Telangana High Court
M/S. Orbit Travels And Tours Private ... vs Mrs. P. Subhapriya And 4 Ors. on 7 June, 2024
Author: P. Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
HONOURABLE SRI JUSTICE P. SAM KOSHY
AND
HONOURABLE SRI JUSTICE N. TUKARAMJI
1. M.A.C.M.A.No.786 OF 2006
&
CROSS OBJECTION (SR) No.33292 of 2006,
2. M.A.C.M.A.No.591 OF 2006
&
CROSS OBJECTION (SR) No.33337 of 2006,
AND
3. M.A.C.M.A. No.636 OF 2006
&
CROSS OBJECTION (SR) No.33318 of 2006.
COMMON JUDGMENT:
(per Hon'ble Sri Justice N. Tukaramji) Heard Ms. A. Padma, counsel representing Ms. S.A.V. Ratnam, learned counsel for the appellants/respondents Nos.1 and 2 and Mr. A.Ramakrishna Reddy, learned counsel for the respondent No.3/cross objectors.
2. As these appeals and cross objections are against the common order and the factual and legal aspects to be considered are selfsame, the appeals and the cross objections are heard together and are being determined by this common judgment. 3(i) The relevant facts in brief are that on 01.05.1996 while Mr. N. Prem Kumar/deceased, Mr. Jugjiv Singh/injured and Mr. John Blackwel/injured were proceeding in a Contessa car bearing registration No.AHA-7246 (for short, 'the car') to visit factory at PSKJ&NTRJ 2 Macmas_786,591&636_2006&cross objections Siddipet, in the midway the driver of the car while driving dozed and drove the car in a negligent manner and caused accident which resulted severe injuries to all the occupants. The injured were removed to the hospital for treatment. However, Mr. N.Prem Kumar succumbed and Mr. Jugjiv Singh and Mr.John Blackwel survived with severe injuries. The dependants of Mr. N. Prem Kumar filed O.P.No.991 of 1997 and Mr.Jugjiv Singh and Mr. Blackwel filed O.P.Nos.982 and 990 of 1997 respectively seeking compensation. 3(ii) The tribunal by common order allowed the petitions in part and granted Rs.41,20,000/-, Rs.55,000/- and Rs.10,00,000/- respectively with interest at 6% per annum from the date of the petition till realization and fixed liability against the respondents 1 and 2/the owners/insured of the car. However, respondent No.3/insurer was directed to pay compensation in the first instance on furnishing bank guarantee and later to recover the same from the owners/insured. 4(a) Against the order in the claim petition filed by the dependants of Mr. N.Prem Kumar/deceased, the M.A.C.M.A.No.786 of 2006 has been filed by the respondents 1 and 2/the owner and the insured of the car assailing the decree and order dated 18.07.2005 in O.P.No.991 of 1997 on the file of the Motor Accidents Claims PSKJ&NTRJ 3 Macmas_786,591&636_2006&cross objections Tribunal-cum-Additional Chief Judge, City Civil Court, Hyderabad which was filed seeking compensation of Rs.75 lakhs for the death. 4(b) Pending this appeal the respondent No.3/insurer of the car filed cross objections No.33292 of 2006.
5(a) Against the order in the claim petition filed by Mr. Jugjiv Singh, the M.A.C.M.A.No.636 of 2006 has been preferred by the respondents 1 and 2/the owner and the insured of the car against the decree and order dated 18.07.2005 in O.P.No.982 of 1997 on the file of the Motor Accidents Claims Tribunal-cum-Additional Chief Judge, City Civil Court, Hyderabad which was filed claiming compensation of Rs.9,14,000/- for the injuries. 5(b) Pending the appeal the respondent No.3/insurer of the car filed cross objections No.33318 of 2006.
6(a) Against the order in claim petition filed by Mr. John Blackwel, the M.A.C.M.A.No.591 of 2006 has been filed by the respondents 1 and 2/the owner and the insured of the car challenging the decree and order dated 18.07.2005 in O.P.No.990 of 1997 on the file of the Motor Accidents Claims Tribunal-cum-Additional Chief Judge, City Civil Court, Hyderabad which was filed seeking compensation of Rs.30,64,000/- for the injuries.
