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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
LETTERS PATENT APPEAL NO.121 OF 2000
1. M/s. Traders Pvt. Ltd., Janasatta )
Karyalaya, Mirazapur Road, )
Ahmedabad, (Owner of Motor )
Vehicle No.MHT 1835). )
2. The Oriental Insurance Co. Ltd., )
30-B, Swastik Society, )
Navrangpura, Ahmedabad - 380 )
009 (Insurer of Motor Vehicle )
No.GBL-8335.)
ig ) .... Appellants
Versus
1. Smt. Sunanda widow of Krishna )
Machivale. )
2. Kum. Nutan Krishna Machivale, )
daughter of the deceased. )
3. Kumar Niranjan Krishna )
Machivale, son of the deceased. )
4. Kum. Kavita Krishna Machivale, )
daughter of the deceased. )
4A Yeshodabai Babu Machivale, )
mother of the deceased. )
All resident of 24-A, Nanabhai )
Chawl, Room No.2, Parel Village, )
Back Road, Bombay - 400 012. )
5. Shri Tukaram Maruti More, 16, )
Hanuman Building, R/76, S.V. )
Road, Bombay - 400 007. )
(Owner of Truck No.MHT 1835) )
(since deceased). )
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5A Jijabai Tukaram More, widow of )
Tukaram Maruti More, 16, New )
Hanuman Building, R/76, S.V. )
Road, Bombay - 400 007. )
6. Shri Sampat Yeshwant Dhanwat, )
Uday Housing Company, )
Kavarana Bldg., 26, P. D'Mello )
Road, Bombay - 400 009 (Driver )
of Truck No.MHT 1835) )
7. The New India Assurance Co. )
Ltd., New India Bhavan, 34-38, )
Bank Street, Fort, Bombay - 400
ig )
023. (Insurer of Motor Truck )
No.MHT 1835) (Discharged). ) ... Respondents
Mr. M.G. Barve for the petitioners.
Mr. P.M. Patel for respondents 1 to 3.
Mr. R. Mahadik i/b Mr. S.R. Singh for respondent 7.
CORAM : SMT. RANJANA DESAI &
SMT. R.P. SONDURBALDOTA, JJ.
DATE ON WHICH THE JUDGMENT
RESERVED : 13TH JUNE, 2008.
DATE ON WHICH THE JUDGMENT
PRONOUNCED : 27TH AUGUST, 2008.
JUDGMENT : (Per Smt. Ranjana Desai, J.)
1. Rule. Respondents waive service. By consent of the parties,
taken up for hearing forthwith.
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2. In this letters patent appeal, order dated 8/3/2000 passed by
learned Single Judge of this court in First Appeal No.807 of 1994 is
under challenge. Respondents 1 to 4A are the heirs of one
Krishna Babu Machivala. They filed Application No.827 of 1988
under the Motor Vehicles Act, 1939 (for short, “the said Act”) in the
Motor Accident Claims Tribunal at Bombay, (for short, “the
Tribunal”) for compensation on account of the death of the said
Krishna (for convenience, “the deceased”) in a car accident on
16/12/1987.
3. We shall now state how the parties are arraigned in the
application before the Tribunal. Respondents 1 to 4A are the
original applicants-claimants (for convenience, “the applicants).
Appellant 1 firm is opposite party No.3. It is the owner of Maruti
Car No.GBL 8335. Maruti Car No.GBL 8335 shall be referred to as
the said car and appellant 1 shall be referred to as the owner of the
said car. Appellant 2 is the 2nd insurer. It is the insurer of the said
car and shall be referred to as such. Respondent 5 is the owner of
Motor Truck No.MHT 1835. He is opposite party No.1. Motor
Truck No.1835 shall be referred to as the offending truck and
respondent 5 shall be referred to as the owner of the offending
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truck. Respondent 5A is the widow of respondent 5. Respondent
6 is the driver of the offending truck. He is opposite party No.2 and
shall be referred to as the driver of the offending truck.
Respondent 7 is the 1st insurer. It is the insurer of the offending
truck and shall be so referred to.
4. On 16/12/1987, at about 11.40 p.m., the deceased was
driving the said car. One Anil Dwarkanath Chudji, an employee of
the Indian Express Newspaper Ltd. (for short, “the Indian Express”)
and another colleague from the Indian Express Office, were with
him. They were proceeding from Nariman Point to Pune. When the
said car approached Sion-Trombay Road near R.K. Studio,
suddenly the offending truck coming from the opposite direction
driven by opposite party No.2 in fast and uncontrollable speed
dashed against Maruti Motor No.CGZ-6272 which was ahead of it,
then went over the driver and dashed against the said car driven by
the deceased with such a great force that it turned round on the
spot killing the deceased instantaneously. Other inmates of the
said car were injured. Soon, the wireless van of the police came to
the spot of incident and removed the injured to the Rajawadi
Hospital, Bombay.
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5. The case of the applicants is that the sudden death of the
only earning member of the family has caused irreparable loss,
pain and suffering to them. The deceased was young and of
robust health. He could have lived upto 75 years but for this
accident. Besides driving in Bombay for the Indian Express who
was his employer, he was required to go to Pune, almost daily on
overtime wages.
6. The applicants’ further case is that the accident took place
because of the rash and negligent driving of the driver of the
offending truck. The owner of the truck is liable to pay
compensation to the applicants because its driver was driving the
truck as its servant in the course of employment with him and/or as
the agent of and/or on behalf of and/or with his knowledge and/or
permission. The insurer of the offending truck is also liable to
indemnify any driver holding license after issuing the certificate of
insurance under the said Act. It is also the case of the applicants
that the deceased was driving the said car as a servant of the
owner of the said car in the course of employment with it and/or as
the agent of and/or on behalf of and/or with the knowledge of
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and/or with its permission and, therefore, the owner of the said car
was liable to pay compensation to the applicants. According to the
applicants, the insurer of the said car driven by the deceased was
also liable to indemnify the deceased holding license after issuing
the certificate of insurance under the provisions of the said Act.
The applicants, therefore, prayed that the Opposite Parties may be
ordered to pay to the applicants a sum of Rs.4,00,000/- or such
other sum as may be deemed fit by way of general and special
damages with interest thereon from the date of the application till
payment.
7. Before the Tribunal, Opposite Party Nos.1 to 3 i.e. the owner
of the offending truck, driver of the offending truck and owner of the
said car respectively, remained absent. The insurer of the
offending truck filed written statement admitting their liability to the
extent of Rs.1,50,000/- and deposited Rs.1,50,000/- with the
Tribunal. The applicants then made an application and requested
the Tribunal that the insurer of the offending truck be discharged.
The Tribunal granted this prayer. Notice as against the said
insurer was discharged.
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8. Insurer of the said car who is appellant 2 herein denied the
claim. It contended that the deceased was employed by the Indian
Express. He was not the employee of the owner of the said car i.e.
M/s. Traders Private Limited (appellant 1 herein). Therefore, even
though he was driving the said car belonging to the owner of the
said car, the insurer of the said car was not liable to pay
compensation to the applicants either in the claim made under the
said Act or under the Workmen’s Compensation Act. According to
the insurer of the said car, assuming the applicants are entitled to
compensation they would be entitled to it only under the
Workmen’s Compensation Act and, therefore, the Tribunal has no
jurisdiction to entertain the application. According to the insurer of
the said car, as there was no negligence on the part of the
deceased, there was no question of the insurer of the said car or
the owner of the said car paying any compensation to the
applicants.
