HIGH COURT OF JAMMU AND KASHMIR AT JAMMU CIMA No. 10 of 2007 AND CIMA No. 11 of 2007 AND CIMA No. 15 of 2007 Oriental Insurance Company Petitioners Mamta Devi & Ors. Respondents !Mr. D. S. Chauhan, Advocate for the Appellants. ^M/S P. S. Chandel, M. L.Gupta & Mr. G. R. Asgar, Advocates for the Respondents. Coram HONBLE MR. JUSTICE J. P. SINGH Dated : 31/03/2008 :JUDGMENT:
Connected Matters
CIMA no. 16 of 2007, CIMA no. 17 of 2007, CIMA no. 19 of 2007, CIMA no. 21 of
2007, CIMA no. 12 of 2007, CIMA no. 13 of 2007, CIMA no. 14 of 2007, CIMA no. 18
of 2007, CIMA no. 20 of 2007 and CIMA no. 22 of 2007
1. These appeals arise out of award of September 25, 2006 of Motor Accidents
Claims Tribunal Udhampur, allowing claim petition nos. 37,39,38,21,47,30 and 11,
awarding Rs.5,45,064/-, 2,89,032/-, 5,73,000/-, 3,06,000/-, 4,07,400/-,
2,13,000/- and 3,21,000/- respectively in favour of, the claimants/ dependants
of those who had died, and claim petition nos. 68, 33,52,36,181 and 37,
awarding Rs.2,50,000/-, 1,16,000/-, 36,000/-, 1,15,000/-, 70,000/- and 10,000/-
to those who had been injured in the motor vehicular accident of Bus No. JK02G-
6807 which had occurred on December 31, 1999 near Omala More, Gordhi District
Udhampur.
2. Appellants learned counsel had raised a common question of law in all
these appeals. Having heard the appeals together, these are being disposed of by
this common judgment.
3. Learned counsel appearing for the Insurance Company, Mr. D. S. Chouhan,
submits that the awards made by the Claims Tribunal in respect of the claims in
question are bad in law because the owner had been plying the vehicle, carrying
66 passengers i.e. beyond the authorized maximum capacity of 42+2 i.e. (44)
passengers, which amounted to violation of the terms and conditions of the
Insurance Policy, and, in that view of the matter, the appellant-insurer was not
liable to indemnify the owner and pay the amount awarded in favour of the
claimants.
4. Learned counsel has not questioned the awards of the Tribunal on any other
ground.
5. Learned counsel appearing for the claimants, on the other hand, submits
that in view of the law laid down by this Court in Oriental Insurance Company
vs. Dhanwanti Devi, reported as 2007(2) JKJ 409 HC, the appeals of the appellant
were liable to be dismissed as the question raised by the appellants counsel
was no more res integra.
6. I have considered the submissions of learned counsel for the parties, gone
through the records and judgments delivered by Honble Supreme Court of India as
also by this Court on the subject.
7. The question raised by learned counsel for the appellant needs to be
answered in view of the law laid down by Honble Supreme Court of India in
National Insurance Company Ltd. Vs. Anjana Shyam and ors, reported as 2007 AIR
SCW 527, where, while dwelling on the question, Honble Supreme Court had held
as follows:-
15.In spite of the relevant provisions of the statute, insurance still remains
a contract between the owner and the insurer and the parties are governed by the
terms of their contract. The statute has made insurance obligatory in public
interest and by way of social security and it has also provided that the insurer
would be obliged to fulfill his obligations as imposed by the contract and as
overseen by the statute notwithstanding any claim he may have against the other
contracting party, the owner, and meet the claims of third parties subject to
the exceptions provided in Section 149(2) of the Act. But that does not mean
that an insurer is bound to pay amounts outside the contract of insurance itself
or in respect of persons not covered by the contract at all. In other words, the
insured is covered only to the extent of the passengers permitted to be insured
or directed to be insured by the statute and actually covered by the contract.
The High Court has considered only the aspect whether by overloading the
vehicle, the owner had put the vehicle to a use not allowed by the permit under
which the vehicle is used. This aspect is different from the aspect of
determining the extent of the liability of the insurance company in respect of
the passengers of a stage carriage insured in terms of Section 147(1) (b) (ii)
of the Act. We are of the view that the insurance company can be made liable
only in respect of the number of passengers for whom insurance can be taken
under the Act and for whom insurance has been taken as a fact and not in respect
of the other passengers involved in the accident in a case of overloading.
16. Then arises the question, how to determine the compensation payable
or how to quantify the compensation since there is no means of ascertaining who
out of the overloaded passengers constitute the passengers covered by the
insurance policy as permitted to be carried by the permit itself. As this court
has indicated, the purpose of the Act is to bring benefit to the third parties
who are either injured or dead in an accident. It serves a social purpose.
