Gujarat High Court
Shantaben Widow Of Deceased Kantibhai ... vs Yakubbhai Ibrahimbhai Patel And 2 Ors. on 28 December, 2006
Author: M.S. Shah
Bench: M.S. Shah
JUDGMENT K.M. Mehta, J.
1. Shantaben widow of deceased Kantibhai Punjabhai Vankar and others, appellants-original claimants (petitioners) have filed this appeal under Section 110D of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act) against the judgement and award dated 28.8.1985 passed by the Motor Accident Claims Tribunal, Himmatnagar, Sabarkantha in M.A.C. Petition No. 30 of 1983. By the impugned award, the Tribunal has held that the claimants are entitled to recover a sum of Rs. 1,36,000/- from all opponents, viz., opponent No. 1 Yakubbhai Ibrahimbhai Patel and opponent No. 2 Faquirmohmed Noormohmed Memon with proportionate costs and interest at the rate of 6% per annum from the date of the application. However, as regards Insurance Company, opponent No. 3 is concerned, the Tribunal has held that the liability of the Insurance Company, is restricted to Rs. 50,000/- with proportionate costs and interest only. The Tribunal further held that all the opponents are jointly and severally liable to pay the aforesaid amount of compensation and to bear their own costs and the rest of the claim of the claimants is rejected. The Tribunal passed order for investment / disbursement also.
2. The appellant-original claimants contended before this Court that the appellants in the claim petition claimed damages to the tune of Rs. 3,00,000/-. As the learned Judge has awarded only Rs. 1,36,000/- and directed respondent No. 3 the New India Insurance Company Limited to answer the judgement to the extent of Rs. 50,000/- with proportionate costs and interest. That is how the appellants have filed this present appeal. However, in the memo of appeal they have confined their claim to additional damages of Rs. 14,000/- only and further prayed that the Insurance Company should be made liable to answer the entire judgement i.e. whatever claim this Court may allow in this appeal.
2.1 The original memo of appeal was filed somewhere in January, 1986. However, subsequently the appellants have amended the memo of appeal and stated that if the judgement of the Tribunal is to be upheld i.e. the liability of the Insurance Company is limited then the appellants challenge the constitutional validity of Section 95(2)(a) and (b) of the Act on the ground that the said provisions are arbitrary, irrational, unreasonable and amount to hostile discrimination in violation of Article 14 of the Constitution of India. Thus, the constitutional validity of Section 95 was also challenged by way of amendment. The said amendment was filed somewhere in January, 1989.
II. BASIC FACTS:
3. We will first set out relevant and material facts giving rise to this appeal which are as under:
3.1 Before discussing the matter in detail, we would like to give brief resume of the judgment in this behalf. First para 3 to 3.6 we are setting out basic facts which emerge from the record of the case. Thereafter in para 4 we have recorded tribunal findings. Thereafter we have considered the contention of Mr. M.C. Bhatt in relation to statutory provisions, policy of the Act and thereafter we have considered Division Bench judgment of Firdos Pervez Mysorewala's case which is in favour of the claimant and other subsequent judgments. However, in the said judgment, the Division Bench has considered the Constitution Bench judgment of C.M.Jaya's case. It is the case of Mr.Rajni Mehta that the Constitution Bench judgment is in favour of insurance company and the Division Bench has not properly considered the same. Thereafter we have considered Constitution Bench judgment in C.M. Jaya's case and also earlier judgment which led to the decision of C.M. Jaya's case.
3.1A Mr. Rajni Mehta has also stated that there are other contrary judgments of this Court which is taken contrary view namely Chandulal Gokaldas case that also we have considered in this behalf.
3.1B Over and above Division Bench judgment and Constitution Bench judgment, Mr.M.C.Bhatt further submitted that there are other judgments of the Hon'ble Supreme Court which deals with the right of claimant and liability of the insurance company and third party right which we have considered in para 11 to 11.31 (page 83 to 117). He has further submitted that there are other two judgments of Hon'ble Supreme Court in Skandia's case and Sohanlal's case which also relates to the liabilities of the insurance company that we have considered in this behalf.
3.1C Thereafter Mr.Rajni Mehta has submitted that there are other judgments which takes the view in favour of the insurance company that we have considered in para 13.1 to 13.29 (page 140 to 156). Thereafter we have made our observations in this behalf i.e. para 14 to 18 from page 157 to 190. That is how the matter has been discussed in this behalf.
PAGE NOS. BASIC FACTS
(Para 3 to 3.6) 4 to 11
Tribunal's finding (para 4) 12
Contention of M.C. Bhatt (para 5 to 6.6) 14 to 19
Relevant statutory prov. (para 7 to 7.4) 19 to 26
Submission of M.C. Bhatt (para 8.1 to 9.10) 29 to 48
D.B. Judgment of this Court
Contention of Mr. Rajni (para 10 to 10.34)
Mehta reg. Constitution 53 to 83
Bench judgment and other judgments of Gujarat
High Court.
Submission of M.C. Bhatt (para 11 to 11.31) 84 to 118
reg. Liability of Ins. Co.
reg. Third party rights
Judgement of S.C. Reg.
Liability of Ins. Co.
Skandia's case & Sohanlal's case (para 11.32 to 11.42) 118 to 133
Submission of ld. Counsel (para 11.43 to 12.4)
reg.Gujarat High Court judgment. 133 to 137
Submission of Rajni Mehta (para 13.1 to 13.29)
reg. Ins. Right reg. Third 140 to 156
party
Our observation (para 14 to 18) 157 to 189
3.2 The original claim petition filed by Shantaben, widow of deceased Kantibhai Punjabhai Vankar and others before the Motor Accident Claims Tribunal, Himatnagar, Dist. Sabarkantha being Motor Accident Claim Petition No. 30 of 1982 under Section 110A of the Motor Vehicles Act, 1939 (hereinafter referred to as M.V. Act). In the said application it is stated that on 19.9.1982 Shri Kantibhai Punjabhai Vankar since deceased, was passing through near Idar- S.T. Depot at Himmatnagar Idar road at 10.15 a.m. on the right side. At that time one rickshaw bearing registration No. GRN 94 which was driven rashly and negligently by Yakubbhai Ibrahimbhai Patel, opponent No. 1 and the rickshaw dashed Shri Kantibhai Punjabhai Vankar from behind and due to such impact Shri Kantibhai Punjabhai Vankar suffered injuries and ultimately died.
3.3 In view of the same, the claimants filed a claim petition claiming damages for death of Shri Kantibhai. The claimants have stated that when the deceased died at that time he was aged 30 years and he was serving in Gujarat State Road Transport Corporation (hereinafter referred to as 'the Corporation') as a clerk and his last salary drawn was Rs. 1044/- per month. In view of the same, the deceased had left behind him the widow and four minor children and mother claimant No. 6. It was also submitted that the deceased joined the service of the Corporation in March, 1975 and at the time of his death, he was getting Rs. 921/- as pay and D.A., Rs. 57/- as contribution to Provident Fund and Rs. 19.50 as Family Pension, in all Rs. 987.50 per month. Thus the annual income of the deceased was Rs. 11,970/- (Rs.987 x 12 = Rs. 11,970/-). It was also stated that he had additional income from agricultural operation. In the said amount, the claimants have added Rs. 900/- as bonus, Rs. 750/- as further D.A., Rs. 1000/- as free travelling expenses and Rs. 1200/- as medical benefit. So in all Rs. 15,820/- per year claimed in the claim petition. It is stated that only expenses of the claimant is Rs. 1500/- per annum and thus claimed Rs. 14,320/- as dependency loss which he will leave for the family and as the deceased was aged 30 years at the time of accident, they have claimed multiplier of 18 and therefore in all claimed a sum of Rs. 3,11,000/- as future income.
3.4 Before the Tribunal the Insurance Company, original opponent No. 3, filed written statement at Exh. 18. They have denied the allegations made by the claimants. It was also stated that there was a contributory negligence on the part of the deceased also. In para 12 the Insurance Company stated that the Insurance Company strictly rely on the terms and conditions of the policy of insurance issued to the owner of the vehicle and under the terms and conditions of the said policy of the Insurance Company, the Insurance Company is not liable for any amount of compensation arising out of the alleged incident. It was stated that otherwise also the claim made by the claimants was highly excessive. It appears that the owner and the driver have adopted the written statement filed by the Insurance Company vide Exh. 19. The tribunal has framed issues at Exh. 20 which read as under:
(1) Whether the accident was caused due to the rash and negligent driving on the part of the driver of the auto-rickshaw No. GRL 94 as alleged?
(2) Whether the deceased was guilty of the contributory negligence as contended?
(3) To what amount of compensation are the claimants entitled to and from whom?
3.5 The claimants have produced at Exh. 24 Secondary School Certificate to show that the date of birth of the deceased is 1.6.1952. Panchnama was also produced at Exh. 25 and Exh. 40 is service book and Exh. 41 is salary statement of the deceased. The insurance policy was issued by New India Assurance Company at Exh. 28.
3.6 As regards oral evidence, the claimants have examined Shantaben, widow of deceased Kantibhai Punjabhai Vankar that deceased was serving in S.T. Corporation and he used to get Rs. 1000/- per month and he used to get salary from the S.T. Corporation and also income from agricultural operations. The claimants have also examined one Shri Sevantilal at Exh. 39 who was serving as Junior Clerk in the Divisional Office of the G.S.R.T.C., at Himatnagar to show that the deceased was getting Rs. 878.20, Special pay Rs. 59 and other charges.
III. TRIBUNAL'S FINDINGS:
4. The learned trial Judge after considering all these evidences as indicated above reached the conclusion that the accident was caused due to rash and negligent driving on the part of the auto-rickshaw and the deceased was not guilty of any contributory negligence. As regards compensation, the learned Judge has held that opponent Nos. 1, 2 and 3 are jointly and severally liable to pay Rs. 1,36,000/- and to bear their own costs. However, the liability of Insurance Company is restricted to Rs. 50,000/- with proportionate costs and interest only.
4.1 Being aggrieved and dissatisfied with the aforesaid award Shantaben has filed present appeal before this Court under Section 110-D somewhere in January 1986. Thereafter, the appellant has amended the memo of appeal and also challenged the constitutional validity of Section 95(2)(a) and (b) of the Motor Vehicles Act on the ground that if the interpretation which has been placed by the Tribunal in the said Section is to be implemented then the said provisions are arbitrary, irrational, unreasonable and amount to hostile discrimination in violation of Article 14 of the Constitution of India and also on the ground of violation of right to life under Article 21 of the Constitution of India. The said amendment was filed on 19.1.1989. In the said amendment it was prayed that this Court may direct the Company to pay compensation of the award to the extent of unlimited liability. It appears that the aforesaid amendment was also granted and is part of memo of appeal. Thereafter, the matter has been reached hearing before this Court.
CONTENTION OF MR. M.C. BHATT: LEARNED COUNSEL FOR THE APPELLANT:
MERITS OF THE APPEAL:
5. Mr. M.C. Bhatt, learned advocate for the original claimant-appellants has assailed the order of the Tribunal mainly on the ground that so far as the finding of the Tribunal that though opponent No. 1, 2 and 3 are jointly and severally liable to pay Rs. 1,36,000/-, the liability of the Insurance Company is restricted to Rs. 50,000/- is clearly erroneous and unjustified both in law as well as on facts of the case.
5.1 The learned Counsel has invited our attention to the copy of the insurance policy produced at Exh. 28. The policy was issued on 24.12.1982 in favour of Fakirmohmed Noormohmed Memon i.e. the owner of the autorickshaw, opponent No. 2 in the present appeal. The period of insurance is for 12 months from 2.6.1982 to 1.6.1983. The following amounts were paid.
O.D. Premium Rs. 80.00
55% on I.E.V. Rs. 93.50
Riot & Strike Rs. 42.50
WC to 1/p driver Rs. 8.00
LL to 3 passengers Rs. 120.00
T.P. Risk Rs. 48.00
(Third party risk)
------------
Rs. 392.00
-15%NCB Rs. 58.80
------------
Rs. 333.20
Rounded upto Rs. 333.00
5.1A The insurance was covered to any other person provided he is to be insured's employ and is driving with his permission.
SECTION II: LIABILITY OF THIRD PARTIES: Clause of Insurance Policy 6.1 As regards liability of third parties, it was stated that (1) subject to the Limits of liability the Company will indemnify the insured against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of (i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the Motor Vehicle; (ii) damage to property caused by the use (including the loading and/or unloading) of the Motor Vehicle.
LIMITS OF LIABILITY:
6.2 Limit of the amount of Company's liability under Section II -1(i) [death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading] in respect of any one accident = Such amount as is necessary under M.V. Act, 1939;
6.3 Limit of the amount of the Company's liability under Section II-1(ii) [damage to property] in respect of any one claim or series of claims arising out of one event = Rs. 50,000/-
As regards Clause (3) of the policy 6.4 In terms of and subject to limitations of the indemnify which is granted by this Section to the insured the Company will indemnify and Driver who is driving the Motor Vehicle on the Insured's order or with his permission provided that such Driver.
AVOIDANCE CLAUSE:
Avoidance of certain terms and right of recovery:
6.4A Nothing in this policy or any endorsement hereon shall affect the right of any person indemnified by this Policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicle Act, 1939, Section 96. But the Insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the said provisions.
6.4B Important Notice The insured is not indemnified if the vehicle is used or driven otherwise than in accordance with the Schedule of this policy. Any payment made by the Company by reason of wider terms appearing in the certificate in order to comply with the Motor Vehicles Act, 1939, is recoverable from the insured. See the clause headed SAvoidance of certain terms and right of recovery.
6.5 On the conjoint reading of various claims of the aforesaid policy, the learned Counsel submitted that as regards premium, the Insurance Company has recovered insurance of third party risk i.e. Rs. 48/- which we have stated. Secondly, he has submitted that as regards liability of third parties for which Clause (1) we have referred along with the Limits of Liability. A conjoint reading of these two clauses will be that the Company will indemnify the insured against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of (i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the Motor Vehicle as per the provision of the Motor Vehicles Act, 1939. From that clause it appears that liability is contemplated as per the provisions of the M.V. Act and in the policy there is no limitation. As per Clause (ii) which provides damage to property caused by the use (including the loading and/or un loading) of the Motor Vehicle, the insurance liability is limited to Rs. 50,000/- as limits of liability which we have stated earlier. The net result will be that if there is claim made by third party regarding death or bodily injury, the liability has to be seen as per the M.V. Act, 1939.
6.6 The learned Counsel has also invited our attention to application of limits of indemnity and the conditions of the policy particularly `avoidance clause' and importance of notice which we have referred to.
RELEVANT STATUTORY PROVISIONS:
7. The learned Counsel has also referred to certain provisions which have great bearing on the present appeal.
7.1 Thereafter, he has invited our attention to Section 2(8) of the Act provides goods vehicle which means any motor vehicle constructed or adapted for use for the carriage of goods or any motor vehicle not so constructed or adapted when used for the carriage of goods solely or in addition to passengers. Section 2(15) of the Act which provides definition of motor cab which means any motor vehicle constructed, adapted or used to carry not more than six passengers excluding the driver, for hire or reward.
7.2 Thereafter he has invited our attention to Chapter VIII of the said Act which provides Insurance of Motor Vehicles against third party risks. Section 93 of the Act provides certain definitions. In that Section 93(d) defines third party which includes the Government. Section 94 of the Act provides necessity for insurance against third party risk.
Necessity for insurance against third-party risk.
94. (1) 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 with the requirements of this Chapter.
Explanation-A person driving a motor vehicle merely as a paid employee, while there is in force in relation to the use of the vehicle no such policy as is required by this sub-section, shall not be deemed to Act in contravention of the sub-section unless he knows or has reason to believe that there is no such policy in force.
2. Sub-section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise.
3. The appropriate Government may, by order, exempt from the operation of Sub-section (1) any vehicle owned by any of the following authorities namely:
x x x x Provided that no such order shall be made in relation to any authority unless a fund has been established and is maintained by that authority in accordance with the rules made in that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties.
x x x x 7.3 Requirements of policies and limits of liability.
95. (1) In order to comply with the requirements of this chapter, a policy of insurance must be a policy which -
(a) is issued by a person who is an authorised insurer or by a co-operative society allowed under S. 108 to transact the business of an insurer, and
(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2):
i. 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;
ii. against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place.
(2) Subject to the proviso to Sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident upto the following limits, namely -
[(a) where the vehicle is a goods vehicle, a limit of [one lakh and fifty thousand rupees] in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding six in number, 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, the amount 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.] x x x x
4. A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
x x x x
5. Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person.
7.4 Duty of insurers to satisfy judgments against persons insured in respect of third party risks.
96. (1) If, after a certificate of insurance has been issued under Sub-section (4) of Section 95 in favour of the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
2. No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:
x x x x
3. Where a certificate of insurance has been issued under Sub-section (4) of Section 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in cl. (b) of Sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under cl. (b) of Sub-section (1) of Section 95, be of no effect :
Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.
4. If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.
x x x x
6. No insurer to whom the notice referred to in Sub-section (2) or Sub-section (2A) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in Sub-section (1) or Sub-section (2A) otherwise than in the manner provided for in Sub-section (2), or in the corresponding law of the State of Jammu and Kashmir or of the reciprocating country, as the case may be.
