Gujarat High Court
New India Assurance Company Limited vs Sharifkhan Babushah Rana on 26 July, 2018
Bench: Harsha Devani, A.S. Supehia
C/FA/1201/2012 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO.1201 of 2012
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS.JUSTICE HARSHA DEVANI Sd/
and
HONOURABLE MR.JUSTICE A.S. SUPEHIA Sd/
===================================================
1 Whether Reporters of Local Papers may
be allowed to see the judgment ? YES
2 To be referred to the Reporter or not
? YES
3 Whether their Lordships wish to see
the fair copy of the judgment ? NO
4 Whether this case involves a
substantial question of law as to the
interpretation of the Constitution of NO
India or any order made thereunder ?
===================================================
NEW INDIA ASSURANCE COMPANY LIMITED
Versus
SHARIFKHAN BABUSHAH RANA
===================================================
Appearance:
MR VIBHUTI NANAVATI(513) for PETITIONER(s) No. 1
MR MEHUL S SHAH(772) for RESPONDENT(s) No. 3.2,3.3
RULE SERVED(64) for the RESPONDENT(s) No. 1,2,3.1
===================================================
CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR.JUSTICE A.S. SUPEHIA
Date : 26/07/2018
ORAL JUDGMENT
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) (1) The appellant - New India Assurance Company Limited has challenged the judgment and award Page 1 of 38 C/FA/1201/2012 JUDGMENT dated 30.12.2012 passed by the Motor Accident Claims Tribunal (Aux.) and 4th (Ad hoc) Additional District Judge, Kheda at Nadiad (hereinafter referred to as the 'Tribunal') in M.A.C. Petition No.1326 of 1997, whereby the claim petition has been partly allowed by holding that the claimants are entitled to recover an amount of Rs.37,63,100/ from the opponents No.1, 2 and 3 therein (viz. The appellant and the opponents No.1 and 2 herein), jointly and severally along with proportionate cost with interest at the rate of 8% per annum from the date of the claim petition till the amount is deposited in the office of the Tribunal together with other ancillary directions.
(2) The facts stated briefly are that one Alpeshbhai Indravadan Gandhi, husband of the original claimant No.1, and his other staff were travelling in a minibus (van) bearing registration No.GUL9291 and were going to Billimora. The said minibus was driven by the original opponent No.1 - driver with excessive speed, and in a rash and negligent manner, without due care. At about 8:30 in the night when they were passing through the place of incident, that is, GandeviNavsari Road, Near Kabhar Patiya, due to the excessive speed, the driver of the vehicle lost control over the steering and Page 2 of 38 C/FA/1201/2012 JUDGMENT the vehicle turned turtle. On account of the impact, the original claimant No.1's husband sustained serious injuries and died during the course of treatment. At the time of the incident the deceased Alpeshbhai was 28 years of age and was married and was a doctor. Considering the age, income and earning capacity of the deceased, the claimants had sought compensation of Rs.1,00,00,000/ from the original opponents.
(3) Before the Tribunal, it was contended on behalf of the appellant - Insurance Company that the deceased was an employee of the insured viz. the Rotary Eye Institute, and hence, was not covered by the insurance policy and, therefore, the Insurance Company was not liable to pay compensation in respect of the death of the deceased.
(4) On the other hand, on behalf of the original claimants it was contended that the deceased was not an employee of the insured and was covered by the policy.
(5) By the impugned judgment and award, the Tribunal has rejected the contentions of the Insurance Company that the deceased was an employee of the insured and that the Insurance Company was not liable to be compensated and Page 3 of 38 C/FA/1201/2012 JUDGMENT further held that the deceased, being a doctor, does not fall within the definition of "workman" as per the Workmen Compensation Act, 1923. The Tribunal, accordingly, determined the total compensation at Rs.37,63,100/ held that all the opponents were jointly and severally liable to pay the amount of compensation to the original claimants with interest at the rate of 8% from the date of the claim petition till the amount is deposited in the office of the Tribunal.
(6) Ms. Masumi Nanavaty, for Mr.Vibhuti Nanavaty, learned advocate for the appellant submitted that the finding recorded by the Tribunal that the deceased was not an employee of the insured is erroneous, inasmuch as, from the terms and conditions of the employment it is clear that he was an employee of the insured. It was submitted that the deceased was a paid employee of the insured - Rotary Eye Institute and that the vehicle in question was a private car being used for the sole purpose of the hospital. It was contended that the deceased, being a paid employee of the hospital, was not covered for the death or injury out of and in the course of employment and, therefore, the appellant Insurance Company is not liable.
