Oriental Insurance Co. Ltd. vs Kaushalya Devi & Ors. on 14 December, 2011

[Cites 24, Cited by 3]

Delhi High Court

Oriental Insurance Co. Ltd. vs Kaushalya Devi & Ors. on 14 December, 2011

CM APPL.505/2005 (delay) in MAC APP. 19/2005 CM APPL.854/2005 (delay) in MAC APP. 34/2005 CM APPL.868/2005 (delay) in MAC APP. 37/2005 CM APPL.886/2005 (delay) in MAC APP. 38/2005 CM APPL.891/2005 (delay) in MAC APP. 39/2005 CM APPL.894/2005 (delay) in MAC APP. 40/2005 CM APPL.899/2005 (delay) in MAC APP. 41/2005 There is 47 days delay in filing the appeal. For the reasons stated in the applications, the same are allowed. Delay of 47 days in filing the appeal is condoned.

The Applications stand disposed of.

MAC APP. 19/2005, MAC APP. 34/2005, MAC APP. 37/2005, MAC APP. 38/2005, MAC APP. 39/2005, MAC APP. 40/2005 and MAC APP. 41/2005

1. The Appellant Oriental Insurance Company Limited is aggrieved by an award dated 27.08.2004 whereby it was made liable to pay the compensation in the seven Claim Petitions decided by a common order with a right of recovery from Vinod Kumar (Respondent No.5) owner of the tempo number DL-IL- R-4449. Jamil (Petitioner in Petition No.326/04 before the Tribunal) who was travelling in the tempo examined himself as PW-11. He deposed that on 11.11.1996 at about 5:00 P.M. he along with 30-35 occupants was travelling in the earlier said MAC APP 19/2005 Etc. Page 3 of 16 tempo for attending a rally. The said tempo was being driven by Respondent Ram Pal (Respondent No.1 before the Tribunal) at a fast speed. It overturned near Nigam Bodh Ghat, New Delhi as a result of which he suffered injuries.

2. PW-11's testimony with regard to the manner of the accident was corroborated by another claimant PW-9 Tahira. It was thus established during the inquiry before the Tribunal that the victims were travelling as gratuitous passengers in a goods vehicle. The Tribunal by the impugned award found that the accident took place on account of rashness and negligence on the part of the tempo driver Ram Pal.

3. While granting compensation in the seven Claim Petitions out of which these appeals have arisen, the Trial Court reasoned that although in New India Assurance Company Limited v. Asha Rani & Ors. (2003) 2 SCC 223, it was held that the owner of the vehicle would be liable to satisfy the decree, the Tribunal relied on National Insurance Company Limited v. Baljeet Kaur & Ors. 2004 ACJ 428 and Swaran Singh v. National Insurance Company Limited 2004 ACJ 1 (SC) to reach the conclusion that first it would be the insurance company's liability to satisfy the award with a right to recover it from the owner Respondent No.2 Vinod Kumar.

4. Para 34 to 37 of the impugned award are extracted hereunder:-

MAC APP 19/2005 Etc. Page 4 of 16

"34. The Respondent No.3 had taken an objection that the tempo was a commercial goods carrier vehicle and in terms of insurance policy, it could not carry passengers whether gratitutions or for hire or reward. It was submitted that the persons were travelling in the tempo in violation of the terms of insurance policy and thus, it is not liable to pay the compensation.

35. Ld. Counsel for respondent no.3 has relied upon the judgment of New India Insurance Company vs. Asha Rani 2003 ACJ (1) SC. However, the Ld. Counsel for petitions have relied upon National Insurance Company Ltd. vs. Baljeet Kaur & Others 2004 ACJ 428 wherein, similar point came up for consideration, wherein, after referring to the Asha Rani Judgment, it was observed that the upshot of the said judgment is that in place of the insurer, the owner of the vehicle shall be liable to satisfy the decree. However, it was observed that it would not be fair and equitable in view of the fact that the petition was pending for so long. It was held that the interest of justice will be subserved if, the award is directed to be satisfied by the insurance company, though, it shall be entitled to recover the same from the owner of the vehicle. The said directions were issued having regard to the scope and purport to Section 168 of M.V. Act.

