Madhya Pradesh High Court
National Insurance Co. Ltd. vs Uma Devi And Ors. on 6 January, 1998
Equivalent citations: 2000ACJ1451
Author: Shambhoo Singh
Bench: Shambhoo Singh
JUDGMENT Shambhoo Singh, J.
1. This order disposes of M.A. No. 414 of 1994 and M.A. No. 398 of 1994 preferred by National Insurance Co. Ltd. and Uma Devi and others respectively being aggrieved of the award dated 2.5.1994 passed by Additional Motor Accidents Claims Tribunal, Ratlam in Claim Case No. 38 of 1983.
2. The claimants case was that on 29.3.1983 on the occasion of Holi festival, some people were going in the truck No. MPU 6244 owned by Prahlad and Ratan-lal, driven by Chetan Kumar and insured by appellant, for enjoying a picnic to Garh Khankai Mata. The deceased Shamlal was engaged as cook for preparation of their food. The driver drove the truck rashly and negligently as a result of which it turned turtle in the Ghats of JhamanPatli wherein some occupants including deceased Shamlal died and some of them sustained serious injuries. The claimants, widow and 3 daughters of the deceased Shamlal, filed claim petition pleading that the deceased Shamlal was aged about 25 years and was earning Rs. 500-600 per month, claimed Rs. 1,40,000 for his death. The respondent No. 1 Chetan Kumar denied the claim and pleaded that he was not driving the truck at the relevant time. The legal representative of deceased Prahlad who also had died in the accident, resisted the claim. The case of Ratanlal is that he had sold truck to Prahlad, he was not owner of this vehicle on the date of incident, therefore, he is not liable to pay compensation. The appellant National Insurance Co. Ltd. though admitted that the truck in question was insured with it at the relevant time but it resisted the claim on the ground that the owner Ratanlal, in view of Sections 95 and 103-A of the Motor Vehicles Act, 1939 (for short 'the Act') before transferring the truck to Prahlad, did not intimate, there was no privity of contract between Prahlad and insurance company, therefore, the insurance company is not liable to pay compensation. It also pleaded that the driver of the truck was not having licence. The owner also committed breach of the provisions of the Act and terms of the insurance policy, by carrying persons in goods vehicle, therefore, it is not liable to pay compensation.
3. The learned Tribunal after recording evidence of both the parties, held that the respondent driver Chetan Kumar drove the truck rashly and negligently, as a result of which the accident occurred wherein the deceased Shamlal sustained injuries and died on 31.3.1983. It further held that on the date of incident Ratanlal was registered owner of the vehicle, therefore, he and the appellant insurance company and the driver Chetan Kumar were liable to pay compensation. The learned Tribunal held that Shamlal was aged about 40 years, at the time of accident and assessed his income at Rs. 180 per month and after deducting 1/3rd amount of personal expenses, determined claimants monthly dependency at Rs. 120 and yearly Rs. 1,440. He applied multiplier of 18 and awarded compensation of Rs. 25,920. Uma Devi and her daughters preferred Appeal No. 398 of 1994 for enhancement of the amount of compensation and insurance company had filed Appeal No. 414 of 1994 for exonerating it from the liability of payment of compensation.
4. Mr. Khan, learned counsel for the appellant insurance company submitted that the learned Tribunal committed error in holding that Ratanlal was the owner of the vehicle, in fact, Ratanlal had sold this truck to Prahlad and there was no privity of contract between the insurance company and Prahlad, the subsequent owner of the vehicle. He further contended that the owner of the truck committed breach of the provisions of the Act and terms and conditions of the insurance policy by carrying passengers in goods vehicle and, therefore, the insurance company is not liable to pay compensation. Mr. Patwa, learned counsel for the claimants, submitted that at the relevant time the truck in question stood registered in the name of Ratanlal. The non-applicants including insurance company did not adduce evidence to prove that before incident the registered owner Ratanlal had sold this truck to Prahlad. He further contended that the insurance company did not plead that the owner committed breach of terms and conditions of the insurance policy and that is the reason why no issue was raised on this point, therefore, the appellant insurance company cannot be allowed to raise this point in appeal. He further contended that even otherwise the burden of proving breach of the terms and conditions of the insurance policy and permit was on the appellant. It did not adduce any evidence, under these circumstances, the Tribunal rightly held the insurance company liable to pay compensation.
5. I considered the arguments advanced by the learned counsel for both sides and perused the record. The finding that the accident occurred due to rash and negligent driving of the truck, has not been challenged before me and rightly so as it is amply proved from the evidence of Gopal Dass, AW 2 and by application of the doctrine of res ipsa loquitur.
