The United India Insurance Co Ltd vs Chinna Lavuka Nagaraju
2023 Latest Caselaw 596 AP

          HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO

                       MACMA No.221 of 2012

JUDGMENT:

1. Aggrieved by the order dated 29.09.2011 in MVOP No.645 of 2008

passed by the Chairman, Motor Accidents Claims Tribunal - cum

- VI Additional District Judge, Kurnool (for short 'the Tribunal'),

the 2nd respondent-United India Insurance Company Limited,

Kurnool, has preferred this appeal questioning the Tribunal's

Award.

2. The parties will be referred to as arrayed in the MVOP for

convenience.

3. The claimant had applied to Section 166 of the Motor Vehicles

Act, claiming compensation of Rs.2,00,000/- for the injuries and

disability sustained by him in a motor vehicle accident that

occurred on 20.04.2008.

4. The claimant's case is that on 20.04.2008, the claimant and other

hamalies were proceeding in the tractor-trolley bearing No.AP-21-

N-3479 and 3480 (herein referred to as 'the offending vehicle')

from the quarry with a load of slabs for unloading and after it

reached Maddilety Swamy Temple at about 2.00 PM, the offending

vehicle's driver drove it at high speed with rash and negligent

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manner. He lost control over the offending vehicle, as a result of

which, it turned turtle by leaving the road on the left side, due to

which the claimant sustained grievous injuries to his left leg, head

and spinal cord, and other Hamalies also sustained injuries.

5. The 1st respondent, the owner of the offending vehicle, remained

ex parte.

6. The 2nd respondent filed a counter, denying the manner and mode

of the accident, the age and earnings and the medical expense of

the claimant interalia contending that the offending vehicle's

driver did not possess a valid and effective driving licence and

valid permit to the vehicle at the time of the accident. The

offending vehicle's owner paid no separate premium to cover the

risk to the hamalies under the policy. Hence, the insurance

company is not liable to compensate the claimant. The claimant

colluded with the owner of the offending vehicle and, by

suppressing the real facts, filed the petition for a false claim.

7. Based on the pleadings, the Tribunal has formulated appropriate

issues. On behalf of the claimant, PWs.1 to 3 got examined and

marked Exs.A.1 to A.7 and Ex.X1. On behalf of the respondents,

RW.1 got examined and marked Ex.B1 copy of the policy.

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8. After evaluating the evidence on record, the Tribunal held that

the accident occurred due to the driver's rash and negligent

driving of the offending vehicle. The Tribunal granted a

compensation amount of Rs.47,000/- with interest @ 9% per

annum from the date of the petition till the date of realization

against respondents 1 and 2.

9. Heard both the learned Counsel. Perused the record.

10. The learned Counsel for the appellant has contended that the

Tribunal ought to have noted that the policy does not cover the

risk of the injured, who is hamali in the offending vehicle;

Tribunal ought to have exonerated the appellant from its liability.

11. Learned Counsel for the respondents supported the Tribunal's

findings and observations.

12. Now the point for determination is,

Whether the Tribunal erred in fastening the liability on the appellant/insurance company/ 2nd respondent ? Point :

13. From the reading of the grounds of appeal and submissions

made on behalf of either side, it can be seen that the following

findings are not disputed by the insurance company or the

claimant.

a. By considering the oral and documentary evidence on

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record, the Tribunal held that the accident occurred due to

rash and negligent driving of the offending vehicle's driver.

The 1st respondent is the owner of the offending vehicle,

and the 2nd respondent rendered the insurance policy to

the crime vehicle under the original of Ex.B1, which was in

force as of the date of the accident.

b. The Tribunal fixed the compensation of Rs.47,000/-

towards injuries sustained by the petitioner with

proportionate costs and interest against respondents 1 and

2. Though the respondent/insurance company preferred

the appeal, it has not questioned the quantum of

compensation. The petitioner also has not preferred any

appeal or cross-objections against the quantum of

compensation fixed by the Tribunal. In view of the same,

this Court finds that the aforesaid findings given by the

Tribunal have attained finality. The particulars of the

accident and the parameters taken by the Tribunal for

awarding compensation need not be narrated and

discussed in detail.