9. Upon consideration of the evidence, the Tribunal concluded
that the driver of the offending truck drove it in a rash and negligent
manner which resulted in the offending truck colliding against the
said car driven by the deceased causing him fatal injuries. The
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Tribunal held that the insurer of the said car was not liable even
under the Workmen’s Compensation Act to pay compensation to
the applicants as the deceased was not an employee of the owner
of the said car. The Tribunal held that the owner of the offending
truck and the insurer of the offending truck are liable to pay
Rs.2,98,000/- minus Rs.15,000/- already paid under section 92A of
the said Act i.e. Rs.2,83,000/- as compensation to the applicants
with interest at the rate of 12% per annum from the date of
application till payment, jointly and severally.
10. The Tribunal further held that the liability of the insurer of the
offending truck is however limited to Rs.1,50,000/- minus
Rs.7,500/- already paid under section 92A of the said Act.
The Tribunal ordered that balance amount of award (Rs.2,83,000/-
– Rs.1,42,500/-) i.e. Rs.1,40,500/- with interest and proportionate
costs be recovered from the owner of the offending truck. The
application was dismissed as against the driver of the offending
truck and the owner of the said car and notice against the insurer
of the said car was discharged.
11. Being aggrieved by this judgment and order, the applicants
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preferred First Appeal No.807 of 1994. Main contention of the
applicants before learned Single Judge was that the deceased was
an employee of the owner of the said car and was driving his car
and, hence, the insurer of the said car was liable to pay
compensation to the applicants as the insurance policy included
liability to third parties. It was contended that therefore, the insurer
of the said car had paid compensation under section 92A of the
said Act. It was urged that the Tribunal ought to have called upon
the insurer of the said car to produce the insurance policy. It was
also urged that the compensation awarded was inadequate and the
entire amount claimed ought to have been granted.
12. Learned Single Judge directed the insurer of the said car to
produce the policy of insurance. On a consideration of certain
clauses of the policy, learned Single Judge came to a conclusion
that the insurer of the said car cannot avoid its liability to pay
compensation to the applicants. He observed that the employer of
the deceased had ordered him to drive the car of its subsidiary
company i.e. the owner of the said car. Learned Single Judge held
that the insurer of the said car was liable to indemnify the
applicants under its ‘Comprehensive Policy’ insuring the said car.
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Learned Single Judge was of the view that the compensation
awarded was inadequate and the applicants would be entitled to
the amount claimed by them that is Rs.4,00,000/-. Learned Single
Judge observed that the insurer of the offending truck had
accepted its liability and deposited Rs.1,50,000/- and that amount
has been received by the applicants. Hence, the balance amount
i.e. Rs.2,50,000/- should be recovered from the insurer of the said
car.
Insurer of the said car was, therefore, directed to pay
Rs.2,50,000/- to the applicants with interest thereon at the rate of
12% per annum from the date of the order of the Tribunal.
13. The said judgment and order is challenged in the instant
letters patent appeal by M/s. Traders Private Limited i.e. owner of
the said car (appellant 1 herein) and the Oriental Insurance
Company Limited – the insurer of the said car (appellant 2 herein).
14. We have heard, at some length, Mr. Barve, learned counsel
for the appellants and Mr. Singh, learned counsel for the New India
Assurance Company Limited i.e. the insurer of the offending truck,
who is respondent 7 herein. We have also heard Mr. Patel,
learned counsel for the claimants.
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15. Mr. Barve, learned counsel for the appellants took us through
the written submissions tendered in the court by the appellants. He
submitted that learned Single Judge erred in taking the insurance
policy issued by the insurer of the said car to the owner of the said
car, on record. He submitted that application to bring on record
the said document was rejected by the Tribunal. That order was
not challenged. The said policy, therefore, could not have been
read in evidence at the appellate stage. Mr. Barve submitted that
taking of the said policy on record has occasioned serious
miscarriage of justice because the appellants had no opportunity to
lead evidence to prove the extent to which IMT 5 purported to
extend Personal Accident Insurance Cover.
16. Mr. Barve submitted that section 110 of the said Act
conferred upon the Tribunal jurisdiction to adjudicate upon claims
for compensation in respect of accidents involving the death of or
bodily injury to and/or damage to any property of Third Party. The
deceased was neither a Third Party within the meaning of section
95(1)(b)(i) nor was he in the employment of the owner of the said
car so that liability under the Workmen’s Compensation Act, 1923
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can be fastened on it. The deceased was in fact a First Party and
the liability, if any, of the appellants would have been in respect of
acts of his negligence resulting into death of or bodily injury to
and/or damage to any property of Third Party.
17. Mr. Barve submitted that learned Single Judge has wrongly
interpreted clause 3 of section II of the said policy. He pointed out
that section II is titled as Liability to Third Parties. Clause 3 thereof
only states that the insurer of the said car was liable in respect of
liability of the driver for his tortuous acts towards Third Party
personal injury or property damage. Learned Single Judge has
wrongly held that the insurer of the said car is liable to compensate
the deceased who was driving the car of the owner of the said car.
18. Mr. Barve submitted that endorsement IMT 5 on which
reliance is placed by learned Single Judge pertains to “Accidents to
unnamed passengers other than the insured and his paid Driver or
Cleaner”. Thus the deceased not being a passenger was not
entitled to the benefit of Personal Accidents Insurance Cover. Mr.
Barve submitted that learned Single Judge erred in treating
Personal Accidents Insurance Cover under Endorsement IMT 5 as
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a contract of indemnity. He submitted that neither Personal
Accidents Insurance Cover nor Life Insurance Policy is a contract
of indemnity. Mr. Barve contended that endorsement IMT 5 is a
Personal Accidents Insurance Cover in respect of death limited to
Rs.15,000/- to unnamed passengers and specifically excludes
such compensation to person driving the vehicle.
19.
Mr. Barve submitted that enhancement of compensation has
no basis. In any event, it is the insurer of the Third Party vehicle
which has to satisfy the award and excess compensation must be
recovered from the said Insurer. He submitted that liability cannot
be fastened on the insurer of the said car in the absence of any
liability being fastened on the owner of the said car.
20. In support of his submissions, Mr. Barve has relied on
judgments of the Supreme Court in Padma Srinivasan v. Premier
Insurance Co. Ltd., AIR 1982 SC 836; National Insurance Co.
Ltd. v. Swaran Singh & Ors., AIR 2004 SC 1531; Punam Devi &
Anr. v. Divisional Manager, New India Assurance Co. Ltd. &
Ors., (FB) AIR 2004 SC 1742; M/s. National Insurance Co. Ltd.
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v. Baljit Kaur & Ors. AIR 2004 SC 1340; Sohan Lal Passi v. P.
Sesh Reddy & Ors., 1996 (5) SCC 21; Skandia Insurance Co. Ltd.
v. Kokilaben Chandravadan & Ors., AIR 1987 SC 1184;
National Insurance Co. Ltd. v. Deepa Devi & Ors. 2008 ACJ
705; Oriental Insurance Co. Ltd. v. Syed Ibrahim & Ors., 2007
ACJ 2816; National Insurance Co. Ltd. v. Anjana Shyam & Ors.
2007 ACJ 2129; British India General Insurance Co. Ltd. v.
Captain Itbar Singh & Ors. AIR 1959 SC 1331 and Subramania
Naicker & Anr. v. Kuppuswamy & Anr., 1990 ACJ 261. Mr.
Barve submitted that in the circumstances, the impugned judgment
and order be set aside and necessary direction be given to recover
the excess compensation from the insurer of the offending truck.
