Allowed

United India Insurance Company Limited v. Sayara Devi and Ors.

Rajasthan HC12 Feb 2014CMA/1019/2001

Case brief

AI extract

What is this about?

The High Court allowed appeals against a Motor Accident Claims Tribunal award. The Court held that under a statutory 'Act Only' third-party policy, insurers are not liable for death or injury to passengers not carried for hire or reward, quashing the Tribunal's order imposing joint liability on the insurer.

What did the court decide?

The finding holding the respondent insurance company jointly and severally liable to satisfy the award was quashed. The order directing execution against the insurer was stayed and its burden absolved

United India Insurance Company Limited Vs… — Contract and Commercial Disputes | Rajasthan HC (2014)

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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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J U D G M E N T

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(1)S.B. CIVIL MISC. APPEAL NO.1014/2001 United India Insurance Co. Ltd. Vs. Prathvi Raj & Ors.

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(2)S.B. CIVIL MISC. APPEAL NO.1016/2001 United India Insurance Co. Ltd. Vs. Prathvi Raj & Ors.

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(3)S.B. CIVIL MISC. APPEAL NO.1018/2001 United India Insurance Co. Ltd. Vs. Tara Ram & Ors.

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(4)S.B. CIVIL MISC. APPEAL NO.1019/2001 United India Insurance Co. Ltd. Vs. Sayara Devi & Ors.

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HON'BLE MR. JUSTICE SANDEEP MEHTA

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Mr.Manoj Bhandari, for the appellant-insurance company. Mr.OP Rajpurohit ) Mr.Rajesh Panwar ) for the claimants/respondents.

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Heard learned counsel for the appellants and learned counsel for the respondent no.2. None has appeared for the respondent no.1/claimant despite service.

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These four appeals have been preferred by the appellants against the common judgment and award dated 1.8.2001 passed in four motor accident claim cases by the learned Judge,Motor Accident Claims Tribunal, Balotra whereby the learned Tribunal accepted the claim petitions and held the appellant as well as owner & driver of the vehicle

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involved in the accident, jointly and severally liable to satisfy the award.

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Briefly stated the facts of the case are that Jonga Jeep No.RJT 3503 owned by respondent Devi Lal was being driven by respondent Mangi Lal. On 22.11.1995, 7 deceased persons and 5 injured were travelling in the said Jonga Jeep. When the Jeep reached at the outskirts of Village Mawadi, a Truck No.RJ19-G-4980 owned by respondent Suja Ram & being driven by respondent Sugan Singh came from opposite side and both the vehicles crashed into each other. Resultantly, Jonga Jeep overturned and was badly damaged. Seven persons namely, Bharti, Nenmal, Methi, Devi Bai, Vaja Ram, Sukhdev and Heera Das sitting in the Jonga Jeep expired. Shyam Sunder, Pukhraj, Babu Lal, Varda Ram and another Pukhraj who were also sitting in the Jonga Jeep received injuries in the said accident. The appellant insurance company is the insurer of Jonga Jeep. In all, eleven claim petitions were filed by the legal heirs of the deceased and the injured persons seeking compensation under Section 166 of the Motor Vehicles Act before the Motor Accident Claims Tribunal, Balotra.

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The learned Tribunal whilst deciding the claim petitions by the common judgment held that both the drivers i.e. the driver of Jonga Jeep and the driver of Truck drove their vehicles rashly and negligently resulting into the unfortunate

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accident. The insurance company took a specific plea that the Jonga Jeep in question was insured to cover third party risk under an Act Only Policy. At the time of accident, it was being used to ply passengers and thus, the insurance company was not liable to satisfy the claim. The learned Tribunal concluded that the insurance company failed to prove that the owner permitted the Jonga Jeep to be used as a taxi for carrying passengers. The learned Tribunal whilst deciding the issues no.4 & 5 held that the plea of the insurance company that the owner of the vehicle had deliberately permitted the driver to use the vehicle for plying passengers, could not be accepted. It was held that the insurance company could not lead any evidence to show that the owner consented or knowingly permitted the driver to collect fare from the passengers. It was accordingly held that the persons travelling in the Jonga Jeep did not board the Jonga Jeep in the knowledge or with the consent of the owner of the vehicle nor was the Jonga Jeep overloaded with the owner's permission. It was held that the driver of the Jonga took the passengers in the vehicle without the knowledge or permission of the owner.