SUBMISSIONS OF LEARNED ADVOCATE MR. M.C. BHATT FOR THE APPELLANTS:
Constitutional validity not challenged:
8.1 In this case the learned Counsel for the claimant states that the claimants have challenged the constitutional validity of Section 95 of the Act more particularly Sections 95(2)(a) and (b) of the Act. However, at the time of hearing of this appeal it was pointed out to the learned Counsel that the validity of Section 95 has been challenged in appeal proceedings arising out of the award passed by the Tribunal.
8.2 However, he has submitted that at present whether the same can be challenged in the present proceedings or not, this Court may keep the question open but in any view of the matter he is not pressing this contention on the ground that the Division Bench of this Court in case of Oriental Fire & General Insurance Co. v. Firdos Pervez Mysorewala and Ors. 2003(2) GLR 1684 has held that though the Insurance Company has limited liability, however, the claimant, as a third party, can recover excess money from the Insurance Company along with owner, driver of the vehicle and the Insurance Company may pay to the claimant and thereafter the Insurance Company can recover the said amount from the owner and driver of the said vehicle.
8.3 In this case the claim Tribunal has been constituted by the Government under Section 110 of the Old Act. The original claimants have filed claim petition under Section 110A of the Act. The Tribunal has passed award under Section 110B of the Act after following the procedures provided under Section 110-C of the Act. The appellant in the present case has filed the appeal under Section 110D of the Act. In view of the same, this Court is hearing this statutory appeal provided under the provisions of the M.V. Act.
8.4 But an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions. It must act under the Act and not outside it. If it acts on the basis of a provision of the statute, which is ultra vires, to that extent it would be acting outside the Act. [Re: Judgement of Hon'ble Apex Court in the case of K.S. Venkataraman and Co. (P) Ltd. v. State of Madras reported in 60 ITR 112, relevant page 133].
8.5 However for challenging validity a Writ Petition under Article 226 of the Constitution of India may be maintainable. [Re: Beharilal Shyamsunder v. Sales Tax Officer, Cui. Circle, Cuttack and Anr. reported in 60 ITR 260].
8.6 In view of this aforesaid principle, it will not be possible for us to accept the contention of the learned Counsel for the appellant that though he does not want to press the constitutional validity of Section which he originally challenged in view of the judgement of the Division Bench but still this Court may keep the question open in the present appeal. The said contention of the learned Counsel for the appellant cannot be accepted in view of the aforesaid principles. However, we will not deal with the said contention as the said arguments have not been made.
IV: MERITS OF THE QUESTION OF LAW:
9. After relying on the provisions of the clause of the policy and the provisions of the Act and award of the Tribunal, he has not seriously challenged the quantum awarded by the Tribunal. However, he has only stated that a sum of Rs. 14,000/- may be given more than the award by the learned Judge in view of oral as well as documentary evidence on record.
9.1 The learned Counsel submitted that the vehicle in question is rickshaw. He submitted that entry in various heads on which the premium is charged does not indicate that the vehicle in which the passengers are carried out on hire or reward in view of definition of Motor Cab under Section 2(15) of the Act and one compares the same with the definition of Section [2(8)- definition of goods vehicle]. It was submitted that when the Insurance Company submitted that their liability is limited the burden is on the Insurance Company to discharge the said burden by leading cogent evidence. He has submitted that the learned trial Judge has not properly appreciated the provisions of law while deciding the liability of the Insurance Company. He has vehemently assailed the findings of the Tribunal where the Tribunal has held that the liability of the Insurance Company is limited to the extent of Rs. 50,000/-.
9.2 The learned Counsel submitted that though there are several judgements of the Hon'ble Supreme Court which provide interpretation of provisions of the Motor Vehicles Act, Insurance Policy, particularly avoidance clause and others. However, he desires to rely upon mainly on the Division Bench judgement of this Court in the case of Oriental Fire & General Insurance Co. v. Firdos Pervez Mysorewala and Ors. reported in 2003(2) GLR 1684 where the Division Bench completely decided the issue involved in the present appeal. The Division Bench while deciding has considered the Constitution Bench judgement of the Hon'ble Apex Court in the case of New India Assurance Co. Ltd. v. C.M. Jaya , Amrit Lal Sood v. Kaushalya Devi Thapar , Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu reported in 2001(2) SCC 491 and also the question regarding what is the effect of insurance policy on third party and New India Assurance Company Limited v. Rula . According to the learned Counsel, the question of law involved in this appeal is squarely applicable and concluded by the aforesaid judgements as well as the subsequent judgement of this Court. He has submitted that in the instant case, terms of insurance policy is identical and therefore the judgement of Division Bench which is binding upon this Court is squarely apply to the facts of this case. He submitted that the ultimate conclusion is to the effect that the limits of the liability is between the owner of the vehicle and the Insurance Company but so far as third party is concerned, in view of the terms and conditions of the policy, the third party is required to be paid the compensation subject to the rights of the Insurance Company to recover excess amount from the owner of the motor vehicle.
9.3 Thereafter, the learned Counsel has referred to the Division Bench judgement of this Court in the case of Oriental Fire & General Insurance Co. v. Firdos Pervez Mysorewala and Ors. . In that case as far as First Appeal No. 198 of 1980 was concerned, the appellant was driving his motorcycle with his father on the pillion seat. He was approaching the cross-roads near the Post Office at Fatehganj in the city of Vadodara. At that time, respondent No. 2 came with the truck in an uncontrollable speed, rashly and negligently, and dashed against the appellant's motor cycle. The appellant and his father were injured. In view of the same, the appellant filed claim petition for damages being Motor Accident Claims Application No. 207 of 1976 claiming Rs. 3 lakhs before the Motor Accident Claims Tribunal. In that case the Insurance Company appeared before the Tribunal. Ultimately, the Tribunal held that it was proved by the appellant that he had received injuries as a result of rash and negligent driving of the truck by respondent No. 2. The Tribunal held that respondent No. 2 and the appellant were guilty of negligence in the ratio of 75:25. Thus, the Tribunal in all awarded a sum of Rs. 1,20,750/- as compensation with proportionate cost and interest at the rate of 6% per annum from the date of application till the payment. As far as the Second Appeal which was filed by the Insurance Company, it was contended that the Insurance Company was not liable to pay any amount exceeding Rs. 50,000/- having regard to the provisions of Section 95 of the Act, and the terms and conditions stipulated in the insurance policy. In the said appeal the claimants have claimed higher amount of Rs. 3,00,000/-. In this context, the Division Bench has considered the provisions of Motor Vehicles Act and the question which was raised before the Division Bench has been set out in para 9 of the judgement as under:
However, the question which deserves consideration is whether the direction given by the Tribunal to the Insurance Company also to pay a sum of Rs. 1,20,750/- as compensation to the original claimant, with proportionate cost and interest at the rate of 6% per annum from the date of the application till payment, which is in excess of Rs. 50,000/- (Rupees fifty thousand) should be upheld or not.
9.4 Thereafter, the Division Bench has also considered important notice and avoidance clause, insurance policy and also other terms and conditions and right of recovery which are also in our present case. In paragraph 12 the Division Bench has considered the judgement in the case of Amrit Lal Sood v. Kaushalya Devi Thapar and thereafter judgement in the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu 2001(2) SCC 491. In paragraph No. 13, the Division Bench has considered the Constitution Bench judgement in the case of New India Assurance Co. Ltd. v. C.M. Jaya and Ors. to which we will make reference afterwards. The Division Bench has quoted paragraph Nos. 10 and 11 of the said Constitution Bench judgement thus: (i.e. C.M. Jaya's case) 9.4A para 10 : On a careful reading and analysis of the decision in Amrit Lal Sood it is clear that the view taken by the Court is no different. In this decision also, the case of Jugal Kishore is referred to. It is held:
i. that the liability of the insurer depends on the terms of the contract between the insured and the insurer contained in the policy;
ii. there is no prohibition for an insured from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby risk to the gratuitous passenger could also be covered; and iii. in such cases where the policy is not merely statutory policy, the terms of the policy have to be considered to determine the liability of the insurer.
Hence, the Court after noticing the relevant clauses in the policy, on facts found that under Section II(1)(a) of the policy, the insurer has agreed to indemnify the insured against all sums which the insured shall become legally liable to pay in respect of death of or bodily injury to 'any person'. The expression 'any person' would undoubtedly include an occupant of the car who is gratuitously travelling in it. Further, referring to the case of Pushpabai Purshottam Udeshi it was observed that the said decision was based upon the relevant clause in the insurance policy in that case which restricted the legal liability of the insurer to the statutory requirement under Section 95 of the Act. As such, that decision had no bearing on Amrit Lal Sood case as the terms of the policy were wide enough to cover a gratuitous occupant of the vehicle. Thus, it is clear that the specific clause in the policy being wider, covering higher risk, made all the difference in Amrit Lal Sood case as to unlimited or higher liability. The Court decided that case in the light of the specific clause contained in the policy. The said decision cannot be read as laying down that even though the liability of the Insurance Company is limited to the statutory requirement, an unlimited or higher liability can be imposed on it. The liability could be statutory or contractual. A statutory liability cannot be more than what is required under the statute itself. However, there is nothing in Section 95 of the Act prohibiting the parties from contracting to create unlimited or higher liability to cover wider risk. In such an event, the insurer is bound by the terms of the contract as specified in the policy in regard to unlimited or higher liability as the case may be. In the absence of such a term or clause in the policy, pursuant to the contract of insurance, a limited statutory liability cannot be expanded to make it unlimited or higher. If it is so done, it amounts to rewriting the statute or the contract of insurance which is not permissible.
9.4B Para 11 : In the light of what is stated above, we do not find any conflict on the question raised in the order of reference between the decisions of two Benches of three learned Judges in Shanti Bai and Amrit Lal Sood aforementioned, and on the other hand, there is consistency on the point that in case of an insurance policy not taking any higher liability by accepting a higher premium, the liability of the Insurance Company is neither unlimited nor higher than the statutory liability fixed under Section 95(2) of the Act. In Amrit Lal Sood case the decision in Shanti Bai is not noticed. However, both these decisions refer to the case of Jugal Kishore and no contrary view is expressed.
9.4C After quoting the Constitution Bench judgement, the Division Bench has observed as under:
The above paragraphs quoted from the decision of the Constitution Bench would indicate that the judgement in Amrit Lal Sood (supra) is not overruled at all. Further, five Judge Constitution Bench had no occasion to consider the avoidance clause in the insurance policy which is considered in Amrit Lal Sood (supra) and Oriental Insurance Co. Ltd. (supra). Applying the principles laid down in the above-referred to two decisions of the Supreme Court to the facts of the present case and more particularly to the terms and conditions stipulated in the insurance policy Exh. 51, this Court is of the opinion that though the liability of the Insurance Company is limited to the extent of Rs. 50,000/- (Rupees fifty thousand) only, the Insurance Company is liable to pay the entire award amount to the claimant and upon making such payment, the Insurance Company can recover the excess amount from the insured by executing the award against the insured to the extent of such excess amount as per Section 96(4) of the Motor Vehicles Act, 1939.
9.5 Over and above a further plea was raised before the Division Bench that the claimant is not a party to the contract of insurance policy and therefore would not be entitled to the benefit of avoidance clause. While considering this question the Division Bench has relied on the decision of the Hon'ble Supreme Court in the case of New India Assurance Company Limited v. Rula and Ors. where the Hon'ble Supreme Court has held that a third party, who is not a signatory or a party to the contract of insurance, but is nevertheless protected by such contract. The Division Bench further considered Section 96 of the Act and also interpreted that Section 96 of the Act which is a substantive provision which declares the liability of the insurer to pay the claimant directly. The State has thus created a liability in the insurer to the injured person. The right of third parties to get compensation from the insurer, being a statutory one, is independent of the contractual right and the obligation between the insurer and the insured. Having regard to the salutary provisions of the Motor Vehicles Act, the plea that the claimant is not a party to the contract of insurance policy and would therefore, be not entitled to claim from insurer an amount in excess of statutory liability, cannot be accepted.
9.6 Thus after observing above, the Division Bench in paragraph No. 15 has observed thus:
para 15 The net result of the above discussion is that though the appeal filed by the Insurance Company will have to be accepted in part by holding that its liability in respect of the accident in question is limited to the extent of Rs. 50,000/- it will have to be further held that the claimant would be entitled to recover the whole amount of compensation from the Insurance Company also and upon making such payment, the Insurance Company would be entitled to recover the excess amount from the insured.
9.7 Ultimately, in para 17 the Division Bench has finally concluded that the liability under the policy is limited to the extent of Rs. 50,000/- only but it is further held that the Insurance Company is liable to pay the entire amount awarded by the Tribunal to the claimant and upon making such payment, the Insurance Company can recover the excess amount from the insured by executing this award against the insured to the extent of such excess amount as per Section 96(4) of the Motor Vehicles Act.
9.8 The learned Counsel submitted that the aforesaid decision of this Court has also been followed by another Division Bench of this Court (Coram: Bhawani Singh, C.J. and Ms. Abhilasha Kumari, J) in the case of New India Assurance Co. Ltd. v. Rajabhai Varsangbhai Bharwad and Ors. reported in 2006(1) GLR 668. In paragraph No. 17 on page 675, the Division Bench has observed as under:
para 17 xxxx In this regard, the M.A.C. Tribunal, in its impugned judgement and award dated 23.9.2005 has placed reliance on 2004 AIR SCW 952 (Oriental Insurance Co. Ltd. v. Nanjappan and Ors.). In this case, the Supreme Court has held that the insurer is liable to pay the quantum of compensation fixed by the Tribunal and can recover it from the owner of the vehicle by way of execution proceedings. There can be no quarrel with this proposition of law and the contention of the learned Counsel for the appellant in this regard is also negatived in view of the specific pronouncement of the Supreme Court in the above noted case. In 2001(2) SCC 491 (Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu and Ors.) it has been held by the Supreme Court that in cases of third party risk, the Insurance Company is liable to pay the whole of the awarded amount to the claimant on the basis of the contractual obligations contained in Clauses relating to the liability of a third party in the policy of Insurance. However, the Insurance Company can recover excess amount from the insured by way of execution proceedings. The Division Bench has been relied upon by the judgement of this Court (Oriental Fire and General Insurance Co. v. Firdos Pervez Mysorewala and Ors.).
9.9 The learned Counsel submitted that the aforesaid judgement of the Division Bench of this Court (Coram: J.M. Panchal and A.M. Kapadia, JJ) in the case of Oriental Fire and General Insurance Co. v. Firdos Pervez (supra) has been relied on by another Division Bench of this Court in the case of New India Assurance Co. Ltd. v. Rajabhai Varsangbhai Bharwad and Ors. reported in 2006(1) GLR 668 and after referring to the earlier Division Bench judgement and thereafter referring to the judgement of the Hon'ble Supreme Court in the case of Oriental Insurance Co. Ltd. v. Nanjappan (supra) and the Division Bench has come to the conclusion that the Insurance Company is liable to pay the entire amount of compensation to the claimant beyond the statutory limits and the excess amount can be recovered from the insurer. Thus, two Division Benches of this Court have taken the view in favour of the claimant which is raised in the present appeal. The present Division Bench will follow the two decisions particularly when the first Division Bench has considered the question in detail and also considered the judgement of the Constitution Bench in C.M. Jaya's case (supra).
9.10 The learned Counsel has also relied on the Division Bench of this Court in the case of Life Insurance Corporation Of India and Anr. v. Heirs & Legal Representatives of Decd. Naranbhai Munjabhai Vadhia and Ors. reported in 13 GLR 920. In that case the Division Bench of this Court has interpreted Section 95 and after relying upon an English Court judgment and also Pessumal's case, in para 5 on pages 926 to 928 the Division Bench has observed as under:
To get over this difficulty when the provisions of compulsory insurance were introduced, the two non-obstante clauses were provided in Section 95(2) and 96(1). Under Section95(5) notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes or persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person. Similarly, in Section96 it is provided that there shall be duty of the insurer to satisfy the judgment against person insured in respect of third party risk, notwithstanding that the insurer may be entitled to avoid or cancel the policy. Goddard J. (as he then was) had already interpreted the effect of such non-obstante clause in Section 36(4) of the Road Traffic Act, 1930, which had given this statutory indemnity in addition to the duty of the insurer to satisfy the judgment against Section 10(2) of the 1934 Road Traffic Act. Lord Goddard had pointed out that so far as the general law of insurance was concerned, when the vehicle was sold and the assured ceased to have interest in the subject matter of insurance, even the driver's extension clause would fall with the rest of the policy, as the policy could be avoided on that count. He, however, held in both the cases that the position would be different under the statute by reason of the non-obstante clause in Section 36(4) which altered the law by conferring right of action freed from difficulties caused by the Life Insurance Act as to insurable interest and as to the absence of any name in the policy other than that of the assured, for the insurers were to indemnify by giving coverage not only to the assured but the class of persons specified in the policy. Such extension clause was common and universal and, therefore, Parliament had given statutory effect to this undertaking of the insurer, because the Act was aimed at the protection of the public by providing that there should be insurance coverage behind every driver of the car. Therefore, where the driver was driving the vehicle with the assured's permission or under his order, the statutory indemnity was by reason of this special provision in the Act one analogous to Section 95(5), available for seeking indemnity from the insurance company. Our law has also specifically altered the general law because even right to avoid policy on this ground which the insurer has does not come in the way of the duty to the insurer to satisfy the judgment against the persons insured in respect of third party risk under Section 96(1). That is why in New Asiatic Insurance Co. v. Pessumal , even though the assured was one Asnani and under the driver's extension clause in para 3, permitted driver Pessumal had been driving at the time of the accident, their Lordships held that the company had insured Pessumal as was in view of Section 2(3) of the policy and, therefore, it came within the term insured under Section 96 of the Act. Their Lordships had taken this view even where there was a restrictive condition under para 3 of the policy which could be effective as between the insured and the company, but it would have to be ignored when considering statutory liability of the company to the third party. The company, having undertaken the liability to third party incurred by the persons specified in the policy, third party's right to recover any amount under or by virtue of the provisions of the Act was not affected even by the restrictive condition of the policy. Once the company issued certificate giving rise to the wider liability, it would have to indemnify the person specified in the policy. That is why even the avoidance clause provided that nothing in the policy or endorsement would affect right of the person to be indemnified by the policy or any other provision to recover amount under or by virtue of the provisions of the Act. Therefore, it is settled legal position that even if the insurer may be entitled to avoid or cancel the policy, the insurance company must fulfil its duty of statutory indemnity under Section95(5) by indemnifying the concerned driver so long as he was permitted to drive the vehicle in question by the assured who was, therefore, covered by the policy.