14. The main contention of the appellant/insurance company is that

the policy under the original of Ex.B1 is not covering for the risk

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of hamalies since no such extra premium was paid by the 1st

respondent/owner of the offending vehicle.

15. As seen from the record, a copy of the insurance policy, marked

as Ex.B1, a premium of Rs.25/- is collected by the insurance

company covering the risk of WC to employee 1.

16. RW.1 - K.Venkoba Rao, the Senior Assistant of the 2 nd

respondent/insurance company, admitted in his evidence that

the policy taken under Ex.B1 is a miscellaneous special package

policy by which the risk will be covered for both tractor and

trailer. The Tractor and Trailer are always used for loading and

unloading napa slabs and allowing their hamalies. Witness adds

that policy will not be allowed for the hamalies.

17. It is evidence of RW.1 and the insurance company's contention

that as per Ex.B1 policy, the vehicle shall be used for

agricultural purposes only and not for commercial purposes. At

the time of the accident, it was using the trailer for commercial

purposes, i.e., for the transportation of slab stones, in violation

of the policy's terms and conditions.

18. In this regard, the Tribunal observed that even if presumed that

PWs.1 and 2 as hamalies are not entitled to any compensation

since there is no such extra risk covered by the policy as no

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premium was paid by the owner of the vehicle, still, PWs.1 and 2

as third parties are entitled to claim for compensation. It seems

that the Tribunal, without going through the terms of the policy,

made a such observation. As already observed, Ex.B1 shows that

one employee's premium amount is collected. Even if it is

assumed that the offending vehicle was used for a different

purpose, the insurance company cannot escape its liability.

19. In a decision between Amritlal Sood vs Kaushalya Devi

Thakar1 the Hon'ble Apex Court held that "the comprehensive

policy issue covers the risk of gratuitous passengers, i.e., the

car's occupants. Therefore, it is clear from the Act itself, the

words of the policy and the decision in Amritlal Sood's case that

a comprehensive policy covers the risk of gratuitous passengers

to the extent of the liability incurred.

20. A three-Judge Bench of the Hon'ble Apex Court in the case of

National Insurance Co. Ltd. Vs Baljit Kaur and Others 2, held

that, considering the question of whether the insurance policy in

respect of goods vehicle is required to cover the gratuitous

passenger in view of the amendment to Section 147 of the Act.

The apex court, after considering all the previous decisions,

(1998) 3 SCC 744

(2004) 2 SCC 1

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concluded that the Insurance Company was not liable as the risk

of an unauthorized passenger in a goods vehicle or gratuitous

passengers is not covered under the policy, and there is a breach

of the condition of the policy in carrying a passenger in a goods

vehicle. Therefore, the vehicle's owner was held liable to satisfy

the decree. However, in paragraph No. 21, the Court was of the

opinion that the interest of justice would be sub-served if the

Insurance Company was directed to satisfy the award in favour

of the claimant, if not already satisfied and recover the same

from the owner of the vehicle. The Court also observed that, for

such recovery, it would not be necessary for the insurer to file a

separate suit. Still, it may initiate a proceeding before the

executing Court as if the dispute between the insurer and the

insured was also determined by the Tribunal and the issue was

decided against the owner and in favour of the insurer.

21. In a decision between National Insurance Co.Ltd., V. Anjana

Shyam3 the Hon'ble Apex court held that "it does not mean that

an insurer is not bound to pay amounts outside the contract of

insurance itself or in respect of persons not covered by the

contract at all. In other words, the insured is covered only to the

2007 CJ 2129 (SC)

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extent the passengers are permitted to be insured or directed to

be insured by the statute and actually covered by the contract.

