Allowed

The Branch Manager, v. Rachappa S/O. Yallappa Akki

Karnataka HC27 Aug 2019MFA/21077/2012

Case brief

AI extract

What is this about?

High Court allowed insurer's appeal holding Act policy covers only third parties and driver, not car occupants without extra premium. Liability fastened on car owner. Claimant's appeal for compensation enhancement dismissed as award sufficient.

What did the court decide?

Liability fastened on owner of car; amount deposited by insurer ordered refunded; claim against insurer dismissed.

The Branch Manager, Vs Rachappa S/O… — Contract and Commercial Disputes | Karnataka HC (2019)

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IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 27^th DAY OF AUGUST 2019

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BEFORE

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THE HON’BLE MR.JUSTICE K. NATARAJAN

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MISCELLANEOUS FIRST APPEAL NO.21077 of 2012 c/w MISCELLANEOUS FIRST APPEAL NO.24740 OF 2012 (MV)

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IN MFA NO.21077 OF 2012 BETWEEN:

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THE BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD., THE MERCHANTS BANK BUILDING, S.R. CIRCLE BAILAHONGAL, REPTED. THROUGH ITS REGIONAL OFFICE, SUMANGALA COMPLEX II FLOOR, STATION ROAD, HUBLI, R/BY ITS ASST.MANAGER

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... APPELLANT

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(BY SRI. NAGANGOUDA R KUPPELUR, ADVOCATE )

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AND:

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RACHAPPA S/O. YALLAPPA AKKI AGE: 62 YEARS, OCC: WORK INSPECTOR (PWD) R/O. MURGOD, TQ: SOUNDATTI, DIST: BELGAUM.

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NARAYAN S/O. JHATADHAR PASALKAR AGE: 47 YEARS, OCC: BUSINESS, R/O. GUNDUR CHAWL BAILAHONGAL, DIST: BELGAUM.

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... RESPONDENTS (BY SRI. HANAMANT R LATUR, ADVOCATE FOR R1. R-2 SERVED.)

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THIS MFA FILED U/SEC.173(1) OF MV ACT, 1988, AGAINST THE JUDGMENT AND AWARD DTD:23.11.2011 PASSED IN MVC.NO.2445/2009 ON THE FILE OF THE SENIOR CIVIL JUDGE & MEMBER ADDL. MACT, BAILHONGAL, AWARDING COMPENSATION OF RS.3,81,645/- WIHT CURRENT AND FUTURE INTEREST AT THE RATE OF 6% P.A. AS COMPENSATION TO THE PETITIONER.

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IN MFA NO.24740 OF 2012 BETWEEN:

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RACHAPPA S/O YALLAPPA AKKI AGE:62 YEARS, OCC: WORK INSPECTOR IN PWD R/O.MURAGOD, TQ: SOUDATTI, DIST: BELGAUM

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... APPELLANT

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(BY SRI. HANAMANT R LATUR, ADVOCATE)

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AND:

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NARAYAN S/O JHATADHAR PASALKAR AGE: 48 YEARS, OCC: BUSINESS R/O.GUNDLUR CHAWL, BAILAHONGAL DIST: BELGAUM

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THE BRANCH MANAGER ORIENTAL INSURANCE COMPANY LTD. THE MARCHANTS BANK BUILDING S R CIRCLE, BAILAHONGAL

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THE DIVISIONAL CONTROLLER NWKRTC, BELGAUM.

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... RESPONDENTS

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(BY SRI. N.R. KUPPELUR, ADVOCATE FOR R2. SRI. RAVI V. HOSAMANI, ADVOCATE FOR R3 NOTICE TO R1 DISPENSED WITH V/O DATED 31.5.2013)

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THIS MFA FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:23-11-2011 PASSED IN MVC NO.2445/2009 ON THE FILE OF SENIOR CIVIL

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JUDGE AND MEMBER ADDL. MACT, BAILHONGAL, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

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THESE MISCELLANEOUS FIRST APPEALS COMING ON FOR ORDERS ON I.A. THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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JUDGMENT

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Though these appeals came up for hearing on I.A. of 2016 for withdrawing the statutory amount,

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with the consent of the learned counsel for both parties, heard finally.