21. Mr. Singh learned counsel for the New India Assurance
Company Limited i.e. the Insurer of the offending truck, respondent
7 herein, submitted that the insurer of the offending truck had filed
written statement in the Tribunal stating that its liability was limited
to Rs.1,50,000/-. It accepted the limited liability and paid
Rs.1,50,000/- to the Claimants and the Claimants filed application
praying for deletion of its name from the proceedings. That
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application was allowed and notice issued against the insurer of
the offending truck was discharged. This order was not
challenged by the appellants. In fact, the appellants have now
prayed that the judgment of the Tribunal be upheld. Therefore, the
appellants cannot now urge that the insurer of the offending truck is
liable to pay any additional compensation to the Claimants.
22.
Mr. Singh submitted that in any case, at the relevant time, the
liability of the insurer of the offending truck in respect of Third Party
risks, in case of goods vehicle was limited to Rs.1,50,000/- under
section 95(2)(a) of the said Act. Mr. Singh further submitted that
on perusal of schedule of the policy of the insurer of the offending
truck, it is clear that premium of Rs.240/- has been paid towards
“Public Risk” under section II-1(i) of the Policy and Rs.16 has been
paid for covering risk of driver/cleaner. No extra premium has
been paid for coverage of any passenger to be carried in the
vehicle or for unlimited liability for Third Party risks. Limits of
liability has been described as “such amount as is necessary to
meet the requirements of M.V. Act, 1939”. Mr. Singh submitted
that it is well settled that liability of the insurer would be limited as
provided under the statute/law except where it can be shown that
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there was a special contract to enhance the liability and extra
premium was paid therefor. Mr. Singh submitted that so far as
insurer of the offending truck is concerned, there was no special
contract to enhance the liability and no extra premium was paid.
Therefore, there is no question of the insurer of the offending truck
paying any compensation to the Claimants beyond the admitted
liability of Rs.1,50,000/- as per section 95(2)(a).
23. Mr. Singh pointed out that the policy of the insurer of the
offending truck is styled as “Third Party Policy”. Third Party
Property Damage as provided under “Limits of Liability” is
Rs.50,000/- (Section II(i)(ii) of the policy). Thus Third Party
Property Damage though limited to Rs.2,000/- under section 92(2)
(d) was extended upto Rs.50,000/- however as far as “Third Party
injury and/or death” is concerned, the liability is restricted to
Rs.15,000/- as per the said Act (Section II-1(i) of the policy). Mr.
Singh submitted that in case of a Comprehensive Policy damage
caused to the vehicle and certain other risks are covered on
payment of requisite extra premium. But that does not mean that
the limit of the liability with regard to Third Party risks becomes
unlimited or higher than that which is statutorily fixed. In this
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connection, Mr. Singh relied on National Insurance Company
Limited v. Jugal Kishore & Ors. 1988 ACJ 270 (SC), New India
Assurance Company Limited v. C.M. Jaya & Ors. 2002 ACJ 271
(SC), Oriental Insurance Company Limited v. Smt. Raj Kumari
& Ors. AIR 2008 SC 403, and National Insurance Company
Limited v. Anjance Shayam & Ors. (2007) 7 SCC 445.
24.
Mr. Singh further submitted that the appellant’s argument that
the insurer of the offending truck should be directed to pay the
entire award amount to the Claimants and then recover that from
the owner of the truck is misconceived. Mr. Singh submitted that
the liability of the insurer of the offending truck is limited to only
Rs.1,50,000/- and there is no provision in law under which any
insurer can be asked first to pay the Claimants and then recover
from the insured even if there is no liability and/or restricted liability.
Mr. Singh submitted that the extra-ordinary jurisdiction to make
such a direction is only enjoyed by the Supreme Court under
Article 136 read with Article 142 of the Constitution of India if the
finding under the law is that there is no liability upon the insurer to
pay the compensation to the Claimants and then recover it from the
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owner. In this connection, Mr. Singh relied upon the judgments of
the Supreme Court in National Insurance Company Limited v.
Kusum Rai & Ors. (2006) 4 SCC 250, Oriental Insurance Co. Ltd.
v. Brij Mohan & Ors. (2007) 7 SCC 56. He also relied on
judgments of this court in United India Insurance Co. Ltd. v.
Anubai G. Thakore & Ors. (F.A. No.827 of 2006 decided on
26/8/2007 and New India Assurance Co. Ltd. v. Diwakar &
Ors. 2007 ACJ 215. Mr. Singh also relied on the judgment of the
Rajasthan High Court in United India Insurance Co. Ltd. v.
Madho Singh & Ors. 2005 ACJ 1953 (RAJ). Mr. Singh submitted
that in the circumstances, the insurer of the offending truck cannot
be saddled with the liability of paying any additional compensation
to the Claimants nor can it be asked to pay the amount to the
Claimants and recover it from the owners of the offending truck.
25. Mr. Patel, learned counsel for the claimants submitted that
learned Single Judge has rightly granted the claim of the claimants
in its entirety. He submitted that no case is made out for
interference with the quantum of maintenance. He submitted that
learned Single Judge has rightly held the appellants also liable to
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pay compensation to the claimants but assuming this court comes
to the conclusion that they are not liable to pay the compensation,
that would entirely be a matter between the two insurance
companies and the owners with which the claimants are not
concerned.
26. We have already noted that the Tribunal has returned a
finding that the driver of the offending truck drove it in a rash and
negligent manner which resulted in the offending truck colluding
against the said car causing fatal injuries to the deceased. The
Tribunal has not found the deceased to be negligent. These
findings of the Tribunal have not been disturbed by learned Single
Judge. We concur with the above findings recorded by the
Tribunal which are endorsed by learned Single Judge. We must
also note that there is no conclusive evidence on record to
establish that the deceased was driving the said car at the instance
of or on the order of the owners of the said car.
27. So far as quantum of compensation is concerned, learned
Single Judge has come to a conclusion that the claimants are
entitled to Rs.4,20,120/-. However, since the applicants have
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claimed only Rs.4 lakhs, learned Single Judge has allowed the
applicants’ claim in its entirety. Thus, learned Single Judge has
enhanced the compensation. In our opinion, the enhancement of
compensation is justified and legal. Moreover, having regard to the
fact that the deceased is survived by two daughters, one son, a
widow and a mother, we are not inclined to disturb the quantum.
The amount awarded appears to us to be reasonable.
28. We must first deal with Mr. Barve’s objection to the taking on
record of the insurance policy of the insurer of the said car by
learned Single Judge. The impugned order indicates that the
Tribunal refused to take the xerox copy of the said policy on record.
Learned Single Judge has observed that it was a basic and crucial
document which could not have been ignored by the Tribunal.
Learned Single Judge, therefore, took it on record and considered
its terms. From the impugned judgment, it does not appear that
the insurer of the said car raised any objection to taking of the said
policy on record before learned Single Judge. If such an objection
was raised, learned Single Judge would have dealt with it. It is,
therefore, not open to the insurer of the said car to raise this
objection at this stage. In any event, we do not see what prejudice
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is caused to the insurer and owner of the said car. Interpretation of
the terms of policy can easily be done even at the appellate stage.
In any case, we feel that it is better to have the said policy on
record, consider its clauses, rather than keep scope for doubts and
make the determination of the issues vulnerable. In this
connection, we may refer to the judgment of the Supreme Court in
National Insurance Company Limited v. Jugal Kishore &
Others, 1988 ACJ 270, where the Supreme Court commented on
the attitude of the insurance companies, of not filing a copy of the
policy in the court and held that it is the duty of the party which is in
possession of a document which would be helpful in doing justice
in the cause to produce the said document and such party should
not be permitted to take shelter behind the abstract doctrine of
burden of proof. In view of the above, this submission of Mr. Barve
is rejected.
