Andhra Pradesh High Court - Amravati

Unknown vs The Hon'Ble Sri Justice ... on 7 March, 2023

             THE HON'BLE SRI JUSTICE V.SRINIVAS

                      M.A.C.M.A.No.1234 of 2009


JUDGMENT:

This appeal is directed against the order of the Chairman,

Motor Vehicle Accident Claims Tribunal-cum-V Additional District

Judge, (FTC), Anantapur (hereinafter called as 'the Tribunal') in

O.P.No.371 of 2007 dated 05.03.2009.

2. The appellant is the insurer of the Auto bearing No.AP 02 V

6275, belonging to the 4th respondent herein. The respondent

Nos.1 to 3 are wife and sons of the N.P.Govindu (hereinafter called

as 'the deceased').

3. According to the claimants, in the petition before the

Tribunal, on 11.03.2007, the deceased and others boarded an auto

bearing No.AP 02 V 6275 at Kutagulla cross to go to their village.

When the auto reached near Nadimpalli on Kadiri-Anantapur, the

driver of the auto drove the same in a rash and negligent manner

and due to which the auto turned turtle. As a result, the deceased

and others sustained injuries. Then the deceased was shifted to

Government General Hospital, Kadiri. In turn shifted to

Government General Hospital, Anantapur for better treatment and

he succumbed to injuries while taking treatment. By the time of

accident the deceased was aged about 42 years and earning

Rs.8,000/- per month by doing seasonal business and attending

agricultural works. Being dependents, the claimants claiming

compensation of Rs.5,00,000/- against owner and insurer of auto

bearing No.AP 02 V 6275.

4. Counter and additional counter were filed by the insurer of

the auto, denying all the material allegations, stated that at the

time of accident the auto was over crowded with passengers by

violating the permit conditions, as such the accident occurred;

that there is no negligence on the part of the driver of the auto;

that the insurance company has not received any premium in

respect of the auto and they never issued any policy and as such

prays to dismiss the petition.

5. The Tribunal settled the following issues for enquiry basing

on the material:

1.Whether the accident occurred due to rash and negligent act of the driver of the Auto bearing No.AP 02 V 6275 or not?

2.Whether the petitioners are entitled to any compensation, if so to what amount and from which of the respondent? and

3.To what relief?

6. In the course of enquiry, on behalf of the claimants, PWs.1

and 2 were examined and Exs.A.1 to A.5 were marked. On behalf

of the insurer of the auto, R.Ws.1 and 2 were examined and

Exs.B.1 and B.2 were marked.

7. On the material, the Tribunal, having come to the conclusion

that as the accident occurred due to the rash and negligent driving

of the driver of the auto and at the time of accident the driver

possess Non-transport driving license, held that the claimants are

entitled compensation of Rs.2,80,000/- with interest at 7.5% per

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

payable by the owner of the said auto, however, the insurer of the

said auto was directed to satisfy the award amount at first

instance and then recover the same from the owner of the auto.

8. It is against the said order, the present appeal is preferred

by the insurer of the auto bearing No.AP 02 V 6275.

9. Heard Sri Amancharla Satish Babu, learned counsel for the

appellant and Sri M.Karibasaiah, learned counsel for the

respondent Nos.1 to 3/claimants.

10. Sri Amancharla Satish Babu, learned counsel for the

appellant submits that the driver of the auto committed violation

of permit conditions by allowing more passengers other than

seating capacity of the vehicle and thereby violating the terms and

conditions of the policy and as such the insurance company is not

liable to satisfy the award. He further submits that the appellant

never issued any policy in respect of auto as the cheque issued by

the owner of the auto towards payment of premium was

dishonoured. Hence, prays to allow the appeal.

11. Sri M.Karibasaiah, learned counsel for the claimants submits

that the Tribunal after considering the entire material on record,

rightly awarded the compensation to the claimants against owner

of the auto and directed the appellant to pay the award amount at

first instance and recover from the owner of the auto. He further

submits that the policy issued in respect of the said auto was in

force and as such there are no grounds to interfere with the order

of the Tribunal.

12. Now, the following points arise for determination:

1. Whether there is any flaw in awarding the compensation to the claimants against the appellant? and

2. To what relief ?

13. POINT No.1:

The short point in this appeal is whether the Tribunal

ordering pay and recovery of the amount by the appellant from the

insured is illegal and contrary to the judgments of Apex Court.

14. This is a petition filed by the legal heirs of the deceased

stated that on 11.03.2007, while the deceased and other

passengers waiting for bus at Kutagulla cross road and boarded an

auto bearing No.AP 02 V 6275 in order to go to their village and

when the auto reached near Nadimpalli on Kadiri-Anantapur, the

driver of the auto drove the same in a rash and negligent manner

and due to which the auto turned turtle. As a result, the inmates

in the auto received injuries including deceased. Deceased was

immediately shifted to Government General Hospital, Kadiri and

subsequently shifted to Government General Hospital, Anantapur

for better treatment and while taking treatment, he succumbed to

injuries. For which a case in Cr.No.6 of 2007 under Section 337 and

304-A of I.P.C. was registered by the Patnam police against driver

of the auto.