36. In the light of this judgment, it is now clear that though, the tempo was commercial goods carrier and the insurance company did not cover the risk for the passengers travelling in the tempo but in the light of judgment of Baljeet Kaur (supra), it is hereby held that respondent no.3 is liable to pay the compensation to the petitioners.

MAC APP 19/2005 Etc. Page 5 of 16

37. The question which thus, arises is whether the respondent no.3 is entitled to recover the said compensation from the owner of the tempo i.e. respondent no.2. It has been held in the case of Sawaran Singh Vs. National Insurance Company 2004 ACJ 1 (SC) that the insurance Company can recover the compensation amount from the owner only if, the owner had failed to take reasonable care and caution and had willingly violated the terms and conditions of the insurance policy. In Skandla Insurance Company Ltd. Vs. Kokilaben Chandravadan & Ors. 1987 Supreme Court cases.

Motor Vehicle Act, 1939, it was observed that section 96(2) (b) (ii) extends immunity to the insurance company if a breach is committed of the condition in the insurance policy. However, the expression „breach‟ is of great significance, that the insurer will have to abundantly establish that the insured is guilty of any violation of terms. The very concept of infringement or violation of the promises that the expression „breach‟ carries within itself induces an inference that the violation or infringement on the part of the promise was willful infringement or violation if the insured is not at all at fault and has done anything he should not have done or is not amiss in this regard then, such insured can not be held responsible for any breach it may have been committed. Unless the insured is at fault and is guilty of a breach, the insurer cannot escape from the obligation to indemnify the insured. In the present case, there is no evidence on record to show that respondent no.2 had permitted the tempo to be used by the driver for carrying passengers. The respondent no.3 has failed to prove any evidence in this regard. The respondent no.3 has also failed to examine respondent no.2 to establish this fact. Thus, the respondent no.3 has not been able to MAC APP 19/2005 Etc. Page 6 of 16 show that the breach of the terms of policy were willful on the part of the respondent no.2 and thus, it is not entitled to recover the compensation amount from respondent no.2."

5. In the case of New India Assurance Company Ltd. v. Asha Rani & Ors. (2003) 2 SCC 223, the decision in New India Assurance Company v. Stapal Singh (2000) 1 SCC 237 was overruled and it was held that Section 147 of the 1988 Act did not impose any statutory liability on the owner of vehicle to get his vehicle insured for any passengers travelling in a goods vehicle and therefore, the insurers would not be liable (for the claim of such persons travelling in goods vehicle). Their Lordships' compared the definition of goods vehicles as given in 1939 Act and in the 1988 Act. The relevant parts of the report in Asha Rani (supra) are extracted hereunder:-

"14. Before adverting to the pointed issue, we may notice the definition of "goods vehicles", "public service vehicle" and "stage carriage" and "transport vehicle" occurring in Sections 2(8), 2(25), 2(29) and 2(33) of the 1939 Act, which are as under:-

"2(8) "goods vehicle" means any motor vehicle constructed or adopted 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:"

(25) "public service vehicle" means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage;"

MAC APP 19/2005 Etc. Page 7 of 16

(29) "stage carriage" means a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey;

(33) "transport vehicle" means a public service vehicle or a goods vehicle;" (emphasis supplied)

15. Sections 2(14), 2(35), 2(40) and 2(47) of 1988 Act define "goods carriage", "public service vehicle", "stage carriage" and "transport vehicle"

in the following terms:-

"2(14) "good carriage", means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods;

(35) "public service vehicle" means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a maxicab, a motorcab, contract carriage, and stage carriage;

(40) "stage carriage" means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey;

(47) "transport vehicle" means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle;"

(emphasis supplied) MAC APP 19/2005 Etc. Page 8 of 16

16. The changes effected in the respective terminologies in the 1988 Act have a bearing on the question involved in these appeals.