MR. RAJNI MEHTA'S CONTENTION AGAINST DIVISION BENCH JUDGEMENT AND CONSTITUTION BENCH JUDGEMENT:
10. At that point of time, Mr. Rajni Mehta, learned Counsel for the Insurance Company, has submitted that this Court has to consider the 'avoidance clause' and, 'important notice' of Insurance Company which we have already referred to. After relying upon the said provisions, the learned Counsel submitted that 'avoidance' as per Stroud's Judiciary Dictionary Fifth Edition, page 233 is given as 'avoidance is when benefit becomes void of an incumbent'. Avoidance Clause and/or Important Notice does not increase the liability of the Insurance Company to the third party. The 'avoidance clause' does not mean that higher premium was paid and accepted by the Insurance Company for the higher liability of the third party. He has further submitted that in view of these provisions, the Division Bench of this Court has not properly considered or appreciated the judgement of the Constitution Bench of the Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. v. C.M. Jaya and Ors. (supra). According to the learned Counsel for the Insurance Company, as the Division Bench has not properly appreciated the ratio laid down by the Constitution Bench judgement, so this Court may not follow the judgement of this Division Bench but may follow the judgement of the Constitution Bench of the Hon'ble Supreme Court in Jaya's case.
10.1 In view of the aforesaid submissions of the learned Counsel for the Insurance Company, it will be necessary for us to consider first the Constitution Bench judgement at this stage. We have to consider as to what is exactly the ratio of the Constitution Bench judgement in C.M. Jaya's case (supra) and thereafter we will consider other decisions which have been relied on by Mr. M.C. Bhatt, learned Counsel for the appellants on interpretation of insurance policy qua third party.
JUDGEMENT OF HON'BLE SUPREME COURT IN C.M. JAYA'S CASE:
10.2 However, before we consider the judgement of the Constitution Bench in the case of New India Assurance Co. Ltd. v. C.M. jaya (supra), it is necessary to consider the two earlier judgements of the Hon'ble Supreme Court namely, (1) New India Assurance Co. Ltd. v. Shanti Bai and (2) Amrit Lal Sood v. Kaushalya Devi Thapar which has been considered by the Constitution Bench and which has great bearing as to what is ratio of the Constitution Bench judgement.
New India Assurance Co. Ltd. v. Shanti Bai :
10.3 In that case the facts were that on 3.1.1989 the bus in question, while it was being driven by respondent No. 5, met with an accident. The deceased, Laxman Singh, who was sitting on the rooftop of the bus with the permission of the bus driver, respondent No. 5, hit a tree on account of the alleged rash and negligent driving of the said bus by respondent No. 5. He was admitted to hospital and died on 7.1.1989 on account of the injuries received in the accident. The legal heirs of Laxman Singh, who were the original claimants have filed a claim for compensation amounting to Rs. 7,81,000/- before the Motor Accident Claims Tribunal. The Tribunal by its order dated 10.4.1991, awarded to respondent Nos. 1 to 3 compensation of Rs. 1,10,000/- together with interest at the rate of 12 per cent per annum from the date of the presentation of the petition and directed the appellant respondent Nos. 4 and 5 to pay the same.
10.4 Being aggrieved by the said order, the Insurance Company filed Miscellaneous Appeal No. 444 of 1991 before the High Court of Madhya Pradesh. The High Court by its order dated 11.2.1994 dismissed the appeal of the appellant and confirmed the findings of the Tribunal. The matter was carried before the Hon'ble Supreme Court. The Hon'ble Supreme Court in para 6 of the judgement observed that as per the policy the estimated value of the vehicle is Rs. 2,50,000/- and in the Schedule of premium, there is an additional payment of Rs. 600/- in respect of 50 passengers. It was the contention of the Insurance Company that it had charged premium at the rate of Rs. 12/- per passenger in respect of 50 passengers to cover its limited liability under Section 95 of the Act. Thereafter, the Hon'ble Supreme Court has considered Section 95 and considered the judgement in the case of National Insurance Company Ltd. v. Jugal Kishore 1988 ACJ 270 (SC) wherein the Hon'ble Supreme Court considered comprehensive insurance and in para 7 on page 472 as under:
In the present case, therefore, a comprehensive policy which has been issued on the basis of the estimated value of the vehicle of Rs. 2,50,000/- does not automatically result in covering the liability with regard to third party risk for an amount higher than the statutory limit.
10.5 Thereafter, in paragraph No. 9 on page 473 of the said judgement after considering the statutory provisions and also judgement in the case of National Insurance Co. Ltd. v. Jugal Kishore (supra) the Hon'ble Supreme Court has further observed as under:
As pointed out by this Court in the case of National Insurance Co. Ltd. v. Jugal Kishore 1988 ACJ 270 (SC), comprehensive policy only entitles the owner to claim reimbursement of the entire amount of loss or damage suffered upto the estimated value of the vehicle. It does not mean that the limit of liability with regard to third party risk becomes unlimited or higher than the statutory liability. For this purpose, a specific agreement is necessary which is absent in the present case.
Amrit Lal Sood v. Smt. Kaushalya Devi Thapar :
10.6 In that case on August 25, 1970, the fiat car owned by the second appellant collided with a goods carrier on Shimla-Kalka National Highway near Kandaghat Post Office. The car was being driven by the first appellant, a brother of the second appellant. The car was insured with the fifth respondent. Kishan Sarup Thapar, an advocate of Chandigarh who was travelling in the car got injured and was hospitalised for some time. He approached the Motor Accidents Claims Tribunal, Solan and Srimur Districts claiming compensation of Rs. 1,25,000/-. The Tribunal found that the accident occurred due to negligence of the driver of the car and passed an award for Rs. 15,800/- against the appellants.
10.7 Being aggrieved and dissatisfied with the said award, the claimants filed appeal in the High Court claiming more compensation while the insurer (5th respondent), filed an appeal disputing its liability to satisfy the claim. The claimant's appeal was allowed by a learned Judge in part and the compensation was enhanced to Rs. 20,800/-. The learned Judge held that the claimant was a gratuitous passenger travelling in the car and the insurer was, therefore, not liable.
10.8 Being aggrieved and dissatisfied with the said judgement, the matter was carried to the Division Bench. The Division Bench dismissed the appeal filed by the 1st appellant confirming the view of the learned Single Judge that the insurer is not liable as the claimant was only a passenger in the vehicle. In the other appeal, the Division Bench enhanced the compensation to Rs. 56,600/-. The driver and the owner of the car have preferred appeals (in facts and circumstances of the case) before the Hon'ble Supreme Court.
10.9 The Hon'ble Supreme Court has interpreted the provisions of Motor Vehicles Act, what is the nature of comprehensive policy particularly Section 2 liability to third party, general expenditure. The Hon'ble Supreme Court has considered the earlier judgement in the case of National Insurance Co. Ltd., New Delhi v. Jugal Kishore and also the judgement in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani and thereafter the Hon'ble Supreme Court has observed in para 13 as under: (on page 535) 10.10 13. In the policy in the present case also, there is a clause under the heading:
AVOIDANCE OF CERTAIN TERMS AND RIGHT OF RECOVERY- Which reads thus : "Nothing in this Policy or any endorsement hereon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act, 1939, Section 96. But the Insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the said provisions.
10.11 14. The above clause does not enable the insurance company to resist or avoid the claim made by the claimant. The clause will arise for consideration only in a dispute between the insurer and the insured. The question whether under the said clause the insurer can claim repayment from the insured is left open. The circumstance that the owner of the vehicle did not file an appeal against the judgment of single Judge of the High Court under the Letters Patent may also be relevant in the event of a claim by the insurance company against the insured for repayment of the amount. We are not concerned with that question here.
10.12 15. In the result, we hold that the insurance company is also liable to meet the claim of the claimant and satisfy the award passed by the Tribunal and modified by the High Court. The judgment of the High Court in so far as it exonerates the insurance company (5th respondent herein) from the liability, is set aside. The award passed by the Division Bench of the High Court can be enforced against the 5th respondent also. The appeal is allowed to the extent indicated above. The parties will bear their respective costs.
10.13 After these two decisions, another two Judge Bench of the Hon'ble Supreme Court has in another appeal expressed the view that Sthe question involved in these appeals is whether in a case of insurance policy not 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 from the insured. On this question there appears to be some apparent conflict in the two three-Judge Bench decisions of this Court (1) New India Assurance Co. Ltd. v. Shanti Bai and (2) Amrit Lal Sood v. Kaushalya Devi Thapar (Re: New India Assurance Co. Ltd. v. C.M. Jaya ) 10.14 In view of the same, the matter was referred to the Constitution Bench in New India Assurance Co. Ltd. v. C.M. Jaya and Ors. :
10.15 Before the Constitution Bench the facts were that the deceased was riding the pillion seat of a two wheeler when it met with the accident with a truck insured by the appellant and the claimant approached the Tribunal and it awarded a sum of Rs. 1,03,360/- as compensation and held that the liability of the appellant was limited to Rs. 50,000/- and the balance amount was recoverable from the driver and owner of the truck jointly and severally. The truck owner preferred appeal before the High Court. The High Court held that the liability of the appellant was unlimited as the vehicle was comprehensively insured. The High Court also allowed the cross-objections preferred by the claimants solely against the appellant under Order 41 Rule 22, Civil Procedure Code for the full pecuniary liability to be placed upon the insurer while enhancing the amount of compensation from Rs. 1,03,360/- to Rs. 3,60,000/- with interest at the rate of 15% per annum from the date of application. Hence being aggrieved and dissatisfied with the judgements the appellant filed appeal before the Hon'ble Apex Court. The Hon'ble Apex Court has observed that the insurance policy produced before the Court that the liability of the appellant is limited to Rs. 50,000/- in regard to the claim in question. Ultimately, the Hon'ble Apex Court has held that the High Court was not right in holding that the liability of the appellant insurance Company was unlimited merely on the ground that the vehicle in question i.e. the truck was covered by a comprehensive policy. In this set of facts, the Hon'ble Supreme Court considered the decision in the case of National Insurance Co. Ltd. v. Jugal Kishore (supra), the New India Assurance Co. Ltd. v. Shanti Bai (supra). Thereafter, in para 4 of the judgement the Hon'ble Supreme Court has considered the decision in the case of Amrit lal Sood (supra). In paragraph No. 5 of the judgement, the Hon'ble Supreme Court has observed as follows:
Thus, a careful reading of these decisions clearly shows that the liability of the insurer is limited, as indicated in Section 95 of the 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 unlimited in respect of third party and it is limited only to the statutory liability. This view has been consistently taken in the other decisions of this Court.
10.16 In paragraph No. 6 of the said judgement on page 275, the Hon'ble Apex Court considered the decision in the case of Shanti Bai (supra) and in paragraph No. 7 of the said judgement the Hon'ble Supreme Court considered the decision in the case of Amrit Lal Sood in which the Hon'ble Apex Court has considered the decision in the case of National Insurance Co. Ltd. v. Jugal Kishore (supra) and in para 7 on page 275 of the said judgement the Hon'ble Supreme Court has observed as under:
Hence, the Court after noticing the relevant clauses in the policy, on facts found that under Section II(1)(a) of the policy, the insurer has agreed to indemnify the insured against all sums which the insured shall become legally liable to pay in respect of death of or bodily injury to `any person'. The expression `any person' would undoubtedly include an occupant of the car who is gratuitously travelling in it.
x x x x Thus, it is clear that the specific clause in the policy being wider, covering higher risk, made all the difference in Amrit Lal Sood's case as to unlimited or higher liability. The Court decided that case in the light of the specific clause contained in the policy. The said decision (i.e. Amrit Lal Sood case) cannot be read as laying down that even though the liability of the insurance company is limited to the statutory requirement, an unlimited or higher liability can be imposed on it. The liability could be statutory or contractual. A statutory liability cannot be more than what is required under the statute itself. However, there is nothing in Section 95 of the Act prohibiting the parties from contracting to create unlimited or higher liability to cover wider risk. In such an event, the insurer is bound by the terms of the contract as specified in the policy in regard to unlimited or higher liability as the case may be. In the absence of such a term or clause in the policy, pursuant to the contract of insurance, a limited statutory liability cannot be expanded to make it unlimited or higher. If it is so done, it amounts to re-writing the statute or the contract of insurance which is not permissible.
10.17 Ultimately in paragraph No. 8 (page 276) of the said judgement the Hon'ble Supreme Court has observed as follows:
In the light of what is stated above, we do not find any conflict on the question raised in the order of reference between the decisions of two Benches of three learned Judges in Shanti Bai and Amrit Lal Sood , aforementioned and, on the other hand, there is consistency on the point that in case of an insurance policy not taking any higher liability by accepting a higher premium, the liability of the insurance company is neither unlimited nor higher than the statutory liability fixed under Section 95(2) of the Act. In Amrit Lal Sood's case the decision in Shanti Bai is not noticed. However, both these decisions refer to the case of Jugal Kishore and no contrary view is expressed.
10.18 In para 9 on page No. 276 of the said judgement the Hon'ble Apex Court considered the decision in the case of New India Assurance Co. Ltd. v. Ram Lal 1988 ACJ 754(SC) and in para 10 the Hon'ble Apex Court considered the decision in the case of National Insurance Co. LTD. v. Nathilal the Hon'ble Supreme Court has observed as under:
10.19 In the premise, we hold that the view expressed by the Bench of three learned Judges in the case of Shanti Bai is correct and answer the question set out in the order of reference in the beginning as under:
In the case of insurance company not taking any higher liability by accepting a higher premium for payment of compensation to a third party, the insurer would be liable to the extent limited under Section 95(2) of the Act and would not be liable to pay the entire amount.
10.20 Thereafter, the Hon'ble Supreme Court considered the facts of the case and again referred to the judgements of the Hon'ble Supreme Court in the cases of Shanti Bai (supra) and Amrit Lal Sood (supra) and observed in paras 12, 13 and 14 on page 277-278 of the said judgement as follows:
para 12...As already stated above, in Amrit Lal Sood's case, the Court found an express term in the policy for covering wider risk and to meet the higher liability unlike in the case of Shanti Bai. Therefore, the High Court was not right in holding that the liability of the appellant insurance-company was unlimited merely on the ground that the vehicle in question, i.e., the truck, was covered by a comprehensive insurance policy.
13. In the circumstances, we hold that the liability of the appellant-insurance company is limited to Rs. 50,000/-, as held by the Tribunal.
14. The appeals are, therefore, allowed to the extent of limiting the liability of the appellant-insurance company to Rs. 50,000/-, making it clear that it does not affect in any manner the liability of the respondents 4 and 5 (the truck owner and the driver) to pay the full amount of the award. The judgment and order of the High Court under challenge in these appeals shall stand modified accordingly.
10.21 After referring to the said judgement, the learned Counsel for the Insurance Company has submitted that this Court will have to consider that what was the question referred to before the Constitution Bench and the answer given by the Hon'ble Apex Court in para 11. In view of the Constitution Bench judgement it appears that higher premium is required to be paid by the insured for higher liability. In the case of Insurance policy not 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) and would not be liable to pay the entire amount as per para 11 of the Constitution Bench judgement in New India Assurance Co. Ltd. v. C.M. Jaya's case (supra). He has further submitted that the insurance policy has not taken any higher liability by accepting higher premium. Therefore, the insurer's liability would be limited to the extent limited under Section 95(2) of the Act.
10.22 The learned Counsel for the Insurance Company therefore submitted that the Division Bench of this Court in the case of Oriental Fire and General Insurance Co. v. Firdos Pervez Mysorewala 2003(2) GLR 1684 has not properly appreciated the judgement of the Constitution Bench in the case of C.M. Jaya (supra). The Division Bench has not considered what was the question before the Constitution Bench and what was the answer given by the Constitution Bench. He has submitted that the observation of the Division Bench that the Hon'ble Supreme Court had no occasion to consider 'avoidance clause' is not legal and proper because though, on facts of the case before the Constitution Bench, the avoidance clause was not there. However once the Hon'ble Supreme Court has considered Amrit Lal Sood's case (supra) it necessarily means that the Hon'ble Supreme Court has considered the avoidance clause. Therefore, this Court may not follow the judgement of the Division Bench in the case of Oriental Fire and General Insurance Co. v. Firdoz Pervez Mysorewala and subsequent Division Bench judgement in the case of New India Assurance Co. Ltd. v. Rajabhai Varsangbhai Bharwad and Ors. reported in 2006(1) GLR 668 as in the subsequent judgement the Division Bench has followed the earlier Division Bench judgement in the case of Oriental Fire and General Insurance Co. v. Firdos Pervez Mysorewala (supra).