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MFA No.21077 of 2012 is filed by the insurance company assailing the judgment and award dated 23^rd November 2011 passed by the Senior Civil Judge and Additional MACT, Bailhongal (hereinafter referred to as the ‘Tribunal’, for short), in MVC No.2445 of 2009 whereas the claimant has filed MFA No.24740 of 2012 seeking enhancement of compensation against

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the same judgment and award passed by the Tribunal.

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Heard the arguments of learned counsel for both the parties.

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The rank of the parties before the Tribunal is

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retained for convenience.

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The claimant filed a petition under Section 166 of the Motor Vehicles Act, 1988 (hereinafter referred to as the ‘Act’, for short) claiming compensation of Rs.15,00,000/inter alia contending that on 08.08.2009 at about 13.15 hours when the claimant

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was traveling by sitting in a car bearing registration No.KA.22/M-787 belonging to the first respondent and when they were proceeding on Yaragatti-Belgaum road near Yaragatti village, the driver of the car drove the car in a rash and negligent manner with a high speed and dashed to the NWKRTC bus bearing registration No.KA.25/F-2460. Due to which the claimant sustained grievous injuries. He was taken to the Government hospital at Yaragatti and KLE hospital, Belgaum. It is further contended that he has spent huge amount towards medical expenditure and other incidental expenses. Hence, the claim petition.

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In pursuance to the notice, respondent

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Nos.1 and 2 owner and insurer of the car appeared through counsel and filed objection by taking contention that the said accident occurred due to the sole negligence of the driver of the NWKRTC bus but not by the driver of the car and prayed for dismissal of the claim petition.

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3^rd respondent-owner of the NWKRTC bus filed objections contending that the accident occurred due to rash and negligent driving by the driver of the car and the police have also filed charge sheet against the driver of the car. Therefore, no liability shall be fixed on the NWKRTC. Hence, prayed for dismissal of the claim petition.

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Based on the rival pleadings, the Tribunal framed the following issues:

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Whether petitioner proves that on 08.08.2009 at about 13.15 hours on Yaragatti-Belgaum road, within the limits of Murgod Police station, in view of negligence use of a car No.KA 22/M-787 and

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bus No.KA 25/F-2460 an accident took place resulting in the injuries to petitioner?

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Whether the petitioner is entitle for compensation? If so at what extent and from whom?

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What order?

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To substantiate the contention, claimant himself examined as PW-1 and also got examined another witness as PW-2 and marked 78 documents as Exs.P-1 to P-78. On the other hand, first respondent was examined as RW-2, second respondent was examined as RW-3 whereas third respondent was examined as RW-1 and got marked 4 documents as Exs.R-1 to R-4.

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After considering the evidence on record, the Tribunal answered issue No.1 holding that the driver of the car was responsible for the accident and awarded compensation of Rs.3,81,645/- together with interest at the rate of 6% per annum under the following heads:

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		Rs.
1	Painand suffering	80,000/-
2	Medicineandhospitalcharges	1,63,000/-
3	Nourishment charges	2,000/-
4	Attendant and conveyance charges	5,000/-
5	Towardsloss of leave	60,845/-
6	Loss of amenities and future unhappiness	70,000/-
	Total	3,81,645/-

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Assailing the judgment and award passed by

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the Tribunal, the second respondent-insurer filed MFA No.21077 of 2012 challenging fastening of liability as well as quantum of compensation whereas the claimant filed MFA No.24740 of 2012 seeking enhancement of compensation.

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Learned counsel for the insurer mainly argued on the point of fastening of liability on the insurer contending that the vehicle in question was insured with the respondent and it was an Act Policy

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covering only the driver or insured along with 3^rd parties

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but not covered the inmates of the car who were traveling in the car at the time of the accident. But the Tribunal committed an error in fastening the liability on the insurance company. In support of his case, the learned counsel placed reliance on the Division Bench judgment of this Court in the case of The Branch Manager, the New India Assurance Co. Ltd., v. Mahadev Pandurang Patil and Another reported ILR 2011 KAR 850 and also on the judgment of the Hon’ble Apex Court in the case of National Insurance Co. Ltd., v. Balakrishnan and another reported in 2013 ACJ 199 and prayed for allowing the appeal. Alternatively the counsel also argued with respect to the quantum of compensation contending that the Tribunal has awarded exorbitant amount towards pain and sufferings as well as loss of amenities, future happiness even though the claimant was a Government employee who do not suffer any loss of future income etc. Hence, prayed for dismissing the appeal filed by the claimant.