6. Now the question is as to whether the appellant insurance company was not liable to pay compensation on the ground of breach of terms and conditions of the insurance policy and provisions of the Act. The relevant provisions regarding permit and insurance policy are contained in the following sections and rules:
Section 94. Necessity for insurance against third party risk.-(1) No person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.
Section 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 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 (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 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, xxx xxx xxx 95 (2) Subject to the proviso to Subsection (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 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,-
(1) a limit of fifty thousand rupees in all where the vehicle is registered to carry not more than thirty passengers;
(2) a limit of seventy-five thousand rupees in all where the vehicle is registered to carry more than thirty but not more than sixty passengers;
(3) a limit of one lakh rupees in all where the vehicle is registered to carry more than sixty passengers; and (4) subject to the limits aforesaid, ten thousand rupees for each individual passenger where the vehicle is a motor cab, and five thousand rupees for each individual passenger in any other case;
(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 two thousand in all, in respect of damage to any property of a third party.
xxx xxx xxx 95 (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 persons. Section 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 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 a transport 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 the nondisclosure of a material fact or by a representation of fact which was false in some material particular.
xxx xxx xxx (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 by 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 becomes 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 determining 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 person 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 reciprocating country, as the case may be xxx xxx xxx Section 42. Necessity for permits.-(1) No owner of a transport vehicle shall use or permit the use of the vehicle in any public place whether or not such vehicle is actually carrying any passenger or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or the Commission authorising the use of the vehicle in that place in the manner in which the vehicle is being used:
Provided that a stage carriage permit shall, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a contract carriage:
Provided further that a stage carrier's permit may, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a goods vehicle either when carrying passengers or not:
Provided further that a public carriage permit shall, subject to any conditions that may be specified in the permit, authorise the holder to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him.
(2) In determining, for the purposes of this Chapter, whether a transport vehicle is or is not used for the carriage of goods for hire or reward,-
(a) the delivery or collection by or on behalf of the owner of goods sold, used or let on hire or hire-purchase in the course of any trade or business carried on by him other than the trade or business of providing transport,
(b) the delivery or collection by or on behalf of the owner of goods which have been or which are to be subjected to a process or treatment in the course of a trade or business carried on by him, or
(c) the carriage of goods in a transport vehicle by a manufacturer of or agent or dealer in such goods whilst the vehicle is being used for demonstration purposes, shall not be deemed to constitute a carrying of the goods for hire or reward; but the carriage in a transport vehicle of goods by a person not being a dealer in such goods who has acquired temporary ownership of the goods for the purpose of transporting them to another place and there relinquishing ownership shall be deemed to constitute a carrying of the goods for hire or reward.
xxx xxx xxx"
7. Rule 111 of the Motor Vehicles Rules, 1974 (for short 'the Rules') deals with carriage of persons in goods vehicles. It is quoted below:
111. Carriage of persons in goods vehicles.-(1) Save in the case of vehicle which is being used for the carriage of police or a stage carriage in which goods are being carried in addition to passengers no person shall be carried in a goods vehicle other than a bona fide employee of the owner or the hirer of the vehicle, or the owner or the hirer and except in accordance with this rule.
xxx xxx xxx (2) No person shall be carried in the cab of a goods vehicle beyond the number for which there is seating accommodation at the rate of thirty-eight centimetres measured along the seat for each person excluding the space reserved for the driver, and not more than:
(i) six persons in addition to the driver in any goods vehicle other than light transport vehicle;
xxx xxx xxx (5) No person shall be carried in any goods vehicle-
(a) unless an area of not less than 3600 square centimetres of the floor of the vehicle is kept open for each person;
(b) in such manner-
(i) that such person when carried on goods or otherwise is in danger of falling from the vehicle,
(iii) that any part of his body, if he was in a sitting position, is at a height exceeding three metres from the surface upon which the vehicle rests.
8. Admittedly, the vehicle in question was insured with the appellant insurance company under Section 95 of the Act and, therefore, under Section 96 of the Act it is liable to satisfy judgment against the insured. The insurance company may defend the proceedings on the grounds mentioned in Clauses (a), (b) and (c) of Sub-section (2) of Section 96. If the insurance company relies on the conditions mentioned in sub-Clause (i) or sub-Clause (ii) of Clause (b) of Sub-section (2) of Section 96, it has to prove that the insured has committed violation of conditions. If it fails to do so, it cannot be absolved of its liability to indemnify the insured, it has to fulfill its statutory liability.