Page 4 of 38C/FA/1201/2012 JUDGMENT (6.1) The learned advocate invited the
attention of the court to the terms and conditions of the Insurance Policy and more particularly to Condition No. II thereof, to submit that the risk of the employee carried in the insured's private vehicle during the course of his employment is specifically excluded from the policy in question. It was submitted that therefore, despite the fact that the policy in question is a comprehensive policy, the risk of the employee would not be covered as the same is specifically excluded under the policy. In support of her submissions, Ms. Nanavaty placed reliance upon an unreported decision of a Division Bench of this court in the case of Oriental Insurance Co. Ltd. v. Kirit Dharamsibhai Modi & others, rendered on 05.03.2015 in First Appeal No.3309 of 1996 and allied matters, to submit that in the facts of the said case also, the court in a similar set of facts, wherein the comprehensive policy was taken for four persons, after considering condition No. II of the policy, had held that as the insured had not paid any additional premium to cover any additional risk of the employee travelling in the insured vehicle during the course of employment the Insurance Company was not liable. It was urged that the deceased, being an employee, is not covered under the insurance policy as the insured had not paid Page 5 of 38 C/FA/1201/2012 JUDGMENT any additional premium covering the risk of the employees travelling in the vehicle at the time of the accident.
(6.2) Reference was made to endorsement IMT 16, which bears the heading "Legal Liability to Employees of the Insured who may be travelling or driving the Employer's Car (other than the Paid Drivers) (Private Cars Only). It was submitted that in case the insured desires to indemnify himself against the death or bodily injury to any employee (other than paid drivers), he is required to pay premium in terms of IMT16, however, in the facts of the present case, no premium having been paid in terms of IMT16 and hence, the appellantInsurance Company is not liable to indemnify the insured in respect of any liability arising for the death or any injury sustained by an employee in respect of accident in connection with the motor vehicle in question.
(6.3) In support of her submissions, the learned advocate had placed reliance upon an unreported decision of a Division Bench of this court in the case of National Insurance Co. Ltd. v. Smitaben wd/o. Bhogilal Jiagjivandas Gadhia, rendered on 07.02.2012 in First Appeal No.2214 of 1999; as well as the decision of Supreme Court in Page 6 of 38 C/FA/1201/2012 JUDGMENT the case of Oriental Insurance Co. Ltd. v. Meena Variyal, (2007) 5 S.C.C. 428. Reliance was also placed upon the decision of a Division Bench of this court in the case of New India Assurance Co. Ltd. v. Gitaben Mukeshbhai Pathak & Others, 2013 ACJ 2016.
(7) Opposing the appeal, Mr. Vishal Mehta, learned advocate for Mr. Mehul Shah, learned advocate for the respondents No.3/1, 3/2 and 3/2 (the original claimants), submitted that the deceased was not an employee of the insured, and, hence, the Insurance Company is wholly liable to pay the amount payable by the insured in respect of the accident. It was contended that the test as to who can be said to be an employee is laid down by the Supreme Court in the case of Dhrangadhra Chemical Works Ltd. v. State of Saurashtra, AIR 1957 S.C. 264, wherein the court has held that the principles according to which the relationship as between employer and employee or master and servant has got to be determined are wellsettled. The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done. A distinction is also drawn between a contract for services and a contract of service and that Page 7 of 38 C/FA/1201/2012 JUDGMENT distinction is put in this way: "In the one case the master can order or require what is to be done while in the other case he can not only order or require what is to be done but how itself it shall be done." The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer. It was submitted that in the facts of the present case, considering the contractual relationship between the deceased and the insured, there is nothing to show that the deceased was working under the control and supervision of the insured so as to fall within the ambit of the expressions "workman" or "employee". It was submitted that the Tribunal has, therefore, rightly held that the deceased was not an employee of the insured and that the liability of the Insurance Company to pay the compensation is squarely covered by Endorsement No.IMT5, for which additional premium has been paid by the insured.
(7.1) It was submitted that as no amount has been mentioned as regards the liability under the Schedule and the column is kept blank, it must be presumed that the liability of the Insurance Company is unlimited. It was submitted that the Tribunal has therefore, rightly held the Insurance Company liable to indemnify the insured Page 8 of 38 C/FA/1201/2012 JUDGMENT in respect of the compensation awarded and that the impugned judgment and award, being just, legal and proper, does not call for any interference by this court.
(7.2) Alternatively, it was submitted that if this court comes to the conclusion that the Insurance Company is not liable or that there is limited liability on the part of the Insurance Company, the court may direct the Insurance Company to pay the amount of compensation to the claimants and to recover such amount from the insured.