10.23 The Constitution Bench judgement has approved the judgement of the Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. v. Ram Lal (supra) wherein it was held that the High Court was in error that the appellant Insurance Company was liable to pay the amount of compensation which was more than Rs. 50,000/- and that the liability of the appellant was limited to Rs. 50,000/- in the case of Oriental Fire & General Insurance Co. Ltd. v. Firdos Pervez Mysorewala and Ors. (supra).
10.24 It is submitted that this Court is bound to follow all directions to hilt as proclaimed by the Constitution Bench judgement of S.C. In C.M. Jaya case in its entirety and may not attempt to rewrite the statute or the contract of insurance as observed by the Hon'ble Apex Court.
10.25 The learned Counsel submitted that the Constitution Bench judgement of the Hon'ble Supreme Court in the case of C.M. Jaya (supra) supports his case and the Division Bench judgements in the case of Firdos Pervez Mysorewala (supra) and Rajabhai Varsangbhai Bharwad and Ors. (supra) have not appreciated the ratio laid down by the Constitution Bench. However, over and above, he has stated that there are couple of judgements of the Division Benches of this Court which also support the contention of the Insurance Company and therefore, in any view of the matter this Court may not follow the earlier judgements of this Court in the case of Firdos Pervez (supra) and Rajabhai Varsangbhai Bharwad (supra).
10.25A Mr. Rajni Mehta has also relied on the decision of the Hon'ble Supreme Court in the case of Oriental Insurance Co. Ltd. v. Shakuntala Garg and Ors. in Civil Appeal No. 104 off 2003 (arising out of SLP [C] No. 691 of 2002) which was decided on January 10, 2003. The said order is reproduced as under:
In or view, having regard to the Constitution Bench Judgement in New India Assurance Co. Ltd. v. C.M. Jaya and Ors. , the appellant-Insurance Company's liability is limited i.e. to the tune of Rs. 50,000/- as indicated in the policy. After perusing the impugned order it is clear that the appellant-Insurance Company has accepted its liability to the extent of Rs. 50,000/- and that appears to be the liability of the Insurance Company as could be seen from the certified copy of the policy being produced. Unfortunately, in this case the original policy was not before the Claims Tribunal. Under these circumstances, we modify the award to fix the liability of the Insurance Company only to the extent of Rs. 50,000/-. In other respects the impugned award stands confirmed. The appeal is disposed of accordingly.
Learned Counsel for the appellant at this stage expressed an apprehension that by virtue of the terms of the award, the appellant may be required to pay the entire amount and recover it from the owner. In the light of the modification of the impugned award, such question does not arise.
Chandulal Gokaldas case:
10.26 In that case the Division Bench was concerned with the case where the deceased was travelling on a scooter and at that time another driver of Matador Tempo came with excessive speed and dashed with the scooter on the wrong side, as a result of which deceased Yogesh Chandulal Mehta, sustained serious injuries and succumbed to the same during the course of treatment. In that circumstance original owner, driver and Insurance Company were impleaded and case was registered against them. Before the Tribunal the Insurance Company contended regarding limited liability to the extent of Rs. 1,50,000/- as per the insurance covered under an Act policy. The Tribunal awarded a sum of Rs. 2,12,000/- by way of compensation and directed the award to be executed against all the three opponents rejecting the plea of limited liability of the Insurance Company.
10.27 Being aggrieved and dissatisfied, the Insurance Company filed appeal before this Court. In that context, the Division Bench after relying on the decision of the Constitution Bench of the Hon'ble Apex Court in the case of New India Assurance Co. Ltd. v. C.M. Jaya held in para as under:
10.28 SHowever, it is certain that in absence of any such plea or clause in the insurance policy, the liability of the insurer cannot be said to be unlimited as held by the Tribunal even in respect of the third party. But, it is restricted or limited to the extent of Rs. 1,50,000/- in view of the policy being an Act policy. Therefore, the first contention advanced by the learned advocate Mr. Nanavati on behalf of the appellant in First Appeal No. 1435 of 1991 is quite justified and is required to be accepted. We are, therefore, convinced that the Tribunal's finding and ultimate conclusion that the Insurance Company is fully liable is hereby quashed and set aside and is substituted by the liability as per the Act policy to the extent of Rs. 1,50,000/-. In other words, insofar as original opponent No. 3, insurer of Matador-Tempo is concerned, the liability for payment of compensation will be restricted to an amount of Rs. 1,50,000/- over and above the proportionate cost and interest thereon. We, therefore, decide point No. 1 accordingly.
10.29 In para 13 on page 2390 of the said judgement, the Division Bench has observed as under:
It has been contended by the learned Advocate Mr. Nanavati appearing for the Insurance Company that the Insurance Company has deposited the full amount as per the award of the Tribunal, and therefore, in view of our direction about the limited liability to the extent of Rs. 1,50,000/- with proportionate cost and interest thereon, the excess amount deposited has to be refunded to the Insurance Company. The Tribunal upon verification is directed to return the excess amount to the Insurance Company in the light of the limited liability and the findings recorded by us.
10.30 He has submitted that in this case the Division Bench has considered the Constitution Bench judgement in the case of C.M. Jaya (supra) and taken a view contrary to and inconsistent with the earlier Division Bench judgement in the case of Firdos Pervez Mysorewala (supra). The present Division Bench may follow the judgement in the case of Chandulal Gokaldas and may not follow the judgement of the Division Bench in the case of Firdos Pervez Mysorewala (supra).
10.31 The learned Counsel has further submitted that even prior to the judgement in the case of Chandulal Gokaldas (supra) there was another judgement of the Division Bench of this Court which has taken the same view. However, in that case the Division Bench has no advantage of going through the Constitution Bench judgement, still the Division Bench has taken the view in favour of the Insurance Company.
10.32 The learned Counsel has also relied upon the Division Bench judgment of this Court in the case of United India Insurance Co. Ltd. v. Shobhanaben Girishbhai and Ors. , particularly para 12 and 13.
It is amply established that deceased Girish was a person other than a passenger carried for hire or reward or by reason of or in pursuance of a contract of employment. The provisions of Section 95 of the Act deal with the nature and extent of liability arising from the use of motor vehicle for death or injury to any person or damage to the property of a third party and this liability is limited to the extent provided by Sub-section (2) of Section 95 in respect of the goods vehicle and the vehicles carrying passengers for hire or reward. An owner of a vehicle was obliged to have a policy which can be termed as a statutory policy or `Act policy' under which specific coverage for every class of persons has to be provided for. As discussed earlier, in absence of proof as to any wider coverage under the policy of insurance nothing more than the statutory limit can be awarded and insurance company can be held liable only to that extent. Therefore, the liability imposed on the insurance company of Rs. 1,50,000 is unwarranted and the award will have to be modified by reducing it to Rs. 50,000.
10.32A For the reasons aforesaid, the appeal is partly allowed. The impugned judgment and award fixing the liability of the insurance company at Rs. 1,50,000 is modified by reducing it to the statutory liability of Rs. 50,000. We hope that looking to the socio-economic background of poor claimants, the amount of costs and interest, if paid to the claimants, will not be recovered from them by the insurance company. The excess amount out of the amount deposited by the insurance company in response to the interim orders passed by this Court will be refunded.
10.33 The learned Counsel has further submitted that when the counsel for the claimants has relied on two Division Bench judgement, he is also referring to another Division Bench judgement in the case of United India Insurance Co. Ltd. v. Chandulal Gokaldas Mehta (Decd.) Through Sunilbhai C. Mehta and Ors. reported in 2003(3) GLR 2386 and in that case the Constitution Bench judgement has been considered.
10.34 He has also relied on another unreported judgement of this Court in the case of Jaipur Golden Transport Company Private Limited, Delhi and Anr. v. Shri Keshavlal Maganlal and Ors. in First Appeal No. 159 of 1968 decided on 3.11.1971 (Coram: J.B. Mehta and S.N. Patel, JJ). In that case the fourth point was regarding limits of Insurance Company. However, though we have gone through the said judgement we do not find any observation of the Division Bench which goes against the claimants and in favour of the Insurance Company but we have pointed out to the learned Counsel for the Insurance Company on which portion of the said judgement he has relied on. However, he has not pointed out anything.
LEARNED COUNSEL MR. M.C. BHATT'S FURTHER SUBMISSIONS:
11. It may be noted that in this case this appeal raises substantial question of law regarding rights of claim vis-a-vis Insurance Company. Though we have referred to two Division Bench judgements which have a view in favour of the claimant, we have also referred to Constitution Bench judgement and other two Division Bench judgements which have taken the view in favour of the Insurance Company and against the claimant. As regards the unreported judgement, it does not decide the issue which is presently raised in this appeal. Therefore, we do not refer to the said decision.
11.1 The learned Counsel submitted that in the present appeal, this Court may not stop at the discussing at this stage. The learned Counsel has further submitted that this case raises important question of interpretation of insurance policy particularly avoidance clause, important notice and also the provisions of the Motor Vehicles Act, particularly, Sections 94, 95 and 96 which relate to third party liability of the Insurance Company. He has submitted that over and above the two Division Bench judgements of this Court where the Hon'ble Supreme Court judgements have been considered, he also relies on other judgements of the Hon'ble Supreme Court which also interpret the rights of the Insurance Company and those decisions have also a great bearing. In support of his submissions and to press his point that the liability of the Insurance Company regarding third party is concerned, this Court can always direct that the third party can recover the entire amount from the Insurance Company and thereafter the Insurance Company can recover the same either from the owner of the vehicle or from other members of his family. In support of his submission, he has relied on the following judgements:
JUDGMENT OF HON'BLE SUPREME COURT REGARDING LIABILITY OF THIRD PARTIES:
11.2 New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani: . In that case one Shri S.N. Asnani owned a car. He insured it with the New Asiatic Insurance Co. Ltd. Asnani permitted Pesumal Dhanamal Aswani to drive that car. When Pesumal was driving the car with Daooji Radhamohan Meherotra and Murli Dholandas in the car, the car met with an accident as a result of which Meherotra died and Murli received injuries. From the facts it appears that Pesumal himself owned a Pontiac car which had been insured with the Indian Trade and General Insurance Co. Ltd. In view of this, the heirs of Meherotra instituted suit against Pesumal for the recovery of Rs. 2,50,000/- by way of damages with interest. Murli instituted suit No. 71 of 1959 against Pesumal to recover Rs. 1,50,000/- by way of damages. In that case notices under Section 96(2) of the Motor vehicles Act, 1939 were issued to the New Asiatic Insurance Company Ltd. The notice was given to the Company as the defendant's liability to third parties had been insured with it. In that facts of the case, the Company took out Chamber Summons and it was contended that notice under Section 96(2) of the Act was bad in law and should be set aside and that the Company was not liable to satisfy any judgement which might be passed in the suit against the defendant. It was prayed that the Company be added as a party defendant to the suit or be authorised to defend the suit in the name of the defendant.
11.3 The matter came up before the learned Single Judge of the Bombay High Court and the learned Judge held that the notice issued to the Company in the suits under Section 96(2) of the Act, to be bad in law and accordingly set them aside.
11.4 Being aggrieved and dissatisfied with the said judgement, the plaintiff filed Letters Patent Appeals which were allowed and the Chamber Summonses were dismissed. It was directed that the trial Judge would hear the alternative prayers in the Chamber Summonses and make the necessary orders. These orders were challenged before the Hon'ble Supreme Court. (The judgement of Division Bench since ) 11.5 It may be noted from the facts of the case that the policy in question was described as 'Private Car (Comprehensive Policy)'. The Hon'ble Supreme Court considered both the policy issued in favour of Asnani where the Hon'ble Supreme Court has considered for the purpose of certain terms and right of recovery which was stated in the policy which is similar to our case. Even certain conditions were also considered. Even the Hon'ble Supreme Court considered the policy of Pesumal. Thereafter, in para 11, the Supreme Court has considered Sections 93, 94, 95 and 96. Thereafter the Hon'ble Supreme Court interpreted the provisions of the Motor Vehicles Act in para 12 of the judgement as under:
(12) Chapter VIII of the act, it appears from the heading, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third-parties who suffer on account of the user of the motor vehicle would be able to get damages for injuries suffered and that their ability to get the damages will not be dependent upon the financial condition of the driver of the vehicle whose user led to the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment.
11.6 The Hon'ble Supreme Court has further observed in paras 21 and 22 as under:
21. The Act contemplates the possibility of the policy of insurance undertaking liability to third parties providing such a contract between the insurer and the insured, that is, the person who effected the policy, as would make the company entitled to recover the whole or part of the amount it has paid to the third party from the insured. The insurer thus Acts as security for the third party with respect to its realising damages for the injuries suffered, but vis-a-vis the insured, the company does not undertake that liability or undertakes it to a limited extent. It is in view of such a possibility that various conditions are laid down in the policy. Such conditions, however, are effective only between the insured and the company, and have to be ignored when considering the liability of the company to third parties. This is mentioned prominently in the policy itself and is mentioned under the heading 'Avoidance of certain terms and rights of recovery', as well as in the form of 'an important notice' in the Schedule to policy. The avoidance clause says that nothing in the policy or any endorsement thereon shall affect the right of any person indemnified by the policy or any other person to recover an amount under or by virtue of the provisions of the Act. It also provides that the insured will repay to the company all sums paid by it which the company would not have been liable to pay but for the said provisions of the Act. The 'Important Notice' mentions that any payment made by the company by reason of wider terms appearing in the certificate in order to comply with the Act is recoverable from the insured, and refers to the avoidance clause.
22. Thus the contract between the insured and the company may not provide for all the liabilities which the company has to undertake vis- is the third parties, in view of the provisions of the Act. We are of opinion that once the company had undertaken liability to third parties incurred by the persons specified in the policy, the third parties' right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy. Considering this aspect of the terms of the policy, it is reasonable to conclude that proviso (a) of para 3 of Section II is a mere condition affecting the rights of the insured who effected the policy and the persons to whom the cover of the policy was extended by the company, and does not come in the way of third parties' claim against the company on account of its claim against a person specified in para 3 as one to whom cover of the policy was extended.
11.7 The Hon'ble Supreme Court has further observed in paragraph No. 23 as follows:
23. xxxxxxx We have to see whether the company, on account of undertaking that liability can be said to have insured Pesumal on account of his driving the car with the permission of Asnani. The same may be said about the other contention for the appellant that there is nothing in the Act which makes it compulsory for an insurer to insist that the owner of the car takes out a policy in the widest terms possible covering any person who drives the car with his permission. The company did agree under the policy to indemnify drivers who drove the car with the insured's permission. The question is whether that undertaking covers Pesumal.
25. We are of opinion that the High Court rightly held that the company had insured Pesumal in view of para 3 of Section II of the policy and that it comes within the expression 'insurer' in Section 96 of the Act. We therefore dismiss the appeals with costs, of hearing one set.
11.8 Guru Govekar v. Miss Filomena F. Lobo and Ors. . In the aforesaid judgement the question which was before the Hon'ble Apex Court was as to whether an insurer who has issued a policy insuring any person specified in the policy against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of a motor vehicle in a public place, is liable to pay compensation to such third party or to his or her legal representatives as the case may be when the liability arises when the motor vehicle is in the custody of a repairer.
11.9 In that case one Sayed Hussain was a partner of a firm by name M/s. International Ship Repairers carrying on business at Vasco-da-Gama, Goa, which was the owner of an Ambassador car. He entrusted the said car to Guru, proprietor of M/s. Auto Electrical Works on February 26, 1983 with instructions to carry out electrical repairs to the car and handed over the keys of the car to the repairer for that purpose. The car had been insured by the owner with M/s. Oriental Insurance Co. Ltd., as required by the provisions of the Motor Vehicles Act, 1939.
11.10 On February 26, 1983, Filomena F. Lobo, respondent, was returning home along with her friend and was walking on the left side of the road. She noticed a car parked near Damodar Mandap and proceeded further only to be knocked down by the very car which had reversed and dashed against her back. As she suffered severe injury, she instituted a claim petition before the Motor Accidents Claims Tribunal, South Goa at Margao impleading Mr. Sayeed Hussain, partner of M/s. International Ship Repairers; Guru, the proprietor of M/s. Auto Electrical Works; Momad Donttach, the employee of the repairer who was repairing the car at the time of the accident and the insurer M/s. Oriental Insurance Co. Ltd., as respondents. She has filed claim petition under Section 110-A of the Act. The Tribunal held that she was entitled to a compensation of Rs. 90,000/- for the injuries suffered by her and that the insurer and all other respondents were liable to pay the compensation of Rs. 90,000/- jointly and severally with interest thereon.
