United India Insu Co Ltd. Thru Reg. ... vs Devidas @ Devilal Ramchandra ...
2017 Latest Caselaw 6822 Bom

 FA 386,387&388.08.odt                        1


   IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                        NAGPUR BENCH : NAGPUR

                       FIRST APPEAL NO.386 OF 2008
                                  WITH
                       FIRST APPEAL NO.387 OF 2008
                                  WITH
                       FIRST APPEAL NO.388 OF 2008


 FIRST APPEAL NO.386 OF 2008

 United India Insurance Company Limited,
 Gondia Branch, through the Regional
 Manager, Nagpur Regional Office,
 Shankar Nagar Square,
 Nagpur.                             ..                             Appellant


                               .. Versus ..


 1]     Ramchandra s/o Dhondu Bawanthade,
        Aged about 52 years,
        Occupation-Nil,
        R/o. Maramjob, Tahsil-Deori,
        District-Gondia..(original applicant)

 2]     Hiralal s/o Rajaram Shahu,
        Age Major, Occupation-Businessmen
        and owner of Minidoor No.MH35/1797,
        R/o. Deori, District-Gondia.   ..                      Respondents

                    ..........
 Shri D.N. Kukday, Advocate for Appellant,
 Shri Shashikant Borkar, Advocate for Respondent No.2,
 None for Respondent No.1.
                    ..........

 WITH



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  FA 386,387&388.08.odt                        2

 FIRST APPEAL NO.387 OF 2008

 United India Insurance Company Limited,
 Gondia Branch, through the Regional
 Manager, Nagpur Regional Office,
 Shankar Nagar Square,
 Nagpur.                             ..                             Appellant

                               .. Versus ..

 1]     Devidas @ Devilal s/o Ramchandra
        Bawanthade, aged about 30 years,
        Occupation-Driver of Vehicle No.
        MH35/1797, R/o. Maramjob, Tahsil-Deori,
        District-Gondia..(original applicant)

 2]     Hiralal s/o Rajaram Shahu,
        Age Major, Occupation-Businessmen
        and owner of Minidoor No.MH35/1797,
        R/o. Deori, District-Gondia.   ..                      Respondents


                    ..........
 Shri D.N. Kukday, Advocate for Appellant,
 Shri Shashikant Borkar, Advocate for Respondent No.2,
 None for Respondent No.1.
                    ..........

 WITH

 FIRST APPEAL NO.388 OF 2008

 United India Insurance Company Limited,
 Gondia Branch, through the Regional
 Manager, Nagpur Regional Office,
 Shankar Nagar Square,
 Nagpur.                             ..                             Appellant

                               .. Versus ..

 1]     Devidas @ Devilal s/o Ramchandra,
        Bawanthade, aged about 30 years,
        Occupation-Driver of Vehicle No.
        MH35/1797, R/o. Maramjob, Tahsil-Deori,



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  FA 386,387&388.08.odt                     3
        District-Gondia..(original applicant)

 2]     Hiralal s/o Rajaram Shahu,
        Age Major, Occupation-Businessmen
        and owner of Minidoor No.MH35/1797,
        R/o. Deori, District-Gondia.   ..                      Respondents

                    ..........
 Shri D.N. Kukday, Advocate for Appellant,
 Shri Shashikant Borkar, Advocate for Respondent No.2,
 None for Respondent No.1.
                    ..........

                               CORAM : KUM. INDIRA JAIN, J.

DATED : SEPTEMBER 06, 2017.

ORAL JUDGMENT

By this common judgment, these appeals are

being disposed of together. A short common question

involved in all these appeals is, whether insurer can be

directed to pay compensation amount determined by the

Motor Accident Claims Tribunal, though legally not liable to

pay due to fundamental breach of the policy and, thereafter,

to recover the same from the owner of the offending vehicle.

2] The facts giving rise to the present appeals may be

stated in nutshell as under :

(i) On 10.10.2005, owner of matador

bearing No. MH-35-1797 engaged the services of Vandana

wife and Bhagratha, mother of claimant for preparing meals

on the eve of Navratri Utsav at Dongargad. Vandana and

Bhagratha were to work as cooks and serve meals to 100

persons. Digambar, 11 months old son was with Vandana at

the relevant time. Vandana, Bhagratha and Digambar were

proceeding in matador towards Dongargad. Near Borgaon

Shivar, an unknown vehicle came in high speed and gave a

dash to matador. Due to dash, Bhagratha, Vandana and

Digambar died on the spot.