(8) This court has considered the rival submissions advanced by the learned advocates for the respective parties and has perused the record and proceedings of the case. At the outset, it may be noted that while the appellant has challenged the impugned judgment and award even as regards the quantum of compensation awarded by the Tribunal, the same has not been seriously contested before this court. Thus, the controversy before this court is limited to the liability or otherwise of the appellant to pay the awarded amount and the extent of such liability.
Page 9 of 38C/FA/1201/2012 JUDGMENT (9) It may be pertinent to note that though the appellant Insurance Company is disputing its liability to pay the awarded amount, the respondent No.2 - Rotary Eye Institute, which is the owner of the vehicle, though duly served, has not thought it fit to enter appearance and contest the appeal.
(10) In the backdrop of the facts and contentions noted hereinabove, the question that arises for consideration before this court is whether having regard to the clauses of the insurance policy, the appellant - Insurance Company is liable to pay the awarded amount to the original claimants; and if so, whether such liability is limited or absolute.
(11) Since the claimants have disputed that the deceased was an employee of the insured and the Tribunal has decided this issue in favour of the claimants, the first question that arises for consideration is whether the deceased was an employee of the insured. For this purpose it may be germane to refer to the contract for service Exhibit 45. A perusal of the contract for service shows that it is a "Contract for Services as Honorary Ophthalmic Surgeon at Rotary Eye Institute, Navsari". Under the terms and conditions of the contract, the designation of Page 10 of 38 C/FA/1201/2012 JUDGMENT the deceased was Honorary Ophthalmic Surgeon and he was to be paid an honorarium of Rs.4,000/ per month. Apart from the above, the deceased was also required to be compensated by way of payment of 10% of the appropriate percentage of the total money set aside every month out of the O.P.D. collection at the Institute; he was also to be paid 10% of the appropriate percentage of the total money set aside every month out of the Operation Fee component of the hospitalisation bills collected by the Institute from the patients; as well as 10% of the appropriate percentage of the total money set aside every month out of the Room Visiting Fees component of the hospitalisation bills collected by the Institute from the patients. Under Clause IV of the contract which bears the heading "Time Devotion and Duties", the deceased was required to devote full time to the Institute to cater to the duties mentioned therein, which included examination of the patients - both in the morning and afternoon; emergency cases of all natures; attending the routine as well as special Diagnostic and Operative Camps as finalized by the competent authority of the Institute; participation in the R & D activities; as well as presenting research papers in the National and International Medical Conferences on behalf of the R & D Department of the Institute; training Page 11 of 38 C/FA/1201/2012 JUDGMENT of the junior doctors and other paramedical staff as well as any other assignment but clearly not visualized at the time of contract. The deceased was governed by the leave rules of the Institute as in vogue from time to time except that he was not entitled to any kind of financial benefit that might be applicable to the regular employees of the Institute as far as the leave rules are concerned. The deceased was entitled for weekly offs as well as public holidays as decided by the Institute for each accounting year and was also entitled to 30 days contingency leave during each accounting year. The deceased was also governed by the conduct rules of the Institute as in vogue from time to time and as applicable to the regular employees of the Institute. The contract was operative for a period of three years, which could be extended from time to time with the mutual consent.
(12) Thus, on a perusal of the terms of the contract, it is evident that though the employment of the deceased was contractual, his services were in nature of the services rendered by the regular employees and he was entitled to leave in terms of the rules for regular employees and was also governed by the conduct rules.
Page 12 of 38C/FA/1201/2012 JUDGMENT (13) Clause XI of the contract bears the heading:
"Expiration of the Present Employment" and reads thus:
" That with effect from 1st April 96, AIG shall no longer remain as the regular employee of the Institute and that the earlier appointment order No.10/95 dtd. 03 041995 automatically becomes null & void."
The above clause thus reveals that the earlier contractual employment of the deceased was come to an end by virtue of the present contract which came to be executed on 04.05.1996 and the deceased would no longer remain as a regular employee of the Institute. Thus, even the Insured has considered the deceased as a regular employee, albeit contractual. Having regard to the terms and conditions of the contract of employment and the nature of services to be rendered by the deceased, this court is of the opinion that the deceased was an employee of the Insured. As held by the Supreme Court in Dhrangadhra Chemical Works Ltd. v. State of Saurashtra, (supra) the test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done. On a plain reading of the terms and conditions of the Page 13 of 38 C/FA/1201/2012 JUDGMENT above contract it is amply clear that the Insured Institute had due control and supervision over the deceased, inasmuch as the deceased was governed by the leave rules as well as the conduct rules which would enable the employer to take action against the deceased in accordance with the rules governing the regular employees. Several clauses of the contract indicate that the deceased was to discharge certain duties as determined by the competent authority. Considering the nature of the work to be discharged by the deceased which clearly shows that there was due control and supervision by the employer, this court is of the considered opinion that the deceased would fall within the ambit of the expression "employee" as contemplated in the above decision of the Supreme Court. The Tribunal was, therefore, not justified in holding that the deceased was not an employee of the Insured.
