Andhra HC (Pre-Telangana)
Oriental Insurance Co. Ltd. vs B. Lakshmamma And Ors. on 13 September, 2000
Equivalent citations: 2000(6)ALT634
JUDGMENT G. Bikshapathy, J.
1. Common questions of law arise in all the C.M.As. Hence, they are disposed of by a common judgment.
2. The issue that falls for consideration in these appeals is:
"Whether the Insurer is liable for compensation in respect of gratuitous passengers in a goods vehicle under the provisions of Motor Vehicles Act, 1988"
3. In C.M.As. except C.M.A. Nos. 1266/99, 654/99 and C.M.A. Sr. No. 95539 of 1998, the factual matrix is that on 7-9-1996 while the lorry bearing No. AAQ 7899 was crossing the Papagni River cause way, it had capsized resulting in number of deaths. Therefore, the dependents of the deceased, laid claims under "no fault liability; Under Section 140 of Motor Vehicles Act, 1988. The learned Tribunal allowed the claims for a sum of Rs. 50,000/- being the amount permissible under "no fault liability" together with interest @ 12 per cent per annum from the date of the petition till the date of payment. The Tribunal also observed that the goods vehicle was comprehensively insured.
4. In other C.M.As., the deceased were travelling in ill-fated goods vehicle No. AAT 399 on 4-1-1994. While so, it met with an accident resulting instantaneous death of two occupants. Therefore, the dependents of the deceased made a claim under 'no fault' and 'fault' liability Under Sections 140 and 166 of Motor Vehicles Act, 1988. The Tribunal allowed the claims by a common award dated 12-10-1998, against which the present C.M.As. have been filed.
5. It is the case of the learned Counsel for the Insurance Company that all these passengers are gratuitous passengers and they are not covered by the Insurance Policy and therefore, the dependents of the deceased persons are not entitled for compensation under the provisions of the Motor Vehicles Act, 1988.
6. The learned Counsel relied on the decision of the Supreme Court reported in Smt. Mallawwa v. Oriental Insurance Company Limited, and the decision of this Court reported in Divisional Manager, New India Assurance Company Limited, Ongole v. Tumu Gurava Reddy, . On the other hand, the learned Counsel for the respondents/ claimants submit that the accidents have taken place after Motor Vehicles Act, 1988 entered the force and as per the judgment of the Supreme Court reported in New India Assurance Company v. Satpal Singh, . gratuitous passengers are also entitled for the compensation. It is also stated that the case of Mallawwa was referred to by the Supreme Court in Satpal Singh's case and it was observed by the Supreme Court that the corresponding provision has been substantially recast and therefore, he submits that the appeals filed by the Insurance Company have to be dismissed.
7. The only issue that arises for consideration is whether the Insurance Company is justified in contending that the gratuitous passengers are not entitled for compensation?
8. It is beyond pale of controversy that Under Section 95 of the Old Act, the gratuitous passengers were not covered by the Insurance policy, but that provision has been substantially altered in the new 1988 Act. The requirements of the policy limits under old Act was contained in Section 95, which reads as follows:
"95. Requirements of policies and limits of liability:- (1) In order to comply with the requirements of this Chapter, a policy of Insurance may be a policy which-
(a) is issued by a person who is an authorised insurer or by a Cooperative Society allowed Under Section 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 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 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, in respect of the death of, or bodily injury to any such employee-
(a) engaged in driving the vehicle, or
(b) 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 vehicle, being carried in the vehicle, or
(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 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, or
(iii) to cover any contractual liability"
Explanation:- For the removal of doubts, it is hereby declared that the death of or a 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 shall cover any liability incurred in respect of any one accident up to the following limits, namely:-
(a) where the vehicle is 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.
(3) to (5) xxx xxx xxx"
But in the recast provision Clause (ii) of the proviso to Section 95(1) of the old Act was totally deleted. Recast Section 147 reads as follows:
"147. 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 or damage to any property of a third party caused by or arising out of the use of the vehicle in all public places;
(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.
(3) to (5) xxx xxx xxx"
In Pushpabai Parshottam Udeshi v. Ranjit Ginning & Pressing Company, , the Supreme Court while observing that Sections 95 (1) (a) and 95 (1) (b)(l) adopted the provisions of the English Road Traffic Act, 1960 held thus:
"Section 95 provides that a policy of Insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of 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. The plea that the words "third party" are wide enough to cover all persons except the person and the insurer is negatived as the insurance cover is not available to the passengers is made clear by the proviso to Sub-section which provides that a policy shall not be required:
"(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by a 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."