(ii) First Appeal No.386/2008 arises out of

the judgment and award passed by the Motor Accident

Claims Tribunal, Gondia in Claim Petition No.38/2006 filed by

Ramchandra s/o Dhondu Bawanthade under Section 163-A

of the Motor Vehicles Act, 1988. ('Act' for short) for

compensation on account of death of his wife Bhagratha.

(iii) First Appeal No.387/2008 is against the

judgment and award passed by the tribunal in Claim Petition

No.42/2006 filed by Devidas @ Devilal s/o Ramchandra

Bawanthade under Section 163-A of the Act claiming

compensation as a legal representatives of deceased

Vandana.

(iv) First Appeal No.388/2006 arises against

the judgment and award passed by the tribunal in the Claim

Petition No.37/2006 under Section 163-A of the Act filed by

Devidas @ Devilal s/o Ramchandra Bawanthade claiming

compensation on account of death of his son Digambar.

3] In all the three claim petitions, tribunal held that

insurance company is not liable to pay compensation, but

directed the insurer to pay the amount of compensation to

the claimants and recover the same from the owner of

matador involved in the accident.

4] Shri Kukday, learned counsel for appellant-

Insurance Company, vehemently contended that directions

to pay and recover cannot be given by the tribunal once the

tribunal comes to the conclusion that insurer is not legally

liable to pay compensation. It is submitted that in the

catena of judgments such directions given by the Hon'ble

Apex Court are in the exercise of extra-ordinary jurisdiction,

but the same cannot be so adopted by the tribunal in the

exercise of statutory powers available under the Motor

Vehicles Act, 1988. Learned counsel submitted that powers

of the tribunal are governed by the statutory provisions and

claim petitions are required to be tried in accordance with

the procedure enumerated in the Act. It is submitted that

tribunal committed patent error while giving such directions

when it has been held that the goods vehicle was being

used for carrying gratuitous passengers in breach of terms

of insurance policy. It is urged that directions given by the

tribunal to pay and recover are improper and illegal and

such part of directions need to be set aside from the

impugned judgment and award. In support of submissions,

learned counsel for appellant-Insurance Company placed

strong reliance on :

(I) National Insurance Company Limited .vs. Saju P. Paul and another, [I (2013) ACC 46 (SC),

(II) Manuara Khatun and others .vs. Rajesh Kr. Singh and others, [AIR 2017 SC 1204],

(III) Traders Private Limited, Ahmedabad and another .vs. Sunanda wd/o Krishna Machivale and others, [2009 (1) Mh.L.J.898],

(IV) United India Insurance Company Limited .vs. Anubai Gopichand Thakare and others, [2008 (1) Mh.L.J, 73].

5] Alternatively, it is submitted on behalf of appellant

that if such direction is to be given then first owner should

be directed to furnish solvent surety of the entire amount of

award, then only liability can be fastened to the insurance

company to satisfy the award. Learned counsel submits that

in the present case no such order of furnishing the solvent

surety has been passed and in that event insurance

company would not be liable to satisfy the award.

6] In case of National Insurance Company

Limited .vs. Saju P. Paul and another (supra), referring

to its previous decisions in National Insurance Company

Limited .vs. Baljit Kaur and others [1 (2004) SLT 269],

National Insurance Company Limited .vs. Challa

Bharathamma and others [V (2004) SLT 825], in

paragraphs 16, 17 and 18, the Hon'ble Supreme Court

observed thus :

"16. In the present case, Section 147 as originally existed in 1988 Act is applicable and, accordingly, the judgment of this Court in Asha Rani (supra) is fully attracted. The High Court was clearly in error in reviewing its judgment and order delivered on 09.11.2010 in review petition filed by the claimant by applying Section 147(1)(b)

