Gujarat High Court
Diwaliben Bhalabhai Pardhi (Deceased ... vs United India Insurance Co. Ltd. And Ors. on 31 July, 1995
Equivalent citations: (1996)1GLR314
JUDGMENT R.K. Abichandani, J.
1. All these First Appeals arise out of a common award made by the Motor Accidents Claims Tribunal (Special), Kheda, Nadiad, on 3.12.1991 and the challenge by the appellants is confined only to the extent that the Tribunal did not hold the respondent No. 3, insurance company, liable for the awarded amount.
2. At the outset the learned advocate appearing for the appellants sought permission to delete, in all these appeals, the respondent Nos. 1 and 2, namely, the driver and the owner of the vehicle as they were not served with the notice of the appeals and no relief was sought against them. Their names were deleted as per permission granted on 17.7.1995.
3. The accident occurred on 5.4.1987 when the truck bearing No. GRT 6046 driven by the driver Shivsa turned turtle resulting in death of nine persons and injury to fifty-nine persons who were travelling in the truck along with their goods. Bharatkumar was the owner of the vehicle. According to the claimants, the truck was engaged on hire from its owner Bharatkumar for a sum of Rs. 2,000/-. There were about 80 to 100 bags of wheat carried in the truck. This wheat was given to the labourers in lieu of labour work done by them and they were being carried in the said truck to their village. Sixty-eight labourers travelled with their goods in the said truck. The fact that the truck was taken on hire from the owner, Bharatkumar, is clearly borne out from the evidence on record particularly the deposition at Exh. 121 of Sakhrambhai who was the Mukadam. There is a clear finding that the accident occurred as a result of rash and negligent driving of the driver of the truck. The Tribunal by its award dated 21.12.1991 awarded various amounts in this claim petition to the claimants ordering that they will be payable by the respondent Nos. 1 and 2 and exonerating the insurance company of any liability upholding its contention that there was a breach of condition of the insurance policy as the vehicle was used for hire without any permit.
4. All these appeals have been directed against the award of the Tribunal insofar as it holds that the insurance company was not liable to pay the amount as it had a valid defence.
5. The only contention which was raised on behalf of the appellants by their legal counsel was that the respondent No. 3, insurance company, had no valid defence under Section 96(2) of the Motor Vehicles Act, 1939 and as under the law it could not take up any defence other than a defence covered by Section 96(2), the Tribunal ought to have held the insurer liable to pay the amount under the award. It was contended that there was no condition in the policy excluding the use of the vehicle for carrying passengers for hire or reward and, therefore, an important ground to successfully disclaim the liability under Section 96(2)(b)(i)(a) of the Act was not established by the insurer and hence the benefit of statutory insurance cannot be denied in respect of the claimants. It was contended that absence of permit was different from the use of a vehicle contrary to permit which alone was a ground available under Section 96(2)(b)(i)(a) of the Act to defend, when passengers are carried for hire or reward. Reliance was placed on the decision of this Court in Alam Yasin Mirza v. V.K. Makwana 1992 ACJ 148 (Gujarat). Reliance was also placed on a decision of Full Bench in National Insurance Co. Ltd. v. Nathibai Chaturabhuj 1982 ACJ 153 (Gujarat), in support of the contention that the insurer had not established breach of any specified condition excluding use of the insured vehicle for the carriage of any passenger for hire or reward.
6. The learned Counsel appearing for the insurer submitted that all the grounds enumerated in the decision of the Full Bench in Nathibai's case 1982 ACJ 153 (Gujarat), as also the additional ground added by the subsequent Full Bench in New India Assurance Co. Ltd. v. Kamla-ben 1993 ACJ 673 (Gujarat), were duly established and, therefore, the insurer could successfully disclaim its liability under Section 96(2)(b)(i)(a) of the said Act.
7. Section 96(1) of the said Act imposes an obligation on the insurer, after issuance of insurance certificate under Section 95(4), to pay to the person entitled to the benefit of the decree passed in his favour a sum not exceeding the sum assured payable under the policy. Such judgment is a "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)" Therefore, if the liability is not at all covered by the terms of the policy the insurer cannot be held liable to make the payment in respect of such liability. In other words, if the contract of insurance does not cover by the terms of the policy a particular liability, there would be, in effect, no contract of insurance in respect of such liability. It is the duty of the user of the vehicle under Section 94(1) to get a policy of insurance which complies with the requirements of Chapter VIII. Such a policy of insurance must comply with the requirements laid down in Section 95 of the said Act. If a policy satisfying these requirements is not obtained by the person using or causing to use a motor vehicle in a public place, then by virtue of Section 125 of the said Act an offence would be committed, if such an uninsured vehicle is driven or allowed to be driven in contravention of the provision of Section 94 which is punishable with imprisonment which may extend to 3 months or with fine up to Rs. 1,000/- or with both. When the policy does not cover under its terms a particular liability then there is no contract existing between the parties under which such liability can be enforced. Absence of contract covering liability should not be confused with defence available under Section 96(2)(b)(i)(a) of the Act. In short, the insurer cannot be compelled to make payments in respect of the liability which is not at all covered by the terms of the policy.
