Madras High Court
The New India Assurance Co. Ltd. vs Vijayakumar And Ors. on 31 January, 2001
Equivalent citations: (2001)1MLJ548
JUDGMENT K. Sampath, J.
1. The above C.M.As. arise out of M.A.C.T. O.P.Nos. 1846 of 1992, 1916 of 1992 and 1855 of 1992 on the file of the Motor Accidents Claims Tribunal, Salem. Those three claim petitions arose out of a single accident in which the petitioner in M.A.C.T. O.P.No. 1846 of 1992 and the petitioner in M.A.C.T. O.P.No. 1855 of 1992 were injured and one Manikandan died and his parents filed M.A.C.T. O.P.No. 1916 of 1992. In M.A.C.T. O.P.No. 1846 of 1992, as against a claim for Rs. 1 lakh, the injured Vijayakumar was awarded Rs. 53,850. In M.A.C.T. O.P.No. 1855 of 1992, as against a claim for Rs. 50,000, the injured Muralidharan was awarded Rs. 25,000. In M.A.C.T. O.P.No. 1916 of 1992, as against a claim for Rs. 5 lakhs, Rs. 2,20,000 was awarded. Common questions arise for decision and the C.M.As. are disposed of by the following order.
2. The injured claimants and the deceased were travelling in a jeep bearing registration No. TAT. 4946. The jeep dashed against rocks and trees on Yercaud Ghat Road, resulting in the accident. The tribunal held that the accident was only due to the rash and negligent driving of the jeep by its driver. It is not necessary to go into that question as this finding is not seriously challenged cannot also be challenged, having regard to the facts and circumstances of the case. This finding is confirmed.
3. The points raised by the learned Counsel for the appellant in the C.M.As. are;
(1) The insured had violated policy conditions by carrying more than five persons in the jeep; and (2) Policy issued was an "Act Policy" which would not cover gratuitous passengers in the jeep.
4. M.A.C.T. O.P.No. 1846 of 1992 was disposed of by one officer and the other two M.A.C.T. O.Ps., namely, 1855 and 1916 of 1992, were disposed of by another officer. Though this is not very material, only for the sake of record this is noticed. On the side of the appellant/Insurance Company in all the appeals, its official was examined as R.W.1 before the tribunal.
5. Mr. R. Vedantham, learned Counsel for the Insurance Company, submitted that the jeep carried more than five persons and this was contrary to the terms of the policy and therefore the Insurance Company would be exonerated. That the jeep carried more than five passengers was not substantiated by the Insurance Company and in fact one of the claimants had emphatically denied that the jeep carried more than five passengers. In these circumstances, the contention raised by the learned Counsel that there was contravention of the terms of the policy was rightly rejected by the tribunal and this is confirmed.
6. The next question relates to whether the passengers in the jeep would be entitled to compensation as third parties and if so what would be the extent of the liability of the Insurance Company.
7. Mr. R. Vedantham, relied on the following decisions:
1. Pushpabai Purushottam Udeshi v. Ranjit Ginning and Pressing Co. 1977 A.C.J. 343; 2. Kunhimohammed v. Ahmedkutty 1987 A.C.J. 872; 3. Oriental Insurance Co. Ltd. v. Irawwa and Ors. 1992 A.C.J. 918; 4. New India Assurance Co. Ltd. v. Shanti Bai 1995 A.C.J. 470; 5. National Insurance Company Ltd. v. Nathilal and Ors. (1999)1 S.C.C. 552; 6. Oriental Insurance Co. Ltd. v. Ajayakumar 1999 A.C.J. 1499 (Ker.); 1. Mallawwa v. Oriental Insurance Company Ltd. (1999)1 A.C.C 112 and 8. P. Sathyanarayana v. Muralidhara (1999)2 A.C.C. 155.
8. The learned Counsel for the appellant also referred to the provisions under the 1939 Act and the corresponding provisions in 1988 Act and submitted that there was no change with regard to the non-liability of the Insurance Company in the case of gratuitous passengers travelling in the vehicle. The learned Counsel further submitted that even conceding, without admitting, that the Insurance Company was liable, then the policy being only an Act Policy, the company could not be asked to pay more than what had been agreed in the contract between the parties.