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13. Per contra, learned counsel for the claimant

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addressed arguments supporting the judgment and award passed by the Tribunal and contended that the Tribunal after considering the judgment of this Court in MFA 6851 of 2006, fastened the liability on the insurance company. Apart from that, the learned counsel also contended that the insurance company has satisfied the award in the connected matter in MVC No.2449 of 2010 arising out of the same accident passed by the MACT, Gokak, and now it cannot dispute the liability in this appeal. In support of his contentions, he relied upon the judgment of this Court in the case of B.U. Chaitanya v. Managing Director,

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Bangalore Metropolitian Transport Corporation and

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another reported in 2013 ACJ 1423 and on an unreported judgment of this Court in MFA No.100952 of 2014 connected with MFA Nos.100953 of 2014 and 24783 of 2013 between the Branch Manager and Ranganath @ Rangappa and another. Further, with respect to enhancement of compensation, learned

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counsel contended that the claimant has suffered two fractures to his legs and though the doctor has been examined who assessed the disability as 70% to both limbs, the Tribunal has not at all considered anything about the loss of earning capacity and though awarded loss of amenities and future happiness for only 70,000/- which is meager and prayed for dismissing the appeal filed by the insurer by allowing the appeal filed by the claimant by enhancing the compensation.

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Upon hearing the arguments of learned counsel for both parties, the points that arise for consideration in these appeals are:

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(i). Whether the Tribunal is not justified in fastening the liability on the insurer when no extra premium is collected for covering the risk of the inmates of the car?

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(ii) Whether the claimant is entitled for enhancement of compensation?

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(iii) What order?

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15. The claimant has established the factum of

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accident that occurred on 08.08.2009 at about 13.15

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hours when he was traveling in the car bearing registration No.KA22/M-787 on Yaragatti-Belgaum road near Yaragatti village, the driver of the car drove the car in a rash and negligent manner with high speed and dashed to the NWKRTC bus bearing registration No.KA.25/F-2460. The driver of the KSRTC bus was examined as RW-1 and he has stated that the accident occurred due to rash and negligent driving by the driver of the car. But PW-1 in the cross-examination admitted that the accident occurred due to negligence on the part of the driver of the car. Police have also filed charge sheet against the driver of the car. FIR, complaint, panchanama are all produced before the Tribunal. After considering the evidence on record, the Tribunal has held that the accident occurred solely due to the rash and negligent driving by the driver of the car. The finding in respect of holding negligence on the part of the driver of the car is unchallenged by the owner of the

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car or the driver of the car. Therefore, the finding in respect of negligence on the part of the driver of the car is not in dispute.

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The only controversy in the appeal filed by the insurer is fastening of liability on the insurer in respect of the policy not covering the risk of the inmates of the car. The branch manager of the insurer was examined as RW-3 and produced Exs.R-3 and R-4 and contended that the policy issued by the insurer is only an act policy covering the risk of 3^rd party as well as the driver and the insured owner of the car. Therefore, the inmates of the car is not covered under the policy. Therefore, no liability could be fastened on the insurer in respect of the injury or death occurred by use of the vehicle in question. The Tribunal, by relying upon the unreported judgment of this Court in MFA No.6851 of 2006 held that the inmates of the car are also covered under the policy. The counsel for the insurer relied upon the Division Bench judgment of this Court in the case of The Branch Manager, the New India Assurance

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Co. Ltd., v. Mahadev Pandurang Patil and Another

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reported in ILR 2011 KAR 850 wherein this Court at paragraphs 14 to 17 has held as under:

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“14. From the scheme of Chapter XI, the statutory insurance which is made mandatory is only to protect the interest of third parties. Section 146 deals with the necessity for insurance against third party risks. Section 147 deals with the requirements of policies and limits of liability. 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. Section 2(35) of the Act defines what a public service vehicle means, i.e., any motor vehicle used or adopted to be used for the carriage of passengers for hire or reward and includes a maxi cab, a motor cab, contract carriage and stage carriage. Proviso appended thereto categorically states that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in a goods vehicle however the liability in so far as they are concerned is limited to the liability under the Workmen’s Compensation Act. It does not speak of any passenger in a ‘goods carriage’. Therefore, it is clear the statutory insurance is confined to

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the death 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.

