Allahabad High Court
United India Insurance Co. vs Hari Shanker And Another on 25 May, 2022
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 25 Reserved A.F.R. Case :- FIRST APPEAL FROM ORDER No. - 611 of 2008 Appellant :- United India Insurance Co. Respondent :- Hari Shanker And Another Counsel for Appellant :- Alka Saxena Counsel for Respondent :- Arun Kumar Tewari,Kamal Tiwari, Vimal Kumar,Vishwa Mohini Hon'ble J.J. Munir,J.
1. This is an Insurance Company's appeal challenging the judgment and award passed by the Motor Accident Claims Tribunal/ Additional District Judge, Court No.6, Sitapur dated 07.02.2008 in MACP No.230 of 2006, ordering the Insurance Company to pay and recover.
2. The only issue involved in this appeal is whether a gratuitous passenger, travelling on board a goods vehicle, who sustains injury in an accident, is entitled to recover from the Insurance Company on the plea of pay and recover?
3. In view of the issue involved, elaborate reference to the facts and evidence is not warranted in the present appeal. All that is relevant is that the claimant-respondent, Hari Shanker was travelling on board a truck bearing Registration No. U.G.K.-0016 on 06.02.2006. He was proceeding from his native Village Nai Basti, Juhra, Pargana and Tehsil Mishrikh, District Sitapur to Powayan. The truck by accident, ill-fate or negligence, turned turtle at a place called Niyamatpur within the local limits of Police Station Sidhauli, District Shahjahanpur. The accident occurred at around 4 o'clock in the evening hours.
4. It is the claimant's case that he sustained grievous injuries leading to amputation of both of his heels. He claimed a total compensation under various heads to the tune of Rs.3 lakhs. The vehicle, wherein the claimant was travelling, was insured with the United India Insurance Company Limited, Station Road, Sitapur. The Insurance Company were impleaded as parties. The owner of the truck is one Rakesh Chandra, who was arrayed as opposite party no.1 to the claim petition. He is the second respondent to the appeal. The claimant is the first respondent here. The claim was contested both by the owner and the Insurance Company before the Tribunal.
5. The Insurance Company put forth the defence that the claimant was a gratuitous passenger on board a goods vehicle, which amounted to the violation of the insurance policy. Other defences were also urged. The parties led evidence, where mostly documentary evidence was led by the claimant. The claimant examined himself in support of his case as PW-1. The Tribunal on the basis of his testimony concluded that he was indeed a gratuitous passenger on board a goods vehicle. The Tribunal held the owner liable to pay the claimant a sum of Rs.24,557/- together with 6% simple interest. The Insurance Company were not held liable to indemnify. Nevertheless, invoking the principle of "pay and recover", the Insurance Company were ordered to pay the awarded compensation to the claimant in the first instance and then recover from the owner.
6. It is this part of the direction made by the Tribunal that the Insurance Company have questioned in the present appeal. Though, appearance was put in on behalf of the respondent and name of the learned Counsel was shown on the respondent's side, at the hearing of the appeal, no one appeared either on behalf of the claimant or the owner. The hearing proceeded ex parte and judgment was reserved.
7. Heard Ms. Alka Saxena, learned counsel for the appellant.
8. The learned Counsel for the appellant submits that the Insurance Company are not liable to pay anything in the first instance and then recover, because there is a breach of the insurance policy in carrying a gratuitous passenger on board a goods vehicle. She has placed reliance on the decision of the Supreme Court in National Insurance Co. Ltd. v. Bommithi Subbhayamma and others, (2005) 12 SCC 243 and the decision of their Lordships in National Insurance Co. Ltd. v. Prema Devi and others, (2008) 5 SCC 403.
9. This Court has considered the submissions advanced on behalf of the appellant-Insurance Company and carefully perused the record.
