Andhra HC (Pre-Telangana)
Jayavarapu Rajamma And Ors. vs Jayavarapu Laxminarayana And Ors. on 21 June, 2007
Equivalent citations: 2007(6)ALD306, 2007 A I H C 3560, (2008) 2 ACC 551, (2009) 2 ACJ 985, (2008) 3 TAC 483, (2007) 6 ANDHLD 306
JUDGMENT G. Bhavani Prasad, J.
1. The question as to whether, in the facts and circumstances, the insurance company can be made liable for compensation in respect of the claims made by the owner or the legal representatives of the deceased as third party claims, is the subject-matter of the reference by one of us (Hon'ble Sri Justice B. Prakash Rao).
2. The motor accident in question occurred when the owner/insured was travelling in the car along with his family members and his father died in the accident. The mother and two other sons of the deceased made the claim for compensation against the owner who himself was driving the car, the owner of the lorry and the respective insurance companies. The Tribunal while holding that the accident occurred due to the negligent driving of the car, held that the father or the other family members of the insured will not fit within the ambit of third party as the insured and the deceased are living under one roof being father and son. The Tribunal accordingly dismissed the petition without costs holding the insurance company to be not liable to pay the compensation.
3. The claimants preferred the appeal contending that the kith and kin of the insured are third parties entitled to make the claim.
4. When the appeal came up for hearing, the decisions in National Insurance Company Limited v. Seema Malhotra 2001 (2) ALD 68 (SC) : 2001 SAR (Civil) 211 and Dhanraj v. New India Assurance Company Limited 2004 (1) DT (SC) 884 : 2005 AILD 24 (SC), were respectively relied on. As there was variance regarding the liability of the insurance company in respect of the claims by the owners or the legal heirs of the deceased, which question is likely to come up again and again, it was felt desirable that the same should be decided for the guidance of the Tribunals.
5. Sri AT. Ananda Rao and Smt. A. Malathi, learned Counsel for the parties placed the relevant decisional law to help determine the question.
6. In Dhanraj"s case (supra), the injured owner/insured travelling in his own jeep at the time of the accident made the claim under the comprehensive policy. Referring to Section 147 of Motor Vehicles Act, 1988 (for short "the Act"), the Apex Court observed that an insurance policy covers the liability incurred by the insured in respect of death of or bodily injury to any person (including an owner of the goods or his authorized representative) carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle and that Section 147 does not require an insurance company to assume risk for death or bodily injury to the owner of the vehicle. Referring to Oriental Insurance Company Limited v. Sunita Rathi and Ors. , it was observed that where the insured/ owner of the vehicle has no liability to a third party, the insurance company has no liability also. In the case before the Apex Court, it was not shown that the policy covered any risk for injury to the owner himself. The premium paid under the heading 'own damage' was explained to be towards damage to the vehicle and not for injury to the person of the owner and it was laid down that an owner of a vehicle can only claim, provided a personal accident insurance has been taken out.
7. In New India Assurance Company Limited v. Meera Bai and Ors. 2007 ACJ 821, following Dhanraj 's case (supra), the Apex Court held that the owner who was himself driving the vehicle, was not covered under the policy and that the driver of the vehicle covered by the policy is only a paid driver as per the insurance Schedule and not the owner.
8. In Oriental Insurance Company Limited v. Jhuma Saha , the owner driving the vehicle died in the accident not involving any other vehicle. Observing that the liability of the insurer company is to the extent of indemnification of the insured against the respondent or an injured person, a third person or in respect of damages of property and that if the insured cannot be fastened with any liability under the provisions of the Act, the question of the insurer being liable to indemnify the insured does not arise, the Apex Court referred to Dhanraj's case (supra), with approval. As the additional premium was not paid in respect of the entire risk of death or bodily injury to the owner of the vehicle, Section 147(1)(b) which in no uncertain terms covers a risk of a third party only was held attracted.