PSKJ&NTRJ 4 Macmas_786,591&636_2006&cross objections 6(b) Pending this appeal the respondent No.3/insurer of the car filed cross objections (SR) No.33337 of 2006.
7. In spite of due service of notice the respondent(s)/claim petitioner(s), chose to remain silent.
8. In all the appeals, the learned counsel for the appellants/respondents 1 and 2/owner and insured of the car (for short, 'the appellants') would contend that the tribunal by relying on impermissible and inadmissible evidence concluded the fact as to violation of policy condition. The tribunal should have considered the statement that the car has been provided by the PW-1 gratuitously without hire charges. The witness of the respondent No.3/insurer respondents' witness i.e. RW-1 had confirmed this fact in his evidence. Further the RW-2 also deposed that the appellants/respondents 1 and 2 provide cars on hire to the customers of lodger in Taj Krishna and the hire charges would be collected in the final bill. The tribunal should have considered that the occupants of the car at relevant time are not the witnesses to the fact of Director/RW-1 giving instructions to provide the car free of hire charges. Accordingly obliging the request, the car was sent to receive the injured at Airport, whereafter the deceased also joined them. Further the manner of accident narrated by the injured is in PSKJ&NTRJ 5 Macmas_786,591&636_2006&cross objections contradiction to the pleaded version, as there is reference of another vehicle and contributory negligence. It is also evident by the investigators report/Ex.B-14 that the service of car was extended as complement through the deceased. The tribunal ought to have considered the fact that the compensation for the damage of car was paid by the insurance company. The tribunal erred in considering Exs:B-11 and B-15 to conclude that the car and other 21 cars of the appellants are being for rental purpose. The tribunal has granted excessive compensation to the claimants and should have calculated damages as per Schedule II of the Motor Vehicles Act. Thus, the fact of using the car on hire at relevant time has not been established by the insurer to repudiate the liability and the victims of the accident being third party the insurer shall be held liable as per the contract.
9. The learned counsel for the respondent No.3/insurer (for short, 'the insurer') in cross objections would contend that when the tribunal had concluded policy violation and the insurer is not liable to pay compensation directing to pay the compensation and to recover from the insured is improper, particularly when the insured/owners is solvent company with business activity. The insurer should not have been burdened with liability particularly when the policy conditions PSKJ&NTRJ 6 Macmas_786,591&636_2006&cross objections are violated with all knowledge by the appellants. Thus prayed for completely absolving the insurer by setting aside the direction of pay first and later to recover the amount from the insured/respondents 1 and 2.
10. During hearing the learned counsel for the appellants clearly submits that they are restricting the appeals to the extent of liability to pay compensation fixed by the tribunal.
11. We have considered the rival contentions pleaded by the learned counsel and perused the materials on record.
12. At the outset, the accident, rash and negligent driving of the driver of the car, death and injuries to the occupants, compensation awarded, interest and other directions in the impugned order are not in dispute.
13. The singular contest in all the appeals is in regard to fastening the liability in payment of compensation. As per the appellants the service of the car was extended as complimentary without hire charges, as such, the use of car at relevant time should be considered as one within private use. Per contra the contest of the insurer was that as the car was used for hire as it is violation of policy condition, in effect, the insurer is absolved from the liability.
PSKJ&NTRJ 7 Macmas_786,591&636_2006&cross objections However through its Administrative Officer/RW-3 admitted that by the relevant date the car is covered under comprehensive policy.
14. Thus the issue for consideration would be (a) whether hiring of the car by the owner would exempt the insurer from the liability? (b) If so, whether the direction of pay first and then recover from the insured is sustainable?
15. The appellants through their witnesses made every effort to portray that the car was given in gratuitous service and the insurer by pointing the inconsistencies in the evidence strived to probabalise the fact of lending the car on hire. Howsoever, the insurer has not referred to any covenant in the insurance policy to attest that hiring of vehicle would exonerate its liability and pleaded that indemnity to hirer is covered under Indian Motor Tariff (IMT-44) which is equally applicable to the parties to the insurance contract and its contravention amounts to violation of policy condition.