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Relying on the decision rendered by this Court in the case of National Insurance Co. Ltd. vs. Nirmala Bai & Ors. reported in 2000 ACJ 932, the learned Tribunal held that the victims who were sitting in the Jonga Jeep at the time of accident fell within the category of gratuitous passengers and

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were covered under the definition of third party. Accordingly, it was held that the appellant insurance company was liable to cover the risk of the persons sitting in the Jonga Jeep.

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Shri Manoj Bhandari, learned counsel for the

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appellants, while relying on the decisions rendered by the Hon'ble Supreme Court in the cases of (1) United India Insurance Co. Ltd., Shimla vs. Tilak Singh and Ors. reported in AIR 2006 SC 1576 and (2) The Oriental Insurance Co. Ltd. vs. Meena Variyal and Ors. reported in AIR 2007 SC 1609, urged that the issue regarding the liability of the insurance company to satisfy a claim in the case of a fare paying passenger or a gratuitous passenger where the insurance cover is for the third party risk, is no longer res integra. It was urged that in both the cases, the Hon'ble Supreme Court held that where the insurance cover is issued as an Act only policy, neither a fare paying passenger nor a gratuitous passenger sitting in the vehicle would be covered under the definition of third party because no specific premium is paid by the insured to the insurance company for covering the risk of passengers travelling in the vehicle. Reliance was also placed on the decision rendered by this Court in the case of United India Insurance Co. Ltd. vs. Pabu Ram & Ors. (S.B. Civil Misc. Appeal No.450/1998) wherein also the same view was taken by referring to the decision of the Hon'ble Supreme Court rendered in the case of Tilak Singh (supra). It was thus

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contended that the finding recorded by the learned Tribunal holding the appellant to be jointly and severally liable alone with the owner and driver of the offending vehicle to satisfy the award, is absolutely illegal. He further urged that in such a case even a direction could not have been issued to the insurance company to satisfy the claim and then recover the amount from the owner. However, it is admitted that the 50% of the amount has already been paid by the insurance company to the claimants under the impugned award.

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Per contra, learned counsel for the respondents/claimants have vehemently opposed the submissions advanced by the learned counsel for the appellant insurance company. It is submitted that the finding recorded by the learned Tribunal is that the victims were going to attend a religious function and, therefore, they would definitely stand covered by the definition of third party and their risk is covered under the policy. It is thus submitted that the learned Tribunal rightly held the appellant insurance company to be jointly and severally liable to satisfy the award with the owner and driver of the offending vehicle.

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Heard and considered the arguments advanced at the bar and perused the impugned award as well as the record.

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It is not in dispute that the Jonga Jeep which met with the unfortunate accident causing death of 7 persons and

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injuries to 5 persons was insured under an Act only policy. Such a policy is issued to cover the risk of third party/parties in case of an accident by or with the insured vehicle. A person sitting in the vehicle at the time of accident is definitely not covered under the definition of third party. The Hon'ble Supreme Court in the case of Tilak Singh (supra) laid the issue to rest while observing as below :-

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“A. The 1939 Act:-

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In Pushpahai Purshottam Udesh and Ors. vS. Ranjit Ginning & Pressing Co. (P) IM and Anr. [1977] 2 SCC 745 the insurance company had raised the contention that the scope of statutory insurance under section 95(1)(a) read with 95(1)(b) (i) of the Motor Vehicles Act, 1939 does not cover the injury suffered by a passenger and, since there was a limited liability under the insurance policy, the risk of the insurance company would be limited to the extent it was specifically covered. After referring to the English Road Traffic Act, 1960, and Halsbury's Laws of England (Third Edition) this Court came to the conclusion that section 95 of the 1930 Act required that the policy of insurance must be policy insuring the insured against any liability incurred by him in respect of death or bodily injury to a third party and rejected the contention that the words "third party" were wide enough to cover all persons except the insured and the insurer. This Court held as under : (vide para 20)

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"Therefore it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire or reward. As under Section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured the plea of the counsel for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act."

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12.1 In Amrit Lal Sood and Anr. vs. Kaushalya Devi

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Thapar and Ors. [1998] 3 SCC 744 it was held that in that particular case that the terms of the policy were wide enough to cover a gratuitous passenger and, therefore, there was liability towards the gratuitous person.

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12.2 In Dr. T.V. Jose v. Chacko P.M. alias Thankachan and Ors., [2001] 8 SCC 748 Variava, J. had an occasion to survey the law with regard to the liability of insurance companies in respect of gratuitous passengers. After referring to a number of decisions of this Court the learned Judge observed (vide para 20) "the law on this subject is clear, a third-party policy does not cover liability to gratuitous passengers who are not carried for hire or reward." The insurer company was held not liable to reimburse the appellant.