(i). The High Court committed grave error in holding that Section 147(1)(b)(i) takes within its fold any liability which may be incurred by the insurer in respect of the death or bodily injury to any person. The High Court also erred in holding that the claimant was travelling in the vehicle in the course of his employment since he was a spare driver in the vehicle although he was not driving the vehicle at the relevant time but he was directed to go to the worksite by his employer. The High Court erroneously assumed that the claimant died in the course of employment and

overlooked the fact that the claimant was not in any manner engaged on the vehicle that met with an accident but he was employed as a driver in another vehicle owned by M/s. P.L. Construction Company. The insured (owner of the vehicle) got insurance cover in respect of the subject goods vehicle for driver and cleaner only and not for any other employee. There is no insurance cover for the spare driver in the policy. As a matter of law, the claimant did not cease to be a gratuitous passenger though he claimed that he was a spare driver. The insured had paid premium for one driver and one cleaner and, therefore, second driver or for that purpose 'spare driver' was not covered under the policy.

17. The High Court misconstrued the proviso following sub-section (1) of Section 147 of the 1988 Act. What is contemplated by proviso to Section 147 (1) is that the policy shall not be required to cover liability in respect of death or bodily injury sustained by an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923. The claimant was admittedly not driving the vehicle nor he was engaged in driving the said vehicle. Merely because he was travelling in a cabin would not make his case different from any other gratuitous passenger.

18. The impugned judgment is founded on misconstruction of Section 147. The High Court was wrong in holding that the insurance company shall be liable to indemnify the owner of the vehicle and pay the compensation to the claimant as directed in the award by the Tribunal."

7] Regarding direction to the insurance company to

first satisfy the award and then recover the same from the

owner, Hon'ble Supreme Court in para 25 held thus :

"25. The pendency of consideration of the above questions by a Larger Bench does not mean that the course that was followed in Baljit Kaur (supra) and Challa Bharathamma (supra) should not be followed, more so in a peculiar fact situation of this case. In the present case, the accident occurred in 1993. At that time, claimant was 28 years' old. He is now about 48 years. The claimant was a driver on heavy vehicle and due to the accident he has been rendered permanently disabled. He has not been able to get compensation so far due to stay order passed by this Court. He cannot be compelled to struggle further for recovery of the amount. The insurance company has already deposited the entire awarded amount pursuant to the order of this Court passed on 1.8.2011 and the said amount has been invested in a fixed deposit account. Having regard to these peculiar facts of the case in hand, we are satisfied that the claimant (Respondent No. 1) may be allowed to withdraw the amount deposited by the insurance company before this Court along with accrued interest. The insurance company (appellant) thereafter may recover the amount so paid from the owner (Respondent No. 2 herein). The recovery of the amount by the insurance company from the owner shall be made by following the procedure as laid down by this Court in the case of Challa Bharathamma."

8] In a recent decision in Manuara Khatun and

others .vs. Rajesh Kr. Singh and others [AIR 2017 SC

1204], relying upon National Insurance Company

Limited .vs. Saju P. Paul's case (supra), it is held by the

Hon'ble Apex Court that the insurer of the offending vehicle

found involved in causing accident due to negligence of its

driver to pay compensation to the claimants and recover the

same from the insured.

9] The Division Bench of this court in Traders

Private Limited, Ahmedabad and another .vs.

Sunanda wd/o Krishna Machivale and others [2009 (1)

Mh.L.J. 898] concurring to the views of the learned Single

Judge in First Appeal Nos.826/2006 and 827/2006 decided

on 4-8-2007, in paragraphs 58 and 59, observed as under :

58. We may also refer to Anjana Shyam's case (supra) which lends support to our above conclusion. In that case, the question before the Supreme Court was whether the Insurance Company's liability was confined only to the extent of the number of passengers insured by it and could not be extended to cover persons not covered by the insurance policy. The Supreme Court held that the insurance company can be made liable only in respect of the number of passengers for whom insurance can be taken under the Motor Vehicles Act and for whom insurance has been taken as a fact and not in respect of other passengers involved in the accident in case of overloading. The Supreme Court observed that since there was no means of ascertaining who, out of the overloaded

passengers, constituted the passengers covered by the insurance policy, insurance company in such a case, would be bound to cover the higher of the various awards and would be compelled to deposit the higher of the amounts of compensation awarded to the extent of number of passengers covered by the insurance policy. The Supreme Court observed that it would be for the Tribunal thereafter to direct distribution of the money so deposited by the Insurance Company proportionately to all the claimants and leave all the claimants to recover the balance from the owner of the vehicle.