9. Per contra, Mr. P. Jagadeesan, learned Counsel for the respondents made the following submissions;
The Insurance Company had only a limited liability was not raised in the claim petition M.A.C.T. O.P.No. 1846 of 1992, that the words 'any person' in Section 147(b)(i) would very much include a gratuitous passenger and that the Insurance Company could not escape liability. The learned Counsel for the respondents relied on the following decisions:
(1) National Insurance Co., Ltd. v. Rasheeda and Anr. 1998 A.C.J. 1404; (2) Oriental Insurance Co. Ltd. v. Radha Rani 1999 A.C.J. 1524; (3) New India Assurance Co. Ltd. v. Jyotiben Bhupendrabhai Maniyar, Rajkot A.I.R. 1999 Guj. 292; (4) New India Assurance Co. Ltd. v. Satpal Singh A.I.R. 2000 S.C 235; (5) Oriental Insurance Co. Lid. v. Minaxi A.I.R. 2000 Karn. 73 and (6) New India Assurance Co. Ltd. v. Rajendra Singh A.I.R. 2000 Karn. 202.
It was also submitted by the learned Counsel for the respondents that the new Section is only clarificatory in nature and the words 'any person' were there in existence already in the earlier Act.
10. Let us, now, take up the question as to whether the passenger in the jeep could be termed to be a third party entitled to compensation as per the terms of the policy issued by the company. The accident took place in May, 1992, after coming into force of the new Act. The Sections relevant for consideration are Section 95 under the old Act and Section 147 under the new Act.
In Section 95(1)(b)(i) the requirement is that the policy of insurance must be a policy insuring the person or classes of persons specified in the policy to the extent specified in Sub-section (2) against any liability which may be incurred by him in respect of the death of or bodily injury to any person [Italics supplied] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place.
11. In Amrit Lal Sood v. Kaushalya Devi Thapar 1988 A.C.J. 531, the Supreme Court dealing with a case under the old Act has held that the expression 'any person' would undoubtedly include an occupant gratuitously travelling in the car.
12. Thus the position under the old Act itself was that the insurer would be liable in the case of injury to or death of a passenger travelling in the vehicle not for hire or reward involved in the accident provided that the policy insured such a person.
13. The next aspect relates to the extent of the liability under the old Act.
14. In Jayalakshmi v. Ruby General Insurance Co. Ltd. 1970 A.C.J. 451 (F.B.), a Full Bench of this Court held that in 'Act Only' policy the limits of liability laid down in Section 95(2) (1939 Act) applied to third parties also. 'Act only' policy is policy conforming to the minimum requirements of the Act. While a comprehensive policy does not limit the liability, it is open to the owner to choose the coverage.
15. In Sheikhupura Transport Co. Ltd. v. Northern Indian Transporters Insurance Co. Ltd. A.I.R. 1971 S.C. 1624 : 1971 A.C.J. 206, the Supreme Court held that if the company by contract enhanced the limit of liability, it would only mean that it is a case of 'Act only' policy. The liability would be limited to what is agreed in the contract between the parties.
16. In Pushpabai Purushottam Udeshi v. Ranjit Ginning and Pressing Co. 1977 A.C.J. 343, (case already referred to) where the passenger in a car died in an accident and the Insurance Company had insured the owner only to the extent of Rs. 50,000 in respect of injury to the passenger, it was held by the Supreme Court that the liability of the Insurance Company was limited upto the insured amounts.
17. In Rajeswari Transports (Firm), Theni v. M.G. Rajan 1982 A.C.J. (Supp.) 118, a Division Bench of this Court held that the insurer could restrict his liability even in a case of comprehensive policy. If the insured wanted a policy with unlimited liability then he should have bargained for such a policy and paid the requisite premium. If the limit is not mentioned in the policy, and it has merely restricted the liability of the insurer under Section 95(2) of the Act, then it is possible to say that the liability of the insurer is unlimited, being a comprehensive policy.
18. In M.K. Kunhimohammed v. P.A. Ahmed Kutty 1987 A.C.J. 872, a bus met with an accident due to the negligence of its driver resulting in death of a passenger. It was held that the liability of the insurer of the bus was limited to Rs. 5,000.
19. In National Insurance Co. Ltd. v. Jugal Kishore 1988 A.C.J. 270 : A.I.R. 1988 S.C. 719, it was held by the Supreme Court, as follows:
Comprehensive insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered upto the estimated value of the vehicle calculated according to the rules and regulations framed in this behalf. Comprehensive insurance of the vehicle and payment of higher premium do not mean that the limit of the liability with reference to third party risk becomes unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act. For this purpose a specific agreement has to be arrived at between the owner and the insurance company and separate premium has to be paid on the amount of liability undertaken by the insurance company in this behalf. Likewise, if risk of any other nature, for instance with reference to the driver or passengers, etc. in excess of statutory liability if any, is sought to be covered it has to be clearly specified in the policy and separate premium paid therefor.