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15. Therefore, the passenger of a vehicle which is not meant for public service is not covered under this Section. The said passenger in the case of a two wheeler is the pillion rider and in the case of three wheeler and four wheeler the occupants of such vehicle who are not carried in the said vehicle for hire or reward. Therefore, the insurance policy taken in respect of a vehicle, in which they are travelling as such passengers are not treated as third parties and such an insurance do not cover the risk of such persons. The reason is Section 147 does not require a policy to cover the risk to passengers who are not carried for hire or reward. The statutory insurance does not cover injuries suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. The occupants/passengers/inmates of a private vehicle do not fall within the definition of the word third party. Therefore, the legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of the vehicle, passengers in such private vehicle or a pillion rider in the case of a two wheeler. Gratuitous passengers who are not carried for hire or reward in a vehicle other than a public service vehicle, cannot be construed as third parties.

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16. If the risk of an occupant of a car, inmate of a vehicle or passenger in a private car, is to be covered, additional premium has to be paid. If no additional

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premium is paid, their risk is not covered. The statutory liability under Sections 146 and 147 of the Act has to be read with the terms of the insurance policy issued under Section 146 of the Act. But that does not prevent an insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute, whereby the risk to gratuitous passengers could also be covered. A third party policy does not cover liability to gratuitous passengers who are not carried for hire or reward. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid. The liability is restricted to the liability arising out of the statutory requirements under Section 146 only.

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17. In view of the authoritative pronouncement of the Apex Court holding that an occupant/inmate/passenger in a private car, is not a third party, the finding recorded by the tribunal that the insurance policy issued covers the risk of such persons and therefore the insurance company is liable to pay compensation amount is illegal and contrary to the law declared by the Apex Court. In fact, in the policy, no additional premium is received by the insurance company to cover the risk of such persons. It is clear from the terminology used in the policy which fact is not in dispute. In one of the cases, additional premium is collected to loading the risk of third party only, as is clear from the policy that loading was not meant to cover risk of inmates of a private car and therefore, merely because an additional premium is collected under the said policy, it cannot be inferred that the risk of inmates of a car are

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covered. The words are specific that the loading is done in order to cover only third party risk, it is not a case of additional premium being collected to cover the risk of inmates along with third parties. Therefore, in the facts of this case, we are satisfied, as the insured has not paid additional premium and the insurance company has not collected any additional premium, the risk of the occupants of a private car was not covered. Therefore, liability foisted on the insurance company cannot be sustained and accordingly, it is hereby set aside.”

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In the said case, the Division Bench of this Court has clearly held that the Act policy does not cover the risk of the inmates of the car who traveled in the vehicle without collecting extra premium by the owner. The same view was taken by the Hon’ble Apex Court in the case of Balakrishnan (supra) wherein the Hon’ble Apex Court at paragraph 21 has held as under:

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“21. 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 the IRDA, which is presently the statutory authority,

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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 third party risk of an occupant in a car. But, if the policy is a ‘comprehensive/package policy’ the liability would be covered. These aspects were not noticed in the case of Bhagyalakshmi, (2009) 7 SCC 148 and, therefore, the matter was referred to a larger Bench. We are disposed to think that there is no necessity to refer the present matter to a larger Bench as the IRDA, which is presently the statutory authority, has clarified the position by issuing circulars which have been reproduced in the judgment by Delhi High Court and we have also reproduced the same.”

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Though in the said case, the Hon’ble Apex Court remanded the matter for giving finding in the said case where the policy was Act Policy or comprehensive/ package policy, the Hon’ble Apex Court held that when extra premium is not collected by the insurer not covering the risk of 3^rd party/inmates of the car, no liability shall be fastened on the insurance company.