10. There is no doubt that the claimant was a gratuitous passenger on board a goods vehicle. He was neither the driver nor the cleaner or a functionary on board the ill-fated truck. He was also not the owner of the consignment being carried or the consignment owner's authorized agent. The claimant has admitted in his cross-examination that he had not paid the truck driver for the passage, but would pay the same sum of money the other passengers on board would pay. It is from the totality of circumstances and the aforesaid admission in his cross-examination that the Tribunal has rightly held the claimant to be a gratuitous passenger on board the ill-fated truck. In New India Assurance Co. Ltd. v. Asha Rani and others, (2003) 2 SCC 223, it was held by a three Judge Bench of their Lordships of the Supreme Court thus:
"9. In Satpal case [New India Assurance Co. v. Satpal Singh, (2000) 1 SCC 237 : 2000 SCC (Cri) 130] the Court assumed that the provisions of Section 95(1) of the Motor Vehicles Act, 1939 are identical with Section 147(1) of the Motor Vehicles Act, 1988, as it stood prior to its amendment. But a careful scrutiny of the provisions would make it clear that prior to the amendment of 1994 it was not necessary for the insurer to insure against the owner of the goods or his authorised representative being carried in a goods vehicle. On an erroneous impression this Court came to the conclusion that the insurer would be liable to pay compensation in respect of the death or bodily injury caused to either the owner of the goods or his authorised representative when being carried in a goods vehicle the accident occurred. If the Motor Vehicles Amendment Act of 1994 is examined, particularly Section 46, by which the expression "injury to any person" in the original Act stood substituted by the expression "injury to any person including owner of the goods or his authorised representative carried in the vehicle", the conclusion is irresistible that prior to the aforesaid Amendment Act of 1994, even if the widest interpretation is given to the expression "to any person" it will not cover either the owner of the goods or his authorised representative being carried in the vehicle. The objects and reasons of clause 46 also state that it seeks to amend Section 147 to include owner of the goods or his authorised representative carried in the vehicle for the purposes of liability under the insurance policy. It is no doubt true that sometimes the legislature amends the law by way of amplification and clarification of an inherent position which is there in the statute, but a plain meaning being given to the words used in the statute, as it stood prior to its amendment of 1994, and as it stands subsequent to its amendment in 1994 and bearing in mind the objects and reasons engrafted in the amended provisions referred to earlier, it is difficult for us to construe that the expression "including owner of the goods or his authorised representative carried in the vehicle" which was added to the pre-existing expression "injury to any person" is either clarificatory or amplification of the pre-existing statute. On the other hand it clearly demonstrates that the legislature wanted to bring within the sweep of Section 147 and making it compulsory for the insurer to insure even in case of a goods vehicle, the owner of the goods or his authorised representative being carried in a goods vehicle when that vehicle met with an accident and the owner of the goods or his representative either dies or suffers bodily injury. The judgment of this Court in Satpal case[New India Assurance Co. v. Satpal Singh, (2000) 1 SCC 237 : 2000 SCC (Cri) 130] therefore must be held to have not been correctly decided and the impugned judgment of the Tribunal as well as that of the High Court accordingly are set aside and these appeals are allowed. It is held that the insurer will not be liable for paying compensation to the owner of the goods or his authorised representative on being carried in a goods vehicle when that vehicle meets with an accident and the owner of the goods or his representative dies or suffers any bodily injury."
11. In his supplementing opinion, S.B. Sinha, J. held:
"26. In view of the changes in the relevant provisions in the 1988 Act vis-à-vis the 1939 Act, we are of the opinion that the meaning of the words "any person" must also be attributed having regard to the context in which they have been used i.e. "a third party". Keeping in view the provisions of the 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor.
27. Furthermore, sub-clause (i) of clause (b) of sub-section (1) of Section 147 speaks of liability which may be incurred by the owner of a vehicle in respect of 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, whereas sub-clause (ii) thereof deals with liability which may be incurred by the owner of a vehicle 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."