29. Before we go to the rival legal submissions, we must refer to
the observations made by learned Single Judge that the owner of
the said car is a subsidiary company of Indian Express Newspaper
Limited. It must be stated here that in the application, the
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applicants have said that the deceased was working as a driver in
the Indian Express. The wife of the deceased has also said so in
the evidence. In this connection, the applicants have examined
Prem Mannalal Ramne, Chief Time Keeper of the Indian Express.
He has said in the examination-in-chief that the deceased was
serving in the Indian Express. But, he has not said that the
deceased was serving as a driver with the owner of the said car. In
cross-examination, he has stated that the deceased was not an
employee of owner of the said car. He has stated that the Indian
Express and owner of the said car are different companies. He
has admitted that the deceased was paid salary by the Indian
Express and he was not receiving any salary from the owner of the
said car. Therefore, it is clear that the deceased was an employee
of the Indian Express and not of the owner of the said car. There is
no evidence on record to establish that the Indian Express is a
sister concern of owner of the said car. This finding reached by the
Tribunal is in our opinion correct. Contrary finding recorded by
learned Single Judge is, therefore, set aside.
30. It must also be noted that learned judge has observed that
there is hardly any dispute that the owner of the said car is a
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subsidiary company of the Indian Express and that the Indian
Express had asked the deceased to drive the said car. This
observation of learned Judge is factually wrong. There is no such
admission on record. In its written statement, the owner of the said
car has denied that the deceased was its employee. As we have
already noted, there is no clear evidence on record to establish that
the owner of the said car is a subsidiary company of the Indian
Express.
31. Before we go to the relevant provisions of the said Act, it is
necessary to refer to the judgment of the Supreme Court in Minu
Mehta’
s case (supra) to which our attention is drawn by Mr. Barve.
In Minu Mehta’
s case (supra), the Supreme Court was faced with
a situation where this court and the Andhra Pradesh High Court
had held that the liability of the insured and consequently of the
insurer to compensate a Third Party dying or being injured on
account of the use of the insured vehicle, is irrespective of whether
the death, injury, etc. has been caused by rash and negligent
driving. The Supreme Court was of the opinion that this view
expressed by the High Courts was without any basis in law. The
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Supreme Court, therefore, analyzed the law. We may sum up what
the Supreme Court has held as that would be relevant for the
present case also.
32. The Supreme Court observed that the liability of the owner of
the car to compensate the victim in a car accident due to the
negligent driving of his servant is based on the law of tort. The
owner is made liable on the basis of vicarious liability. Before the
master could be made liable, it is necessary to prove that the
servant was acting during the course of his employment and was
negligent. With the increase of traffic and accidents it was found
that in number of cases hardship was caused where the person
inflicting the injury was devoid of sufficient means to compensate
the person affected. Therefore, in England, certain statutes were
enacted. In India, provisions relating to compulsory insurance in
respect of Third Party insurance were made by introducing Chapter
VIII in the said Act. After considering the provisions of the said Act,
particularly sections 95(1)(a) and (b), 95(1)(b)(i) and section 96, the
Supreme Court observed that the owner’s liability arises out of his
failure to discharge a duty cast on him by law. The right to receive
compensation can only be against person who is bound to
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compensate due to the failure to perform a legal obligation. If a
person is not liable legally, he is under no duty to compensate any
one else. The Tribunal is constituted for expeditious disposal of
the motor claims. The general law applicable is only common law
and the law of torts. If under the law, a person becomes legally
liable then the person suffering the injuries is entitled to be
compensated and the Tribunal is authorized to determine the
amount of compensation which appears to be just. The Supreme
Court observed that the concept of owner’s liability without any
negligence is opposed to the basic principle of law and the mere
fact that a party received an injury arising out of the use of a
vehicle in public place cannot justify fastening liability on the owner.
The Supreme Court concluded that the proof of negligence
remains the lynch pin to recover compensation.
33. We must approach the present case keeping the above basic
principles in mind. The question which we have to answer is once
it is held that the death of the deceased is caused because of the
negligent driving of the driver of the offending truck who should pay
compensation to the claimants and to what extent. We shall first
examine whether the insurer of the said car and the owner of the
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said car are liable to pay the compensation and if they are to what
extent.
34. The policy of the insurer of the said car is as it’s title states
Private Car Comprehensive Policy. In Jugal Kishore’
s case
(supra), the Supreme Court discussed the nature of a
comprehensive policy. We shall advert in detail to this judgment a
little later. But at this stage, we must mention that in this judgment,
the Supreme Court has in the context of Comprehensive Policy
stated that if the insured wants to cover risk with regard to driver or
passenger, etc. in excess of statutory liability, it has to be clearly
specified in the policy and separate premium has to be paid
therefor. Therefore, the terms of the policy of the insurer of the
said car will have to be carefully perused.
35. Before going to the terms of the policy, we must note that
after examining the present case in the light of the judgment of the
Supreme Court in Minu Mehta’
s case (supra), we are of the
opinion that the insurer of the said car would have been liable in
respect of acts of negligence of the deceased resulting into death
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of / or bodily injury to and/or damage to any property of Third Party.
The deceased was not a Third Party within the meaning of section
95(1)(b)(i) of the said Act. The deceased was a victim in this case.
There is no evidence to establish that he was negligent. There is
nothing to establish that he was the employee of the owner of the
said car or he was driving the said car at the instance of the owner
of the said car. On first principles, we do not see how the insurer
of the said car could be held liable to pay compensation to the
heirs of the deceased. It is also difficult to understand how the
owner of the said car can be held liable to pay compensation to the
heirs of the deceased under the said Act under the policy which is
issued in its favour and which is on record.
36. In this context, before going to the terms of the policy, it is
necessary to refer to certain relevant provisions of the said Act.
Chapter VIII of the said Act is titled as Insurance of Motor Vehicles
against Third Party Risks. Section 94(1) thereof states that no
person shall use except as a passenger or cause or allow any
other person to use a motor vehicle in a public place, unless there
is in force in relation to the use of the vehicle by that person or that
other person as the case may be, a policy of insurance complying
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with the requirements of Chapter VIII. Under section 95(4) a policy
shall be of no effect for the purposes of Chapter VIII unless and
until there is issued by the insurer in favour of the person by whom
the policy is effected a certificate of insurance containing, inter alia,
the conditions subject to which the policy is insured.
37. Section 95(1)(b)(i) states that a policy of insurance must be a
policy which insures the person or class of persons specified in the
policy against any liability which may be incurred by him in respect
of the death or bodily injury to any person or damage to any
property of a Third Party caused by or arising out of the use of the
vehicle in a public place.
38. Section 95(1)(b)(ii) states that a policy of insurance must be a
policy which insures the person or classes of persons specified in
the policy against the death of or bodily injury to any passenger of
a public service vehicle caused by or arising out of the vehicle in a
public place. Obviously 95(1)(b)(i) and (ii) concern themselves with
Third Parties. Proviso to section 95(1)(b) states which liability the
policy is not expected to cover. It says that a policy shall not be
required to cover liability in respect of death arising out of and in
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the course of his employment, of the employee of a person insured
by the policy or in respect of bodily injury sustained by such an
employee arising out of and in the course of his employment other
than a disability arising under the Workmen’s Compensation Act,
1923, in respect of the death or bodily injury, to any such employee
(a) engaged in driving the vehicle or (b) if it is a public service
vehicle, engaged as a conductor of the vehicle or examining tickets
in the vehicle, or (c) if it is a goods vehicle, being carried in the
vehicle. The proviso limits the liability of the insured to the extent
that would arise under the Workmen’s Compensation Act in respect
of driver, conductor or ticket examiner and those who are carried in
a goods carriage.