59. In our opinion, directions facilitating recovery of the amount from the owner of the offending vehicle issued by the Supreme Court in Baljit Kaur's case (supra), in Oriental Insurance Company Limited .vs. Nanjappan and others, (2004) 13 SCC 224, in Kusum Rai's case (supra), in Oriental Insurance Company Limited .vs. Brij Mohan and others, (2007) 7 SCC 56 and in Syed Ibrahim's case (supra) are in exercise of its jurisdiction under Article 142 of the Constitution of India read with Article 136 thereof for doing complete justice to the parties. Such powers do not vest in us. It is therefore not possible for us to pass similar orders. We may note that learned Single Judge of Aurangabad Bench of this Court (Kingaonkar, J.) has taken a similar view in First Appeal No.827/2006 and First Appeal No.826/2006 decided on 4-8- 2007. However, learned Single Judge of Nagpur Bench of this Court (Kharche, J.) has taken a contrary view in National Insurance Company Limited .vs. Prakash Sakharam Dudhankar and others, 2006 (1) Mh.L.J. 601 = 2006 (1) BCR 412. The view taken by Kingaonkar, J. commends itself to us.

10] The learned Single Judge in case of Traders

Private Limited, Ahmedabad and another (supra)

refused to issue direction to the insurance company to

satisfy the award first and, thereafter, to recover the same

from the owner. It was held that such direction cannot be

issued to insurance company in all cases, if it is not in law to

pay compensation to pay it and recover from the owner of

the offending vehicle. The learned Single Judge held that

direction given by the Apex Court in case of M/s. National

Insurance Company Limited .vs. Baljit Kaur and

others, 2004 (2) Mh.L.J. (SC) 372 was in the exercise of

its jurisdiction under Article 142 of the Constitution of India

read with Article 136 thereof for doing complete justice to

the parties. It was observed that such powers do not vest in

the High Court and, therefore, it would not be possible to

pass similar orders.

11] The contrary view taken by the learned Single

Judge of this court in National Insurance Company

Limited .vs. Prakash Sakharam Dudhankar and

others, 2006 (1) Mh.L.J. 601 was not accepted by the

Division Bench of this court in case of Traders Private

Limited, Ahmedabad and another .vs. Sunanda

Machivale and others (supra) and the Division Bench

accepted the view taken by the learned Single Judge in

United India Insurance Company Limited .vs. Anubai

Gopichand Thakare and others (supra).

12] Section 149 of the Motor Vehicles Act, 1988 relates

to the duty of insurer to satisfy the judgment and award

against persons insured in respect of third party risks. For

ready reference provisions of Section 149 of the Act are

reproduced here as follows :

"Section 149 : Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. -

(1) if, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is requirement to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) [or under the provisions of section 163-A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer

had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely :-

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely :-

(i) a condition excluding the use of the vehicle -

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

(b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or

(d) without side-car being attached where the vehicle is a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duly licenced, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or

(b) that the policy is void on the

ground that it was obtained by the non- disclosure of a material fact or by a representation of fact which was false in some material particular.

(3) Where any such judgment as is referred to in sub-section (1) is obtained from a Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in sub-section (1), as if the judgment were given by a Court in India :

Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub-section (2).

(4) Where a certificate of insurance has been issued under sub-section (3) of section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub-section (1) of section 147, be of no effect :

Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.

(5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.

(6) In this section the expression "material fact" and "material particular" means, respectively, a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression "liability covered by the terms of the policy" means liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.

(7) No insurer to whom the notice referred to in sub-section (2) or sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (3) otherwise than in the manner provided for in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be.

Explanation. - For the purposes of this section, "Claims Tribunal" means a Claims Tribunal constituted under section 165 and

"award" means an award made by that Tribunal under section 168".