11.11 Being aggrieved by the said award of the Tribunal, an appeal was preferred before the Bombay High Court who allowed the appeal and held that under Section 92A of the Act the insurer was liable to the extent of Rs. 7,500/- only. However, the appeal filed by Guru (to whom car was entrusted) was dismissed holding that he and his mechanic Momad Donttach alone were jointly and severally liable to pay the compensation. The result of the judgement was that the entire compensation minus Rs. 7,500/- which the insurer was asked to pay under Section 92-A of the Act had to be paid by Guru the repairer of the car and his mechanic Momad Donttach. Against the said judgement of the High Court, appeal was preferred before the Hon'ble Supreme Court. The Hon'ble Apex Court considered Section 94 of the M.V. Act which provides necessity for insurance against third party risk and also other provisions of the Motor Vehicles Act particularly Section 95 of the Act which provides the requirements of policies and limits of liability. The Hon'ble Supreme Court has also considered provisions of Section 35(1) of the Road Traffic Act, 1930 which was in force in England and several English decisions. However, in para 12 on page 10 of the said judgement the Hon'ble Supreme Court has observed as under:
While it may be true, as we have observed earlier, that under the Law of Torts, the owner may not be liable on the principle vicarious liability, the insurer would be liable to pay the compensation by virtue of provisions of Section 94 and Section 95 of the Act, referred to above.
11.12 In paragraph 13 on page 10 of the said judgement the Hon'ble Supreme Court considered the judgement in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani (supra) and in paragraph No. 14, the Hon'ble Supreme Court has observed as follows:
para 14 - Thus on the facts of the case before us we are of the view that the insurer is liable to pay the compensation found to be due to the claimant as a consequence of the injuries suffered by her in a public place on account of the car colliding with her on account of the negligence of the mechanic who had been engaged by the repairer who had undertaken to repair the vehicle by virtue of the provisions contained in Section 94 of the Act which provides 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 with the requirements of Chapter VIII of the Act. Any other view will expose innocent third parties to go without compensation when they suffer injury on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act.
11.13 Oriental Insurance Co. Ltd. v. Inderjit Kaur and Ors. : In that case the facts were that a bus met with an accident. Its policy of insurance was issued by the appellant Insurance Co. on 30.11.1989. The premium for the policy was paid by cheque. The cheque was dishonoured. The premium was paid in cash on 2.5.1990. In the meantime, on 19.4.1990 the bus collided with a truck, whose driver died. The truck driver's widow and minor sons filed the claim petition. The Insurance Company denied the claim on the ground that the insurance premium was not properly paid (for which we are not concerned). The Tribunal rejected the contention of the Insurance Company and awarded the claimants compensation in the sum of Rs. 96,000/- with interest at the rate of 12 per cent per annum from the date of the petition, to be paid by the insured and the Insurance Company jointly and severally. The appeal filed by the Insurance Company before the High Court was summarily dismissed and against which appeal was preferred before the Hon'ble Supreme Court. The Hon'ble Apex Court considered several provisions and ultimately observed in paras 9, 10 and 12 as follows:
11.14 para 9 - We have, therefore, this position. Despite the bar created by Section 64VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.
11.15 Para 10 - The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured.
11.16 Para 12 It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant.
11.17 Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu and Ors. . In that case the question raised before the Hon'ble Apex Court was what is the extent of liability of an insurance company towards the third party as per Section 95(2)(b) of the M.V. Act and what are its rights in case of payment of an amount in excess of the limits of the liability under the insurance policy vis-a-vis the insured? In that case the legal heirs of one C. Abdul Shukkoor who died in a road accident on 6.7.1988. The accident was caused by an autorickshaw which was insured with the Insurance Company. The claimants claimed compensation of Rs. 2,00,000/-. The Insurance Company filed its reply specifically stating therein that its liability was limited to Rs. 50,000/- under the policy of insurance. The Tribunal passed an award of Rs. 1,94,150/- and fastened the entire liability on the Insurance Company. The Insurance Company filed appeal before the High Court which was also dismissed. The policy was taken on 1.7.1989 i.e. the liability of the insurance company to satisfy judgements against persons insured in respect of third party risk is covered under Section 96(1) of the Act. The Hon'ble Supreme Court has considered Section 96 of the M.V. Act and also the terms of policy. In paragraph 7 of the judgement the Hon'ble Supreme Court has considered the judgement in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani (supra) and in paragraph 8 of the said judgement Amrit Lal Sood v. Kaushalya Devi Thapar (supra) was also considered. The Hon'ble Supreme Court has in para 9 of the said judgement also considered the judgement in the case of New India Assurance Co. Ltd. v. Shanti Bai (supra) and the judgement in the case of National Insurance Co. Ltd. v. Jugal Kishore (supra). The Hon'ble Supreme Court has observed as under:
11.18 It was pointed out that the comprehensive policy only entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle which did not mean the limit of liability with regard to third party risk becoming unlimited or higher than the statutory liability. In the case of National Insurance Co. Ltd. v. Jugal Kishore (supra) this Court observed that the liability under the policy could not exceed the statutory liability under Section 95 of the Act only on the ground that the insured had undertaken comprehensive insurance of the vehicle. The payment of higher premium on that score, however, did not mean that the limit of liability with regard to third party risk became unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act.
11.19 Further in paragraph No. 10 the Hon'ble Court has observed as under:
In the facts and circumstances of this case we find that despite holding the liability under the policy limited to the extent of Rs. 50,000/-, the Claims Tribunal and the High Court were not unjustified in directing the appellant company to pay the whole of the awarded amount to the claimants on the basis of the contractual obligations contained in clauses relating to the liability of the third parties and avoidance clause.
11.20 In paragraph No. 11 of the said judgement the Hon'ble Apex Court has observed thus:
The appeal is accordingly allowed holding that the appellant company is liable to pay the entire award amount to the claimants. Upon making such payment the appellant can recover the excess amount from the insured by executing this award against the insured to the extent of such excess as per Section 174 of the Motor Vehicles Act, 1988. No costs.
11.21 New India Assurance Company Limited v. Rula and Ors. : In this case the truck was insured on 8.11.1999 in terms of the M.V. Act. The said vehicle was insured as goods carrying vehicle Schedule - Policy A (Act only). On the same day it met with an accident in which three occupants died. Their dependents filed three claim petitions before the Motor Accident Claims Tribunal. The Insurance Company has contested the claim petition on the ground that the truck was not covered by any insurance policy inasmuch as the truck-owner had obtained the insurance policy on the basis of a cheque dated 8.11.1991 towards payment of premium but this cheque was dishonoured on 16.11.1991 with the result that the insurance policy itself was cancelled. The said contention was negatived by the Tribunal and the Tribunal awarded compensation. Against that order, appeal was preferred before the High Court where the appeal was dismissed. Thereafter, the matter went to the Hon'ble Supreme Court. In that context the Hon'ble Supreme Court considered Section 146 of the M.V. Act which provides necessity for insurance against third party risk; Section 147(5) of the Act which provides that notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this Section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons; Section 149 of the Act which provides duty of insurers to satisfy judgements and awards against person insured in respect of third party risks. In that context, the Hon'ble Supreme Court in para 8 on page No. 1222 of the judgement has observed as under:
para 8 The contract of insurance in respect of motor vehicles has, therefore, to be construed in the light of the above provisions. Section 146(1) contains a prohibition on the use of the motor vehicles without an insurance policy having been taken in accordance with Chapter 11 of the Motor Vehicles Act. The manifest object of this provision is to ensure that third party, who suffers injuries due to the use of the motor vehicle, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who had caused the injuries.
11.22 In para 9 the contract of insurance under Chapter 11 of the Motor Vehicles Act, 1988 which contemplates a third party who is not a signatory or a party to the contract of insurance, but is nevertheless, protected by such contract was considered. Thereafter, the Hon'ble Supreme Court in para 10 of the said judgement has referred to the decision in the case of Oriental Insurance Co. Ltd. v. Inderjit Kaur and then in para 11 on page No. 1223 of the said judgement has observed as under:
This decision, which is a 3-Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. If, on the date of accident, there was a policy of insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party.
11.23 Thus the Hon'ble Apex Court confirmed the judgement of the High Court in this regard.
11.24 National Insurance Co. Ltd. v. Baljit Kaur and Ors. : In that case the question arose for consideration before the Hon'ble Apex Court is whether an insurance policy in respect of a goods vehicle would also cover gratuitous passengers, in view of the legislative amendment in 1994 to Section 147 of the Motor Vehicles Act, 1988. In that case the Hon'ble Supreme Court considered the judgement in the case of New India Assurance Co. v. Satpal Singh and Natinal Insurance Co. Ltd. v. Ajit Kumar and other cases. In that case the Tribunal directed payment of compensation to the claimants. The High Court upheld the said verdict of the Claims Tribunal on appeal with the further direction that the appellant insurer would be entitled to recover the amount of compensation from the owner. In that context, the Hon'ble Supreme Court considered Section 147 of the M.V. Act, 1988, as amended by the Motor Vehicles (Amendment) Act, 1994 and ultimately in para 21 the Hon'ble Supreme Court has observed as under:
We, therefore, clarify the legal position which shall have prospective effect. The Tribunal as also the High Court had proceeded in terms of the decisions of this Court in Satpal Singh (supra). The said decision has been overruled only in Asha Rani (supra). We, therefore, are of the opinion that the interest of justice will be subserved if the appellant herein is directed to satisfy the awarded amount in favour of the claimant if not already satisfied and recover the same from the owner of the vehicle. For the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing Court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. We have issued the aforementioned directions having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988 in terms whereof it is not only entitled to determine the amount of claim as put forth by the claimant for recovery thereof from the insurer, owner or driver of the vehicle jointly or severally but also the dispute between the insurer on the one hand and the owner or driver of the vehicle involved in the accident inasmuch as can be resolved by the Tribunal in such a proceeding.
11.25 Oriental Insurance Co. Ltd. v. Nanjappan and Ors. (2004) 13 SCC 224: In that case the accident took place on 15.9.1990 and therefore the Tribunal held that the liability was of the insured one and the insurer had no liability. In appeal, for accepting the case of the respondent claimants the High Court held that the decision of this Court in New India Assurance Co. v. Satpal Singh was applicable. Thereafter, the matter went to the Hon'ble Apex Court. It may be noted that meanwhile the judgement of the Hon'ble Supreme Court in the case of Satpal Singh was reversed in the case of New India Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223. However, it is submitted that though the view in Satpal Singh case (supra) has been reversed, yet in a recent decision in National Insurance Co. Ltd. v. Baljit Kaur it has been held that it would be equitable if the Insurance Company pays the amount of compensation to the claimant and recovers it from the insured.
11.26 The Hon'ble Supreme Court after relying on the judgement in the case of Baljit Kaur (supra) the Hon'ble Supreme Court has in para 8 on page 226 of the judgement observed as under:
para 8 -Therefore, while setting aside the judgment of the High Court we direct in terms of what has been stated in Baljit Kaur's case (supra) that the insurer shall pay the quantum of compensation fixed by the Tribunal, about which there was no dispute raised, to the respondents-claimants within three months from today. For the purpose of recovering the same from the insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount the insured, owner of the vehicle shall be issued a notice and he shall be required to furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the Executing Court shall take assistance of the concerned Regional Transport authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the insured, owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realization by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle, the insured. The appeal is disposed of in the aforesaid terms, with no order as to costs 11.27 National Insurance Co. Ltd. v. Puja Roller Flour Mills (P) Ltd. and Ors. (2005) 11 SCC 386. In that case the Tribunal by its award dated 15.9.1994 fixed the compensation at Rs. 6,72,000/- and directed that as according to the terms of the insurance policy the liability of the Insurance Company was limited to the extent of Rs. 1,50,000/-, the claimants shall be entitled to recover a sum of Rs. 1,50,000/- only from the Insurance Company and the balance amount from the owner of the vehicle. Against the said order, the owner of the vehicle filed an appeal before the High Court in which the High Court upheld the quantum of compensation but directed that liability of the Insurance Company could not have been limited to Rs. 1,50,000/- but the same was an unlimited one. Thereafter, the Insurance Company filed letters patent appeal which has been dismissed. Thereafter, the matter went to Hon'ble Apex Court. In that context, the Hon'ble Supreme Court at paras 3 and 4 on page 387 has observed as under:
11.28 learned Counsel appearing on behalf of the appellant submitted that according to the terms of the insurance policy the liability of the Insurance Company was to the extent of Rs. 1,50,000 in accordance with the Motor Vehicles Act, 1939 (hereinafter referred to as the old Act) but now, under the Motor Vehicles Act, 1988 (hereinafter referred to as the new Act) the liability of the Insurance Company is unlimited. It has been submitted that in cases where the insurance policy issued under the old Act was subsisting on the date of passing of the new Act, a special provision has been made under the proviso to Section 147(2) of the New Act which lays down that if any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, the same shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier. The new Act came into force on 1.7.1989 and the accident had taken place on 29.9.1989 on which date the policy was effective. As the accident has taken place within the period of four months and the policy was to expire thereafter, the date of accident being earlier one in point of time, according to the proviso, the policy issued under the old Act shall continue to be effective in the case in hand. Thus, in view of the proviso the liability of the appellant Insurance Company would be limited to a sum of Rs. 1,50,000 only.
11.29 Para 4 Accordingly, the appeal is allowed, impugned orders passed by the Division Bench as well as the learned Single Judge of the High Court directing that liability of the Insurance Company shall be unlimited are set aside and order passed by the Tribunal limiting the liability of the Insurance Company to Rs. 1,50,000/- is restored. It is needless to say that the Insurance Company shall be liable to recover the amount in excess of Rs. 1,50,000 paid by it to the claimants from the owner of the vehicle. No costs.
11.30 The learned Counsel further submitted that all the decisions which have been referred to earlier relate to interpretation of the Act as well as insurance policy and also the directions given by this Court that even though the liability of the Insurance Company is limited still this Court can give direction in the matter that third party has right to recover the entire amount of claim from the Insurance Company and if the liability is limited then the Insurance Company can recover the same against the owner and driver as if the same has to be recovered in the execution proceedings as per the judgement of the Hon'ble Apex Court referred therein. The learned Counsel submitted that over and above, there are two important judgements of the Hon'ble Supreme Court which interpret the provisions of the Act particularly the defence of exclusion clause and also interpretation of M.V. Act and insurance policy which has great bearing on the question involved therein which will have to be considered while interpreting the provisions of the Act and the provisions of the insurance policy and the prayer that this Court can give directions to third party that they can recover the entire amount from the Insurance Company and the Insurance Company in turn can recover the excess amount from the owner and the driver.
11.31 Hon'ble Supreme Court Judgement regarding liability of Insurance Company under the provisions of the Act in general.
11.32 Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan and Ors. 1987 ACJ 411 : (1987) 2 SCC 654. The facts of that case which have been set out in para 2 of the judgement are as under:
The accident in question took place on November 14, 1964. The truck had come from Barejadi and had been unloaded at Baroda. The driver had gone for bringing snacks from the opposite shop leaving the engine running. The ignition key was in the ignition lock and not in the cabin in the truck as alleged by the driver. The driver had handed over control of the truck to the cleaner. On these facts the driver having been grossly negligent in leaving such a truck with its running engine in the control of the cleaner. This being the immediate cause of the accident, the owner of the car viz. the insured was held vicariously liable along with the driver and the cleaner.
11.33 In paragraph No. 3 on page 414 of the said judgement, the Hon'ble Supreme Court has observed as under:
xxxxxx Once a finding is that the driver in the course of the employment or the master's agent in the course of that agency, he negligently left the vehicle with the cleaner, the vicarious liability would immediately be fastened to the owner of the truck.
x x x x Therefore, the insurer cannot plead any exemption on the ground that the owner had committed breach of the specified condition....
11.34 Thereafter, the Hon'ble Supreme Court considered various judgements and ultimately in paragraphs 11, 12 and 13 on page 415-416 has observed as under:
...Now, the proposition is incontrovertible that so far as the owner of the vehicle is concerned, his vicarious liability for damages arising out of the accident cannot be disputed having regard to the general principles of law as also having regard to the violation of the obligation imposed by Section 84 of the Act which provides that no person driving or in charge of a motor vehicle shall cause or allow the vehicle to remain stationary in any public place, unless there is in the driver's seat a person duly licensed to drive the vehicle or unless the mechanism has been stopped and a brake or brakes applied or such other measures taken as to ensure that the vehicle cannot accidentally be put in motion in the absence of the driver. However, the present case the appellant contends that the exclusion clause is strictly in accordance with the statutorily permissible exclusion embodied in Section 96(2)(b)(ii) and that under the circumstances the appellant Insurance Company is not under a legal obligation to satisfy the judgment procured by the respondents.
11.35 Para 12. The defence built on the exclusion clause cannot succeed for three reasons, viz:
(1) On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour, and fulfil the promise and he himself is not guilty of a deliberate breach.
(2) Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver.
(3) The exclusion clause has to be 'read down' in order that it is not at war with the 'main purpose' of the provisions enacted for the protection of victims of accidents so that the promisor is exculpated when he does everything in his power to keep the promise.
11.36 Para 13 -...Why then has the legislature insisted on a person using a motor vehicle in a public place to insure against third party risk by enacting Section 94. Surely the obligation has not been imposed in order to promote the business of the insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the Community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependants of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recovered, from the person held liable who may not have the resources. The exercise undertaken by the law Courts would then be an exercise in futility. And the outcome of the legal proceedings which by the very nature of things involve the time cost and money cost invested from the scarce resources of the Community would make a mockery of the injured victims, or the dependents of the deceased victim of the accident, who themselves are obliged to incur not inconsiderable expenditure of time, money and energy in litigation. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force.
