner-second respondent is that the fastening of liability on the second respondent to pay
the balance compensation excluding Rs.25,000/- for the untimely death of the deceased persons is contrary to law in view of the fact that the lorry was engaged by the volunteers of the Democratic Students Organisation without his knowledge and consent. He further submitted that the owner-second respondent permitted the driver-first respondent to take the load to Sompeta on 7-12-1990 and he has strictly
gave instructions to his driver not to carry any passenger in the lorry except owner of the goods, who is entitled to travel in the cabin of the vehicle, and the said lorry was forcibly taken away by the volunteers of the Democratic Students Organisation and he has no knowledge of the vehicle transporting students from Sompeta via Srikakulam to Visakhapatnam and thus he is not liable to pay the compensation. In support of his contention he relied on a judgment of this Court in Machiraju Vishalakshi and others v. The Treasurer, Council of India Mission of the Luthern Church in America, Guntur and others, (DB), the judgment in Civil Miscellaneous Appeal No.1054 of 1986 dated January 31st, 1989. He also relied on the judgment of Madras High Court in Kanniappa Nadai’ v. Jayapandi and others, . He further placed reliance on a judgment of this Court in LPA No. 118 of 1999 and Batch disposed of on 13-7-1999.
16. On the other hand, Sri S. Hanumaiah, the learned Counsel appearing for the third respondent, insurance company, contended that if the contention of the second respondent-insured is accepted that he is not liable to pay the compensation, as well as the Insurance Company is not liable to pay the compensation under no fault liability as held by the Supreme Court in National Insurance Company Limited v. Jethu Ram and others, . In the above said judgment the Supreme Court while considering Sections 92-A and 92-B corresponding to Sections 140 and 141 of the Motor Vehicles Act, 1988 on scrutiny of the aforesaid provisions. Their Lordships did not find anything contained therein which should suggest that the liability which accrues under the provisions of Section 92-A has to be borne by the insurer even if it is ultimately held that under the policy of insurance the insurer is not liable to pay the compensation in question. Therefore, in the considered
view of Their Lordships the Tribunal and the High Court have misread the aforesaid provisions of the Motor Vehicles Act and in the aforesaid premises the impugned judgment of the Tribunal and the High Court was held to be unsustainable insofar as it relates to the liability of the insurer arising under Section 92-A and 92-B of the Act. As directed by the Court the Insurance Company paid to the claimant the amount awarded under no fault liability. In final adjudication, the Insurance Company was held not liable to pay the compensation and the liability was mulcted on the owner of the offending vehicle. Therefore, the Insurance Company was held to be entitled to recover the amounts paid under no fault liability from the owner. Therefore, as per the principle laid down by the Supreme Court in Jethuram’s case (supra), if the Court directs the Insurance Company, at the interlocutory stage to pay the compensation to the claimant, under no fault liability, and in the event of fixing the liability on the owner of the vehicle and not the Insurance Company in final adjudication, the Insurance Company is entitled to recover the said sums from the owner paid under no fault liability.
17. Secondly, the learned Counsel for the appellant insurer contended that as per the facts and circumstances of the case and on the basis of the evidence of RW1 and more particularly in the absence of examination of the driver of the vehicle, R1, who is the best person to speak on the facts of the case, and as the insured has allowed the students to travel in the lorry from Srikakulani to Visakhapatnam in a heavy goods vehicle, which amounts to violation of the terms and conditions of the insurance policy, covering the vehicle, therefore, the Insurance Company is not liable to pay the compensation. In support of his contention, he relied on a decision of the Apex Court in Mallawwa and others v. Oriental Insurance Company Limited and others, .
The principle laid down in the above judgment is that the Insurance Company is not liable to indemnify the insured, if he violates the terms and conditions of the insurance policy covering the vehicle. In the instant case, the second respondent-insured allowed the students to travel in the goods vehicle and the accident occurred resulting in death of four students and injuries to others. Thus the second respondent-insured alone is liable to pay compensation to the claimants in all the cases.
18. As can be seen from both the oral and documentary evidence and the conclusions arrived at by the learned Chairman of the Claims Tribunal, the admitted fact is that the crime vehicle went to Sompeta with a load on 7-12-1990 and it came to Srikakulam and picked up the students to transport to Visakhapatnam to attend a meeting. As observed by the Tribunal though the lorry went to Sompeta, it started from Srikakulam and the owner is a resident of Srikakulam. Therefore, when once the vehicle started from Srikakulam it cannot be ruled out that the owner of the vehicle has no knowledge and that the students forcibly took the vehicle away. Had this version been true, the driver would have immediately reported the matter to the owner and the owner in turn would have certainly reported the matter to the police as a precautionary measure.