39. Sub-clause (ii) and (iii) of the proviso however carve out
exception. Under these provisions, the insurer is required to cover
liability in respect of the death of or bodily injury to persons being
carried in or upon or entering or mounting or alighting from the
vehicle at the time of the occurrence of the event out of which a
claim arises, where the vehicle is a vehicle in which passengers
are carried for hire or reward or by reason of or in pursuance of a
contract of employment. The exemption is with reference to the
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nature of the vehicle and not with reference to the persons carried
in the vehicle. Section 95(2) pertains to limits of liability to which
we shall soon advert. In the scheme of the provisions to which we
have made reference hereinabove, the driver of the said car i.e. the
deceased does not figure at all. The deceased was not a Third
Party within the meaning of section 95(1)(b)(i) of the said Act. He
was not even an employee of the owner of the said car. Assuming
he was an employee of the owner of the said car, insurer of the
said car would have been liable in respect of acts of negligence of
the deceased resulting into death of / or bodily injury to and / or
damage to any property of Third Party. Such is not the case here.
The deceased being not a Third Party, in our opinion, his heirs are
not entitled to compensation from the owner of the said car or
insurer of the said car under the said Act.
40. To fasten the liability on the insurer of the said car, learned
Single Judge has relied upon certain terms of its policy. He has
quoted clause 3 of section II i.e. Liability to Third Parties. It reads
thus :
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“3. In terms of and subject to the limitations of
the indemnity which is granted by this Section to the
Insured the Company will indemnify any Driver who
is driving the Motor Car on the Insured’s order or
with his permission provided that such Driver
(a) is not entitled to indemnity under any
other Policy
(b) shall as though he were the Insured observe
fulfil and be subject to the terms,
exceptions and conditions of this Policy in
so far as they can apply.”
Learned Single Judge has observed that from this clause, it is
clear that the deceased being driver of the said car was covered
and was entitled to be indemnified by the insurer of the said car. In
our opinion, learned Single Judge has not interpreted the said
clause correctly.
41. Clause 3, it must not be forgotten is under the caption
“Liability to Third Parties”. Clause 3 implies that the insurer takes
upon itself the vicarious obligation resting on the owner of the car
to make good any loss or damage caused to Third Parties by his
employee i.e. the driver due to his negligence. The words
“indemnify the driver” mean to make good the loss or damage
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caused to Third Parties because of the negligent driving of the
driver of the car of the insured by the insurer of the car. It does not
mean that the victim has to be compensated by the insurer of the
car.
42. Moreover, sub-clause (a) indicates that the insurer will
indemnify any driver who is driving the motor car on the insured’s
order or with his permission provided that such driver is not entitled
to indemnity under any other policy. Thus, the driver who can get
indemnity from any other company under any other policy, is under
this contractual term not to get indemnity from the company who
has issued the policy insuring the car he was driving (New Asiatic
Insurance Company Limited v. Pessumal Dhanamal Aswani &
Ors., AIR 1964 SC 1736). This case should have been examined
from this angle also. Unfortunately, this has not been done.
43. Learned Single Judge has also wrongly interpreted clause 5.
Clause 5 reads thus :
“5. In the event of the death of any person entitled
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33respect of the liability incurred by such person
indemnify his personal representatives in the terms
of and subject to the limitations of this Policy
provided that such personal representatives shall asthough they were the Insured observe fulfil and be
subject to the terms, exceptions and conditions of
this Policy in so far as they can apply.”Clause 5, in our opinion must also be interpreted in the
manner in which clause 3 has been interpreted by us hereinabove.
It means that if under the policy, a driver who is negligent and
causes death of a Third Party or causes damage to the property of
the Third Party and who has to be indemnified by making good the
loss caused by his action to the Third Party, dies his personal
representatives will have to be similarly indemnified in respect of
liability incurred by him against Third Parties. The said amount
cannot be recovered from the legal representatives of the
deceased driver.
44. Learned Single Judge has also relied on I.M.T. 5 which reads
as under :
“I.M.T. 5. Accidents to unnamed Passengers other
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34In considerations of the payment of an
additional premium it is hereby understood and
agreed that the company undertakes to pay
compensation on the scale provided below for bodilyinjury as hereinafter defined sustained by any
passenger other than the insured and/or his paid
driver attendant or cleaner and/or a person in theemploy of the insured coming within the scope of
workmen’s compensation Act, 1923 and subsequent
amendments of the said Act and engaged in and
open the service of the insured at the time suchinjury is sustained whilst mounting into
dismounting from or travelling in but not drivingthe Motor Car and caused by violent accident
external and visible means which independently of
any other cause shall within six calender months ofthe occurrence of such injury result in –
Death only … 100% compensation.
Learned Single Judge has observed that from this clause, it is
clear that the paid driver who comes within the scope of the
Workmen’s Compensation Act, 1923 is excluded for the reason
that he is already covered under clause 3 of section II and,
therefore, the Tribunal was not right in holding that the deceased
was not covered under the policy. This reasoning again proceeds
on the basis that under clause 3 of section II driver of the insured is
entitled to compensation. Learned Single Judge has accepted that
IMT 5 excludes the driver of the insured, but according to him this
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35is because he is covered by clause 3 of section II. As stated by us
hereinabove under clause 3 of section II driver of the insured is not
entitled to compensation he being not a Third Party and, therefore,
in our opinion this reasoning of learned Single Judge must be set
aside as it is based on a wrong premise.
45. In any case, IMT 5 is a personal accident insurance cover
and liability in respect of death is limited to Rs.15,000/- to unnamed
passenger. Assuming that in terms of observations of the
Supreme Court in Jugal Kishore’
s case (supra), the owner of thesaid car has covered risk with regard to unpaid driver on payment
of separate premium and the deceased was an unpaid driver and
was covered by IMT 5, the insurers of the said car would be
required to pay compensation on the scale provided i.e. in respect
of death, the compensation is 100%. The schedule of premium
shows that a premium of Rs.94 was paid towards IMT 5 for death
benefits in respect of 4 passengers. This covered an amount of
Rs.15,000/- per passenger and nothing more.
46. In view of the above, we are clearly of the view that learned
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36Single Judge is not right in fastening the liability to pay the
compensation on the owner of the said car or the insurer of the
said car. We must now turn to the liability of the insurer of the
offending truck.
47. We have already noted that the insurer of the offending truck
has filed its written statement before the Tribunal stating that its
liability is limited to Rs.1,50,000/-. It had paid the amount before
adjudication of the claim. The claimants had filed a written
application praying for the deletion of the insurer of the offending
truck. That application was allowed and notice issued against the
insurer of the offending truck was discharged. The claimants did
not make any grievance about this in the first appeal filed by them.
It is pertinent to note that the order discharging the insurer of the
offending truck was not challenged by the present appellants i.e.
the owner of the said car and the insurer of the said car and,
therefore, that order has become final. In any case, since learned
counsel for the appellants has raised a serious objection to the
discharge of the insurer of the offending truck in this court by
raising legal issues, it is necessary to see whether insurer of the
offending truck has rightly been discharged, or whether the
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37responsibility of paying the entire compensation rests on it. It is
also urged by Mr. Barve, learned counsel for the appellants that
learned Single Judge should have directed the insurer of the
offending truck to make up the amount granted by the Tribunal by
paying to the Claimants the amount in excess of Rs.1,50,000/-.
According to Mr. Barve, since the said amount has wrongly been
directed to to be paid to the claimants by the insurer of the said car,
the insurer of the offending truck may be directed to pay it to the
insurer of the said car and recover it from the owner of the
offending truck.