11.37 In paragraph No. 14 on page 417 of the said judgement the Hon'ble Supreme Court has considered Section 96 of the Act and also Breach of Contract by Carter, Section 84 of the Motor Vehicles Act and on page 418 the Hon'ble Supreme Court has observed as under:
...When the option is between opting for a view which will relieve the distress and misery of the victims of Accidents or their dependents on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach. The very same conclusion would emerge in obeisance to the doctrine of 'reading down' the exclusion clause in the light of the 'main purpose' of the provision so that the 'exclusion clause' does not cross swords with the 'main purpose' highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose. This theory which needs no support is supported by Carter's "Breach of Contract" vide paragraph 251. To quote:
Notwithstanding the general ability of contracting parties to agree to exclusion clauses which operate to define obligations there exists a rule, usually referred to as the "main purpose rule", which may limit the application of wide exclusion clauses defining a promisor's contractual obligations. For example, in Glynn v. Margetson and Co. (1893) AC 351 at p. 357. Lord Halsbury L.C. stated :
It seems to me that in construing this document, which is a contract of carriage between the parties, one must in the first instance look at the whole instrument and not at one part of it only. Looking at the whole instrument, and seeing what one must regard...as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract.
Accordingly, wide exclusion clauses will be read down to the extent to which they are inconsistent with the main purpose, or object of contract.
11.38 It may be noted that whether the aforesaid decision lays down correct law or not, the matter was referred to a three Judge Bench in the case of Sohan Lal Passi v. P. Sesh Reddy and Ors. . The Hon'ble Supreme Court has taken notice of Chapter VII-A particularly Section 92A of the Act which provides that where the death or permanent disablement of any person has resulted from an accident, the owner of the vehicle shall be liable to pay compensation in respect of such death or disablement in accordance with the provisions of the said Section. Sub-section (2) specifies a fixed amount for such liability without fault. In view of Sub-section (3), the claimant is not required to plead and establish that the death or permanent disablement in respect of which the claim has been filed was the result of the wrongful act, neglect or default of the owner of the vehicle. Section 92B of the Act also introduced that the right to claim compensation under Section 92 in respect of death or permanent disablement of any person shall be in addition to any other right i.e. the right to claim compensation on principle of fault. Similarly, the Hon'ble Apex Court has also taken into consideration Sub-Section (3) of Section 166 of the Act which gives relaxation for filing application and ultimately the said clause has been omitted by Motor Vehicles (Amendment) Act, 1994. The Hon'ble Apex Court has observed that the effect of the aforesaid amendment is that there is no limitation for filing claims before the Tribunal in respect of an accident. It was observed that the Parliament realised the grave injustice and injury which was being caused to the heirs and legal representatives of the victims who died in accidents by rejecting their claim petition only on the ground of limitation. Thereafter, the Hon'ble Apex Court has considered Sub-section (6) of Section 158 which provides that the officer-in-charge of the Police Station is enjoined to forward a copy of information/report regarding the accident to the Tribunal having jurisdiction. A copy thereof has also to be forwarded to the insurer concerned. The same Amendment Act has also substituted Sub-section (2) of Section 166 because of which an application for compensation under Sub-section (1) of Section 166 now can be made at the option of the claimants either to the Claims Tribunal having jurisdiction over the area in which the accident occurred or to the Claims Tribunal within the local limits of whose jurisdiction the claimant resides or carries on business or within the local limits of whose jurisdiction the defendant resides. Originally, such application used to be filed before the Claims Tribunal having jurisdiction over the area in which the accident occurred. This used to cause great hardship and in many cases it became impossible for the claimants to approach such Claims Tribunal, the distance being beyond their reach from the place of their residence. The Hon'ble Supreme Court has therefore observed that some of the aforesaid significant amendments introduced in the Motor Vehicles Act, 1939 and Motor Vehicles Act, 1988 have been only to indicate that even Parliament is conscious that right to claim compensation by the claimants in connection with the motor vehicles accidents should not be defeated on technical grounds. Thereafter, Section 96 has been considered by the Hon'ble Apex Court. Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan's case (supra) has been considered. Kashiram Yadav v. Oriental Fire and General Insurance Co.'s case (supra) has also been considered. A three Judge Bench of the Hon'ble Supreme Court considered this question afresh and in paragraph 10 on page 1049 the Hon'ble Supreme Court has observed as under:
para 10 - The road accidents in India have touched a new height. In majority of cases because of the rash and negligent driving, innocent persons become victims of such accidents because of which their dependents in many cases are virtually on the streets.
x x x x The Indian Parliament, being conscious of the magnitude of the plight of the victims of the accidents, have introduced several beneficial provisions to protect the interest of the claimants and to enable them to claim compensation from the owner or the insurance company in connection with the accident.
11.40 Thereafter, the Hon'ble Apex Court considered the amendment in Section 92-A of Amendment Act, 1982, Sub-Section (3) to Section 166 of the Act of 1988 and Sub-Section (6) to Section 158 of the Amendment Act of 1994 and thereafter in paragraph No. 12 the Hon'ble Apex Court considered Section 96 of the old Act and also judgement in the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC) and observed as follows:
While interpreting the contract of insurance, the Tribunal and Courts have to be conscious of the fact that right to claim compensation by heirs and legal representatives of the victims of the accident is not defeated on technical grounds. Unless it is established on the materials on record that it was the insured who had willfully violated the condition of the policy by allowing a person not duly licensed to drive the vehicle when the accident took place, the insurer shall be deemed to be a judgment debtor in respect of the liability in view of Sub-section (1) of Section 96 of the Act. It need not be pointed out that the whole concept of getting the vehicle insured by an insurance company is to provide an easy mode of getting compensation by the claimants, otherwise in normal course they had to pursue their claim against the owner from one forum to the other and ultimately to execute the order of the Accident Claims Tribunal for realisation of such amount by sale of properties of the owner of the vehicle. The procedure and result of the execution of the decree is well known.
11.41 The Hon'ble Supreme Court in para 13 on page No. 1054 of the said judgement has observed as under:
We affirm and reiterate the statement of law laid down in the above case. We may also state that without the knowledge of the insured, if by driver's acts or omission others meddle with the vehicle and cause an accident, the insurer would be liable to indemnify the insured. The insurer in such a case cannot take the defence of a breach of the condition in the certificate of insurance.
We are in respectful agreement with the view expressed in the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan (supra).
11.42 The Hon'ble Supreme Court in paragraph No. 15 on page 1054 of the said judgement has held thus:
para 15 - Accordingly, the appeals are allowed and the orders of the claims Tribunal and the High Court are modified where only the appellant has been held to be liable to pay the compensation and the respondent-insurance company has been absolved of the liability. The respondent-insurance company shall be jointly and severally liable to pay the compensation to the claimants.
Submission of learned Counsel of appellant against Gujarat High Court Judgement which were cited by Mr.Rajni Mehta which are in favour of Insurance Company.
11.43 Learned advocate Mr. Bhatt's contention is that this Court may not follow the Division Bench judgements of this Court in the case of Chandulal Gokaldas (supra), Shobhanaben Girishbhai (supra) and unreported judgement of this Court in the case of Jaipur Golden Transport Company Private Ltd. v. Shri Keshavlal Maganlal and Ors. (supra) for the following reasons:
12. The learned advocate for the appellant submitted that the question involved in the present appeal is regarding correctness of the tribunal's finding wherein the tribunal has held that the opponents are severally and jointly liable to pay the entire amount. However, the liability of the Insurance Company is restricted to Rs. 50,000/-.
12.1 He has submitted that, however, the contention which he has urged before this Court is clearly covered by the Division Bench judgement of this Court in the case of Oriental Fire and General Insurance Company v. Firdos Pervez Mysorewala and Ors. (supra) which we have referred to and the Division Bench while deciding the said issue has taken into consideration the Constitution Bench judgement of the Hon'ble Supreme Court in the case of C.M. Jaya (supra), Amrit Lal Sood's case (supra), Oriental Insurance Co. v. Cheruvakkara Nafeessu(supra), and also question of additional responsibility of Insurance Company qua third person and discussed the judgement in the case of New India Assurance Co. Ltd. v. Rula and Ors. (supra) and has come to a definite conclusion that so far as the appeal filed by the Insurance Company is concerned the same will have to be accepted in part by holding that the liability in respect of accident in question is limited to the extent of liability contained in policy. However, it will have to be further held that the claimants will be entitled to recover the whole amount of compensation from the Insurance Company and upon making the payment the Insurance Company will be entitled to recover the excess amount from the insured. The aforesaid decision of the Division Bench has been further followed by another Division Bench in the case of New India Assurance Co. Ltd. v. Rajabhai Varsangbhai Bharwad and Ors. (supra).
12.2 The aforesaid judgement of the Division Bench in the case of Oriental Fire & General Insurance Co. v. Firdos Pervez Mysorewala (supra) was delivered on 10.4.2003 whereas the other Division Bench judgement of this Court in the case of United India Insurance Co. Ltd. v. Chandulal Gokaldas Mehta (Decd.) though decided on 19.6.2003 it appears that the decision in the case of Firdos Pervez (supra) has not been noticed. It is no doubt true that the subsequent Division Bench has considered the Constitution Bench judgement of the Hon'ble Supreme Court but this Court may not follow the ratio laid down by the subsequent judgement in the case of United India Insurance Co. Ltd. v. Chandulal Gokaldas (supra) because the most important aspect is that though this decision refers to Section 95(2) of the Act, but no argument has been advanced by the other side regarding insurance policy/condition of the policy and important notice and avoidance clause has not been considered and therefore it was submitted that the controversy involved in the present case did not arise in the decision of this Court in the case of United India Insurance Co. Ltd. v. Chandulal Gokaldas (supra) and therefore the case of Chandulal Gokaldas (supra) is distinguishable on facts.
12.3 The learned Counsel further submitted that on the other hand the other two Division Bench judgements which we have referred to take consistent view interpreting the policy clause, avoidance clause that though the liability of the Insurance Company is limited but nonetheless the claimants would be entitled to recover the whole amount of compensation from the Insurance Company and upon making the payment the Insurance Company would be entitled to recover the excess amount from the insured and therefore this Court may follow those decisions.
12.4 The learned advocate has relied on the judgement of this Court in the case of Gulamhussen Mohmadbhai Kazi v. Jahur Suleman Luhar and Ors. reported in 2002(4) GCD 3295 where the question of right of third party against Insurance Company has been considered regarding passengers who were standing on the road in paragraph Nos. 41, 42, 43,43.1 and in paragraph Nos. 44 and 45 the Court has observed thus:
para 44 - ...In view of all these decisions the claimants have been able to prove that the accident arose because of the owner as well as driver's negligence. It may be noted that as far as the persons who were on the road they have not contributed anything in connection with the accident. Only the driver and the owner are liable for the accident and there was no breach of conditions of the policy by the persons who were on the road and, therefore, the Insurance Company failed and neglected to fulfill all the four conditions laid down by the Full Bench of this Court in the case of Kamalaben. The judgement of the Supreme Court in Skindia's (sic) case which has been subsequently affirmed in Roshanlal's case clearly applies and to that extent the Insurance Company is liable to pay compensation to the heirs and legal representatives of the persons who were standing on the road as well as injured who were also standing on the road. Thus in view of all these decisions the Insurance Company is liable to pay compensation to the persons in this behalf.
45. These appeals relate to the claim arising out of the injury and death of the passengers who were standing on the road. The expression 'third party' could only mean a person outside the vehicle and on the road. It is now well accepted that the insurer or the Insurance Company being one party to the contract the insured or the policy holder being another, the claims made by the others in respect of the negligent use of the motor vehicle would be claims made by the third parties. The contention of the learned Counsel for the Insurance Company is that since there is breach of condition by the owner, the Insurance Company is not liable to make payment of compensation. I have considered the Section 95(1)(b)(i) which is generally couched in respect of death or bodily injury to any person without restricting it to any particular person or classes of person. The exemption is with reference to the nature of the vehicle and not with reference to the persons carried in the vehicle. Thus the rigour of sub-Section (2)(b) of Section 95 (now Section 140) would fully come into play and by Clauses (i) & (ii) provision has been made to cover two categories; one in respect of person other than the passengers carried for hire or reward; and the other in respect of passengers. In view of the same the Insurance Company is liable to pay compensation to the third parties who are pedestrians in this case.
SUBMISSION OF MR. RAJNI H. MEHTA, LEARNED COUNSEL FOR THE INSURANCE COMPANY:
13.1 It may be noted that earlier we have already considered the submission of Mr. Rajni H. Mehta when he has objected to the Division Bench judgement of this Court in the case of Oriental Fire & General Insurance Co. v. Firdos Pervez (supra) where the Division Bench has considered Constitution Bench judgement in the case C.M. Jaya (supra) and the judgement of the Division Bench in the case of New India Assurance Co. Ltd. v. Rajabhai Varsangbhai Bharwad and Ors. (supra). He has stated that the Division Bench in the case of Firdos Pervez (supra) has not properly appreciated the Constitution Bench judgement. In that context, we have referred to certain contention of Mr. Rajni H. Mehta, learned Counsel, and referred to the Constitution Bench judgement in the case of C.M. Jaya (supra) as the same has great bearing on the question. However, over and above, he has made the following submission:
13.2 It may be noted that Mr. Mehta has also submitted that Mr. M.C. Bhatt, learned advocate for the appellant, has also relied on certain decisions of the Hon'ble Apex Court particularly in relation to third party and certain directions to be given to the Insurance Company by this Court that though the liability of the Insurance Company is limited this Court can give direction to the Insurance Company to pay the entire amount and thereafter to recover the same from the owner. However, he desires to rely on certain decisions of the Hon'ble Apex Court where the Hon'ble Apex Court has held that the liability of the Insurance Company is limited and the Court cannot give directions that the claimant can recover the entire amount from the Insurance Company and thereafter the Insurance Company can recover the excess amount from the owner of the vehicle. He has also relied on a judgement of a Division Bench of this Court in the case of Chandulal Gokaldas.
13.3 National Insurance Co. Ltd. v. Nathilal and Ors.
13.4 In that case in para 8 on page 659 the Hon'ble Court has observed as under:
In the light of the above ratio laid down by this Court and in view of the fact that no extra premium was paid towards unlimited liability as is clear from the policy produced before the Tribunal, the judgement and order of the Tribunal affirmed by the High Court cannot be sustained and are, accordingly, set aside. The liability of the insurance company is limited to Rs. 15,000/-. The award of the Tribunal will accordingly stand modified insofar as the liability of the appellant insurance company is concerned.
13.5 He has also referred to the judgement of the Hon'ble Supreme Court in the case of National Insurance Company v. Jugal Kishore and Ors. in which at para 8 on page 273 the Hon'ble Supreme Court has observed as under:
In the instant case, the appellant is not seeking to avoid its liability but wants a determination of the extent of its liability which is to be determined, in the absence of any contract to the contrary, in accordance with the statutory provision contained in this behalf in Clause (b) of Sub-section (2) of Section 95 of the Act. In the instant case since as seen above the appellant did not undertake in the policy any liability in excess of the statutory liability, the award against it could be only in accordance with the said statutory liability.
13.6 The Hon'ble Supreme Court has further observed in para 10 of the said judgement as under:
In the result, this appeal succeeds and is allowed to this extent that the liability of the appellant is fixed at Rs. 20,000/- together with interest as allowed by the High Court.
13.7 He has relied on another judgement in the case of National Insurance Co. Ltd. v. Keshav Bahadur and Ors. :
13.8 In that case the Hon'ble Apex Court considered Section 95, Shanti Bai's case (supra) and in para 7 on page 651 has observed as under:
13.9 para 7 - In case insurer-appellant not taking any higher liability by accepting higher premium, the liability is neither unlimited nor higher than the statutory liability fixed under Section 95(2) of the Act. Even if a vehicle is the subject-matter of comprehensive insurance and a higher premium is paid on that score, limits of the liability with regard to third party risk does not become unlimited or higher beyond the statutory liability fixed. For this purpose, a specific agreement has to be arrived at between the insured and the insurer and separate premium has to be paid in respect of additional amount of liability undertaken by the insurer in that regard.
13.10 Thereafter, after referring to the decision in the case of Jugal Kishore (supra), in para 8 of the said judgement the Hon'ble Supreme Court has observed thus:
13.11 SThe inevitable conclusion on the factual backgrounds is that the liability of the insurer appellant is limited to Rs. 50,000/-.
13.12 National Insurance Co. Ltd. v. Prembai Patel and Ors. : In that case the deceased Sunder Singh was employed as driver of the truck. The truck while carrying a heavy load of firewood overturned resulting in death of its driver Sunder Singh. The legal heirs and representatives of the deceased filed a claim petition before the Tribunal. The Tribunal held that the deceased himself was responsible for the accident and accordingly dismissed the claim petition. Against that order, appeal was preferred and in appeal it was held that it was fully established that the accident took place due to the fact that the arm bold of the truck broke down and not on account of any negligence on the part of the driver of the truck. Therefore, the High Court awarded Rs. 2,10,000/- as compensation to the legal representatives of the driver. The High Court further gave directions to the Insurance Company to pay the entire amount of compensation awarded to the claimants.