(14) The next question that arises for consideration is whether having regard to the nature of the Insurance Policy, the appellant - Insurance Company is liable to indemnify the insured for the compensation awarded by the Tribunal?
(15) A contract of insurance of a motor vehicle is governed by the provisions of the Insurance Act, Page 14 of 38 C/FA/1201/2012 JUDGMENT 1938. The terms of the policy as also the quantum of the premium payable for insuring the vehicle in question depends not only upon the carrying capacity of the vehicle but also on the purpose for which the same was being used and the extent of the risk covered thereby. By taking an "Act policy", the owner of a vehicle fulfills his statutory obligation as contained in section 147 of the Act. The liability of the insurer is either statutory or contractual. If it is contractual its liability extends to the risk covered by the policy of insurance. If additional risks are sought to be covered, additional premium has to be paid.
(16) Since driving of a motor vehicle may cause accident involving loss of life and property not only of a third party but also the owner of the vehicle and the insured vehicle itself, different provisions have been made in the Insurance Act as also the Motor Vehicles Act laying down different types of insurance policies. The amount of premium required to be paid for each of the policy is governed by the Insurance Act. A statutory regulatory authority namely the Tariff Advisory Committee established under section 64U of the Insurance Act, regulates the rates, advantages, terms and conditions that may be offered by insurers in respect of any risk or of Page 15 of 38 C/FA/1201/2012 JUDGMENT any class or category of risks, the rates, advantages, terms and conditions of which, in its opinion, it is proper to control and regulate, and any such rates, advantages, terms and conditions are binding on all insurers. Thus, it is the Tariff Advisory Committee which fixes the norms and the guidelines in exercise of powers under section 64UC of the Insurance Act.
(17) Accordingly, the Tariff Advisory Committee has framed Indian Motor Tariffs General Regulations providing for the category of risks, rates, advantages and terms and conditions.
(18) It may also be apposite to refer to the decision of the Supreme Court in New India Assurance Co. Ltd. v. C.M. Jaya, (2002) 2 S.C.C. 278, wherein it has been held thus:
"10. On a careful reading and analysis of the decision in Amrit Lal Sood (supra), it is clear that the view taken by the Court is no different. In this decision also, the case of Jugal Kishore is referred to. It is held:
(i) that the liability of the insurer depends on the terms of the contract between the insured and the insurer contained in the policy;Page 16 of 38
C/FA/1201/2012 JUDGMENT
(ii) there is no prohibition for an insured from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby risk to the gratuitous passenger could also be covered; and
(iii) in such cases where the policy is not merely statutory policy, the terms of the policy have to be considered to determine the liability of the insurer."
(19) It is in the above backdrop that the liability of the appellant Insurance Company is required to be examined. For the purpose of considering the liability, if any, or the extent of the liability of the Insurance Company, it would be necessary to study the Insurance Policy in question. In the present case, the original claimants are the heirs of an employee other than an employee to whom the Workmen's Compensation Act applies and, therefore, not covered under the Act policy. The Insurance Company would, therefore, be liable only provided the policy is a comprehensive policy and additional premium has been paid to cover passengers like the deceased. A perusal of the insurance policy at Exhibit 49 shows that it is a comprehensive policy, the relevant contents whereof are reproduced hereinbelow for ready reference:
Page 17 of 38C/FA/1201/2012 JUDGMENT COMPREHENSIVE/SCHEDULE OF PREMIUM A: OWN DAMAGE BASIC 3458 B: LIABILITY TO PUBLIC 557 RISK Less: 25% for side car Less: 5% of Reco. Auto Add: On LEV Assn. Membership as per Add: 3.4% on Extra END IMT 31 electrical or Legal liability to electronic fitting passengers Legal Liability to non Add: Loss of fare passengers Accessories Value @3% (Min. Add: Legal liability to Premium Rs.15) Endt Driver/coolies and IMT 30 other employees in connection with the 15 Less: 30% of the operation and/or vehicle is used for maintaining and/or damage of own goods unloading of motor vehicle Less: Exclusion of Riot and Strike Add: Accident benefits (0.15% on total for spouse & insured as IEV) per IMT 4, Accident 250 benefit for nonfare Less: Exclusion passenger or passenger Earthquake etc. required IMT 5 Less: Exclusion of Flood Etc. Add: For increased Less: % discount on third party property voluntary excess damage risks -
Page 18 of 38 C/FA/1201/2012 JUDGMENT
Less: 5% Recognized Section III (IMT 70)
Auto Assn.