9. Even earlier, this Court was considering the question in United India Insurance Company Limited v. O. Mallu Bai 1994 (2) An.WR 103 (DB). The death of the insured owner of a vehicle in the accident while driving the same led to the claim by his heirs under a comprehensive insurance policy and the Division Bench held that by the policy being comprehensive it does not mean that it covers liability arising due to bodily injury to or death of the insured himself unless such liability is covered by terms of the policy. Considering the question whether the insurance company is liable to pay compensation to the heirs of the owner of a vehicle who died in the accident while driving the vehicle, the Division Bench with reference to Sections 95 and 96 of the Motor Vehicles Act, 1939 held that it is evident that no such liability was imposed under the Act, but it is open to the insurance company and the insured to extend coverage of the policy to bodily injury or death of the insured, for which it becomes necessary to read the terms of the policy.
10. When it came to persons other than the owner/insured, it was held in Amrit Lal Sood and Anr. v. Kaushalya Devi Thapar and Ors. , that in the absence of any limitation in the policy, even gratuitous passengers travelling in the car are entitled to compensation. The Apex Court pointed out that the liability of the insurer depends on the terms of the contract between the insured and the insurer as evident from the policy. Noting that the statutory insurance does not cover the injuries suffered by the occupants of the vehicle who are not carried for hire or reward, it was held that the same does not prevent an insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby the risk to gratuitous passengers could also be covered. It was held that where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer. Interpreting the terms of the comprehensive insurance policy in that case, the expression 'any person' therein was held to undoubtedly include an occupant of the car who is gratuitously travelling in the car. The question whether the insurer can claim repayment from the insured in such an event was left open.
11. In Seema Malhotra 's case (supra), the Supreme Court noted the insurer vehemently disputing the liability when the claim is made by the insured himself or his legal heirs without any third party being involved and further noted that the insurance company has no dispute that the claims, if any, made by the kith and kin of the insured for the injuries sustained by them in the accident including the claims made by the legal representatives of the deceased in such accident would also be treated as third party claims. Thus, the plea of the insurer was recorded and any further question on that aspect did not arise for adjudication therein.
12. Chapter XI of the Act itself is in respect of insurance of motor vehicles against third party risks and the definition of "third party" under Section 145(g) of the Act is only to include the Government within the meaning of a third party. The necessity for insurance under Section 146 is also against third party risk. Section 147 which incorporated requirements of policies and limits of liability, is to the same effect. While the statute does not require the insurance policy to cover the risk of death of or bodily injury to the owner of the vehicle, the insurer can cover a wider risk under the contract of insurance and the terms of the policy determine the liability of the insurer in each case. The owner of a vehicle in case of injury and his heirs/dependants in case of his death can make a claim only if the policy covers any risk of injury or death to the owner personally, for which premium is paid. Mere nomenclature of a policy as a comprehensive policy is not the guide and where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer. A policy by its terms can cover the risk to the owner or gratuitous passengers also. Claims by the kith and kin of the insured for injuries or their legal representatives in case of their death in the accident have to be treated as third party claims and are sustainable if the policy in question covers such third party claims. Thus, the determination of the maintainability of the claims for compensation on the facts and circumstances of each case depends upon the terms and conditions of the insurance policy involved therein. Accordingly, the reference is answered in the following terms:
1. A statutory insurance policy in terms of Section 147 of the Act covers the liability incurred by the insured in respect of death of or bodily injury to any person (including an owner of the goods or his authorized representative) carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle.
2. Section 147 of the Act does not require an insurance company to assume risk for death or bodily injury to the owner of the vehicle.
3. An insurer can enter into a contract of insurance with the insured covering a risk wider than the minimum requirement of the statute whereby the risk to the owner of the vehicle/insured or gratuitous passengers or such other risks not covered by the statute can also be covered, for which premium is paid.
4. The owner of the vehicle/insured driving or travelling in the vehicle in case of injuries or his legal representatives in case of his death in the accident can make a claim only if the policy by its terms covers such risk.
5. The kith and kin of the insured for injuries and their legal representatives in the event of their death in the accident can sustain claims for compensation as third party claims, provided the relevant policy of insurance covers such a risk.
6. The terms of the insurance policy determine the liability of the insurer in each case.
7. Mere nomenclature of the policy as a comprehensive policy or otherwise is not the guide, but the specific terms and conditions of the policy govern the existence and extent of the liability of the insurer.
13. The civil miscellaneous appeal shall be placed before appropriate Bench as per roster for hearing and disposal.