13.13 Being aggrieved with the judgement of the High Court, the matter went to the Hon'ble Supreme Court. Before the Hon'ble Supreme Court the only challenge was that the owner of the truck has taken policy and as per Section 147 and 149 of the Act, the liability is restricted to that extent which is provided under the Workmen's Compensation Act, 1923 as driver was employed by the owner and it is not liable to satisfy the entire award made in favour of the claimants. In that context, after considering the policy for Act liability, limitation as to use, important notice, Section 147 and Section 149, Chapter 11 of the M.V. Act, considering Constitution Bench judgement, Shanti Bai's case, Amrit Lal Sood's case, in paragraphs 16 and 17 the Hon'ble Supreme Court has observed as under:
13.14 SPara 16 The High Court, in the impugned judgement, has held that if the legal representatives of the deceased employee approach the Motor Accidents Claims Tribunal for payment of compensation to them by moving a petition under Section 166 of the Act, the liability of the insurance company is not limited to the extent provided under the Workmen's Act and on its basis directed the appellant Insurance Company to pay the entire amount of compensation to the claimants. As shown above, the insurance policy taken by the owner contained a clause that it was a policy for 'Act Liability' only. This being the nature of policy the liability of the appellant would be restricted to that arising under the Workmen's Act. The judgement of the High Court, therefore, needs to be modified accordingly.
13.15 In paragraph Nos. 17 and 18 of the said judgement on page 1329 the Hon'ble Apex Court has observed as under:
13.16 para 17 The liability of the appellant insurance company to satisfy the award would be restricted to that arising under the Workmen's Compensation Act. The respondent Nos. 1 and 2 owners of the vehicle) would be liable to satisfy the remaining portion of the award.
13.17 National Insurance Co. Ltd. v. Kusum Rai and Ors.
13.18 In that case the owner was owning a jeep. The said vehicle was used as taxi and thus a commercial vehicle. The owner has employed one Ram Lal who was driving the taxi. However, he has a driving licence for driving a light motor vehicle. In that context, the taxi met with an accident on 14.8.2000 as a result whereof a girl aged about 12 years died. In that context, claim petition was filed and the question arose as to whether the Ram Lal had any valid or effective licence. However, the Tribunal held that the Insurance Company cannot get rid of its third party liability as the said question arises only between the owner of the vehicle and the Insurance Company. The Insurance Company can recover this amount from the owner of the vehicle. Thereafter, appeal was filed before the High Court and the High Court dismissed the appeal and held that the mere fact that there was violation of the terms and conditions subject to which the insurance policy had been issued, cannot have the effect of exonerating the insurer from the statutory liability cast upon him in this regard to pay the amount to the third party victim. The High Court further held that it will be open to the insurer to initiate an appropriate proceeding for the refund of the amount paid by it to the claimants and establish the breach of the terms and conditions subject to which the insurance policy had been issued. In this context, appeal was filed before the Hon'ble Supreme Court. Before the Hon'ble Apex Court the judgement in the case of Oriental Insurance Co. Ltd. v. Nanjappan (supra) was cited and it was stated that Insurance Company may pay the awarded amount to the claimants and recover the same from the owner of the vehicle. In that context, the Hon'ble Supreme Court considered Section 149 of the Act and also the judgement in the case of National Insurance Co. Ltd. v. Swaran Singh and ultimately the decision in the case of NANJAPPAN (supra). However, in paragraph No. 19 on page 257 the Hon'ble Apex Court has considered thus:
13.19 SThus, although we are of the opinion that the appellant was not liable to pay the claimed amount as the driver was not possessing a valid licence and the High Court was in error in holding otherwise, we decline to interfere with the impugned award, in the peculiar facts and circumstances of the case, in exercise of our jurisdiction under Article 136 of the Constitution but we direct that the appellant may recover the amount from the owner in the same manner as was directed in Nanjappan.
13.19A The learned Counsel has relied on an unreported judgement of this Court in the case of F.A. No. 159 of 1968 in the case of Jaipur Golden Transport Company Private Limited (supra) decided by a Division Bench of this Court (Coram: J.B. Mehta and S.N. Patel, JJ) on 3.11.1971.
13.20 The learned Counsel has further submitted that insurance policy not taking higher liability by accepting higher premium. Therefore, having held that liability is limited to Rs. 50,000/- erred in holding that insurance Company to pay excess amount and then recover from insured. This is against the observation made by the Constitution Bench judgement in C.M. Jaya's case (supra). He has relied on subsequent judgement of Division Bench in the case of Chandulal Gokaldas (supra) where the Constitution Bench judgement has been considered. He submitted that this Court may not follow the Division Bench judgements of this Court in the case of Oriental Fire & General Insurance Co. (supra) and Rajabhai Varsangbhai (supra) but may follow the Constitution Bench judgement.
13.21 After relying on the aforesaid judgements, Mr. Rajni Mehta has made the following submissions.
13.22 As regards judgement of the Hon'ble Supreme Court in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani and Ors. (supra) the same is not applicable because it arose out of interim orders passed by the Division Bench judgement on Judge's summons.
13.23 The learned Counsel has made submissions regarding the Apex Court's judgement in the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu and Ors. (supra) as under:
i. Basis of the judgement is Amrit Lal Sood's case .
ii. Amrit Lal Sood's case Judgement is referred by the Hon'ble Supreme Court Constitution Bench judgement.
iii. Observation in this case in para 9 that Shanti Bai's case and Jugal Kishore's case 1988 ACJ 270 is no help to the Company as in these cases the effect of judgement of Amrit Lal Sood's case has not been considered, is not appropriate because it was a later case and therefore earlier cases could not have considered the later case.
iv. Insurance policy not taking higher liability by accepting higher premium. Therefore, having held that liability is limited to Rs. 50,000/- erred in holding that insurance Company to pay excess amount and then recover from insured. This is against Constitution Bench judgement.
13.24 The judgement of the Hon'ble Supreme Court in Oriental Insurance Co. Ltd. v. Nanjappan and Ors. (2004) 13 SCC 224 has given specific direction in para 8 at page 226 how and when amounts can be released to the claimants.
13.25 The aforesaid judgement of Nanjappan (supra) has not referred to the Constitution Bench judgement wherein it is held that the Company's liability is limited to Rs. 50,000/-, additional liability is not payable unless additional premium was paid and Insurance Company has given rider cover. Therefore, direction given in para 8 of the judgement may not be given.
13.26 The latest judgement of the Hon'ble Supreme Court in the case of National Insurance Co. v. Kusum Rai and Ors. (supra) has held that direction can be given only by the Hon'ble Apex Court under Article 136 of the Constitution of India after considering para 8 of the judgement in Nanjappan's case (supra). This is required to be followed by all the other Courts/Tribunals.
13.27 The learned Counsel submitted that this Court may hold that the Insurance Company's liability is limited to Rs. 50,000/- and no additional amount of award is payable by the Insurance Company in view of the judgement of the Hon'ble Supreme Court, particularly the judgement of the Constitution Bench in C.M. Jaya's case.
13.28 The learned Counsel therefore submitted that when this Court in the case of Firdos Pervez (supra) after relying upon the judgment of the Constitution Bench in the case of C.M. Jaya (supra) has held that the claimant would be entitled to recover whole amount of compensation from the insurance company and also making such payment the insurance company would be entitled to recover excess amount from the insurer. The said decision has been followed by another Division Bench of this Court in the case of Rajabhai's case (supra), whereas on the other hand another Division Bench judgment of this Court in the case of Chandulal Gokaldas (supra) also after relying upon the Constitution Bench in C.M. Jaya's case (supra) decided contrary to the aforesaid two Division Bench judgments. It is no doubt true that subsequent Division Bench judgment has not noticed the earlier Division Bench judgment in case of Firdos Pervez. However, when there is an apparent conflict between Division Bench judgments of this Court, he submitted that only course open for this Court is to refer the matter to the Larger Bench of this Court to decide this important questions of law.
13.29 Over and above, the learned Counsel further submitted that the question raised in this appeal is very important question of law and affect large number of people because this Court while deciding the appeal will decide the substantial question of law of general importance as question involved in present appeal will affect almost all insurance companies, the person who takes the insurance policy i.e. owner of the vehicle and also the third party namely, unknown, illiterate and unconscious people who are affected by the motor vehicle accident, that means the judgment will affect large number of people. Therefore the learned Counsel submitted that this matter which raises very important question of law may be referred to Larger Bench of this Court as there is apparent conflict between the judgment of Division Bench.
OUR OBSERVATIONS:
14. In the impugned judgement the learned Tribunal after considering both oral as well as documentary evidence arrived at the finding and held that the accident occurred due to rash and negligent driving on the part of the auto-rickshaw and the deceased was not guilty of any contributory negligence.
14.1 As regards, total compensation the learned trial Judge has held that opponent Nos. 1, 2 and 3 are jointly and severally liable to pay Rs. 1,36,000/- and bear their own costs. The Tribunal held that the liability of the Insurance Company is restricted to Rs. 50,000/- with proportionate costs and interest only. However, the claimants can recover the additional amount [i.e. Rs. 1,36,000/- minus Rs. 50,000/-] Rs. 86,000/- from either the owner or the driver of the vehicle.
14.2 As regards the liability of Insurance Company, whether it has limited liability or not, we have to consider the provisions of the policy as well as the provisions of the Act. There is no serious challenge against the judgement of quantum of compensation by the learned advocate for the claimant. We are of the view that the claimants are entitled to Rs. 1,36,000/- and therefore the claimants can claim the entire amount either from the Insurance Company or owner or driver of the vehicle.
14.3 Mr. M.C. Bhatt, learned sr. advocate, has seriously assailed the last finding of the Tribunal and contended that this Court may quash and set aside the finding and give final directions that third party can recover the entire amount from the Insurance Company, namely, Rs. 1,36,000/- irrespective of the liability of the Insurance Company is limited to Rs. 50,000/- and after paying the claim of additional amount of Rs. 86,000/- to the claimants, the Insurance Company can recover the same from either the owner of the vehicle or the driver of the vehicle.
14.4 In support of the aforesaid contention, the learned Counsel has relied on the Division Bench judgement of this Court in the case of Oriental Fire and General Insurance Co. v. Firdos Pervez Mysorewala and Ors. decided on 10.4.2003 wherein the Division Bench of this Court after considering the Constitution Bench judgement in the case of C.M. Jaya (supra) has held that though the Insurance Company's liability is limited, it will have to be further held that the claimant would be entitled to recover the whole amount of compensation from the Insurance Company and upon making such payment, the Insurance Company would be entitled to recover the excess amount from the insured.
14.5 We have already noted that the aforesaid judgement in the case of Firdos Pervez Mysorewala (supra) has been followed by a Division Bench of this Court in the case of Rajabhai Varsangbhai Bharwad (supra). We have also referred to the judgement of this Court in the case of Life Insurance Corporation of India and Anr. v. Heirs & Legal Representatives of Deceased Naranbhai Munjabhai Vadhia and Ors. reported in 13 GLR 920. In our view all the three decisions have taken a view in favour of the claimant and against the Insurance Company. It is no doubt true that as far as first Division Bench judgement in the case of Firdos Pervez Mysorewala (supra) is concerned, the Division Bench has an advantage of referring to the Constitution Bench judgement and another judgement of the Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. v. Rula (supra) which takes the view in favour of the claimant and against the Insurance Company regarding third party and held that the claimant can recover the entire amount from the Insurance Company beyond the statutory limit and thereafter the Insurance Company can recover the excess amount paid from the owner of the vehicle and driver of the vehicle.
14.6 On the other hand, we have a direct decision of another Division Bench in the case of Chandulal Gokaldas (supra) where after considering the Constitution Bench judgement of the Hon'ble Supreme Court in C.M. Jaya's case (supra), the Division Bench has held that the liability of the Insurance Company is limited and whatever extra amount which the claimant is entitled, the claimant can recover directly from the owner and driver of the vehicle and the Insurance Company is not at all liable. We have already referred to the principles laid down by the Division Bench in this regard. Similar view has also been taken by another Division Bench Shobhanaben Girishbhai (supra) where also the Division Bench has taken similar view. The learned Counsel for the Insurance Company has also relied on unreported judgement in the case of Jaipur Golden Transport Company Private Ltd. However, we have not been able to find any principle therein.
14.7 Thus, according to us there is apparent conflict of view i.e. on the one hand in the cases of Firdos Pervez Mysorewala (supra) and Rajabhai Varsanghbhai Bharwad (supra) and LIC v. Legal Heirs and Representatives of Deceased Naranbhai Munjabhai Vadhia and Ors., the Division Bench has decided in favour of the claimant whereas in the case of Chandulal Gokaldas (supra), Shobhanaben Girishbhai (supra) and Jaipur Golden Transport Company Private Limited (supra) the Division Bench has taken the view in favour of the Insurance Company. In view of the same, we are inclined to refer the entire matter to a larger Bench so that the larger Bench can decide the correctness of the views taken by the respective Division Benches of this Court.
14.8 In our considered view, there are not only conflict of views but the appeal raises substantial question of general importance of right of claimant against the Insurance Company. The contention of the claimant is that the claimant can recover the entire amount from the Insurance Company irrespective of the limited liability and thereafter the Insurance Company can recover the excess amount (more than the statutory limit) from the owner and the driver of the vehicle. On the other hand, the contention of the Insurance Company is that once the liability of Insurance Company is limited. The Insurance Company is not liable to pay any excess amount over and above the statutory limit fixed in the policy. The Tribunal can direct the claimant who can recover the excess amount either from the driver or owner of the vehicle directly. Therefore, the appeal raises substantial question of law of general importance of rights of claimant, rights of Insurance Company and to some extent rights of third party. We have referred to several judgements of the Hon'ble Apex Court in our judgement but according to us the following judgements will have great bearing in this aspect.
1. New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani
2. Guru Govekar v. Miss Filomena F. Lobo and Ors. .
3. Oriental Insurance Co. Ltd. v. Inderjit Kaur and Ors. .
4. Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu and Ors. (2001) 2 SCC 491
5. New India Assurance Company Ltd. v. Rula and Ors.
14.9 It may be noted that all these decisions are prior to the Division Bench judgement of this Court in the case of Firdos Pervez Mysorewala (supra). However, the later judgement in the case of Baljit Kaur and Ors. (supra), Nanjappan and Ors. (supra) and Puja Roller Flour Mills (supra) are later in point of time and the Division Bench which we have referred to had no advantage of going through the said judgements and according to us these decisions will have also great bearing in the matter.
14.10 Over and above, the other judgement of the Hon'ble Supreme Court in the case of Skandia Insurance Co. Ltd. (supra) and further judgement of three Bench Judge in the case of Sohanlal Passi v. P. Sesh Reddy and Ors. 1996 ACJ 1044 which also decides the question of law regarding the right of Insurance Company. Thus, these two decisions will also have great bearing on the question raised in the present appeal.
14.11 These are the decisions where the Hon'ble Supreme Court has decided the issue in favour of the claimant regarding compensation.
14.11A On the other hand some of the judgements where the Hon'ble Supreme Court has held that the liability of the Insurance Company is limited and the claimants cannot recover the excess amount from the Insurance Company.
1. National Insurance Co. Ltd. v. Nathilal and Ors.
2. National Insurance Co. Ltd. v. Prembai Patel and Ors. .
3. National Insurance Co. Ltd. v. Kusum Rai and Ors. .
14.11B These three decisions will have relevance because certain observations are in favour of the Insurance Company and against the claimants.
14.11C It is no doubt true that the earlier judgement in the case of Nathilal and Ors. was available with the earlier Division Bench and the judgements in the case of Kusum Rai (supra) and Prembai Patel (supra) were subsequent to the Division Bench judgement and therefore the Division Bench has not an advantage of going through the said judgements. According to us all these decisions have also great bearing which decide the right of claimant, Insurance Company and third party that the larger Bench will have to decide.
14.11D Over and above we have to consider the effect of the Constitution Bench judgment of the Hon'ble Supreme Court in the case of C.M. Jaya (supra) because relying on the said judgement the Division Bench of this Court in the case of Firdos Pervez Mysorewala (supra) has decided in favour of the claimants whereas another Division Bench in Chandulal Gokaldas's case relying on the judgement of the Hon'ble Supreme Court in C.M. Jaya's case (supra) has decided in favour of insurance company.
14.11E So what is the scope and ambit and true ratio of the Constitution Bench judgement of the Apex Court will also have to be determined in this behalf because two different Division Benches have taken different views.
14.11F As indicated earlier over and above there are other subsequent judgements subsequent to the Constitution Bench in C.M.Jaya's case which will have some bearing and therefore this appeal raises substantial question of law of general importance of the provisions of the Motor Vehicles Act, Insurance Policy, rights of third parties.
14.12 Over and above, the conflict of Division Bench judgements and the right of Insurance Company and other judgements, to some extent the earlier Division Bench has considered this aspect. In our view, the appeal also raises substantial question of rights of third party, types of Insurance Third party insurance or Act policy etc. The object of the Act, principle regarding compensation to be given to the victim also will have to be considered. In view of this, we are referring to some of our observations regarding third party, type of Insurance policy, object clause and certain decision of the High Court and Hon'ble Supreme Court which interpret the object clause of Motor Vehicles Act and the principle of compensation.