20. The Supreme Court, in Amrit Lal Sood's case 1988 A.C.J. 531, (already referred to), dealing with a case under the old Act in para 4 has observed as follows:
The liability of the insurer in this case depends on the terms of the contract between the insured and the insurer as evident from the policy. Section 94 of the Motor Vehicles Act, 1939 compels the owner of a motor vehicle to insure the vehicle in compliance with the requirements of Chapter VIII of the Act. Section 95 of the Act provides that a policy of insurance must be one which insures the person against any liability which may be incurred by him in respect of death of or bodily injury to any person or damage to any property of third party caused by or arising out of the use of the vehicle in a public place. The Section does not however require a policy to cover the risk to passengers who are not carried for hire or reward. The statutory insurance does not cover injury suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. But that does not prevent an insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby the risk to gratuitous passengers could also be covered. In such cases where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer.
Thus the Supreme Court ultimately held that the terms of the policy had to be considered to determine the liability of the insurer.
21. In New India Assurance Co. v. K. Chandra 1991 A.C.J. 386, a cyclist was hit by a bus and he died and it was a third party risk. There was no extra premium paid to make the insurer liable beyond the limit prescribed under Section 95(2)(b). It was held that it was only a case of statutory liability.
22. In Oriental Fire and General Insurance Company v. Poompavai (1991)1 A.C.C. 253 (D.B.), a Division Bench of this Court has held that unless the limit of liability of insurer is enhanced by specific contract, its liability is limited to Rs. 50,000 in the case of each claimant.
23. In New India Assurance Co. Ltd. v. Shanti Bai 1955 A.C.J. 470, the Supreme Court held that a comprehensive insurance does not automatically cover that liability with respect to the third party risk for an amount higher than the statutory liability.
24. In New India Assurance Co. v. CM. Jaya (1999)2 S.C.C 47, the question arose under the 1939 Act as to the liability of the insurer in respect of third party risk and whether the insurance policy did not take any higher liability by accepting a higher premium. The Supreme Court has referred the question, whether the liability of the insurer would be limited to the extent specified in Section 95(2) or would cover the entire amount of compensation with the right to cover the excess amount from the insured, to a larger Bench as according to it there was a conflict between the two decisions, namely, (1) New India Assurance Co. Ltd. v. Shanti Bai 1995 A.C.J. 470 : (1995)2 S.C.C. 539 and (2) Amrit Lal Sood v. Kaushalya Devi Thapar (1988)3 S.C.C. 744.
25. Now coming to the new Act, Section 147 of the new Act runs as follows:
Requirements of policies and limits of liability: (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; 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 of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle 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:
Provided that a policy shall not be required, (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee-
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation: For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.
(2) Subject to the proviso to Sub-section (1), a policy of insurance referred to in Sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely,
(a) save as provided in Clause (b), the amount of liability incurred;
(b) in respect of damage to any property of a third party, a limit of rupees six thousand: Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, 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.
26. The words "injury to any person, including the owner of the goods or his authorised representative carried in the vehicle" in Sub-section (1)(b)(i) above, were substituted by Act 54 of 1994 with effect from 14.11.1994.
27. In Sathyanarayana v. Muralidhara (1999)2 A.C.C. 155, a learned single judge of the Karnataka High Court held that the third party risk did not cover injured and deceased occupants of same car involved in the accident and it was not covered under third party risk.
28. A Full Bench of the Kerala High Court in Oriental Insurance Co. Ltd. v. Ajayakumar 1999 A.C.J. 1499 (F.B.), held that the risk of a passenger travelling in a private vehicle gratuitously was covered by an 'Act policy' and the insurance company was liable.
29. In Oriental Insurance Co. Ltd. v. Radha Rani 1999 A.C.J. 1524, the question arose, in the case of the death of a non-fare paying passenger in jeep when the vehicle dashed against an electric pole, whether the insurance company was liable under 'Act only' Policy in that case. A Division Bench of the Madhya Pradesh High Court held that 'any person' in Section 147 (1) of the 1988 Act would cover an occupant who was carried without hire or reward and even if no extra premium was paid for such passengers and the policy was only an 'Act only' policy, the insurance company would be liable. In that case, an attempt was made on behalf of the insurance company to draw a distinction between the 'Act only' policy and 'comprehensive' policy to indicate that the risk of occupant/passenger was not covered by the said policy, though a comprehensive policy covered the same. However, this contention was rejected by the Bench in the following terms:
We have not been apprised at the Bar whether any extra premium is paid to cover the passenger's risk in a comprehensive policy. In absence of said stipulation in the policy, we are of the considered view that in a policy of the nature of Ex.D-1 the passenger risk is covered.