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Thus even under the 1939 Act the established legal position was that unless there was a specific coverage of the risk pertaining to a gratutious passengers in the policy, the insurer was not liable. We find that clause (ii) of the proviso to Section 95(1) has been eliminated while drafting section 147 of the 1988 Act. Under sub-section (1)(b) under the 1988 Act, compulsory policy of insurance required under the statute must now provide against any liability which may be incurred by the owner of the vehicle "in respect of the death of or bodily injury to any person including owner of the goods or authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicles in a public place."

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B. The 1988 Act :

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The argument that the risk pertaining to a third party would extend to a person other than the parties to the insurance contract was raised in New India Assurance Company vs. Satpal Singh and Ors. [2000] 1 SCC 237 where after contrasting the language of section 95 (1) of the 1939 Act with the provisions of section 147 (1) of the 1988 Act this Court held:

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"The result is that under the new Act an insurance policy covering third party risk is not required to exclude gratutious

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passengers in a vehicles, no matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act vis-avis gratuitous passengers are of no avail while considering the liability of the insurance company in respect of any accident which occurred or would occur after the new Act came into force."

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The view expressed in Satpal Singh's case (supra) however, has been specifically overruled in the subsequent judgment of a Bench of three judges in New India Assurance Company vs. Asha Rani and Ors. [2003] 2 SCC 223. In that case the discussion arose in connection with carrying passengers in a goods vehicle. This Court after referring to the terms of section 147 of the 1988 Act, as contrasted with section 95 of the 1939 Act, held that the judgment in Satpal Singh's case (supra) had been incorrectly decided and that the insurer will not be liable to pay compensation. In the concurring judgment of Sinha, J. after contrasting the language used in the 1939 Act with that of the 1988 Act, it has been observed (vide paras 25 and 27):

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"25. Section 147 of 1988 Act, inter alia, prescribes compulsory coverage against the death of or bodily injury to any passenger of "public service vehicle". 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 would be limited to the liability under the Workmen's Compensation Act. It does not speak of any passenger in a `good carriage'.

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Furthermore, sub-clauses (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 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 caused by or arising out of the use of the

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vehicle in a public place."

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16. In our view, although the observation made in Asha Rani's case (supra) were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also. Thus, we must uphold the contention of the appellantinsurance company that it owed no liability toward the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to gratuitous passenger.”

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In Meena Variyal's case (supra), the Hon'ble

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Supreme Court went to the extent of holding that where the policy does not cover the risk of the deceased, the insurance company cannot be directed to satisfy the award and thereafter recover the same from the owner of the vehicle.

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The case at hand is one where the insurance policy was issued under the 1988 Act. The policy was an Act Only Policy covering only third party risk. It is not in dispute that no specific premium was paid by the insured to the insurance company for covering the risk of passengers travelling in the vehicle. Thus, even if the finding recorded by the learned Tribunal in the impugned judgment that the claimants were gratuitous passengers in the vehicle and were collected by the driver of the vehicle without the knowledge and consent of the owner is accepted, then also, their liability would not be covered under the insurance policy. Therefore, the finding

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recorded by the learned Tribunal holding the appellant insurance company to be jointly and severally liable to satisfy the award along with the owner and driver of the vehicle involved in the accident, is ex-facie illegal.

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In view of the uncontroverted legal position as laid down by the Hon'ble Supreme Court in the aforesaid decisions, these appeals deserve to be and are hereby allowed. The finding recorded by the learned Tribunal in Paras No.42 and 43 of its impugned judgment dated 1.8.2001 holding the appellant insurance company to be jointly and severally liable to satisfy the award along with the owner and driver of the vehicle involved in the accident, is illegal and is hereby quashed.

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Whilst admitting these appeals, the execution of the award against the appellant insurance company was ordered to be stayed subject to the deposit of 50% of the amount by it. In view of the fact that the appellant insurance company has been totally absolved of the liability, the burden put on it to satisfy the award is quashed. The appellant insurance company shall be entitled to recover any amount deposited by it towards the statutory liability or under the orders of this Court by filing execution proceedings before the learned Tribunal against the owner and driver of the offending vehicle.

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No cost.

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Record of the learned Tribunal be sent forthwith.

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Let a copy of this order be placed in all the

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connected appeals.

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(SANDEEP MEHTA), J.

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