membership discount Less: Total (O.D. 50
Less: Deductions Liability Premium)
for no claim Bonus 2075
Less: 5% special 872
2255
ENDT 74: discount (if due)
113
Net Premium (Excl. Tax)
2142
Add: 5% insurance tax 107
Total own damage 1303 Net Premium (inclusive 2249 premium of Tax Rounded) Rs.
Subject: to IMP endorsement number and memorandum 71, 24, 19, 5, 17.
(20) In the present case, in terms of the Insurance Policy, the Insured is inter alia covered by Endorsement IMT5 which reads as under:
"I.M.T. 5. Personal Accident cover to unnamed passengers other than the insured and his paid Driver or Cleaner In consideration of the payment of an additional premium, it is hereby understood and agreed that the Company undertake to pay compensation on the scale provided below for bodily injury as hereinafter defined sustained by any Page 19 of 38 C/FA/1201/2012 JUDGMENT passenger other than the insured and/or his paid driver attendant or cleaner and/or a person in the employ of the insured coming within the scope of the Workmen's Compensation Act, 1923 and subsequent amendments of the said Act and engaged in and upon the service of the insured at the time such injury is sustained whilst mounting into dismounting from or traveling in but not driving the motor car and caused by violent accidental external and visible means which independently of any other cause shall within three calendar months of the occurrence of such injury result in:
Scale of compensation
a) Death only 100%
b) Total and irrecoverable loss of:
i. Sight of both eyes or of the actual loss by physical separation of the two entire hands or two entire feet or of one entire hand and one entire foot or such loss of sight of one eye and such loss on one entire hand or one entire foot.
100% Page 20 of 38 C/FA/1201/2012 JUDGMENT ii. Use of two hands or two feet, or of one hand and one foot or such loss of sight of one eye and such loss of use of one hand or one foot.
100%
c) Total and irrecoverable loss of i. The sight of one eye or the actual loss by physical separation of one entire hand or one entire foot.
50% ii. Use of one hand or a foot without physical separation.
50% NOTE: xxxxx"
(21) Thus, Endorsement IMT5 covers any unnamed passenger other than the excepted categories mentioned therein namely: (i) the insured and/or his paid driver, attendant or cleaner; and/or
(ii) a person in the employ of the insured, who comes within the scope of the Workmen's Compensation Act and subsequent amendments and is engaged in and upon the service of the insured at the time such injury is sustained. A close look at the categories excluded from the ambit of Page 21 of 38 C/FA/1201/2012 JUDGMENT Endorsement No.IMT 5 reveals that they are those categories of persons who are otherwise covered under the Act policy. Thus, these categories have rightly been excluded as they are covered by the statutory policy and hence, no additional premium is required to be paid for them.
(22) In the present case, as discussed hereinabove, the deceased does not come within the scope of the Workmen's Compensation Act and subsequent amendments and, therefore, does not fall in the categories which are excluded from the cover of Endorsement No. IMT5.
(23) Insofar as the applicability of Endorsement IMT5 in case of the deceased employee is concerned, the learned advocate for the appellant Insurance Company contended that Endorsement IMT 5 refers to unnamed passenger and that in respect of the employees of the Insured, a specific policy is required to be obtained under Endorsement IMT16. For this purpose, reliance was placed upon an unreported decision of a Division Bench of this court in the case of Oriental Insurance Co. Ltd. v. Kirit Dharamsibhai Modi (supra). Such contention is based upon Section II of the policy which to the extent the same is relevant for the present purpose reads thus:Page 22 of 38
C/FA/1201/2012 JUDGMENT "SECTION II - LIABILITY TO THIRD PARTIES
1. Subject to the limits of liability as laid down in the Schedule hereto the Company will indemnify the Insured in the event of an accident caused by or arising out of the Motor car against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of
a) Death of or bodily injury to any person including occupants carried in the motor car (provided such occupants are not carried for hire and reward) but except so far as it is necessary to meet the requirements of Motor Vehicles Act the company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured.
b) Damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured.