17. Chapter VIII of 1939 Act and Chapter XI of 1988 Act deal with insurance of motor vehicles against third party risks.

18. Liability has been defined in Section 145(c) as under-

"145. (c)" 'liability', wherever used in relation to the death of or bodily injury to any person, includes liability in respect thereof under Section 140;"

19. Section 146 specifies the necessity for insurance against third party risk. In terms thereof an owner of a motor vehicle is statutorily enjoined to have a policy of insurance complying with the requirements of the said chapter before he uses or causes or allows any other person to use a motor vehicle in public.

20. Section 147 deals with requirements of policies and limits of liability. Proviso appended thereto, however, makes an exception to the main provision which reads thus:-

"Provided that a policy shall not be required-

(i) to cover liability in respect of the death, arising out of an 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-

MAC APP 19/2005 Etc. Page 9 of 16

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged as 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."

21. We may notice that the proviso appended to Section 95 of 1939 Act contained Clause (ii) which has been omitted in the 1988 Act and reads as under:-

"(ii) 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 of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises."

22. Thus, it may be noticed that so far as employees of the owner of the motor vehicle are concerned, an insurance policy was not required to be taken in relation to their liability other than arising in terms of the provisions of the Workmen's Compensation Act, 1923. On the other hand, proviso (ii) appended to Section 95 of 1939 Act, enjoined a statutory liability upon the owner of the vehicle to take out an insurance policy to cover the liability in respect of a person who was travelling in a vehicle pursuant to a contract of employment. The Legislature has consciously not inserted the said provision in 1988 Act.

MAC APP 19/2005 Etc. Page 10 of 16

23. The applicability of the decision of this Court in Mallawwa (Smt.) and Ors. v. Oriental Insurance Company Ltd. and Ors. (1999) 1 SCC 403 in this case must be considered keeping that aspect in view. Section 2(35) of 1988 Act does not include passengers in goods carriage whereas Section 2(25) of 1939 Act did as even passengers could be carried in a goods vehicle. The difference in the definitions of the "goods vehicle" in 1939 Act and "goods carriage" in 1988 Act is significant. By reason of the change in the definitions of the terminology, the Legislature intended that a goods vehicle could not carry any passenger, as the words "in addition to passengers" occurring in the definition of goods vehicle in 1939 Act were omitted. Furthermore, it categorically states that 'goods carriage' would mean a motor vehicle constructed or adapted for use "solely for the carriage of goods". Carrying of passengers in a 'goods carriage', thus, is not contemplated under 1988 Act.

24. We have further noticed that Section 147 of 1988 Act prescribing the requirements of an insurance policy does not contain a provision similar to Clause (ii) of the proviso appended to Section 95 of 1939 Act. The decisions of this Court in Mallawwa's case (supra) must be held to have been rendered having regard to the aforementioned provisions.

25. Section 147 of 1988 Act, inter alia, prescribes compulsory coverage against the death of or bodily injury to any passenger of "public service vehicle". Proviso appended thereto categorically states that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in a goods vehicle would be limited to the liability under the Workmen's MAC APP 19/2005 Etc. Page 11 of 16 Compensation Act. It does not speak of any passenger in a 'good carriage'.

26. In view of the changes in the relevant provisions in 1988 Act vis-a-vis 1939 Act, we are of the opinion that the meaning of the words "any person" must also be attributed having regard to the context in which they have been used i.e. 'a third party'. Keeping in view the provisions of 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor."

6. The Tribunal however relied on Para 21 of the report in National Insurance Company v. Baljit Kaur & Ors. (2004) 2 SCC 1 and reasoned that the compensation can be paid in the first instance by the Insurance Company and it can be recovered later on from the owner. Relevant portion of Para 21 of the report is extracted hereunder:-

" 21...........The question, however, would be as to whether keeping in view the fact that the law was not clear so long such a direction would be fair and equitable. We do not think so. We, therefore, clarify the legal position which shall have prospective effect. The Tribunal as also the High Court had proceeded in terms of the decision of this Court in New India Assurance Company v. Satpal Singh (2000) 1 SCC 237. The said decision has been overruled only in New India Assurance Company Limited v. Asha Rani & Ors. (2003) 2 SCC 223. We, therefore, are of opinion that the interest of justice will be subserved if the appellant herein is directed to satisfy the awarded amount in MAC APP 19/2005 Etc. Page 12 of 16 favour of the claimant. If not already satisfied, and recover the same from the owner of the vehicle......."