9. As held by the Supreme Court in Narcinva V. Kamat v. Alfredo Antonio Doe Martins 1985 ACJ 397 (SC) and Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), the onus of proving breach of the terms and conditions of the policy is on the insurance company. The appellant insurance company did not produce evidence to prove that Chetan Kumar, respondent No. 1, who was driving the offending vehicle at the time of accident had no valid licence. The insurance policy has not been produced, therefore, the terms and conditions of the policy of the offending vehicle are not known, under these circumstances the question of breach of the terms and conditions of the insurance policy by the insured does not arise.
10. It was argued that the vehicle in question was a goods vehicle, therefore, it could not carry persons. As passengers were carried in this goods vehicle, the appellant is not liable to pay compensation. This argument is not acceptable. From perusal of Section 42 of the Act and Rule 111, it is clear that the goods vehicles are also allowed to carry persons in accordance with the provisions of the Rules, 1974. According to Rule 111 (2) (i) six persons in addition are allowed to be carried. In Sub-rule (5) it is provided that no person shall be carried in any goods vehicle unless an area not less than 3600 square centimetres of the floor of the vehicle is kept open for each person. In the instant case goods were not loaded, only passengers were sitting in the vehicle. The appellant insurance company also did not get the permit produced of this vehicle, therefore, this court is not in a position to know the terms and conditions of the permit under which this vehicle was to be plied. For arguments sake, if it is assumed that some conditions and terms of the insurance policy and permit were violated, even then the appellant cannot be absolved of its liability to indemnify the insured as it has not been proved that breach was committed by the insured. There is no evidence on record that owner of the vehicle was present at Ratlam where the passengers mounted the vehicle or he permitted them to travel. It is thus clear that breach of conditions or terms was committed by Chetan Kumar, the driver of the vehicle and not by the insured. For avoiding liability it must be established by the insurer that the breach was committed by the insured and that it was the insured, who was guilty of violating the promise or infringement of the contract. Unless the fault of insured is proved, the insurer cannot escape from the obligation to indemnify the owner of the vehicle.
11. It was argued that respondent No. 4, Ratanlal, the registered owner of the truck had sold it to the deceased Prahlad, the father of respondent No. 2 without intimation to the appellant and without making compliance of Section 103-A, therefore, the appellant is not liable to pay compensation. Admittedly, the respondent No. 4 Ratanlal was the registered owner of the offending vehicle at the time of accident. The vehicle was not transferred to Prahlad, who is alleged to have purchased the same from respondent No. 4 Ratanlal. Learned Tribunal passed award against respondent No. 4, the appellant insurance company and Chetan Kumar jointly. The appellant insurance company did not lead evidence to prove that respondent No. 4 Ratanlal, the registered owner, had transferred the offending vehicle to Prahlad. It is true that Uma Devi, PW 1 and Rameshchandra, PW 3, stated that the truck belonged to Prahlad but on the basis of these statements it cannot be held that the vehicle was purchased by Prahlad. There is no evidence that the consideration was passed to the transferor Ratanlal by transferee Prahlad. In Satish Sanghi v. Mihir Kumar Joshi 1993 ACJ 893 (MP), where the transferee admitted that he had purchased the vehicle on hire-purchase basis but the registration stood in the name of the transferor, it was held that the owner of the vehicle was the registered owner. In New India Assurance Co. Ltd. v. Vimla 1992 ACJ 628 (MP), where the transferee had admitted to have purchased the vehicle, it was held that on the basis of admission of transferee without proving transfer, it cannot be held that transferee was the owner of the vehicle. Under these circumstances the learned Tribunal rightly held that the respondent No. 4 was the owner of the vehicle. As it is not proved that the vehicle had been sold to Prahlad, the question of privity of contract between the appellant and Prahlad does not arise. In view of this the appellant is liable to indemnify the insured registered owner, respondent No. 4 Ratanlal. This court in case of Harcharan Singh v. Turza Bai 1995 ACJ 423 (MP), held as under:
I, therefore, hold that although on the date of accident, the actual owner of the truck in question was the present appellant, the registered owner and the insurance company cannot avoid their joint liability for payment of compensation to the claimants. So far as the registered owner is concerned, if he has not discharged his statutory responsibility under Section 31 of the Act, of informing the registering authority of the fact of transfer of the vehicle, his liability for the accident caused by the vehicle involved continues till the transferee is registered as an owner. So far as the insurance company is concerned, as held by the Madras High Court in the case of Dharman v. N.C. Srinivasan 1990 ACJ 27 (Madras), to which I find myself in complete agreement, transfer of the vehicle is not one of the grounds under Section 96 (2) of the Act, on which the insurance company can advance a defence and deny its liability to the third party. In a case where such a transfer of vehicle is made without following the provisions by the party of Section 103-A of the Act, it would be open to the insurance company to proceed against the registered owner for reimbursement of the compensation amount which was required to be paid under the policy cover to the third party. That would, however, be an independent proceeding against the insured based on the policy conditions of the insurance. As against third party, however, in a claim petition, the insurance company can have no such defence.