2. The company will pay all costs and expenses incurred with its written consent."Page 23 of 38
C/FA/1201/2012 JUDGMENT It was contended that thus clause (a) of sub section (1) of the policy excludes the liability of the company where the death or injury arises out of and in the course of the employment of such person by the insured; and hence, the deceased would not fall within the ambit of Endorsement No.IMT 5.
(24) In this regard, while it is true that a Division Bench of this court in the above referred decision in the case of Oriental Insurance Co. Ltd. v. Kirit Dharamsibhai Modi (supra) has held in favour of the Insurance Company insofar as this issue is concerned; however, the Supreme Court in the case of New India Assurance Co. Ltd. v. Shanti Bopanna, AIR 2017 S.C. 2857, has turned down the contention of the Insurance Company that the deceased who was the Managing Director of the owner company was not a third party because he was an employee sitting in the car. The court held that it is obvious from the circumstances that the deceased was indeed a third party being neither the insurer nor the insured. In National Insurance Co. Ltd. v. Balakrishnan, (2013) 1 SCC 731, on which reliance has been placed on behalf of the claimants, the Supreme Court while considering the question as to whether the first respondent, Page 24 of 38 C/FA/1201/2012 JUDGMENT the Managing Director of the second respondent, a company registered under the Companies Act, 1956, is entitled to sustain a claim against the appellantinsurer for having sustained bodily injuries, held thus:
"26. In view of the aforesaid factual position, there is no scintilla of doubt that a "comprehensive/package policy"
would cover the liability of the insurer for payment of compensation for the occupant in a car. There is no cavil that an "Act policy" stands on a different footing from a "comprehensive/package policy". As the circulars have made the position very clear and IRDA, which is presently the statutory authority, has commanded the insurance companies stating that a "comprehensive/package policy"
covers the liability, there cannot be any dispute in that regard. We may hasten to clarify that the earlier pronouncements were rendered in respect of the "Act policy" which admittedly cannot cover a thirdparty risk of an occupant in a car. But, if the policy is a "comprehensive/ package policy", the liability would be covered."Page 25 of 38
C/FA/1201/2012 JUDGMENT (25) In the opinion of this court, the above decisions would be squarely applicable to the facts of the present case and would be covered by under Endorsement No.IMT5 of the comprehensive policy obtained by the insured which covers all categories of passengers, except those which are specifically excluded from its ambit.
(26) In Oriental Insurance Company v. Meena Variyal, (2007) 5 SCC 428, on which reliance has been placed by the learned advocate for the appellant, the Supreme Court was considering a case where the Regional Manager was provided a car by the employer. The car was insured in terms of the Motor Vehicles Act, 1988. There was no special contract. In other words, the Insurance Policy was an Act policy and not a comprehensive policy. The car met with an accident. The deceased was an occupant of the car. The car was being used for the business and for the benefit of the employer of the deceased at the time of the accident. The claimants as dependents claimed compensation. The court held thus:
"12. Chapter XI of the Act bears a heading, "Insurance of Motor Vehicles against thirdparty risks". The definition of "third party" is an inclusive one since Section 145(g) only indicates that "third Page 26 of 38 C/FA/1201/2012 JUDGMENT party" includes the Government. It is Section 146 that makes it obligatory for an insurance to be taken out before a motor vehicle could be used on the road. The heading of that section itself is "Necessity for insurance against third party risk". No doubt, the marginal heading may not be conclusive. It is Section 147 that sets out the requirement of policies and limits of liability. It is provided therein that in order to comply with the requirements of Chapter XI of the Act, a policy of insurance must be a policy which is issued by an authorised insurer; or which insures the person or classes of persons specified in the policy to the extent specified in subsection (2) against any liability which may be incurred by the owner in respect of the death of or bodily injury or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place. With effect from 14111994, injury to the owner of goods or his authorised representative carried in the vehicle was also added. The policy had to cover death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the Page 27 of 38 C/FA/1201/2012 JUDGMENT vehicle in a public place. Then, as per the proviso, the policy shall not be required 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, an employee engaged in driving the vehicle, or who is a conductor, if it is a public service vehicle or an employee being carried in a goods vehicle or to cover any contractual liability. Subsection (2) only sets down the limits of the policy.