Ex.D-1 in that case was an 'Act Policy'. The Bench was not inclined to accept the distinction between the 'Act only' policy and comprehensive policy with regard to coverage of passenger's risk. The Bench disagreed with the Division Bench decision of the Kerala High Court rendered in P.M. Chacko alias Thankachan v. Rosamma Antony 1991 A.C.J. 597 (Ken), wherein their Lordships have distinguished the decisions rendered in the cases of H. Siddalinga Naika 1985 A.C.J. 89 (Karn.), Santosh Gupta 1985 A.C.J. 585 (Del.) and Sanatan Pradhan 1988 A.C.J. 792 (Ori.) on the ground that most of the cases were dealing with a comprehensive policy.
30. In Oriental Insurance Co. Ltd. v. Minaxi A.I.R. 2000 Karn. 73, another learned Judge of the same High Court held that the terms 'any person' used in Section 147 also covers the pillion rider, for in the explanation below the proviso thereto, it is clarified that the death or bodily injury to any person or damage to any property of a third person shall be deemed to have been caused by or to have arisen out of the use of the vehicle in a public place at the point of time of accident that occurred in a public place.
31. In National Insurance Co. Ltd. v. Behari Lal (2000)7 S.C.C. 137, the problem arose this way. The insurer had issued a policy under Section 95(2) of the Motor Vehicles Act, 1939, in favour of the owner of the vehicle for the period from 28.1.1988 to 27.10.1989 which by virtue of the proviso to Section 147(2) of the Motor Vehicles Act, 1988, continued to be effective after the commencement of the new Act. At that stage while being driven by a driver, the bus met with an accident resulting in the death of a passenger and injury to several other passengers travelling therein. The claims tribunal awarded a sum of Rs. 1,50,000 to the heirs of the deceased passenger but limited the liability of the insurer only to Rs. 15,000. However, the High Court held that the liability of the insurer was coextensive with that of the respondents and modified the award of the claims tribunal. Before the Supreme Court, the Insurance Company contended that in view of the proviso to Section 147(2) of the new Act. its liability Was limited only to Rs. 15,000 per passenger as the policy had been issued under Section 95(2) of the old Act. The Supreme Court dismissed the appeal holding that the liability of the insurer was governed by Section 147(2)(a) of the new Act, namely the amount of liability incurred but not under Section 95(2) of the old Act. The Supreme Court reasoned as follows:
A policy of insurance may be a contract policy or a statutory policy. The proviso to Section 147 (2) of the new Act does not deal with unlimited liability which an insurer may undertake under a contract policy. It deals with a statutory policy with limited liability. The phrase "with any limited liability and in force" means a statutory policy under the old Act with the limit prescribed therein which was valid immediately before the commencement of the new Act. The words are not employed to limit the liability of an insurance company to the amount specified in the policy by virtue of the provisions of Section 95(2) of the old Act either for a period of four months or for a lesser period during which the policy is valid.
The proviso cannot be so interpreted as to subject the insurance companies to different maximum liabilities under statutory policies in respect of accidents occurring during the same period.
32. The policy has been produced and marked as Ex.R-1 in all the three claim petitions. The learned Counsel for the claimants raised a contention that the policy was an 'Act Policy' was not raised before the tribunal and therefore it was not open to the insurance company to raise that point here. May be, the objection regarding the policy being an 'Act policy', had not been raised in so many words in the counter before the tribunal. However, the policy having been marked and the same being the contract between the parties, the court cannot shut it out of reckoning. No doubt, a perusal of the policy clearly shows that it was only an 'Act policy' and the liability is limited. Extra premium has to be paid to make the liability unlimited. But then, in view of the present legal position, the terms of the policy do not matter.
33. The accident in the instant case having taken place on 24.5.1992, after the coming into force of the New Act, there can be no doubt that the insurance company is answerable for the claims by reason of injury to or death of the occupants of the vehicle.
34. Thus, I hold that the appellant/Insurance Company cannot escape liability to pay compensation to the victims or their Legal Representatives in the accident, that even if the policy is only an Act Policy, the insurance company has got to pay the amounts quantified by the tribunal. The Civil Miscellaneous Appeals are dismissed.