15. Thereafter, the claimants filed claim application and the

same was resisted by the appellant stating that by the time of

accident the auto was overloaded with the passengers by violating

permit conditions and driver of the auto proceeding dangerously

and could not control the auto. So that the vehicle fell down on

the road side. Hence, there is no rash and negligence on the part

of the driver of the auto as alleged by the claimants.

16. In the first issue before the Tribunal, categorically gave

finding that Patnam Police registered a case in Cr.No.06 of 2007

against the driver of auto baring No.AP 02 V 6275 on the report

given by one A.Venkataramana under Ex.A.1 and after death of

deceased, police held inquest over the death body of deceased

Govindu and in the inquest report covered under Ex.A.2

panchayatdhars opined that entire incident occurred due to rash

and negligent driving of driver of the auto and in Ex.A.3 Post

Mortem report stating that the deceased died due to hamorrage

and shock as a result of multiple injuries and after due

investigation, Patnam police laid charge sheet on the file of

Judicial First Class Magistrate, Kadiri against driver of the auto

bearing No.AP 02 V 6275 and the driver is responsible for the

accident.

17. In the said criminal case one Chinna Venkataramanna was

referred as eye witness and he as well examined as P.W.2 in the

present case and P.W.2 consistently stated in his evidence that due

to rash and negligent driving of the auto the accident occurred.

Though the appellant categorically taken a defence that due to

overcrowd in the auto, the driver could not control the same,

resulting accident, but to prove the same, the appellant did not

examine either driver or owner of the crime auto and to disbelieve

the version of claimants.

18. P.W.2 by name Chinna Venkataramanna, who is said to be

eye witness to the incident clearly and categorically deposed

about the manner of the accident as narrated in F.I.R. covered

under Ex.A.1. The evidence of P.W.2 remains unchallenged. In the

circumstances, the Tribunal opined that only due to rash and

negligent act of driver of auto, the accident occurred, for which

appellant had not placed any evidence to establish that there is no

rash and negligent driving and the accident occurred only due to

negligence and unable to control the vehicle. Therefore, this Court

also concurs with the findings of the Tribunal regarding cause of

accident.

19. So far as income and age, as well multiplier, there is no

dispute on the conclusions arrived by the Tribunal to award

Rs.2,80,000/- towards compensation as against claim of

Rs.5,00,000/-, is not seriously disputed by the appellant.

20. The only dispute before this Court is that the driver of the

auto allowed passengers more than the seating capacity of the

vehicle. Thereby, the Tribunal ought not to have order to satisfy

the award by the appellant at first instance and then recover the

same again from the owner of the crime vehicle.

21. On this context, the judgment of the Hon'ble Supreme

Court between National Insurance Company Limited v. Anjana

Shyam and Others1 is relevant. In the said judgment, "the dispute

is, on the date of the accident, the materials indicate that the

bus was overloaded and the bus in question has carrying capacity

of 42 passengers including one driver and one conductor but

carrying more than 90 passengers and interms of Section

147(1)(b)(ii) of the Act, the insurance taken for 42 passengers

only".

22. In the present case also as per Ex.B.2, the number of

passenger seats available is four, whereas, at the material time of

the accident 7+1 persons were said to be travelling in the auto

against permitted seating capacity of 3+1.

23. In these circumstance, it is relevant to state by the

appellant/insurance company that no vehicle can be plied on the

road without taking out an insurance against third party risk under

the limit in terms of Section 147(2)(a) of the Act is the amount of

liability incurred.

1 Civil Appeal No.2422-2459 of 2001, Dt.20.08.2007

24. Under section 147(1)(b)(ii) of the Act, the Insurance

Company has the obligation, subject to the provisions of that

section, to satisfy the decree or award made by the court

concerned or Tribunal on claims by third parties. Section 149(2) of

the Act provides that no sum shall be payable by an insurer unless

notice of the proceedings had been given to the Insurance

Company before the commencement of the proceedings through

the court or the Claims Tribunal, and that it shall not be liable if

there has been a breach of a specified condition of the policy as

indicated in that sub section. This is the submission made by the

appellant/insurance company.

25. For which the Hon'ble Supreme Court in Anjana Shyam case

(referred to supra) held at paragraph Nos.18 to 20 that:

18. In this situation, the insurance taken out for the number of permitted passengers can alone determine the liability of the insurance company in respect of those passengers. In terms of Section 149 of the Act, the duty of the insurer is only to satisfy judgments and awards against persons insured in respect of the third party risk. Obviously, this is to the extent the third party risk is coverable and is covered.

Section 149 of the Act speaks of judgment or award being obtained against any person insured by the policy and the liability of the insurer to pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder subject to any claim the insurer may have against the owner of the vehicle. Section 149 could not be understood as compelling an insurance company to make payment of amounts covered by decrees not only in respect of the number of persons covered by the policy itself but even in respect of those who are not covered by the policy and who have been loaded into the vehicle against the terms of the permit and against the terms of the condition of registration of the vehicle and in terms of violation of a statute.