48. We have already referred to certain relevant provisions of the
said Act. Policy of the insurer of the offending truck is a Third Party
Policy. So far as the liability of the insurer of the offending truck is
concerned, it is necessary to refer to section 95(2) which covers
limits of liability. It reads thus:
“95(2) Subject to the proviso to sub-section
(1), a policy of insurance shall cover any liability
incurred in respect of any one accident up to the
following limits, namely :-[(a) where the vehicle is a goods vehicle, a
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38including the liabilities, if any, arising under the
Workmen’s Compensation Act, 1923, in respect
of the death of, or bodily injury to, employees
(other than the driver), not exceeding six innumber, being carried in the vehicle;]
[(b) where the vehicle is a vehicle in which
passengers are carried for hire or reward or by
reason of or in pursuance of a contract of
employment, –(i) in respect of persons other than
passengers carried for hire or reward, a
limit of fifty thousand rupees in all;(ii) in respect of passengers, a limit
of fifteen thousand rupees for each
individual passenger;
(c) save as provided in clause (d), where
the vehicle is a vehicle of any other class, theamount of liability incurred;
(d) irrespective of the class of the vehicle, a
limit of rupees six thousand in all in respect of
damage to any property of a third party.]”
49. The offending truck was a goods vehicle. It is necessary to
see what are the limits of liability provided under the policy issued
by the insurer of the offending truck. The relevant portion reads as
under :
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Limits of Liability
Limit of the amount of the Such amount as is
Company’s liability under section necessary to meet
11-1(i) in respect of an one the requirements of
accident. the Motor Vehicles
Act, 1939.
Limit of the amount of the
Company’s liability under section
11-1(ii) in respect of any claim or
series of claims arising out of one
event. Rs. 50,000/-
50.
Thus, as per section II-I(i) of the policy as far as Third Party
injury and/or death is concerned, the limits of liability set out in the
policy, the liability of the insurer of the said truck, it being a “goods
vehicle” was limited to Rs.1,50,000/- under section 95(2)(a) of the
said Act. Schedule of the premium reads as under :
B: LIABILITY TO PUBLIC RISK Rs. 240.00
Add: for L.L. To authorized non fare
paying passengers as per END IMT 14
(b) Rs.
Limit any one passenger Rs. ______
Limit any one Accident Rs. ________
Add for L.L. To paid driver and/or
Cleaner as per END IMT. is Rs. 16.00
Add for increased T.P. Limits
Section II 1(i) Unlimited
Section II 1(ii) Rs. ………..
Add : for ………. Rs.
Rs.
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COMPREHENSIVE PREMIUM (A+B) Rs. 256.00
Less : 10% Sp. Discount (If due) Rs.
NET PREMIUM DUE (ROUNDED OFF) Rs. 256.00
This premium of Rs.240/- has been paid towards “Public
Risk” under section 11-1(i) of the Policy and Rs.16 has been paid
for covering risk of driver / cleaner. However, no extra premium
has been paid for coverage of any passenger to be carried in the
vehicle or for unlimited liability for Third Party Risks.
51. Under the caption Limits of liability, Rs.50,000/- is covered
under section 11-1(ii) of the policy i.e. Third Party Property
Damage”. Under section 95(2)(d), Third Party Damage is limited to
Rs.6,000/-. But it appears that risk towards “Third Party Damage”
is extended and covered upto Rs.50,000/-.
52. In this connection, we shall again refer to the judgment of the
Supreme Court in Jugal Kishore’
s case (supra). In that case, the
Supreme Court was concerned with comprehensive policy which
covers more risks than Third Party Policy with which we are
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concerned here. The Tribunal had awarded compensation in the
sum of Rs.10,000/- recoverable jointly and severally from the
appellant insurance company and the owner of the offending bus.
The claimant preferred an appeal to the Delhi High Court
contending that the compensation was inadequate. The Delhi
High Court awarded a sum of Rs.1,00,000/- as compensation to
the claimant recoverable jointly and severally from the appellant
insurance company and the owner of the offending truck.
Aggrieved by the said judgment, the appellant insurance company
approached the Supreme Court. The policy of the appellant
insurance company indicated that the liability undertaken with
regard to the death or bodily injury to any person caused by or
arising out of the use (including the loading and/or unloading) of
the motor vehicle falling under section II(1)(i) had been confined to
“such amount as is necessary to meet the requirements of the
Motor Vehicles Act, 1939. This liability as noted by the Supreme
Court, at the relevant time as per clause (b) of sub-section (2) of
section 95 of the said Act was Rs.20,000/- only. The details of
premium indicated that no extra premium with regard to a case
falling under section II (1)(i) was paid by the owner of the offending
bus. The Supreme Court noted that only the offending bus was
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comprehensively insured the insured’s estimate of value including
accessories (I.E.V.) thereof having been shown as Rs.40,000/-. It
was urged that the policy was a “Commercial Vehicle
Comprehensive” policy and the premium paid was higher than the
premium of an `Act only’ policy and therefore, liability of the
appellant’s insurance company was unlimited and not confined to
Rs.20,000/- only. The Supreme Court rejected this submission.
“Even though it is not permissible to use a vehicle
unless it is covered at least under an `Act only’
policy it is not obligatory for the owner of a vehicle
to get it comprehensively insured. In case, however,
it is got comprehensively insured a higher premiumthan for an `Act only’ policy is payable depending
on the estimated value of the vehicle. Suchinsurance entitles the owner to claim reimbursement
of the entire amount of loss or damage suffered up
to the estimated value of the vehicle calculatedaccording to the rules and regulations framed in
this behalf. Comprehensive insurance of the vehicle
and payment of higher premium on this score,
however, do not mean that the limit of the liability
with regard to third party risk becomes unlimited orhigher than the statutory liability fixed under sub-
section (2) of section 95 of the Act. For this
purpose, a specific agreement has to be arrived at
between the owner and the insurance company and
separate premium has to be paid on the amount of
liability undertaken by the insurance company in
this behalf. Likewise, if risk of any other nature, for
instance, with regard to the driver or passengers etc.
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in excess of statutory liability, if any, is sought to be
covered it has to be clearly specified in the policy
and separate premium paid therefor.”
53. In our opinion, ratio of this judgment is clearly attracted to the
present case.
54. In C.M. Jaya’s
case (supra), the deceased was riding the
pillion seat of a two wheeler when it met with accident with a truck
insured by the appellant insurance company. The Tribunal
awarded a sum of Rs.1,03,360/- as compensation and held that the
liability of the appellant-insurer was limited to Rs.50,000/- and the
balance amount was recoverable from the driver and owner of the
truck. In appeal, the High Court held that the liability of the
appellant insurer was unlimited as the truck was comprehensively
insured. The High Court allowed the cross-objections preferred by
the claimants and placed the full pecuniary liability on the insurer
while enhancing the compensation. Submissions were advanced
on the extent of liability of the insurer. The question which was
posed for consideration before the Constitution Bench of the
Supreme Court was whether in a case of insurance policy not
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taking any higher liability by accepting a higher premium, in case of
payment of compensation to a third party, the insurer would be
liable to the extent limited under section 95(2) or the insurer would
be liable to pay the entire amount and he may ultimately recover it
from the insured. Since there was conflict of opinion in the
decisions of the Supreme Court, the Constitution Bench took a
resume of its earlier decisions. On facts, the Constitution Bench
noted that the policy disclosed that the limit of the amount of the
insurer’s liability under section 11(1)(ii) in respect of one accident
was Rs.50,000/-. The limit of the amount of the insurer’s liability
under section 11(1)(ii) in respect of series of claims arising out of
one event was Rs.50,000/-. No higher premium was paid to cover
higher liability than the statutory liability fixed in the policy. The
Constitution Bench referred to Jugal Kishore’
s case (supra) and to
New India Assurance CO. Ltd. v. Shanti Bai, 1995 ACJ 470 (SC)
and observed that the liability of the insurer is limited, as indicated
in section 95 of the said Act, but it is open to the insured to make
payment of additional higher premium and get higher risk covered
in respect of third party also. But in the absence of any such
clause in the insurance policy, the liability of the insurer cannot be
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unlimited in respect of third party and it is limited only to the
statutory liability. The Constitution Bench added that this view has
been consistently taken in its other decisions. Though the
Constitution Bench did not in so many words state that if the
insurance company’s liability is limited, it cannot be made to pay
the entire compensation amount and recover it from the insurer
while holding that the appellant insurance company’s liability was
limited, it was made clear that the liability of the driver of the
offending vehicle and owner of the offending vehicle was not
affected. The Constitution Bench did not direct the appellant
insurance company to pay the compensation amount and recover it
from the owner and driver of the vehicle. The judgments of the
Supreme Court in Jugal Kishore’
s case (supra) and C.M. Jaya’
s
case (supra), in our opinion, apply to the present case. There is no
extra premium paid for coverage of any passenger to be carried in
the vehicle for `unlimited liability’ for third party risks. Liability of the
insurer of the offending truck as per the schedule is limited to such
amount as is necessary to meet the requirements of the said Act.