An insurance company can be made liable only for the number

of passengers for whom insurance can be taken under the Act

and not for the other passengers involved in the accident in case

of overloading. "Keeping that in mind, we think that the practical

and proper course would be to hold that the insurance company,

in such a case, would be bound to cover the higher of the various

awards and will be compelled to deposit the higher of the

amounts of compensation awarded to the extent of the number

of passengers covered by insurance policy".

22. The identical issue once again surfaced in the case of United

India Insurance Co.Ltd., v. K.M.Poonam 4 , the Hon'ble Apex

Court reiterated the relevant provisions of the Motor Vehicles Act

and, after taking note of its various earlier decisions, including

Baljit Kaur (supra) and Anjana Shyam (supra), has resolved and

settled the issue thus: "the liability of the insurer, therefore, is

confined to the number of persons covered by the insurance

policy and not beyond the same. In other words, as in the

present case, since the insurance policy of the owner of the

2011 ACJ 917 (SC)

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vehicle covered six occupants of the vehicle n question, including

the driver, the liability of the insurer would be confined to six

persons only, notwithstanding the larger number of persons

carried in the vehicle. A such excess number of persons would

have to be treated as third parties, but since no premium had

been paid in the policy for them, the insurer would not be liable

to make payment of the compensation amount as far as they are

concerned".

23. In a decision Shivaraj vs Rajendra 5 , the Apex Court, in the

following facts of the case, held that

".....the High Court, however, found in favour of respondent No.2 (insurer) that the appellant travelled in the tractor as a passenger, which was in breach of the policy condition, for the tractor was insured for agriculture purposes and not for carrying goods. The evidence on record unambiguously pointed out that neither was any trailer insured nor was any trailer attached to the tractor. Thus, it would follow that the appellant travelled in the tractor as a passenger, even though the tractor could accommodate only one person, namely the driver. As a result, the Insurance Company (respondent No.2) was not liable for the loss or injuries suffered by the appellant or to indemnify the tractor's owner. In our opinion, the conclusion reached by

2018 Law Suit (SC) 853

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the High Court, in our opinion, is unexceptionable in the present case.

.....At the same time, however, in the facts of the present case, the High Court ought to have directed the Insurance Company to pay the compensation amount to the claimant (appellant) with the liberty to recover the same from the tractor owner, in view of the consistent view taken in that regard by this Court in National Insurance Co. Ltd. Vs Swarna Singh & Others 2004 3 SCC 297 1, Mangla Ram Vs. Oriental Insurance Co. Ltd. 2018 5 SCC 656, Rani & Ors. Vs. National Insurance Co. Ltd. And others 2018 9 Scale 310 including Manuara Khatun and Others Vs. Rajesh Kumar Singh And Others. 2017 4 SCC 796. In other words, the High Court should have partly allowed the appeal preferred by respondent No.2. The appellant may, therefore, succeed in getting relief of direction to respondent No.2 Insurance Company to pay the compensation amount to the appellant with the liberty to recover the same from the tractor owner".

24. In Shamanna and another Vs. The Divisional Manager

The Oriental Insurance Co. Ltd. and Ors.6, the Apex Court

held that "to deny the benefit of pay and recover, what

seems to have substantially weighed with the High Court is

Civil Appeal No.8144 of 2008

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the reference to larger Bench made by the two-Judge Bench

in National Insurance Co. Ltd. v. Parvathneni and anoth-

er.7 which doubted the correctness of the decisions in the

exercise of jurisdiction under Article 142 of the Constitution

of India directing insurance companies to pay the compen-

sation amount even though the insurance company has no

liability to pay. In the Parvathneni case, the Supreme Court

pointed out that Article 142 of the Constitution of India does

not cover such types of cases and that if the insurance com-

pany has no liability to pay at all, then it cannot be com-

pelled by order of the Court in the 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. The above reference in the Parvathneni case

was disposed of on 17.09.2013 by the three-Judges Bench

keeping the questions of law open to be decided in an ap-

propriate case. Since the reference to the larger Bench in the

Parvathneni case has been disposed of by keeping the ques-

tions of law open to be decided in an appropriate case, pre-

sently, the decision in the Swaran Singh case followed in

(2009) 8 SCC 785

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Laxmi Narain Dhut and other cases hold the field. The