12. This view was followed in National Insurance Co. Ltd. v. Bommithi Subbhayamma.
13. The aforesaid view was once again reiterated by a Three Judge Bench of their Lordships of the Supreme Court in National Insurance Co. Ltd. v. Baljit Kaur and others, (2004) 2 SCC 1. In Baljit Kaur, their Lordships took note of the effect of overruling the earlier decision in New India Assurance Company v. Satpal Singh and others, (2000) 1 SCC 237 by the decision in Asha Rani (supra), which had led to the gratuitous passenger on board a goods vehicle being excluded from the Insurance Company's indemnity. The decision in Asha Rani was held to be prospective in Baljit Kaur. It was to get over the ripple in the changed position of the law that their Lordships directed the Insurance Company to pay in the first instance and recover it from the owner. It was held in Baljit Kaur:
"21. The upshot of the aforementioned discussions is that instead and in place of the insurer the owner of the vehicle shall be liable to satisfy the decree. The question, however, would be as to whether keeping in view the fact that the law was not clear so long such a direction would be fair and equitable. We do not think so. We, therefore, clarify the legal position which shall have prospective effect. The Tribunal as also the High Court had proceeded in terms of the decision of this Court in Satpal Singh [(2000) 1 SCC 237 : 2000 SCC (Cri) 130] . The said decision has been overruled only in Asha Rani [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] . We, therefore, are of the opinion that the interest of justice will be subserved if the appellant herein is directed to satisfy the awarded amount in favour of the claimant, if not already satisfied, and recover the same from the owner of the vehicle. For the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. We have issued the aforementioned directions having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988, in terms whereof, it is not only entitled to determine the amount of claim as put forth by the claimant for recovery thereof from the insurer, owner or driver of the vehicle jointly or severally but also the dispute between the insurer on the one hand and the owner or driver of the vehicle involved in the accident inasmuch as can be resolved by the Tribunal in such a proceeding."
14. In subsequent decisions, such as those in New India Assurance Co. Ltd. v. Vedwati and others, (2007) 9 SCC 486, it was held that the Insurance Company was not liable to indemnify a gratuitous passenger travelling on board a goods vehicle. Likewise, it was held in National Insurance Co. Ltd. v. Kaushalaya Devi and others, (2008) 8 SCC 246. The same view was returned in Prema Devi (supra).
15. The issue here is not whether a gratuitous passenger travelling on board a goods vehicle makes the Insurance Company liable. There is no cavil or doubt that the Insurance Company is not liable to indemnify a gratuitous passenger on board a goods vehicle unless he happens to be the owner of the goods or his authorized agent, and that too, in a case arising after 1994 Amendment to the Act. The issue is whether in a case of this kind where the Insurance Company has no liability of any kind for a gratuitous passenger travelling on board a goods, should they at all be made liable in the first instance to pay and then recover. This question was considered by the Supreme Court in a relatively recent decision of their Lordships in Shamanna and another v. Divisional Manager, Oriental Insurance Co. Ltd., (2018) 9 SCC 650. In Shamanna (supra), it was held:
"7. The Supreme Court considered the decision of Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] in subsequent decision in National Insurance Co. Ltd. v. Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] , wherein this Court held that : (SCC p. 705, para 5) "5. The decision in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] has no application to cases other than third-party risks and in case of third-party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured."
8. The same principle was reiterated in Premkumari v. Prahlad Dev [Premkumari v. Prahlad Dev, (2008) 3 SCC 193 : (2008) 1 SCC (Civ) 822 : (2008) 1 SCC (Cri) 694] .
9. For the sake of completion, we may refer to few judgments where the breach of policy conditions was fundamental and the Supreme Court taking contrary view that the insurance companies were not liable to pay the compensation. In National Insurance Co. Ltd. v. Bommithi Subbhayamma [National Insurance Co. Ltd. v. Bommithi Subbhayamma, (2005) 12 SCC 243] , the Supreme Court reversed the judgment of Andhra Pradesh High Court in making the insurance company liable for payment of compensation in respect of gratuitous passengers carried in the goods vehicle.
10. In Oriental Insurance Co. Ltd. v. Brij Mohan [Oriental Insurance Co. Ltd. v. Brij Mohan, (2007) 7 SCC 56 : (2007) 3 SCC (Cri) 304] , the claimant was travelling in the trolley attached to tractor carrying earth to brick kiln. It was found that the tractor and the trolley were not used for "agricultural works", the only purpose for which the tractor was insured, when the claimant sustained the injuries. The Supreme Court though held that the insurance company is not liable to pay compensation, however, invoked the power vested in the Supreme Court under Article 142 of the Constitution of India in directing the insurance company to satisfy the award by paying compensation to the insured/claimant and realise the same from the owner of the tractor.