There is no special contract to enhance the liability and hence, no
extra premium was paid therefor. We therefore hold the liability of
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the insurer of the offending truck being limited, it cannot be saddled
with liability to pay additional compensation.
55. We now come to a very crucial aspect of the matter. The
claimants have already received the total amount of compensation
i.e. Rs.4,00,000/- as awarded by learned Single Judge. Out of that
amount, Rs.1,50,000/- has been paid by the insurer of the
offending truck. Remaining amount has been paid by the insurer of
the said car. We have already held that the liability of the insurer of
the offending truck is rightly limited to Rs.1,50,000/- and that the
owner of the said car and the insurer of the said car cannot be held
liable to pay any compensation to the claimants. The insurer of the
said car is therefore entitled to get back the said amount. The said
amount obviously cannot be recovered from the claimants because
apart from the fact that they are entitled to this amount in law, such
a direction would cause great hardship to the claimants. Since, the
liability of the insurer of the offending truck is limited to
Rs.1,50,000/- the remaining amount may have to be paid by the
owner of the offending truck, who would be vicariously liable to pay
for the tortious acts of his employee, the negligent driver of the
offending truck. Mr. Barve learned counsel for the insurer of the
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said car urged that the insurer of the offending truck may be
directed to pay the said amount so that it can recover it from the
owner of the offending truck.
56. In our opinion, we cannot in all cases issue a direction to any
insurance company if it is not bound in law to pay compensation, to
pay it and recover it from the owner of the offending vehicle. We
have already referred to the Constitution Bench judgment in C.M.
Jaya’
s case (supra), where this question fell for consideration and
the Constitution Bench did not direct the insurance company to pay
the entire amount, that is including the amount in excess of it’s
limited liability and recover it from the insured. The Constitution
Bench had before it the judgment of the Supreme Court in Jugal
Kishore’
s case (supra), where the Supreme Court held that the
liability of the appellant insurance company was limited to
Rs.50,000/- and observed that this finding did not affect in any
manner the liability of the truck owner and the driver to pay the full
amount of the award. Similarly, in National Insurance Co. Ltd. v.
Bommithi Subbhayamma & Ors., 2005 ACJ 721, the Supreme
Court held that the insurance company was not liable to pay
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compensation on the death of gratuitous passenger in the truck
when it met with accident but the claimants are entitled to recover
the amount of compensation granted by the Tribunal from the
owner of the vehicle.
57. It is also necessary to refer to Smt. Raj Kumari’s
case
(supra) , on which Mr. Singh has placed reliance. In that case, the
High Court had held that though the liability of the insurer was
limited to Rs.50,000/-, yet it was to first pay the amount awarded to
the claimants and recover the amount in excess of Rs.50,000/-
from the owner and the driver of the offending vehicle. The insurer
carried an appeal to the Supreme Court. The Supreme Court
observed that the liability of the insurer was limited to quantum
which was to be indemnified in terms of the policy. The Supreme
Court observed that in certain cases, it has, after looking into the
fact situation, directed the insurance company to make payment
with liberty to recover the amount in excess of the liability from the
insured. The Supreme Court clarified that those decisions were
given on the fact situation of the cases concerned. The Supreme
Court directed that the insurer shall pay an amount of Rs.50,000/-
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with interest awarded to the claimants and the balance has to be
paid by the insured.
58. We may also refer to Anjana Shyam’
s case (supra) which
lends support to our above conclusion. In that case, the question
before the Supreme Court was whether the Insurance Company’s
liability was confined only to the extent of the number of
passengers insured by it and could not be extended to cover
persons not covered by the insurance policy. The Supreme Court
held that the insurance company can be made liable only in
respect of the number of passengers for whom insurance can be
taken under the Motor Vehicles Act and for whom insurance has
been taken as a fact and not in respect of other passengers
involved in the accident in case of overloading. The Supreme
Court observed that since there was no means of ascertaining
who, out of the overloaded passengers, constituted the passengers
covered by the insurance policy, insurance company in such a
case, would be bound to cover the higher of the various awards
and would be compelled to deposit the higher of the amounts of
compensation awarded to the extent of number of passengers
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covered by the insurance policy. The Supreme Court observed
that it would be for the Tribunal thereafter to direct distribution of
the money so deposited by the Insurance Company proportionately
to all the claimants and leave all the claimants to recover the
balance from the owner of the vehicle.
59. In our opinion, directions facilitating recovery of the amount
from the owner of the offending vehicle issued by the Supreme
Court in Baljit Kaur’
s case (supra), in Oriental Insurance Co. Ltd.
v. Nanjappan & Ors. (2004) 13 SCC 224, in Kusum Rai’
s case
(supra), in Oriental Insurance Co. Ltd. v. Brij Mohan & Ors.
(2007) 7 SCC 56 and in Syed Ibrahim’
s case (supra) are in
exercise of its jurisdiction under Article 142 of the Constitution of
India read with Article 136 thereof for doing complete justice to the
parties. Such powers do not vest in us. It is therefore not possible
for us to pass similar orders. We may note that learned Single
Judge of Aurangabad Bench of this court (Kingaonkar, J.) has
taken a similar view in First Appeal No.827 of 2006 and First
Appeal No.826 of 2006 decided on 4/8/2007. However, learned
Single Judge of Nagpur Bench of this court (Kharche, J.) has taken
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a contrary view in National Insurance Co. Ltd. v. Prakash
Sakharam Dudhankar & Ors. 2006(1) BCR 412. The view taken
by Kingaonkar, J. commends itself to us.
60. We will now turn to Padma Srinivasan’
s case (supra) on
which reliance is placed by Mr. Barve. In that case, the accident
had taken place on 5/4/1970. The claimant filed appeal under
section 110-A of the Motor Vehicles Act, 1939. The respondent-
insurance company denied its liability. The Tribunal held that the
claimant is entitled to recover compensation in the sum of
Rs.60,000/-. The Tribunal limited the liability to Rs.50,000/-. The
insurance company filed an appeal in the High Court. It contended
that on the date on which the insurance policy was issued, its
statutory liability was limited to a sum of Rs.23,000/- only and,
therefore, the Tribunal was in error in passing an award in the sum
of Rs.50,000/-. The Supreme Court considered the relevant
provisions of the Motor Vehicles Act, 1939 and held that the
material date for ascertaining the extent of liability of the insurer is
the date of the accrual of the cause of action for a claim arising out
of an accident, which in general would be the date of the accident.