12. This court in case of Bhagwan Das v. National Insurance Co. Ltd. 1991 ACJ 1137 (MP), where more than 4 passengers in addition to 5 labourers were travelling in truck held insurance company liable to pay compensation to the claimants. In similar circumstances Himachal Pradesh High Court in case of United India Insurance Co. Ltd. v. Sukha Devi 1995 ACJ 796 (HP), where more than 35 passengers were carried in the truck held insurance company liable to pay compensation. Under similar circumstances, High Court of Gujarat in case of Oriental Fire & Genl. Ins. Co. Ltd. v. YusufMusa Chandki 1986 ACJ 500 (Gujarat), directed insurance company to pay compensation as it has failed to get the permit of the truck produced on record.
13. The Supreme Court in case of B.V. Nagaraju v. Oriental Insurance Co. Ltd. 1996 ACJ 1178 (SC), where passengers were carried in a truck against the conditions of insurance policy, following Skandia's case 1987 ACJ 411 (SC), held that exclusion of terms of the insurance policy must be read down so as to serve the main purpose of the policy, that is, indemnify the insured.
14. In view of above, the learned Tribunal rightly held the appellant insurance company liable to indemnify the insured-owner of the offending vehicle. Under these circumstances the appeal (M.A. No. 414 of 1994) filed by the insurance company is dismissed, with costs. Counsel's fee is fixed as Rs. 500, if certified.
15. The claimants have challenged the amount of compensation and filed appeal (M.A. No. 398 of 1994) for enhancement of the same.
16. Mr. Jain submitted that the learned Tribunal committed error in determining the dependency of the claimants to be Rs. 120 per month. It has come in the evidence of Uma Devi, PW 1 that her husband was halwai (Sweet maker) and he used to cook food in marriages and thereby he used to earn Rs. 500-600 per month. She admitted in cross-examination that her husband used to get the work of cooking of food in marriages for 2-3 days in a month. He was given Rs. 50-60 per day. Kanhaiyalal, PW 4 also supported her and stated that the earning of Shyamlal from cooking food and work of halwai was Rs. 100 per month. The learned Tribunal committed error in determining dependency at Rs. 120 per month on the basis of the sentence uttered by Uma Devi that her husband used to get Rs. 50-60 per day for cooking food in marriage parties and this work was available to him for 2-3 days in a month. It cannot be accepted that the deceased was maintaining his family of 5 members in Rs. 120 per month. It is also improbable that Shyamlal would sit idle for 27 days. Kanhaiyalal stated that Rs. 15-20 per day were given to the female labourers. Under the circumstances it can be assumed that the average monthly earning of the deceased was Rs. 450 at the rate of Rs. 15 per day. After deducting '/3rd of it for his personal expenses, dependency of the claimants would come to Rs. 300 per month or Rs. 3,600 per year.
17. The age of deceased has been rightly assessed by the Tribunal to be 40 years. The learned Tribunal selected multiplier of 18 which appears to be on higher side. In my view appropriate multiplier would be 14. Thus, the amount would come to (Rs. 3,600 x 14) Rs. 50,400. It appears proper to award Rs. 4,000 to the appellant-claimant No. 1, Uma Devi, the widow of the deceased, for loss of consortium and Rs. 2,000 each to the claimant Nos. 2 to 4 for loss of love and affection, and thus the amount of compensation would come to Rs. 60,400. It is rounded off to Rs. 60,500. The claimants are entitled to interest on the enhanced amount at the rate of 12 per cent per annum from the date of application till realization of the same.
18. As a result, claimant's appeal partly succeeds. The claimants are entitled to compensation of Rs. 60,500 with interest at the rate of 12 per cent per annum from the date of application till realization of the same. The widow Uma Devi has been taken in Government service. In view of this, the claimants are entitled to equal share in the compensation. The minor's share of compensation shall be kept in a nationalised bank on interest paying scheme under fixed deposit till they attain majority or otherwise as ordered by this court. Uma Devi may withdraw quarterly interest for meeting expenditure with the permission of Tribunal.