11. In the present case, to deny the benefit of "pay and recover", what seems to have substantially weighed with the High Court is the reference to larger Bench made by the two-Judge Bench in National Insurance Co. Ltd. v. Parvathneni [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] which doubted the correctness of the decisions which in exercise of jurisdiction under Article 142 of the Constitution of India directing insurance company to pay the compensation amount even though insurance company has no liability to pay. In Parvathneni case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] , the Supreme Court pointed out that Article 142 of the Constitution of India does not cover such type of cases and that : (SCC p. 786, para 5) "5. If the insurance company has no liability to pay at all, then, it cannot be compelled by order of the court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle."
12. The above reference in Parvathneni case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] has been disposed of on 17-9-2013 [National Insurance Co. Ltd. v. Parvathneni, (2018) 9 SCC 657] by the three-Judge Bench keeping the questions of law open to be decided in an appropriate case.
13. Since the reference to the larger Bench in Parvathneni case [National Insurance Co. Ltd.v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] has been disposed of by keeping the questions of law open to be decided in an appropriate case, presently the decision in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] followed in Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] and other cases hold the field. The award passed by the Tribunal directing the insurance company to pay the compensation amount awarded to the claimants and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by this Court in Swaran Singh[National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] and Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] cases. While so, in our view, the High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent to pay and recover from the owner of the vehicle. The impugned judgment [Shamanna v. Laxman, 2016 SCC OnLine Kar 6928] of the High Court exonerating the insurance company from its liability and directing the claimants to recover the compensation from the owner of the vehicle is set aside and the award passed by the Tribunal is restored."
16. But, Shamanna was a case where the Insurance Company were exonerated of their liability on the ground that the deceased was travelling on board a Jeep that was driven by a driver, who had no valid driving licence at the time of accident, which constituted a violation of term of the insurance policy. It was not a case of a fundamental breach of the kind where a passenger on board a goods vehicle was never in the contemplation of the Insurance Company to be a person whose risk they would cover. The larger issue before their Lordships of the Supreme Court whether directions under Article 142 of the Constitution ought to be made obliging the insurer to pay and recover in cases where the victim was travelling on board a goods vehicle, is not a matter that has any bearing on the issue before this Court. In fact, the position that in some cases their Lordships extend the benefit of pay and recover, even where the deceased or the injured was a gratuitous passenger on board a goods vehicle shows that it is not the law that in such cases a direction to pay and recover ought to be or can be issued by other Courts.
17. A still later decision of the Supreme Court in Anu Bhanvara and others v. IFFCO Tokio General Insurance Co. Ltd., (2020) 20 SCC 632 is also an indicator of the same legal position. In Anu Bhanvara (supra), the claimants were travelling on board a goods vehicle (Jeep) that was insured as a goods vehicle. They were gratuitous passengers. The Insurance Company was exonerated by the Motor Accident Claims Tribunal and the liability was fastened on the owner and the driver. The passengers appeared to be young children or youngsters. It was in this context that one of the questions that fell for consideration, to borrow the words of their Lordships, was:
"7. ............ secondly, whether the payment of compensation is to be made jointly by the owner and driver of the vehicle, or by the insurer which could thereafter be recovered by the insurer from the owner and driver."
18. The question was answered in Anu Bhanvara thus:
"9. The next question is as to which of the respondents, that is, the owner and driver, or the insurer of the vehicle, would be liable for payment of such compensation. As regard the liability for payment of compensation, it has been contended by the learned counsel for the appellants that since the vehicle was admittedly insured with Respondent 1 insurance company, the principle of pay and recover would be invoked even in case of a gratuitous passenger in a goods vehicle. The insurance company should thus be made liable for the payment of compensation to the appellants and in turn they would have the right to realise/recover the same from the owner and driver of the vehicle. In support of his submission, the learned counsel for the appellants has relied on the following decisions of this Court, namely, Manuara Khatun v. Rajesh Kumar Singh [Manuara Khatun v. Rajesh Kumar Singh, (2017) 4 SCC 796 : (2017) 2 SCC (Civ) 710 : (2017) 2 SCC (Cri) 492] , Puttappa v. Rama Naik[Puttappa v. Rama Naik, 2018 SCC OnLine SC 3496] ; National Insurance Co. Ltd. v. Saju P. Paul[National Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41 : (2013) 1 SCC (Civ) 968 : (2013) 1 SCC (Cri) 812 : (2013) 1 SCC (L&S) 399] ; New India Assurance Co. Ltd. v. Vimal Devi [New India Assurance Co. Ltd. v. Vimal Devi, 2010 SCC OnLine SC 49] ; National Insurance Co. Ltd. v. Challa Upendra Rao [National Insurance Co. Ltd. v. Challa Upendra Rao, (2004) 8 SCC 517 : 2005 SCC (Cri) 357] ; New India Assurance Co. Ltd. v. C.M. Jaya [New India Assurance Co. Ltd. v. C.M. Jaya, (2002) 2 SCC 278 : 2002 SCC (Cri) 325] and Amrit Lal Sood v. Kaushalya Devi Thapar [Amrit Lal Sood v. Kaushalya Devi Thapar, (1998) 3 SCC 744] .