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The Supreme Court noted that the accident had taken place after
2/3/1970. Under section 95(2)(a) of the Motor Vehicles Act, 1939,
the limit of the liability was increased from Rs.20,000/- to
Rs.50,000/- vide Act, 56 of 1969. This amendment came into
force on 2/3/1970. Thus, in section 95(2)(a), the liability of
Rs.20,000/- was increased to Rs.50,000/-. The Supreme Court
held that since the accident had taken place after the amendment
came into effect and the liability amount was increased, the
claimant would be entitled to Rs.50,000/- and not Rs.20,000/-.
Material date means the date of the accident.
61. In this case, the accident took place on 16/12/1987. Under
section 147(2)(a) of the Motor Vehicles Act, 1988, the liability in
case of death is “liability incurred” that is unlimited. The new Act
came into force from 1/7/1989. Since the accident occurred prior
to this date, in the light of Padma Srinivasan’
s case (supra), the
liability of the insurer of the truck cannot be enhanced to that which
is granted by the Tribunal, because it is not unlimited.
62. In Swaran Singh’
s case (supra) on which Mr. Barve has
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relied upon, the Supreme Court was concerned with interpretation
of section 149 of the Motor Vehicles Act, 1988, which pertains to
duty of insurers to satisfy judgments and award against persons
insured in respect of third party risks. The Supreme Court
concluded that if the insurer has satisfactorily proved its defence in
accordance with the provisions of section 149 (2) read with sub-
section (7), the Tribunal can direct that the insurer is liable to be
reimbursed by the insured for the compensation and other amounts
which it has been compelled to pay to the Third Party under the
award of the Tribunal. The Supreme Court further observed that
such determination of claim by the Tribunal will be enforceable and
the money found due to the insurer from the insured will be
recoverable on a certificate issued by the Tribunal to the Collector
in the same manner under section 174 of the Motor Vehicles Act,
1988 as arrears of land revenue. The Supreme Court observed
that where the adjudication of the claims of the insured and the
insurer might delay the adjudication of the claims of the victims, the
Tribunal may relegate them to the remedy before the regular court.
63. In Captain Itbar Singh’
s case (supra) on which Mr. Barve
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has placed reliance, the Supreme Court observed that if the insurer
has been made to pay something which on the contract of the
policy, he was not bound to pay, he can under the proviso to sub-
section (3) and under sub-section (4) of section 96 of the Motor
Vehicles Act, 1939 recover it from the assured.
64. Mr. Barve sought to rely on the above provisions of law and
the above judgments and contended that the insurer of the
offending truck must be made to pay the entire amount and recover
it from the owner.
65. The question which arises is what is the effect of section 96
(3) and (4) of the said Act and section 149(4) and (5) of the Motor
Vehicles Act, 1988. Can it be said that because of these
provisions, the insurance company can be compelled to make
payment of the awarded amount and recover it from the insured in
all cases? We have carefully considered these provisions. On the
basis of these provisions, we are unable to lay down a broad
proposition that in all cases, the insurer must be made to pay the
entire compensation amount and then recover it from the owner of
the offending vehicle.
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66. Section 96 of the said Act corresponds to section 149 of the
Motor Vehicles Act, 1988. These provisions state the duty of the
insurers to satisfy judgments against persons insured in respect of
Third Party risks. These provisions make the insurer deemed
judgment debtor if award against the insured is passed subject to
notice and defences/grounds. Section 96(2) and section 149(2)
state the conditions under which the insurer can deny Third Party
risks. They contain the defences available with the insurer. The
effect of proviso to section 96(3) and section 149(2) is that the
insurer can recover amount from the insured if it is made liable to
pay because of this section. Under section 96(3) and (4) of the
said Act and under section 149(4) and (5) of the Motor Vehicles
Act, 1988, if the amount which the insurer becomes liable to pay
under the policy exceeds the amount which the insurer would,
apart from the provisions of section 96 or section 149 as the case
may be liable under the policy in respect of that liability, the insurer
shall be entitled to recover the excess from that person. In our
opinion the legislature has given statutory right to the insurer under
sub-section (2) of section 96 of the said Act and under section 149
of the Motor Vehicles Act, 1988 to defend a claim on limited
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grounds. That right cannot be defeated by interpreting sub-section
(3) and (4) of section 96 of the said Act or sub-section (4) and (5)
of section 149 of the Motor Vehicles Act, 1988 in a manner which
will result in giving benefit by one hand and withdrawing it by other
hand.
67. In Swaran Singh’
s case (supra), and in Captain Itbar Singh’
s
case (supra), the Supreme Court was concerned with situations
where the insurance company was compelled to pay
compensation. The Supreme Court observed that if the insurer
proves the available satisfactory defences, or if he has been made
to pay something which on the contract of policy he was not bound
to pay, he can recover the same from the assured under the above
mentioned provisions. These judgments, in our opinion, do not lay
down a proposition that in all cases the insurance company has to
pay the awarded amount and then recover it from the assured,
whether it is liable to pay the amount or not. Such a course may
be available under certain fact situations only. For instance, under
the Motor Vehicles Act, 1988, for Third Party property damage, the
liability is limited to Rs.6,000/- and if there is any policy which
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covers lesser amount viz. Rs.2,000/-, as under the said Act, the
amount of Rs.4,000/- would be recoverable from the insured by the
insurer after paying it.
68. We have already referred to Padma Srinivasan’s case
(supra), and stated that the accident took place on 16/12/1987 i.e.
prior to amendment whereby limit of liability was increased, the
insurer of the offending truck cannot be made to pay the enhanced
liability. However, had the accident taken place after the
amendment which enhanced the liability to unlimited liability, the
insurer would be liable to pay the difference between the limited
liability and the amount awarded and recover it from the insured. In
this connection, we may usefully refer to Madho Sen’
s case (supra)
where the Rajasthan High Court has considered this aspect and
laid down the law. We find substance in Mr. Singh’s submission
that the legislature has given statutory right under sub-section (2)
of section 96 of the said Act and sub-section (2) of section 149 of
the Motor Vehicles Act, 1988. Sub-sections (3) and (4) of section
96 or (4) and (5) of section 149 confer rights on the insurer to
recover from the insured under certain contingencies as explained
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above and, therefore, the said ‘rights’ granted by the legislature
cannot be converted into ‘obligation or liability of the insurer to pay
to the claimants first in all cases whether they are liable or not and
then recover it from the insured. Section 96(2) / section 149(2)
would become superfluous if any other interpretation is put on the
above provisions.
69.
In our opinion, judgments of the Supreme Court in Punam
Devi’s
case (supra), Sohan Lal’s
case (supra), Skandia Insurance
Company’
s case (supra), Deepa Devi’
s case (supra) and
Subramania Naicker’
s case (supra), have no application to the
issues involved in this case and, hence, need not be elaborately
discussed.
70. In the view that we have taken, the letters patent appeal is
disposed of in the following manner :
(a) The compensation amount awarded by
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learned Single Judge to the claimants is
confirmed.
(b) The appellants are held not liable to pay any
compensation to the claimants
(c) Liability of the insurer of the offending truck is
limited to Rs.1,50,000/- and nothing more can
be recovered from it.
(d) The appellants would be at liberty to recover
the amount paid by them from the owner of
the offending vehicle if they so desire.
(e) The impugned judgment and order is set
aside to the above extent and is substituted
by the present judgment and order.
71. Letters patent appeal is disposed of in the aforestated terms
with no order as to costs. Needless to say that all connected civil
applications stand disposed of.
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[SMT. RANJANA DESAI, J.]
[SMT. R.P. SONDURBALDOTA, J.]
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