7. A close reading of Baljit Kaur (supra) reveals that the judgment in Asha Rani (supra) which was passed on 03.12.2002 was to have a prospective effect. Since the position was uncertain because of the earlier decision of the Supreme Court in Satpal Singh (supra) it was observed that the Appellant National Insurance Company Limited would satisfy the award in favour of the claimant, if not already satisfied and recover the same from owner of the vehicle. It was not laid down as a proposition of law that even in the case of gratuitous passengers travelling in a goods vehicle, the Insurance Company will first pay the compensation awarded and would then recover from the insured.

8. Reliance on Swaran Singh (supra) for making the Insurance Company liable to pay the compensation in the first instance was also misplaced because Swaran Singh (supra) related to the cases where the driver did not possess a valid driving licence or the driving licence held by him was a fake. In Swaran Singh (supra) the Insurance Company was made liable to pay the compensation because it had liability to pay on account of insurance of the vehicle and it could avoid liability only because of the breach of the condition of the policy.

MAC APP 19/2005 Etc. Page 13 of 16

9. In the case of gratuitous passengers travelling in a goods vehicle, there is no liability of the insurance company at all to pay the compensation, it is not required to prove any breach of the terms of the policy as the passengers travelling in the goods vehicles are not covered as the premium therefor is not paid by the insured. It is important to note that the judgment by the three Judges Bench in Swaran Singh (supra) was delivered on January 05, 2004 while judgment in Baljit Kaur (supra) was delivered on January 06, 2004. The Hon'ble Chief Justice presided over both the Benches with Hon'ble Mr. Justice S.B. Sinha being the common author in both the judgments. If the Supreme Court had any intention to make the Insurance Company liable to pay the compensation, it would have so mentioned in Baljit Kaur (supra) also.

10. In Padma Sundara Rao & Ors. v. State of T.N. & Ors. (2002) 3 SCC 533, the Supreme Court lamented the practice of relying on the judgments without going into the facts of each case. In Para 9 of the report it was held as under:-

"9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board (1972) 2 WLR 537.

MAC APP 19/2005 Etc. Page 14 of 16

Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases."

11. In the instant case also, the Tribunal committed grave error in interpreting Baljit Kaur (supra) so as to enable the Tribunals and the Courts to make the Insurance Company liable to pay the compensation awarded in the first instance and then to recover from the insured even in the cases where gratuitous passengers, not covered by the Insurance policy, were travelling in a goods vehicle. The Appeals, therefore, have to be allowed.

12. By an order of this Court dated 12.05.2006 the compensation payable to the claimants was ordered to be released subject to furnishing of the security (by the claimants). It was mentioned in the order that the claimants were very poor man and most of them were daily wage earners. Thus, although, the claimants must have furnished security while withdrawing the amount of compensation, yet the Insurance Company might find it difficult to recover the same from the claimants. Moreover, ultimately, it is the liability of the owner of the tempo i.e. Respondent No.5 (Vinod Kumar) to pay the amount. It is, therefore, directed that the Appellant shall have right to recover the amount of compensation paid to the Respondents (Claimants) in these appeals without having resort to file a civil suit. The Appellant can straightway file the execution against Respondent No.5 Vinod Kumar, owner of the tempo.

MAC APP 19/2005 Etc. Page 15 of 16

13. The Appeals are allowed in above terms.

14. Pending applications also stand disposed of.

(G.P. MITTAL) JUDGE DECEMBER 14, 2011 vk MAC APP 19/2005 Etc. Page 16 of 16

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