13. As we understand Section 147(1) of the Act, an insurance policy thereunder need not cover the liability in respect of death or injury arising out of and in the course of the employment of an employee of the person insured by the policy, unless it be a liability arising under the Workmen's Compensation Act, 1923 in respect of a driver, also the conductor, Page 28 of 38 C/FA/1201/2012 JUDGMENT in the case of a public service vehicle, and the one carried in the vehicle as owner of the goods or his representative, if it is a goods vehicle. It is provided that the policy also shall not be required to cover any contractual liability. Uninfluenced by authorities, we find no difficulty in understanding this provision as one providing that the policy must insure an owner against any liability to a third party caused by or arising out of the use of the vehicle in a public place, and against death or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place. The proviso clarifies that the policy shall not be required to cover an employee of the insured in respect of bodily injury or death arising out of and in the course of his employment. Then, an exception is provided to the last foregoing to the effect that the policy must cover a liability arising under the Workmen's Compensation Act, 1923 in respect of the death or bodily injury to an employee who is engaged in driving the vehicle or who serves as a conductor in a public service vehicle or an employee who travels in the Page 29 of 38 C/FA/1201/2012 JUDGMENT vehicle of the employer carrying goods if it is a goods carriage. Section 149(1), which casts an obligation on an insurer to satisfy an award, also speaks only of award in respect of such liability as is required to be covered by a policy under clause (b) of subsection (1) of Section 147 (being a liability covered by the terms of the policy). This provision cannot therefore be used to enlarge the liability if it does not exist in terms of Section 147 of the Act.
14. The object of the insistence on insurance under Chapter XI of the Act thus seems to be to compulsorily cover the liability relating to their person or properties of third parties and in respect of employees of the insured employer, the liability that may arise under the Workmen's Compensation Act, 1923 in respect of the driver, the conductor and the one carried in a goods vehicle carrying goods. On this plain understanding of Section 147, we find it difficult to hold that the Insurance Company, in the case on hand, was liable to indemnify the owner, the employer Page 30 of 38 C/FA/1201/2012 JUDGMENT Company, the insured, in respect of the death of one of its employees, who according to the claim, was not the driver. Be it noted that the liability is not one arising under the Workmen's Compensation Act, 1923 and it is doubtful, on the case put forward by the claimant, whether the deceased could be understood as a workman coming within the Workmen's Compensation Act, 1923. Therefore, on a plain reading of Section 147 of the Act, it appears to be clear that the Insurance Company is not liable to indemnify the insured in the case on hand."
In the considered opinion of this court, the above decision would have no applicability to the facts of the present case, inasmuch as in the facts of the said case, the court was dealing with a matter involving an Act policy as contemplated under section 147 of the Motor Vehicles Act; whereas in the facts of the present case this court is dealing with a case wherein there is a comprehensive policy wherein additional premium has been paid in terms of Endorsement IMT5.
(27) Insofar as the decisions of this court in National Insurance Co. Ltd. v. Smitaben Wd/O Page 31 of 38 C/FA/1201/2012 JUDGMENT Bhogilal Jagjivandas Gadhia (supra) and New In dia Assurance Co. Ltd. v. Gitaben Mukeshbhai Pathak (supra) are concerned, the said decisions were also rendered in the context of Insurance Policies which were Act only policies, namely statutory policies under section 147 of the Motor Vehicles Act, and hence, the same would have not applicability to the facts of the present case which relates to a comprehensive policy.
(28) Reference may be made at this juncture to regulation 27 of the General Regulations of the Indian Motor Tariffs 1.8.89 issued by the Tariff Advisory Committee, which reads thus:
"27. P.A. Cover under Motor Policies:
It is permissible to grant P.A. Cover under Motor Tariff by way extension of the Motor Policies, subject to the following rules.
1. Any P.A. insurance for 24 hours duration should be taken as per P.A. Tariff in force. No.24 hours cover can be issued under Motor Policy.Page 32 of 38
C/FA/1201/2012 JUDGMENT
2. P.A. Cover only for limited duration whilst connected with the use of the vehicle including mounting into dismounting from or travelling in the vehicle in any capacity as stated below:
Description of benefits Premium per year/per % of Capital Sum person for Capital Sum insured Insured of Rs.10000/ For Mot Comm Pvt. Scooter Vehs.
Car
i) Death only 100%
ii) Loss of Two
Limbs or Sight
of two eyes or
one limb and
sight of one
eye 100% 5.00 7.50 6.00
iii) Loss of one
Limb or Sight
of one eye 50%
iv) Permanent Total
Disablement
from injuries
other than 100%
named above.
The maximum cover is limited to capital sum Insured of Rs.2 lacs. per person.
(a) If the Policy is for named persons the rates mentioned above should be charged for each person.Page 33 of 38
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(b) If the policy is desired for unnamed persons the cover should be taken i) in case of private car/taxi for the number of persons the vehicle is authorised to carry (including driver), ii) In case of motor cycle/scooter without side car for minimum two persons the vehicle is authorized to carry."