19. The crucial point involved in this matter is that the owner has not reported the matter either to the police or to the Insurance Company, third respondent. He has not examined the driver of the vehicle, who is his employee and the best person to speak about the truth whether the volunteers of the Democratic Students Organisation for hire engaged the vehicle or they have forcibly taken away the vehicle for the purpose of transportation of students from Srikakulam to Visakhapatnam.
Thus the owner has failed to establish the fact that he has no knowledge of the lorry going to Visakliapatnam. Further the recitals in the evidence are that the volunteers of the Democratic Students Organisation engaged the lorry after payment of hire charges of Rs.2,000/-. Normally, in those types of transactions, the question of issuance of any receipt does not arise. Therefore, it can safely be held that the owner has given the lorry on hire to the volunteers of the Democratic Students Organisation to transport the students from Srikakulam to Visakhapalnam and thus violated the terms and conditions of the insurance policy and therefore he alone is liable to pay the compensation determined by the Tribunal. I am supported in my view by the judgment of the Apex Court in Mallawwa’s case (supra). If the passengers are allowed by the owner to travel in the goods vehicle, the Insurance Company is not liable to pay compensation as per Section 95(l)(b) of the Motor Vehicles Act, 1939. Therefore, the liability is fixed on the insured on the ground that he has violated the terms and conditions of the insurance policy allowing the students to travel in the goods vehicle. Therefore, following the principle laid down by the Supreme Court in Jeihwam ‘s case (supra), the insurance Company is not liable to pay the compensation even under no fault liability.
20. Even the decision relied on by the learned Counsel appearing on behalf of the owner-second respondent in LPA No.118 of 1999 and Batch disposed of on 13-7-1999, is not helpful to the case of the appellant-second respondent for the reason that the burden is upon the insurer to prove that the owner of the vehicle has committed not mere breach but willful breach of the conditions embodied in the policy and that the insurer is liable under Section 149 of the Motor Vehicles Act to indemnify the owner of the vehicle involved in the accident who suffered a decree both
fault liability as well as no fault liability and that the insurer can validly take the defence available under Section 149 of the Act not only in respect of fault liability but also in respect of no fault liability. In other words once the insurer is not liable under the policy for the fault liability for breach of any conditions mentioned therein, it is equally not liable in respect of no fault liability.
21. The learned Counsel for the appellant-owner has relied on the judgments to support his contention that the insurer is liable to indemnify the insured in respect of the amounts awarded by the Tribunal, when he has not violated the terms and conditions of the policy. But I am sorry to comment that in those cases, the issue decided was that the burden of proof lies on the Insurance Company to prove that the owner has violated the terms and conditions of the insurance policy covering the vehicle. When there is an obligation on the insured to appoint driver, who has a valid driving licence, to drive the vehicle and the insured has appointed a driver having a valid driving licence and that driver entrusted the vehicle to a person who does not have a valid driving licence to drive the vehicle and caused an accident, in such of those cases, the burden lies on the Insurance Company to prove that with the knowledge of the insured-owner of the vehicle, the vehicle was entrusted to the driver, who had no valid driving licence, therefore the insured has willfully breached the conditions of policy. Therefore, the Insurance Company is entitled to claim benefit of exclusion clause under Section 95 of the Motor Vehicles Act for payment of compensation, the Court held that the burden lies on it to prove the same. Therefore, the decisions relied on by the learned Counsel for the appellant-insured owner are not applicable to the facts of the instant cases. There is prohibition in transporting the passengers in a goods vehicle, contrary to the terms and
conditions of the insurance policy, when the owner himself has given the vehicle on hire, receiving hire charge of Rs.2,000/- from the volunteers of the Democratic Students Organisation, he has unilaterally violated the terms and conditions of the insurance policy. Therefore, he alone is liable to pay the compensation awarded by the Tribunal below.
22. Therefore, for the foregoing reasons, the appeals filed by the Insurance Company in CMA Nos.1825, 1922, 1974 and 2267 of 1997 deserve to be allowed and they are accordingly allowed setting aside fastening of liability on the appellant company to pay a sum of Rs.25,000/- under no fault liability holding that the owner of the vehicle-insured viz., the appellant in CMA Nos.1528, 1581, 1529 and 1538 of 1997 alone is liable to pay the entire compensation of Rs.48,500/- awarded in OP No.194 of 1991, Rs.49,500/- awarded in OP No.161 of 1991, Rs.47,500/- awarded in OP No.246 of 199! and Rs.49,500/- awarded in OP No.28 of 1991, to the claimants, with interest at 12% per annum. Consequently the appeals filed by the owner of the vehicle-insured are dismissed. In the circumstances of the cases, without costs.