19. It is true that the provisions in Chapter XI of the Act are intended for the benefit of third parties with a view to ensure that they receive the fruits of the awards obtained by them straightaway with an element of certainty and not to make them wait for a prolonged recovery proceeding as against the owner of the vehicle. But from that, it would not be possible to take the next step and find that the insurance company is bound to cover liabilities not covered by the contract of insurance itself. The Act only imposes an obligation to take out insurance to cover third party risks and in the case of stage carriages, the passengers to be carried in the vehicle and the passengers to be carried in the vehicle

can be understood only as passengers authorized or permitted to be carried in the vehicle.

20.In spite of the relevant provisions of the statute, insurance still remains a contract between the owner and the insurer and the parties are governed by the terms of their contract. The statute has made insurance obligatory in public interest and by way of social security and it has also provided that the insurer would be obliged to fulfil his obligations as imposed by the contract and as overseen by the statute notwithstanding any claim he may have against the other contracting party, the owner, and meet the claims of third parties subject to the exceptions provided in Section 149(2) of the Act. But that does not mean that an insurer is 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 extent of the passengers permitted to be insured or directed to be insured by the statute and actually covered by the contract.

26. From the above, it is clear that no doubt the insurer is only

to satisfy judgments and awards against persons insured in respect

of the third party risk. However, in paragraph Nos.21 and 22, it

was held by the Apex Court in the above referred judgment that

"the insurance company can be made liable only in respect of

number of passengers for whom insurance can be taken under the

Act and for whom insurance has been taken as a fact and not in

respect of the other passengers involved in the accident in a case

of overloading".

27. It is further discussed "how to determine compensation

payable or how to quantify the compensation since there is no

means of ascertaining who out of the overloaded passengers

constitute the passengers covered by the insurance policy as

permitted to be carried by the permit itself".

28. The Apex Court held that "the purpose of the Act is to bring

benefit to the third parties who are either injured or dead in an

accident. It servers a social purpose". The Hon'ble Supreme Court

further held that:

"Keeping that in mine, 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 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 the insurance policy".

29. In the similar circumstances, the Hon'ble Supreme Court in

a judgment reported between United India Insurance Company

Limited v. K.M.Poonam & Ors.2 at paragraph Nos.24 to 26

referred the Anjana Shyams's case (referred to supra) and held as

follows:

24. 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 vehicle covered six occupants of the vehicle in 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. 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. However, the liability of the Insurance Company to make payment even in respect of persons not covered by the insurance policy continues under the provisions of sub-

section (1) of Section 149 of the Act, as it would be entitled to recover the same if it could prove that one of the conditions of the policy had been breached by the owner of the vehicle. In the instant case, any of the persons travelling in the vehicle in excess of the permitted number of six passengers, though entitled to be compensated by the owner

2 2011 ALD SC 560.

of the vehicle, would still be entitled to receive the compensation amount from the insurer, who could then recover it from the insured owner of the vehicle.

25. As mentioned hereinbefore, in the instant case, the insurance policy taken out by the owner of the vehicle was in respect of six passengers, including the driver, travelling in the vehicle in question. The liability for payment of the other passengers in excess of six passengers would be that of the owner of the vehicle who would be required to compensate the injured or the family of the deceased to the extent of compensation awarded by the Tribunal.

26. Having arrived at the conclusion that the liability of the Insurance Company to pay compensation was limited to six persons travelling inside the vehicle only and that the liability to pay the others was that of the owner, we, in this case, are faced with the same problem as had surfaced in Anjana Shyam's case (supra). The number of persons to be compensated being in excess of the number of persons who could validly be carried in the vehicle, the question which arises is one of apportionment of the amounts to be paid. Since there can be no pick and choose method to identify the five passengers , excluding the driver, in respect of whom compensation would be payable by the Insurance Company, to meet the ends of justice we may apply the procedure adopted in Baljit Kaur's case (supra) and direct that the Insurance

Company should deposit the total amount of compensation awarded to all the claimants and the amounts so deposited be disbursed to the claimants in respect to their claims, with liberty to the Insurance Company to recover the amounts paid by it over and above the compensation amounts payable in respect of the persons covered by the Insurance Policy from the owner of the vehicle, as was directed in Baljit Kaur's case.

30. In view of the above legal position, the Hon'ble Supreme

Court after referring several judgments held that the risk

pertaining to a third party would extent to a person other than the

parties to the insurance contract was raised.

31. In the present case on hand, the Tribunal after considering

all these facts rightly held that the owner of the auto alone is

liable to pay compensation to the claimants and since the

claimants are third parties, the appellant is directed to satisfy the

award amount at first instance and then recover the same from

the owner of the auto without filing any suit or petition and this

Court found that there is no flaw on the conclusions arrived by the

Tribunal, while passing the said order and the Tribunal rightly fixed