award passed by the Tribunal directing the insurance com-

pany to pay the compensation amount awarded to the clai-

mants and, after that, recover the same from the owner of

the vehicle in question is in accordance with the judgment

passed by this Court in Swaran Singh and Laxmi Narain

Dhut cases. While so, in our view, the High Court ought not

to have interfered with the award passed by the Tribunal di-

recting the first respondent to pay and recover from the ve-

hicle's owner. The impugned judgment of the High Court ex-

onerating the insurance company from its liability and di-

recting the claimants to recover the compensation from the

vehicle's owner is set aside, and the award passed by the

Tribunal is restored".

25. In a decision between Manuara Khatun and others Vs. Rajesh

Kr. Singh and others8, it is a case where the Tribunal further

held that all the passengers, including the two deceased, were

travelling in Tata Sumo for hire and hence they were held to be

gratuitous passengers. Due to the said reason, United India

Insurance Company Ltd., the insurer of Tata Sumo(offending

2017 (2) ALD 65 (SC)

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vehicle), was not liable". In the said facts of the case, the Hon'ble

Apex Court held that "in view of the foregoing discussion, we are

of the view that the direction to United India Insurance Company

(respondent No. 3) - they being the insurer of the offending vehicle

which was found involved in causing an accident due to

negligence of its driver needs to be issued directing them (United

India Insurance Company-respondent No.3) to first pay the

awarded sum to the appellants (claimants) and then to recover the

paid awarded sum from the owner of the offending vehicle (Tata

Sumo)-respondent No.1 in execution proceedings arising in this

very case as per the law laid down in Para 26 of Saju P. Paul's

case quoted supra".

26. As seen from the Ex.B1 policy, the owner of the offending vehicle

paid an additional premium to cover the liability of one employee.

The insurance company is bound by the terms of the contract. In

the present case, the policy issued by the insurance company is

a package policy.

27. On the other hand, the policy issued under Section 147 of the

Motor Vehicles Act is statutory and also called an Act policy. The

insurer's liability under this policy is restricted to indemnify the

insured in respect of the claim made by the third parties and the

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owner of the goods or his authorized representative who travels

in the goods vehicle along with the goods.

28. In my opinion, even a worker who travels in the vehicle may be

considered his authorized representative of the owner travelling

in the offending vehicle as a third party. On that ground, the

Insurance Company is liable to pay compensation, as a statutory

liability, to the third party who was travelling as a worker in the

offending vehicle. Being his authorized representative of owner

carried in the vehicle. So, on that ground, the insurance

company cannot deny the liability of workers travelling in the

offending vehicle at the time of the accident.

29. Since the evidence on record shows that the injured was

proceeding in the offending vehicle, though it has not

contributed to the accident, this Court views that a direction can

be given to the insurance company to pay and recover the

compensation from the offending vehicle's owner, as there is no

seating provided to worker/employee in the trailer.

30. In the light of the law laid down by the Apex Court and High

Court, this Court finds that the contention raised by the

insurance company, that it cannot be fastened with the liability,

is not sustainable.

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31. Given the discussion, as mentioned above, the appeal is partly

allowed without costs by modifying the order dated 29.09.2011

in MVOP No.645 of 2008 passed by the Tribunal. The 2 nd

respondent/insurance company is directed to pay the

compensation awarded by the Tribunal, excluding the amount

already paid, within two months from the date of the order and

recover the same from the offending vehicle's owner by filing an

Execution Petition before the Tribunal. The petitioner can

withdraw the amount by filing an appropriate application before

the Tribunal as per the Tribunal's terms.

32. Miscellaneous petitions pending, if any, in this appeal shall

stand closed.

------------------------------------- T. MALLIKARJUNA RAO, J Dt.03.02.2023 KGM/SAK