8. In the present case, admittedly, the motor vehicle involved in the accident was a Public Carrier belonging to one Bharat-kumar, original opponent No. 2. It has been satisfactorily brought on record that the said truck GRT 6046 was a 'goods vehicle'. The provisions of Section 42 of the said Act make it obligatory for such transport vehicle to be used or permitted to be used in a public place whether or not such vehicle is actually carrying any passenger or goods, to obtain a permit as prescribed. This vehicle was covered by such permit from 1.11.1980 to 31.10.1985. However, admittedly, it was not covered by any permit after 31.10.1985. Therefore, on the date of the accident, i.e., 5.4.1987 this goods vehicle was not covered by any permit.
9. The insurance policy in respect of the said vehicle which is at Exh. 99 was effective from 6.2.1987 to 5.2.1988. It would be material to note the relevant terms of the policy which would indicate the nature of the liability covered under the policy for which the insurance company can be held liable. These relevant terms are:
Limitation as to use: Use only under a Public Carrier's Permit within the meaning of the Motor Vehicles Act, 1939. The policy does not cover-
(1) Use for organised racing, pace-making, reliability trial, speed testing.
(2) Use while drawing a trailer except the towing (other than for reward) of any one disabled mechanically propelled vehicle. (3) Use for carrying passengers in the vehicle except employees (other than the driver) not exceeding six in number coming under the purview of the Workmen's Compensation Act, 1923.
The motor vehicle: As mentioned above."
"Important Notice: The insured is not indemnified if the vehicle is used or driven otherwise than in accordance with this Schedule."
"General Exceptions: The company shall not be liable under this policy in respect of:
Any accident, loss, damage and/or liability caused, sustained or incurred whilst the motor vehicle is-
(a) being used otherwise than in accordance with the limitations as to use or...
10. On a bare reading of the terms of the insurance policy it is clear that the liability in respect of the said motor vehicle which was a goods vehicle was covered under the policy only when it was used under a Public Carrier's Permit within the meaning of Motor Vehicles Act, 1939. Therefore, the liability arising by a use otherwise than under a Public Carrier's Permit was not covered under the terms of the policy. There was also a specific condition to the effect that the policy did not cover use for carrying passengers in the vehicle except employees (other than the driver) not exceeding six in number coming under the purview of the Workmen's Compensation Act, 1923, as per Clause (3) under the heading 'Limitations as to use' There was, therefore, a specific condition in the policy excluding use of the vehicle for carrying passengers which expression would also include carrying passengers for hire or reward. As noted above, there was a clear stipulation under the heading 'General Exceptions' that the insurance company shall not be liable under this policy in respect of any liability arising while the motor vehicle is used otherwise than in accordance with the limitations as to use. It is, therefore, clear that there was no insurance cover given to the said vehicle for any use other than the use under a Public Carrier's Permit and there was a specific condition excluding use of the vehicle for carrying passengers. A person issuing policy of insurance would be liable to indemnify the insured in respect of any liability which the policy purports to cover in the case of that person as provided by Section 95(5), which means that the insurer cannot be held liable to indemnify the insured in respect of any liability which is not at all covered by the policy. Even apart from this, in view of the specific condition excluding use of the vehicle for carrying passengers for hire or reward, a defence was available to the insurer under Section 96(2)(b)(i)(a) of the said Act. The vehicle on the date of insurance was not covered by any permit. Therefore, it was not covered by a permit to ply for hire or reward. It was required to be covered by a permit because it was a transport vehicle being a goods vehicle to which the provisions of Section 42 of the Act applied necessitating it to get a permit for use of such vehicle. In that provision when there is no permit granted for use of a transport vehicle, it cannot be used in any public place whether or not it is actually carrying any passenger or goods. 'Permit' as defined under Section 2(20) means the document authorising the use of a transport vehicle as a contract carriage, or stage carriage or authorising the owner as a Private Carrier or Public Carrier to use such transport vehicle. Even under a permit the transport vehicle is to be used in accordance with the conditions of the permit. Provisions a made in Sections 54 and 56 for making an application for Public Carrier's Permit and grant thereof. The application forms are prescribed under Rule 81 of the Rules framed under the said Act. Form for Public Carriers Permit is known as "Form P PU C". Using a transport vehicle without permit is an offence under Section 123 of the said Act. In view of these legal requirements, the policy in terms stipulated that only the liability arising out of the use of the said vehicle under a Public Carrier's Permit was insured under this policy. The condition of requirement of such permit would also mean that it could not be used for hire or reward except under such permit.