13] So far as the meaning of expression "third-party"

under the Act is concerned, in Dr. T.V. Jose .vs. Chacko

P.M. alias Thankachan and others, (2001) 8 SCC 748,

the Hon'ble Apex Court considered clause (1) of Section II of

the Insurance Policy produced in the case. That was the

third party policy. The Apex Court observed thus :

"19. ...This clearly shows that the policy is a third-party policy. The terms and conditions governing this policy are not on record. What was shown to the Court were terms and conditions of a comprehensive policy relating to private cars. These cannot apply to this policy. In the absence of terms and conditions governing this policy it is not possible to accept the submission of Mr. Iyer that this policy covered liability to occupants of the car. As has been set out hereinabove, 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 8th respondent company will, therefore, not be liable to reimburse the appellant".

14] Needless to state that expression "third party"

needs to be determined in each case with reference to the

terms and conditions of insurance policy. If the risk of a

person is covered under the contract of insurance, then that

person would be the third party regarding whom the

insurance cover can be used and the insurer will be liable to

indemnify such a person or his legal

representatives/dependents. However, the person, who is

not covered under terms and conditions of the insurance

policy cannot be treated as "third party" within the meaning

of the provisions of Section 147 and Section 149 of the Act.

Therefore, the test and the crux of the dispute lies in the

terms and conditions of policy.

15] In the case on hand, following are the undisputed

facts.

(i) Deceased Vandana, Bhagratha and Digambar were travelling in a matador bearing no.MH-35/1797;

(ii) The said matador was a goods vehicle;

(iii) The deceased were travelling as gratuitous passengers;

(iv) Matador was insured with United India Insurance Company Limited;

(v) Certificate of insurance was for goods carrying/ public carrier that is for goods vehicle;

(vi) Accident occurred on 10.10.2005 during validity period of insurance i.e. from 11.11.2004 to 10.11.2005.

16] With the assistance of the learned counsel for the

appellant, this court has perused insurance policy (Exh.47).

From the terms of policy, it is evident that risk of gratuitous

passengers is not covered under the policy. In the absence

of insurance cover to gratuitous passengers travelling in a

goods vehicle and as risk of persons travelling as gratuitous

passengers in goods vehicle is not covered under the

contract of insurance, this court is of the view that insurance

policy cannot be treated as "third party" policy within the

meaning of Section 147 and Section 149 of the Motor

Vehicles Act, 1988 and the issuance of direction to the

insurer to satisfy the award at the first instance and recover

the same later from the owner would be incorrect and

improper.

17] As referred above, the Division Bench of this court

at the principal seat in case of Traders Private Limited,

Ahmedabad and another .vs. Sunanda wd/o Krishna

Machivale and others (supra) accepted the view taken by

the learned Single Judge in First Appeal Nos.826/2006 and

827/2006 decided on 4.8.2007. The facts of the case before

the learned Single Judge and in the present appeals are

almost identical. Hence, this court finds no reason to take a

view different than taken by the learned Single Judge in

United India Insurance Company Limited .vs. Anubai

Gopichand Thakare and others (supra) and the Division

Bench of this court in Traders Private Limited,

Ahmedabad .vs. Sunanda wd/o Krishna Machivale

and others (supra).

18] Considering all the relevant aspects of the matter

and having regard to the case laws referred above, this

court has no hesitation in holding that directions given by

the tribunal in the impugned judgment and award are

unsustainable in law. Hence, the following order :

ORDER

(i) First Appeal Nos.386/2008, 387/2008 and

388/2008 are allowed to the extent of directions issued by

the tribunal in each of the awards, whereby the insurer is

directed to pay/deposit the awarded amount and to recover

the same from the insurer.

(ii) The relevant part of direction under the

final order of the award is set aside.

(iii) It is made clear that merits of the award

are otherwise not considered in these appeals.

                (iv)           No costs.



                                            (Kum. Indira Jain, J.)

  19]            At this stage, learned counsel for appellant states

that 50% of the amount directed to be deposited has been

deposited by the appellant and the same is lying with the

Registry of this court in fixed deposit. The learned counsel

seeks permission to withdraw the said amount. Appellant is

permitted to withdraw the amount.

(Kum. Indira Jain, J.) Gulande, PA