Keeping that in mind, we think that the practical and proper course would be to
hold that the insurance company, in such a case, would be bound to cover the
higher of the various awards and will be compelled to deposit the higher of the
amounts of compensation awarded to the extent of the number of passengers
covered by the insurance policy. Illustratively, we may put it like this. In the
case on hand, 42 passengers were the permitted passengers and they are the ones
who have been insured by the insurance company. 90 persons have either died or
got injured in the accident. Awards have been passed for varied sums. The
Tribunal should take into account, the higher of the 42 awards made, add them up
and direct the insurance company to deposit that lump sum. Thus, the liability
of the insurance company would be to pay the compensation awarded to 42 out of
the 90 passengers. It is to ensure that the maximum benefit is derived by the
insurance taken for the passengers of the vehicle, that we hold that the 42
awards to be satisfied by the insurance company would be the 42 awards in the
descending order starting from the highest of the awards. In other words, the
higher of the 42 awards will be taken into account and it would be the sum total
of those higher 42 awards that would be the amount that the insurance company
would be liable to deposit. It will be for the Tribunal thereafter to direct
distribution of the money so deposited by will be for the Tribunal thereafter to
direct distribution of the money so deposited by the insurance company
proportionately to all the claimants, here all the 90, and leave all the
claimants to recover the balance from the owner of the vehicle. In such cases,
it will be necessary for the Tribunal, even at the initial stage, to make
appropriate orders to ensure that the amount could be recovered from the owner
by ordering attachment or by passing other restrictive orders against the owner
so as to ensure the satisfaction in full of the awards that may be passed
ultimately.
and in view of law laid down by this Court in Oriental Insurance Company vs.
Dhanwanti Devi, reported as 2007(2) JKJ 409 HC, where, while dealing with the
issue as to whether owners permitting carriage of passengers more than the
authorized capacity of the passenger vehicle, involved in the accident, would
absolve the insurer of its liability to indemnify the owner, it had been held as
follows:-
Section 149(2) of the Motor Vehicles Act, 1988 permits the Insurance
Company to avoid a claim for compensation arising out of the use of the Motor
Vehicle on any of the grounds which are as follows:-
(a) that there has been breach of a specified condition of the
policy, being one of the following conditions, namely:-
(i) A condition excluding the use of the vehicle-
(a) For hire or reward, where the vehicle is on the date of the contract of
insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) For organized racing and speed testing, or
(c) For a purpose not allowed by the permit under which the vehicle is used,
where the vehicle is a transport vehicle, or
(d) Without side-car being attached where the vehicle is a motor cycle; or
(ii) A condition excluding driving by a named person or persons or by any person
who is not duly licensed, or by any person who has been disqualified for holding
or obtaining a driving licence during the period of disqualification; or
(iii) A condition excluding liability for injury caused or contributed to by
conditions of war, civil war, riot or civil commotion; or
(b)that the policy is void on the ground that it was obtained by the non-
disclosure of a material fact or by a representation of fact which was false in
some material particular.
In other words, the liability could be avoided by an insurer only if
it could bring its case in any of the conditions prescribed under Section 149(2)
of the Motor Vehicles Act, 1988. The Insurance Company cannot avoid its
liability to pay compensation arising out of the use of Motor Vehicle for any
other violation. This view finds support from National Insurance Company Limited
versus Swaran Singh & Ors., reported as IR 2004 SC, 1531 and this Court judgment
in AIR 2006 (2) JKJ, 698 titled Oriental Insurance Company Limited versus
Allahdin and Ors. Over-loading of a motor vehicle does not attract the breach
contemplated by section 149(2) of the Motor Vehicles Act.
Plea raised by Mr. Chouhan that the vehicle was over-loaded and the
insurer was not liable to compensate the claimants by indemnifying the owner is
thus rejected.
8. In view of the law laid down by Honble Supreme Court of India as also by
this Court, the appellant Insurance Company cannot absolve itself of its
liability to indemnify the owner and pay the amount covered by awards equal to
the number of the authorized capacity of the vehicle. It is, accordingly, bound
to cover the higher of various awards and pay the higher of the amounts of
compensation awarded to the extent of number of passengers covered by the
Insurance Policy.
9. Learned counsel for the Insurance Company had submitted that the awards
which were known to the Insurance Company to have been made in cases arising out
of the accident of the vehicle in question did not exceed the authorized number
of passengers of the motor vehicle in question.
10. In view of the aforementioned statement of learned counsel for the
appellant, the appellant-Insurance Company cannot deny its liability to satisfy
the awards arising out of the claim cases which had arisen out of use of motor
vehicle in question.
11. The sole question raised by appellants counsel that the company was not
liable to indemnify the owner and satisfy the claims in question because the
vehicle in question had been plying with passengers in excess of its authorized
capacity which would amount to violation of the terms and conditions of the
Insurance Policy, thus fails and is accordingly rejected.
There is thus no merit in these appeals, which are accordingly dismissed.