The ratio of the said judgment was affirmed by the Supreme Court in Mallawwva's case (1st cited supra). Section 95 of the old Act of 1939 corresponds to Section 147 of the new Act of 1988. The Supreme Court while interpreting Section 95 of the old Act, observed that the corresponding Section 147 in the new Act was substantially altered. The Supreme Court held the cases which have arisen were covered by Section 95 of that Act. The cases dealt with by the Supreme Court in Mallawwa's case (1st cited supra) were in respect of the accidents which had occurred prior to 1988 Act. But, however, it has to be noticed in this regard that the Supreme Court was dealing with number of cases including Mallawwa's case (1st cited supra), but while in Mallawwa's case (1st cited supra) even according to the Supreme Court, the accident took place on 6-11-1990 (as can be seen from first sentence in para 3), but in para 7 the Supreme Court observed thus:
"In all these cases, the accidents had taken place between 1971 and 1985 and, therefore we have to consider the position of law as it stood then"
Without meaning any iota of disrespect to the apex Court, it failed to notice that in Mallawwa's case (1st cited supra) the accident took place on 6-11-1990 and in other cases accidents were prior to 1988. Therefore, the principle laid down in Mallawwa's case (1 supra), can be applied to the cases which arose prior to the new Act of 1988 coming into force. The Supreme Court itself observed as follows:
"The 1939 Act is now replaced by the 1988 Act. Section 147 which corresponds to old Section 95 has been substantially altered by the Legislature. Therefore, the above interpretation of Section 95 of the 1939 Act will govern the cases which have arisen under the 1939 Act."
Therefore, the accidents which had occurred subsequent to the new Act coming into force, Section 147 governs the field.
9. In Satpal Singh's case (3rd cited supra), the Supreme Court while referring to the old Section 95 and new Section 147, observed in paras 10 and 11 as follows:
"10. The proviso to the said Sub-section is not relevant here as it pertains to death or bodily injury to the employee mentioned therein. Sub-section (2) provides that a policy of Insurance shall cover any liability incurred in respect of any accident, up to the following limits, namely:-
(i) save as provided in Clause (b) the amount of liability incurred:
(ii) 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.
Hence, under Sub-section (2), there is no upper limitation for the insurer regarding the amount of compensation awarded in respect of death or bodily injury of a victim of the accident. It is, therefore, apparent that the limit contained in the old Act has been removed and the policy should insure the liability incurred and cover injury to any person including owner of the goods or his authorised representative carried in the vehicle. The Legislature has also taken care even the policies which were in force on the date of commencement of the Act by specifically providing that any policy of insurance contained any limit regarding insurer's liability shall continue to be effective for a period of four months from commencement of the Act or till the date of expiry of such policy, whichever is earlier. This means, after the said period of four months a new Insurance policy consistent with the new Act is required to be obtained.
11. The result is that under the new Act an Insurance policy covering third party risk is not required to exclude gratuitous passengers in a vehicle, no . matter that even the vehicle is of any type or class. Hence, the decisions rendered under the old Act vis-a-vis gratuitous passengers are of no avail while considering the liability of the Insurance Company in respect of any accident which occurred or would occur after the new Act came into force."
10. The learned Counsel for the respondents/Claimants, also further submits that in view of the Supreme Court judgment referred to above, the matter is no more res intergra and even prior to the judgment of this Court, the learned Single Judge has also considered the matter in extenso in the case reported in Tumu Gurava Reddy's case (2nd cited supra). In that case, it was held that the 'no fault liability' Under Section 140 includes the 'fault liability' 166 and that the defence available under the Chapter-XI, or breach of terms of the policy cannot be invoked by the Insurance Company when the claim Under Section 140 is made by the victims or dependents.
11. In view of the categorical finding of the Supreme Court, it has to be held that the gratuitous passengers irrespective of the type of the vehicle are entitled for compensation and the Insurance Company is liable in respect of such accidents.
