Chattisgarh High Court
Oriental Insurance Co. Ltd. vs Naresh Kumar Agrawal And Anr. on 3 October, 2006
Equivalent citations: 2008ACJ1399
JUDGMENT V.K. Shrivastava, J.
1. This is an appeal against the award dated 28.2.1991 passed by the Fifth Additional Motor Accidents Claims Tribunal, Raipur in Claim Case No. 12 of 1989, whereby an award of Rs. 18,000 has been passed in favour of injured, respondent No. 1, who is owner of the vehicle.
2. On 22.12.1987 at about 12.30 in the night, the respondent No. 1, being owner of vehicle bearing registration No. MKS 8684, sitting on the left side of the driver of the vehicle, was travelling in connection with his business of collecting milk. Respondent No. 2 was driving the vehicle. The vehicle has been insured with the appellant. As a result of rash and negligent driving of respondent No. 2, the vehicle met with an accident and respondent No. 1 sustained grievous injuries, he lost his one eye and also suffered disfiguration. After calculating the damage, he filed an application under Section 110-A of Motor Vehicles Act, 1939 (henceforth, 'the Act') claiming an amount of Rs. 85,000 against the appellant and respondent No. 2.
3. Respondent No. 2 did not deny the ownership, insurance and the accident. He pleaded that the accident did not take place as a result of his negligence and respondent No. 1 has claimed exorbitant amount for the compensation. Appellant although did not dispute the ownership and insurance, but while challenging the claim specifically pleaded that policy does not cover the insured, therefore, the insurance company is not liable to pay any compensation to owner of the vehicle who is respondent No. 1. Tribunal after considering the evidence and material on record held that due to negligent driving of respondent No. 2, on 22.12.1987, the vehicle bearing registration No. MKS 8684, met with an accident. At the time of accident respondent No. 2 was authorised to drive the vehicle under a valid driving licence, respondent No. 1, suffered injuries and lost his one eye, therefore, claimant-respondent No. 1 is entitled for compensation of Rs. 18,000 with costs and interest from the appellant.
4. Feeling aggrieved, the appellant filed the instant appeal and challenged the legality and correctness of the findings arrived at by the Tribunal, but during arguments they limited their challenge and raised only a single question that respondent No. 1 being owner of the vehicle is not entitled for any compensation because insurance company had only to indemnify the liability of owner in case any award has been made against the owner of the vehicle.
5. Insurance policy is Exh. P1 and Exh. P1A. From perusal of the policy, it is evident that although this is a comprehensive policy, but the policy covers only third party risk and damage to the vehicle. Insurance policy was valid from 19.11.1987 to 18.11.1988. The claimant, Naresh Kumar Agrawal, AW 1, has in his statement stated that except Exh. PI he did not get insurance for his own accident. Rajendra Kumar Jain, NAW 1, in his statement stated that the vehicle was insured for damage to the vehicle, injury to driver and third party risk. From the evidence on record it was established that under the said policy insurance of the owner is not covered for any injury.
6. The learned Tribunal relying on the judgment rendered by the High Court of Madhya Pradesh in the matter of Harishankar Tiwari v. Jagru 1987 ACJ 1 (MP), has allowed the claim filed by the owner of the vehicle. The law laid down under the above decision is that the insurance company is liable to cover the risk of a hirer/agent or his employee travelling with the goods in a goods vehicle as a passenger carried for reward or in pursuance of contract of employment. Learned Tribunal did not correctly look into the law laid down by the High Court of Madhya Pradesh in the matter of Harishankar Tiwari (supra).
7. Claims Tribunals are constituted under Section 110 of the Motor Vehicles Act, 1939. Section 110 (1) of the Act reads as below:
110. Claims Tribunals.--(1) A State Government may, by notification in the Official Gazette, constitute one or more Motor Accidents Claims Tribunals (hereinafter referred to as Claims Tribunals) for such area as may be specified in the notification for the purpose of adjudicating upon claims for compensation in respect of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles.
8. Liability of the insurance company has to be fixed only in accordance with the provisions of the Act and those statutory provisions are contained in Sections 95 and 96 of the Act, which read as below:
95. 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 or by a co-operative society allowed under Section 108 to transact the business of an insurer, and
(b) insures the person or classes of per sons specified in the policy to the extent specified in Sub-section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person 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)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 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 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, or
(iii) to cover any contractual liability.
(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 a goods vehicle, a limit of twenty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 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, in respect of persons other than passengers carried for hire or reward, a limit of twenty thousand rupees; and in respect of passengers a limit of twenty thousand rupees in all, and four thousand rupees in respect of an individual passenger, if the vehicle is registered to carry not more than six passengers excluding the driver or two thousand rupees in respect of an individual passenger, if the vehicle is registered to carry more than six passengers excluding the driver;
(c) where the vehicle is a vehicle of any other class the amount of the liability incurred.
(3) Sub-section (3) omitted by Act No. 100 of 1956, Section 74.
(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.
(4-A) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.
(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 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 per sons.
96. Duty of insurers to satisfy judgments against persons insured in respect of third party risks.--(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:
(a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of Section 105; or
(b) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:
(i) a condition excluding the use of the vehicle--
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b)for organised racing and speed testing; or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is public service vehicle or a goods vehicle; or
(d) without side-car being attached, where the vehicle is a motor cycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(c) that the policy is void on the ground that it was obtained by non-disclosure of a material fact or by a representation of fact which was false in some material particular.
(2-A) Where any such judgment as is referred to in Sub-section (1) is obtained from a court in the State of Jammu and Kashmir or in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of Section 13 of the Code of Civil Procedure, 1908, conclusive as to any matter adjudicated upon by it, insurer (being an insurer registered under the Insurance Act, 1938, and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in Sub-section (1), as if the judgment were given by a court in India:
Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before or after the commencement of the proceedings in which the judgment is given, the insurer had notice through the court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the State of Jammu and Kashmir or of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in Sub-section (2).
(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 the reference to any conditions other than those in Clause (b) of Sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under Clause (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 be comes 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.
(5) In this section the expressions 'material fact' and 'material particular' mean, respectively, a fact or particular of such a nature as to influence the judgment of a prudent insurer in deter mining whether he will take the risk and, if so, at what premium and on what conditions, and the expression 'liability covered by the terms of the policy' means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.
(6) No insurer to whom the notice referred to in Sub-section (2) or Sub-section (2-A) has been given shall be entitled to avoid his liability to any per son entitled to the benefit of any such judgment as is referred to in Sub-section (1) or Sub-section (2-A) 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.
9. From reading of the above provisions, it appears that the Claims Tribunals have exclusive jurisdiction to adjudicate upon claims for compensation in respect of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles. The word 'persons' has significance in this case and if owner of the vehicle falls within the category of persons as expressed in the above provision he has right to file an application for compensation in accordance with Section 110-A of the Act.
10. Insurance policy is a contract between the insurance company and person insured and the liability of insurance company is for the liability of the owner vis-a-vis the vicarious liability incurred by the driver of the vehicle. If the driver has incurred a liability due to his rash or negligent act, and the liability is fastened on owner of the vehicle, the aforesaid provisions enable the insurance company to take the liability where death or bodily injury has been caused to third person. Therefore, so far owner of the vehicle is concerned, it appears that he does not come within the ambit of a 'person' as envisaged under Section 110 of the Act.
11. In the result, the impugned award passed by the Tribunal against the insurance company in favour of the owner of the vehicle is illegal and liable to be set aside. Accordingly, the appeal is allowed and the impugned award is set aside.