10. Per contra, the learned counsel for the respondent insurance company has contended that since the claimants were gratuitous passengers in a goods vehicle, in which case the liability for payment of compensation for death or bodily injury to the passengers of such goods vehicle would not be covered, hence the principle of pay and recover would not apply. It has thus been contended that the order of the High Court is perfectly justified in law and calls for no interference by this Court. In support of her submission, the learned counsel has relied on following decisions, namely, New India Assurance Co. Ltd. v. Asha Rani [New India Assurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223 : 2003 SCC (Cri) 493] ; National Insurance Co. Ltd. v. Baljit Kaur [National Insurance Co. Ltd. v. Baljit Kaur, (2004) 2 SCC 1 : 2004 SCC (Cri) 370] ; NationalInsurance Co. Ltd. v. Kaushalaya Devi [National Insurance Co. Ltd. v. Kaushalaya Devi, (2008) 8 SCC 246 : (2008) 3 SCC (Cri) 467] ; National Insurance Co. Ltd. v. Rattani [National Insurance Co. Ltd. v. Rattani, (2009) 2 SCC 75 : (2009) 1 SCC (Civ) 398 : (2009) 1 SCC (Cri) 669] ; National Insurance Co. Ltd. v. Prema Devi [National Insurance Co. Ltd. v. Prema Devi, (2008) 5 SCC 403 : (2008) 2 SCC (Cri) 627] ; Bharati AXA General Insurance Co. Ltd. v. Aandi [Bharati AXA General Insurance Co. Ltd. v. Aandi, 2018 SCC OnLine Mad 13295 : 2019 ACJ 1975] and Bajaj Allianz General Insurance Co. Ltd. v. Lal Singh [Bajaj Allianz General Insurance Co. Ltd. v. Lal Singh, 2015 SCC OnLine Del 7508] ."
11. We have heard the learned counsel for the parties and perused the record as well as the various decisions cited by the learned counsel for the parties. The insurance of the vehicle, though as a goods vehicle, is not disputed by the parties. The claimants in the present case are young children who have suffered permanent disability on account of the injuries sustained in the accident. Thus, keeping in view the peculiar facts and circumstances of this case, we are of the considered view that the principle of "pay and recover" should be directed to be invoked in the present case."
(emphasis by Court)
19. A reading of the aforesaid remarks of their Lordships, particularly, those in paragraph no.11 of the report, to the understanding of this Court, make it evident that the directions that were issued bearing in mind the facts of the case where the victims were young children. The directions, therefore, to pay and recover in Anu Bhanvara are ones made under Article 142 of the Constitution and not a matter of principle to be followed by other Courts. So far as the other Courts are concerned, the policy covering a goods vehicle, like the one here, being one that never envisages a gratuitous passenger travelling on a goods vehicle as a person covered for the risk, the breach is so fundamental that a direction to satisfy the award by the insurer with liberty to recover from the owner ought not to be made.
20. In the result, this appeal succeeds and is allowed. The impugned judgment and award dated 07.02.2008 passed by the Motor Accident Claims Tribunal/ Additional District Judge, Court No.6, Sitapur dated 07.02.2008 in MACP No.230 of 2006, is set aside only to the extent that it obliges the appellant-Insurance Company to pay the sum due to the claimant under the impugned award with liberty to recover from the owner. As regards the owner's liability to satisfy the award, it shall remain intact. The statutory deposit made by the Insurance Company shall be refunded. Costs easy.
Order Date :- 25.5.2022 Anoop