11. The facts on record, therefore, clearly disclose that the use of the said goods vehicle otherwise than under a Public Carrier's Permit was not at all covered under the terms of the policy. Furthermore, the said goods vehicle was in fact used for carrying 68 passengers along with goods in contravention of the specific condition contained in Clause (3) as noted above excluding the liability in respect of carrying passengers in the vehicle. It is also clearly established that on the date of contract of insurance the vehicle was not covered by any permit for plying for hire or reward. Thus, all the requirements which enable an insurer to put up a defence under Section 96(2)(b)(i)(a) as were enumerated in National Insurance Co. Ltd. v. Nathibai Chaturabhuj 1982 ACJ 153 (Gujarat), in para 23 of the judgment are established by the insurer in the present case and the insurer is, therefore, rightly held not liable by virtue of Section 96(2)(b)(i)(a). Even the fourth requirement as has been enunciated in New India Assurance Co. Ltd. v. Kamla-ben 1993 ACJ 673 (Gujarat), to the effect that the insurer should establish that the vehicle was used by the insured or at the instance of the insured in the breach of the specific condition excluding its use for carrying passenger for hire or reward is also established. The evidence clearly discloses that the vehicle was used in breach of the said condition at the instance of the owner Bharatkumar from whom the vehicle was engaged on payment of Rs. 2,000 as stated by the claimant Sakhrambhai at Exh. 121. Even in the cross-examination of this witness a suggestion was made on the footing that the truck was taken on hire from the owner Bharatkumar. It is, therefore, clear that the truck was used without a requisite permit as also for carrying passengers for hire or reward to the knowledge of its owner Bharatkumar and all the four conditions enunciated by the two Full Bench decisions are satisfied. The Tribunal has, therefore, rightly held that the respondent No. 3, insurance company, is not liable to make the payment of the amounts awarded against the insured and the driver.
12. A Division Bench of this Court consisting of A.M. Ahmadi, J. (as His Lordship then was) and R.J. Shah, J. in their judgment rendered on 11.7.1985 in First Appeal Nos. 829 to 862 of 1981 while dealing with a situation where 75 passengers were carried in a goods vehicle for hire, held that in view of Rule 118 a goods vehicle can never be used for carriage of passengers on hire and as the contract of insurance did not cover use of vehicle for the conveyance of passengers for hire or reward, the insurance company was not liable to pay the amount of compensation. In that case also there was, in the policy, a clause similar to Clause (3) of the policy at Exh. 99 by which it was specified that the policy did not cover use of the vehicle for carrying passengers. The Division Bench came to this conclusion after referring to the decision of the Full Bench in Nathibai's case 1982 ACJ 153 (Gujarat). Thus, on the basis of the ratio of the aforesaid two Full Bench judgments and the Division Bench judgment, the respondent No. 3, insurance company, cannot be held to be liable for paying compensation awarded to the claimants against the owner and driver of the vehicle. In this view of the matter, the decision of the learned single Judge in Mam Yasin Mirza v. V.K. Makwana 1992 ACJ 148 (Gujarat), cannot be pressed into service by the appellants. In that decision, it was found that the "vehicle was covered with insurance by the insurance company though it did not have any valid permit or any fitness certificate with respect to its roadworthiness..." In contrast, in the present case, there was a clear stipulation in the policy excluding the use of the vehicle for carrying the passengers which would include the passengers for hire or reward. In the present case, all the requirements of the defence that may be raised under Section 96(2)(b)(i)(a) have been satisfied on the ratio of the two decisions of the Full Bench and the decision of the Division Bench as noted above.
13. The decision of this Court in the case of National Construction v. Rajendra 1985 (2) ACC 494, on which reliance was sought to be placed on behalf of the appellants also cannot assist the appellant's case. In that case, if was held that the policy nowhere laid down that the vehicle cannot be used unless there is a permit and that, therefore, it was not necessary to decide whether the permit was obtained prior to the accident or after it.
14. In the result, the appeals fail and are dismissed with no order as to costs.