(29) Thus, the maximum cover provided under regulation No.27 is limited to capital sum insured of Rs.2 lacs per person. Clause (b) provides that if the policy is desired for unnamed persons the cover should be taken - i) in case of private car/taxi for the number of persons the vehicle is authorised to carry (including driver), ii) In case of motor cycle/scooter without side car for minimum two persons the vehicle is authorized to carry. The regulation further provides that for unnamed persons, Endorsement IMT 5 may be used. As noted hereinabove, in the present case, Endorsement IMT 5 has been used, which is indicative of the fact that the cover taken is for unnamed persons. The vehicle in question is a private car with seating capacity of ten persons, including the driver. The insured has paid additional premium of Rs.250/ to cover the higher liability in respect of passengers than the liability fixed under section 147 of the Act. Such premium of Rs.250/ has been paid towards Page 34 of 38 C/FA/1201/2012 JUDGMENT Endorsement IMT 5. Considering the capacity of the insured vehicle, viz. 10 passengers, the premium per person would come to Rs.25/.
(30) In terms of the regulations, in case of a private car where the premium paid is Rs.5/, the capital sum insured per person is Rs.10,000/.
Therefore, considering the premium of Rs.25/ per person, in the present case the capital sum insured per person would be Rs.50,000/. The liability of the Insurance Company would therefore, be limited to Rs.50,000/ per unnamed person.
(31) The Indian Motor Tariff regulating the rates as well as the terms and conditions that may be offered by the Insurance Companies is framed by the Tariff Advisory Committee, a statutory body established under section 64U of the Insurance Act, 1938. Endorsement No.IMT5 which forms part of the policy makes it clear that it was in consideration of an additional premium of Rs.250/ that the Insurance Company had undertaken to indemnify the insured against its liability in respect of passengers to the extent of Rs.50,000/ per passenger. It is, therefore, not possible to accept the contention raised on behalf of the respondents No.3/1, 3/2 and 3/3 (original claimants) that the additional premium Page 35 of 38 C/FA/1201/2012 JUDGMENT was paid for covering the higher liability. In view of the above facts as emerging from the record, it is manifest that there was no contract to cover unlimited liability in respect of the passengers.
(32) Thus, while the insured is required to be indemnified towards the compensation awarded to the original claimants in respect of the death of the deceased in view of comprehensive policy, which includes premium paid towards Endorsement IMT5, the same is limited to the extent provided in the Insurance Policy, that is, to the extent of Rs.50,000/ per passenger only.
(33) In the light of the above discussion, the appeal partly succeeds and is accordingly allowed to the following extent.
While upholding the quantum of compensation awarded by the Tribunal, out of the awarded amount, the joint and several liability of the Insurance Company is limited to the extent of Rs.50,000/ only. The respondents No.3/1, 3/2 and 3/3 (original claimants), however, are entitled to recover the balance amount from the respondents No.1 and 2 jointly and severally in terms of the award made by the Tribunal.
Page 36 of 38C/FA/1201/2012 JUDGMENT (34) Insofar as the submission made on behalf of the original claimants that the appellant Insurance Company be directed to pay the total amount of compensation to the claimants and recover the same from the insured is concerned, in the opinion of this court, when the liability under the insurance policy is limited to Rs.50,000/ per passenger, the Insurance Company cannot be directed to deposit any amount in excess of its liability.
(35) Vide order dated 20.04.2012, this court while issuing rule in the civil application for stay had directed the Insurance Company to deposit the entire amount awarded by the Tribunal with proportionate costs and interest before the Tribunal on or before the returnable date, which order had been duly complied with by the Insurance Company. Subsequently, by an order dated 29.06.2012, the Tribunal was directed to permit withdrawal of 10% of the amount and was further directed to invest 90% of the amount in fixed deposit with a Nationalized Bank initially for a period of three years with a further direction that such investment shall be renewed from time to time until the appeal is finally disposed of, but with the condition that the claimants shall be entitled to get periodical interest on the said investment. The Tribunal is, Page 37 of 38 C/FA/1201/2012 JUDGMENT therefore, directed to permit the appellant- Insurance Company to withdraw the amount lying in fixed deposit with interest, if any, accrued thereon. Since the liability of the Insurance Company has been held to be limited to Rs.50,000/ and the interest payable thereon, the Insurance Company shall be entitled to recover any amount in excess thereof, which has already been paid to the claimants, from the insured in accordance with law.
Sd/ [HARSHA DEVANI, J] Sd/ [A. S. SUPEHIA, J] *** Bhavesh[pps]* Page 38 of 38