16. To examine the liabilities and limitations of IMT-44, for ready reference the provision is extracted hereunder:
"IMT 44. INDEMNITY TO HIRER - PACKAGE POLICY -
NEGLIGENCE OF THE OWNER OR HIRER - It is hereby declared and agreed that in consideration of payment of an PSKJ&NTRJ 8 Macmas_786,591&636_2006&cross objections additional premium of rupees, the insurer will indemnify any hirer of the vehicle insured against loss, damage and liability as defined in this policy arising in connection with the vehicle insured while let on hire.
Provided that any such hirer shall as though he/she the insured observe fulfill and the subject to the terms, exceptions, conditions and limitations of this policy is so far as they apply."
17. In this context, it is pertinent to note a decision of full bench of the Hon'ble Erstwhile High Court of Andhra Pradesh in APSRTC, Hyderabad and another v. Kanakaratna Bai and others reported in 2012 SCC Online AP 381 in regard to the liability of the insurer against the hired vehicle, wherein held as follows:
"86. It is however to be noticed that in all the cases, premium towards liability towards passengers and third party risk was collected. Once separate premium was collected by the Insurance Companies for covering the risk to the passengers and third parties, it is no longer open to them to escape their liability in this regard. The failure in paying the additional premium as per IMT. 44, at best, would absolve the Insurance Companies from covering the liability and loss, if any, of the APSRTC. It would not extend to protect the Insurance Companies from their acknowledged liability towards third parties as is evident from the policy documents. The Supreme PSKJ&NTRJ 9 Macmas_786,591&636_2006&cross objections Court in Rikhi Ram AIR 2003 SC 1446 : (2003) 3 SCC 97 : 2003 ACJ 534, in no uncertain terms, held that whenever a vehicle covered by an Insurance Policy was transferred to a transferee, the liability of the insurer would not cease so far as the third party/victim is concerned, even if the owner or purchaser did not give intimation as required under the provisions of the Act. The cases on hand stand on a better footing as the insured, being the owner of the vehicle, did not transfer the title or ownership of the vehicle but only its possession. IMT. 44, as pointed out earlier, has application when the hirer of the vehicle requires protection and it does not apply to or abridge the liability of the Insurance Company in so far as third party risks are concerned.
87 xxx
88. On principle, it is not open to the Insurance Companies to absolve themselves of liability towards passengers/third party risks on the short ground that the insured vehicle has been given on hire without following the prescribed procedure. This Court in Madineni Kondaiah AIR 1986 AP 62 (FB) has already held that even transfer of the ownership of an insured vehicle without following the due procedure would not absolve the Insurance Company of liability towards third party risks. Mere transfer of possession, through hire of the vehicle, cannot stand on a worse footing or exempt the Insurance Companies from liability in this regard."
18. A careful reading of the provision and dictum in the above noted judicial pronouncement it is evident clear that the restriction in PSKJ&NTRJ 10 Macmas_786,591&636_2006&cross objections IMT 44 would become live as and when the hirer seeks indemnification from the insurer, regarding the liabilities accepted in the policy by the insured and unless additional premium has been paid by the hirer, extension of liability of indemnification in favour of the hirer, stands absolved for the insurer, in absence of existing contract between them. In such position, at any stretch this provision does not come in aid to the insurer, to repudiate the third party/passengers/claims. In this view, restricting the liability to the owner and exonerating the insurer is contrary to the legal position. Hence the liability fixed by the tribunal to the hirer and owner/respondents 1 and 2 by holding it as policy violation and discharging the insurer cannot be sustained under law. In this view we are of the considered opinion that the direction of the tribunal to the respondent No.3/insurer, to pay and recover is liable to be and accordingly set aside.
19. Resultantly, the appeals filed by the appellants are allowed and the respondents are jointly and severally liable to pay the compensation awarded in the claim petitions. In effect, the cross objections filed by the respondent No.3/insurer stands dismissed. Having regard to the liability to indemnify the insured, the respondent No.3/insurer is directed to deposit the compensation amounts in all PSKJ&NTRJ 11 Macmas_786,591&636_2006&cross objections the claims along with interest as per the impugned orders within four weeks from the date of receipt of a copy of this order. On such deposit the petitioners are permitted to withdraw entire amounts in terms of the impugned orders. No costs.
As a sequel, pending miscellaneous petitions if any, stands closed.
_______________ P. SAM KOSHY, J _______________ N.TUKARAMJI, J Date:07.06.2024 ccm