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In view of the aforesaid finding of the Hon’ble Apex Court, fastening of liability by the Tribunal on the

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insurer is not correct. Ex.R-3 shows that premium of Rs.2,500/- was paid towards the basic 3^rd party coverage and Rs.100/- towards personal accident for owner cum driver and additional Rs.25/- collected towards additional premium for employee but no other premium is collected to cover the inmates of the car. Therefore, Ex.R-3 clearly goes to show that the policy does not cover the risk of the inmates of the car who traveled in the car at the time of the accident. Therefore, I hold that fastening of liability on the insurer by the Tribunal is not correct and the liability shall have to be fastened on the owner of the car.

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However, the learned counsel for the claimant brought to the notice of this Court that in the connected case arising out of the same accident in MVC No.2449 of 2010, the very insurance company has satisfied the award amount. When such being the case, the insurance company is estopped from taking a contention disputing the liability before this Court in this appeal. The learned counsel has made available

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the certified copy of the order passed in MVC No.2449 of 2010. Learned counsel relying on the judgment passed by this Court in the case of B.U. Chaitanya (supra) contended that once the liability has been admitted in a case, the insurer is estopped from denying the liability in respect of the other claims arising out of the same accident.

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On the other hand, learned counsel for the insurer submitted that the petition filed by the claimant in this case is before the MACT Bailhongal whereas the other claimant filed a petition before the MACT Gokak, which is totally a different taluk. But based upon the judgment, MACT Bailhongal, allowed the petition. However, it is contended that the appeal filed by the insurer before this Court was much earlier to passing of the judgment by the MACT Gokak in MVC No.2449 of 2010 and the counsel also fairly admitted that due to the mistake committed by the officials of the insurance company, the compensation amount has been deposited

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before the Tribunal at Gokak whereas this appeal is

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pending before this Court from 2012 challenging the liability in the present appeal. No doubt in respect of the very same accident, two claim petitions came to be filed in two different court in two different taluks whereas in B.U. Chaitanya’s case (supra) all the 3 petitions were filed in one Court and a common judgment has been passed wherein the insurer deposited or satisfied the award in one case and challenged in other two cases which was negatived by

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this Court on the principles of Estoppel. But here in this case, passing of award by two different Courts was not within the knowledge of the insurance company and has deposited the award amount in MVC No.2449 of 2010. But the appeal filed by the insurer is in the year 2012 which is pending before this Court and without knowledge, the Divisional Manger of the Insurance Company at Gokak had satisfied the award. Merely because of some mistake committed by some of the officials of the insurance company, the liability cannot be fastened on the insurer. Therefore, the law of

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estoppel is not applicable to the case on hand since it was without notice or knowledge of both the branches satisfying the award and without the knowledge of pendency of this appeal before this Court. Therefore, the contention raised by the counsel for the claimant cannot be accepted.

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On the other hand, the arguments addressed by the counsel for the insurer is acceptable for the reasons stated above and hold that fastening of the liability on the insurer by the Tribunal is liable to be set aside as the policy does not cover the risk of the inmates of the car.

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As regards the appeal filed by the claimant for enhancement of compensation, though the claimant sustained two fractures, the Tribunal has awarded Rs.80,000/- towards pain and agony, medical expenses is awarded as it is, Rs.2,000/- and Rs,.5,000/- is awarded towards food, nourishment and attendant charges. Loss of pay has also been awarded, even

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though there was no loss of earning, as the claimant is said to be a Government Servant and loss of amenities and unhappiness at Rs.70,000/- is awarded. Therefore, the award passed by the Tribunal is sufficient and cannot be said to be meager and does not require any enhancement. Therefore, the compensation awarded by the Tribunal do not call for interference. Accordingly, the appeal filed by the claimant deserves to be dismissed.

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Consequently, the appeal filed by the insurer in MFA No.21077 of 2012 is allowed. The finding of the Tribunal fastening the liability on the insurance company is hereby set aside. The liability is fastened on the owner of the Car. Claim petition against the insurer is dismissed. The owner of the car is directed to satisfy the compensation awarded by the Tribunal.

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The appeal filed by the claimant in MFA No.24740 of 2012 for enhancement is hereby dismissed.

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Amount deposited by the insurance company is ordered to be refunded to the insurance company.

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In view of allowing of the appeal filed by the

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insurance company, I.A.1 of 2016 filed by the claimant

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for withdrawal of the amount stands dismissed.

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