12. The learned Counsel for the Insurance Company, however, tried to submit that the contract of Insurance has to be interpreted in terms of expressions in the contract made by the parties and it is not for the Court to make new contract. He relies on the judgment of the Supreme Court reported in General Assurance Society Ltd. v. Chandmull Jain, . The Supreme Court in that case observed that in interpreting the documents relating to contract of Insurance, the duty of the Court is to interpret the words in which the contract was expressed by the parties, because it is not for the Court to make a new contract, however reasonable, if the parties have not made themselves. In that case, the Insurance Company insured certain houses against fire including loss or damage by the cyclone or flood and/or loss by change of course of river, or erosion of river, Landslide and/or subsidence. The period of insurance was from 3-6-1950 to 2-6-1951. The proposal was accepted by the company and cover note was issued. On 7th June, the assured sent the premium by cheque. As no policy was received by them, the assured wrote a letter on 1st July, asking for policy or for extension of cover note. This was not done. On 6th July, the company cancelled the risk from 6th July. The cancellation was resisted by the insured on the ground that the risk had already commenced and the question of cancellation would not arise. But, however, on 13th and 15th, houses were washed away and therefore, the claim was made before the Calcutta High Court, which was dismissed by the learned Single Judge. On an appeal, it was decreed for Rs. 1,10,000/- with interest @ 3 per cent. The High Court certified the case fit for appeal. Hence, the appeal was filed by the company. The Supreme Court held that in interpreting the documents relating to a contract of Insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however reasonable, if the parties have not made it themselves. In this case, it is not the interpretation of the contract of Insurance, but the effect of Section 147. Thus the, Supreme Court judgment has no application to the case on hand.
13. In this case, it is not the interpretation of the contract of Insurance, but the question is whether the Insurance Company is liable in respect of the claims by the victims, who are gratuitous passengers and whether Section 147 covers the situation. Therefore, the judgment of the Supreme Court does not assist the Appellant in any manner.
14. The learned Counsel for the Insurance Company again relied on the Division Bench decision of this Court reported in New India Assurance Company Limited, Cuddapah v. Pesala Kishore Kumar, (D.B.). to say that if the insurer is not liable to pay the compensation under 'fault liability', it is also not liable to pay any amount under 'no fault liability'. This situation is not present in the instant case. Moreover, in view of the judgment of the Supreme Court reported in Satpal Singh's case (3 supra), the question of denying the liability of the Insurance Company in respect of the claim of gratuitous passengers, would not arise. The Division Bench following the judgment of Supreme Court in National Insurance Company Limited v. Jethu Ram, . held that the Insurance Company is not liable under 'no fault liability' when it is found not liable under 'fault liability'. The proceedings in Jethu Ram's case were initiated claiming compensation under Motor Vehicles Act, 1939. Pending the proceedings the Insurance Company paid the amounts under the statutory liability Under Section 92-A. However, in final adjudication, the Tribunal found that the Insurance Company was not liable to pay the compensation under 'fault liability', yet, the Tribunal held that the Insurance Company was liable to pay the compensation Under Section 92-A and the owner will not be liable. The Supreme Court observed in para 2 as follows:
"On a close scrutiny of the aforesaid provisions, we do not find anything contained therein which would suggest that the liability which accrues under the provisions of Section 92-A has to be borne by the insurer even if it is ultimately held that under the policy of insurance the insurer is not liable to pay the compensation in question. In our considered opinion, the Tribunal and the High Court have misread the aforesaid provisions of the Motor Vehicles Act. In the aforesaid provisions the impugned judgment of the Tribunal and High Court cannot be sustained so far as it relates to the liability of the insurer arising Under Sections 92-A and 92-B of the Act. These appeals are allowed. The insurer having paid the amount under the aforesaid provisions is entitled to get it reimbursed from the owner."
In this batch of cases, the claimants made claim only Under Section 140 and in the same case Under Section 166 of 1988 Act. The Tribunal in application Under Section 166 held that the insurance company was liable to pay the compensation, whereas in Jethu Ram's case (7th cited supra), the Tribunal found that insurance company was liable even under 'fault liability'. Therefore, the principle laid down by the Supreme Court in not applicable to the batch cases.
15. In respect of the Appeals in C.M.A. Nos. 1266/99, 654/99 and C.M.A. Sr. No. 95539 of 1998, which were laid under fault liability, the learned Counsel submits that the Division Bench judgment is applicable. I am unable to accept this contention. The Tribunal has categorically found that they are entitled for compensation under fault liability and that the Insurance Company is liable for payment of the compensation.
16. Under these circumstances, I do not find any merits in the appeals.
17. Accordingly, the C.M.As. are dismissed. No costs.