14.13 Over and above, the appellant raises question of liability of Insurance Company qua third party.
14.14 While considering the aforesaid aspect of the matter, we have to consider the following aspects:
14.15 The appeal raises important question of law regarding provisions of the Motor Vehicles Act particularly right of third parties against the Insurance Company. What is the meaning of third party, types of Insurance third party insurance or Act Policy-
14.16 THIRD PARTY:
A contract of insurance has two parties to it, the insurer and the insured. They are the contracting parties of contract of insurance and they therefore can be called the first party and the second party respectively. The use of the words, Sthird party in Chapter XI of the MV Act clearly refers to the intention of the legislature to point out to a party who is neither the first party nor the second party to a contract of insurance. In an accident setting, he could be a pedestrian, cyclist or a motorcyclist. Xxxxxxx To a third party or his representative, the insurer is always liable, subject to the exceptions detailed hereunder. The necessity for covering third party risk arises under Section 146 of the MV Act.
14.17 Types of Insurance Third party insurance or Act policy:
14.18 Act policy, so called in common parlance, is what the MV Act requires that the owner of the vehicle shall take to cover the risk to a third party compulsorily. It is usually called A policy for Act Liability and applicable to all vehicles. The only exception will be for the vehicles owned by the Central or State Government and used for government purposes unconnected with any commercial purpose. If vehicles are run for a commercial purpose by either the Central or State Government or by any local authority or any State transport undertaking, an exception will be available by a specific order when the Central or State Government has established and maintained a fund in accordance with the rules under the MV Act for meeting any liability arising out of the use of any vehicle of that authority.
14.19 We have also to consider that the object of M.V. Act which is a benevolent provision or social and welfare legislation under which compensation is paid has to be considered liberally and the intention of the legislature enacting such provisions to achieve the said object has to be considered.
14.20 We have also considered the object of the Act which is a benevolent provision or social and welfare legislatures under which the Court has to award compensation to a party either legal heirs or representative of the deceased in case of fatal accident and to ensure the person who has suffered injury by the accident caused through motor vehicle accident. It has been contended that this Court while considering the fact should consider the provisions liberally.
14.21 The original object of 1939 Act enacted in the interests alike of safety and convenience of the public and of the development of a co-ordinate system of transport. Therefore, it was necessary to take powers to regulate the transport. The principle of compulsory insurance has been approved by all the States and therefore the said provision has to be provided under the Act which is obligatory.
14.22 Principle of statutory interpretation by Justice G.P. Singh - 10th Edition 2006: In interpreting any statute it is always safe to have an eye on the object and purpose of the statute, or reason and spirit behind it. We must look to what the purpose is. The statute must be interpreted with some imagination of the purposes which lie behind them. It has to be construed in the light of the general purpose of the Act itself. The Courts have declined interpretation when it frustrates the patent purpose of the statute. In interpreting statute, ordinarily we understand in a sense in which they best harmonise with the object of the statute and which effectuate the object of the Legislature. The Court should adopt an object oriented approach keeping in mind the principle that legislative futility is to be ruled out so long as interpretative possibility permits.
14.23 The object underlying this provision is immediate benefit to the relations of the victim in case of his death and to the disabled victim of the accident in case of permanent disability. In construing social welfare legislation, the Courts should adopt a benefit rule of construction and in any event, the construction should be preferred which fulfills the policy of the legislation. Construction to be adopted should be more beneficial to the purposes in favour of and in whose interest the Act has been passed. (Oriental Fire & General Insurance Co. Ltd. v. Aleixo Fernandes and Ors. Bombay High Court Panaji Bench -Coram: G.D. Kamat, J (as he was then) 61 Com. Cases 130) 14.24 It may be noted that the aforesaid object and intention has been achieved. The following decisions show how even the Hon'ble Supreme Court has interpreted M.V. Act to achieve the object and intention of the M.V. Act.:
14.25 Motor Owners' Insurance Co. Ltd. v. Jadavji Keshavji Modi and Ors. -
14.26 para - 18. We are, therefore, of the opinion that the ambiguity in the language used by the legislature in the opening part of Section 95(2) and the doubt arising out of the correlation of that language with the words "in all" which occur in C1. (a), must be resolved by having regard to the underlying legislative purpose of the provisions contained in Chapter VIII of the Act which deals with third party risks. That is a sensitive process which has to accommodate the claims of the society as reflected in that purpose. Indeed, it is in this area of legislative ambiguities, unfortunately not receding, that Courts have to fill gaps, clear doubts and mitigate hardships.
It is one of surest indexes of a mature and developed jurisprudence...to remember that statute always have some purpose or object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning". Cabell v. Markham (1945) 148 F 2d 737, 739.
14.27 There is no table of logarithms to guide or govern statutory construction in this area, which leaves a sufficient and desirable discretion for the Judges to interpret laws in the light of their purpose, where the language used by the law makers does not yield to one and one meaning only. Considering the matter that way we are of the opinion that it is appropriate to hold that the word "accident" is used in expression "any one accident" from the point of the various claimants, each of whom entitled to make a separate claim for the accident suffered by him and not from the point of view of the insurer.
14.28 In the aforesaid judgement of the Hon'ble Supreme Court in the case of Motor Owners' Insurance Co. Ltd. (supra), the Apex Court held that expression any one accident used in Section 95(2) of the Act admits of two meanings. In the context of the purpose of the Act, it signifies as many accidents as number of persons injured in an accident and limit of compensation covered under the insurance policy extends to each claimant. So the Insurance Company is held liable to the extent of Rs. 1,50,000/- in each case. If more than one person are injured in course of the same accident, each one has met with accident and each is entitled to total compensation limited by Section 95(2)(a) from the Insurance Company. Thus the Insurance Company is liable to pay compensation to the extent of Rs. 1,50,000/- in each case. Thus the Hon'ble Supreme Court has expanded the scope of word accident each passenger. This shows that the Hon'ble Supreme Court has interpreted the provisions of M.V. Act liberally.
14.29 Shivaji Dayanu Patil and Anr. v. Vatschala Uttam More (Smt.) . In that case the facts as set out in para 2 that on 29th October, 1987, at about 3 a.m., there was a collision between a petrol tanker bearing registration No. MKL 7461 and a truck bearing registration No. MEH 4197 on the National Highway-4 near village Kavatha, in District Satara, Maharashtra. The petrol tanker was proceeding from Pune side to Bangalore whereas the truck was coming from the opposite direction, and As a result of the said collision, the petrol tanker went off the road and fell on its left side at a distance of about 20 feet from the highway. As a result of the overturning of the petrol tanker, the petrol contained in it leaked out and collected nearby. At about 7.15 a.m., an explosion took place in the said petrol tanker resulting in fire. A number of persons who had assembled near the petrol tanker sustained burn injuries and a few of them succumbed to the said injuries. One of those who died as a result of such injuries was Deepak Uttam More. In that context, the legal representative of deceases son namely mother of Deepak Uttam More filed a petition before the Motor Accident Claims Tribunal, Satara under Section 110 of the Act claiming compensation. She also filed application for payment under Section 92-A of the Act. The Tribunal dismissed the petition on the ground that explosion and fire resulting in injuries to the deceased could not be said to be an accident arising out of the use of a motor vehicle and provisions of Section 92-A of the Act were not attracted. When the matter went to the High Court, however, the learned Single Judge of the High Court relying upon Sub-section (4) of Section 92-A observed that at the material time the tanker was not being driven on the highway but was lying on the said (sic side) of the highway and would be covered by the expression `use' in Section 92-A of the Act and compensation would be payable under no fault liability of Section 92-A of the Act. Against the said judgment, a Letters Patent Appeal was filed which was rejected. Against that the matter went to the Hon'ble Supreme Court. In that context, the Hon'ble Supreme Court in para 8 and 9 has considered Section 92-A, Section 92-B and Section 92-C of the Act which provides for `permanent disablement' and thereafter in para 10 the Hon'ble Supreme Court considered the judgment in the case Gujarat State Road Transport Corporation v. Ramanbhai Prabhatbhai the Hon'ble Supreme Court has observed thus:
12. It is thus evident that Section 92A in the nature of a beneficial legislation enacted with a view to confer the benefit of expeditious payment of a limited amount by way of compensation to the victims of an accident arising out of the use of a motor vehicle on the basis of no fault liability. In the matter of interpretation of a beneficial legislation the approach of the courts is to adopt a construction which advances the beneficent purpose underlying the enactment in preference to a construction which tends to defeat that purpose. The same approach has been adopted by this Court while construing the provisions of the Act. [See Motor Owners' Insurance Co. Ltd. v. Jadavji Keshavji Modi ; and Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan .
14.30 The Hon'ble Supreme Court considered the question of what is expression arising out of use of motor vehicle and then also considered Section 92-A of the Act and Rule 291-A of the Bombay Motor Vehicles Rules, 1989, and in para 44 on page 553 the Hon'ble Supreme Court has held as under:
... Moreover, for awarding compensation under Section 92-A of the Act, the Claims Tribunal is required to satisfy itself in respect of the following matters:
i. an accident has arisen out of the use of a motor vehicle;
ii. the said accident has resulted in permanent disablement of the person who is making the claim or death of the person whose legal representative is making the claim.
iii. the claim is made against the owner and the insurer of the motor vehicle involved in the accident.
14.31 All these questions will have to be considered while awarding compensation by the Tribunal to third party. In this context we have to consider what are the principles of compensation:
14.32 Another principle of interpretation which we have to consider:
When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those who are entrusted with the duty, and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only.
(Re: Montreal Street Railway v. Normandin (1917) AC 170 : AIR 1917 PC 142 p.144 and also in the case Oriental Insurance Company Ltd. v. Inderjit Kaur.) {Re: Principles of Statutory Interpretation by Hon'ble Justice G.P.Singh, Tenth Edition, page 383}.
14.33 We may also note that regarding third party negligence in relation to Section 163A of the M.V. Act, the Hon'ble Apex Court in the case of Kaushnuma Begum and Ors. v. New India Assurance Co. Ltd. and Ors. regarding Section 140 wherein the accident arose in question when third party who was travelling on the road and in para 19 on page 433 the Hon'ble Supreme Court has observed thus:
No fault liability' envisaged in Section 140 of the MV Act is distinguishable from the rule of strict liability. In the former the compensation amount is fixed and is payable even if any of the exceptions to the rule can be applied. It is a statutory liability created without which the claimant should not get any amount under that count. Compensation on account of accident arising from the use of motor vehicles can be claimed under the common law even without the said of a statute. The provisions of the M.V. Act permit that compensation paid under no fault liability can be deducted from the final amount awarded by the Tribunal. Therefore, these two are resting on two different premises. We are, therefore, of the opinion that even apart from Section 140 of the M.V. Act, a victim in an accident which occurred while using a motor vehicle, is entitled to get compensation from a Tribunal unless any one of the exceptions would apply.
General Principles of Compensation:
15. It may be noted that in the present case award of the tribunal is under challenge before this Court in the appeal, this Court has to determine the principle of compensation provided under the Act. So while deciding the appeal, this Court has to look into the following principles/decisions.
1. Non-pecuniary loss
2. assessment of damages under M.V. Act
3. the multiplier
4. the dependency: the multiplicand Decisions:
(1)(1965) 1 All ER 563 Ward v. James - in page 573 (iii) loss during his shortened span.
(2) R.D. Hattangadi v. Pest Control (India) Pvt. Ltd. and Ors. in which at para 10 on page 370.
3. Divisional Controller, KSRTC v. Mahadev Shetty and Anr. .
15.1 From the provisions of the Motor Vehicles Act and the insurance policy the following position emerges:
(i) The owner takes out a policy with the Insurance Company in which case the liability of the owner of the vehicle is specified. If the owner suffers death of or a bodily injury the insurance company is liable to pay depending the terms of the policy.
(ii) If the owner employs any driver or cleaner or other employee and if that employee suffers either death or bodily injury then the insurance company is liable to the extent of the liability contained in Workmen's Compensation Act.
(iii) As regards passengers of the vehicle, the owner can have insurance regarding other passengers particularly in a vehicle which travels with the passengers.
(iv) As regards persons who are not travelling in the vehicle but who are outside the vehicle and those persons are on the road and pedestrians and if they suffer injury then as per the provisions of the Act and policy of the Insurance Company the liability of the Insurance Company is as per the Act. This distinction will have to be taken into consideration while considering the present appeal as well as other decisions which we have referred.
Provision of Old Act compared with new Act:
16. Though this appeal arises out of the provisions of 1939 Act (old Act), however, thereafter, the Legislature has amended and enacted New Act, 1988 which provides an Act to consolidate and amend the law relating to motor vehicle which has come into force with effect from 1.7.1989. Though the provisions of the New Act has no bearing on the present appeal, however, we are referring to the same only for a limited purpose to show how the Legislature has considered the question which is arising in the present appeal. In fact, Section 95(2)(b) of the Act which we have considered has already been amended and said Section does not form part in New Section 147 of the Act. The result is that the liability of the insurer in all case is to the full extent of the liability incurred.
16.1 Section 145 provides definition. This section corresponds to Section 93 of the Old Act, there is no change in this section. Section 146 provides necessity for insurance against third party risk. The said section corresponds to Section 94 of the Old Act.
16.2 Section 147 of the New Act provides requirements of policies and limits of liability and the said section corresponds to Section95 of the Old Act. There are two material changes. First, that there is no provision corresponding to the second proviso to Section 95(1) of the Old Act. This proviso enacted that a statutory policy shall not be required except 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, to cover liability in respect of the death 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. This amendment has no effect as far as present appeal is concerned.
16.3 The second important change is that the limits of liability of insurer as provided in Old Section 95(2)(a) & (b) do not find place in Section 147 of the New Act. The result is that the liability of insurer in all cases (except as to the employees and damage to property) is to the full extent of the liability incurred.
16.4 Section 149 of the New Act which provides duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. This Section corresponds Section96 of the Old Act. Defence under Section96(2)(a) of the Old Act is not open under Section 149 of the New Act as there is no corresponding provision in it.
16.5 Section 150 of the New Act which provides rights of third parties against insurers on insolvency of the insured. This section corresponds to Section97 of the Old Act.
16.6 Over and above, as far as New Act is concerned, we have also Section 163-A which provides special provisions as to payment of compensation on structured formula basis. Section 163-A which provides entirely new provision in addition to or in the alternative claim under Section 140 of the Act. The said section has come into effect from 14th November, 1994. This is a new section and such provision was not there in the old provision.
16.7 In view of all these provisions, it appears that the legislature has also amended the provisions in such a way that the liability of Insurance Company was limited which was there in Section 95 has been removed with the result that the third party can claim unlimited amount from Insurance Company and, therefore, the question which has arisen in this appeal may not available in the New Act. Therefore whatever observations which we are making here must be confined to the provisions of Old Act.
16.8 All these show that the legislature is aware of giving benefit to the claimants in this behalf.
17. Why we are referring this entire matter to the larger Bench:
17A In this case the accident took place on 19.9.1982. The claimant filed claim petition in 1983. The trial Court decided the matter on 28.8.1985. The appeal was filed in 1986. Thereafter, the appeal memo was amended in 1988. We are hearing the appeal in 2006. In view of this chequered history we are of the view that instead of referring certain question of law, we may refer the entire matter to the larger Bench.
17B In view of the aforesaid discussion and in view of the conflict of the views of the two Division Benches and in view of Rule 5 of the Gujarat High Court Rules, this Division Bench desires to refer the entire matter on the questions which are raised to the larger Bench. The office is directed to place this matter before the Hon'ble the Acting Chief Justice who may consider to constitute a special Bench or larger Bench to hear this appeal.
17C Ordinarily, we would not have given reasons but in view of the important questions of law arise in this appeal, we have given the reasons for referring the matter to the larger Bench.
18. Before parting with the case, I would like to quote the observations of Lord Denning in Motor Insurers' Bureau v. Connell 1970 ACJ 144. About providing for compulsory insurance for passengers also.
Many people think the Act should be altered so as to provide compulsory insurance for passengers. I think so too. It is very hard on a passenger that he should be injured by the negligence of the driver and have no recourse for damages. I hope that Parliament will soon remedy the position. Meanwhile, I would suggest that anyone, who asks for or accepts a lift should ask the driver; SAre you insured for passengers or not? for, if he is not and there is an accident, he may be able to get any compensation.
CONCURRING VIEW:
M.S. Shah, J.
In view of the fact that apart from the judgments of the two Division Benches of this Court in Oriental Insurance Co. Ltd. v. Firdos Pervez Mysorewala 2003(2) GLR 1684 and in New India Assurance Co. Ltd. v. Rajabhai Vasangbhai Bharwad 2006(1) GLR 668, relied upon by the learned Counsel for the appellant-claimant, there are three other Division Bench judgments of this Court in United India Insurance Co. Ltd. v. Chandulal Gokaldas Mehta , United India Insurance Co. Ltd. v. Shobhanaben Girishbhai , and Jaipur Golden Transport Company Pvt. Ltd. v. Shri Kehaval Maganlal in First Appeal No. 159 of 1968 decided on 3.11.1971 relied upon by the learned Counsel for the Insurance Company and also subsequent Supreme Court decisions in National Insurance Co. Ltd. v. Baljit Kaur , National Insurance Co. Ltd. v. Puja Roller Flour Mills (P) Ltd. (2005) 11 SCC 386, National Insurance Co. Ltd. v. Keshav Bahadur as well as in National Insurance Co. Ltd. v. Prembai Patel , the question of law raised in this appeal needs to be decided by a Larger Bench. I, therefore, agree with the conclusion of learned brother Hon'ble Mr.Justice K.M.Mehta, that this appeal may be placed before a Larger Bench.