United India Insurance Company ... vs Vajabhai Ratabhai Dabhi Since ...
2021 Latest Caselaw 18039 Guj

     C/FA/3345/2011                               CAV JUDGMENT DATED: 03/12/2021




               IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                      R/FIRST APPEAL NO. 3345 of 2011


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE SANDEEP N. BHATT

==========================================================

1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2      To be referred to the Reporter or not ?

3      Whether their Lordships wish to see the fair copy
       of the judgment ?

4      Whether this case involves a substantial question

of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== UNITED INDIA INSURANCE COMPANY LTD THROUGH Versus VAJABHAI RATABHAI DABHI SINCE DECD. THROUGH HEIRS & 2 other(s) ========================================================== Appearance:

MR MAULIK J SHELAT(2500) for the Appellant(s) No. 1 MR.HIREN M MODI(3732) for the Defendant(s) No. 1.1,1.2,1.3,1.4 RULE SERVED(64) for the Defendant(s) No. 2,3 ==========================================================

CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT

Date : 03/12/2021

CAV JUDGMENT

1. The present appeal is filed under Section 173 of the Motor Vehicles Act, by the appellant - the United Insurance Company Limited being aggrieved by and dissatisfied with the judgment and award passed by the Motor Accident Claims Tribunal (Main), Kheda at Nadiad in Motor Accident Claim Petition No.1235 of 1997 dated

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14.06.2011. By the impugned judgment, the Tribunal has awarded Rs.3,85,000/- with 7.5% interest p.a. from the date of application, in favour of the claimants.

2. The brief facts of the case are that, the husband of claimant No.1, father of claimants No.2 to 5 and son of claimants No.6 and 7 had received injuries due to rash and negligent driving of the driver of Tractor bearing registration No.GJ-1-R-8099 along with Trolley bearing registration No.GJ-6-B-3445, on 25.05.1997, on Ahmedabad- Kathlal Highway, near Village : Model. He received injuries and was taken to the hospital. When reached to the hospital, he was found dead due to the said injuries caused by the accident. Therefore, the claimants have filed claim petition being Motor Accident Claim Petition No.1235 of 1997 for compensation of Rs.7 lakhs, which was subsequently amended to the tune of Rs.4 lakhs. The Tribunal has issued summons and opponent No.3 - Insurance Company (the present appellant) has filed its written statement at Exh.15. The Tribunal has framed the issues at Exh.22 and proceeded further by recording the evidence. The Insurance Company has thereafter filed fresh written statement at Exh.42. The Tribunal has proceeded further after recording evidence and after considering the evidence on record, the Tribunal has found that the accident is caused by the tractor and trolley and therefore, negligence of the tractor and trolley is established. The Tribunal has also considered the aspect of quantum by considering the age of deceased as 35 years and though the claimants have claimed Rs.4,000/- per month as income of the deceased, the Tribunal has considered Rs.2,000/- towards income per month of the deceased and after adding 50% towards prospective income and after deducting 1/3 rd towards personal expenses, the Tribunal has come to the conclusion that the monthly income of the deceased would be Rs.2,000/-, so Rs. 24,000/- per year

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as prospective loss of income and applied 15 multiplier, which comes to Rs.2,60,000/-. In addition to that, the Tribunal has awarded Rs.10,000/- towards loss of consortium, Rs.10,000/- towards love and affection and Rs.5,000/- towards funeral expenses. In all, the Tribunal has awarded Rs.3,85,000/- with 7.5% interest p.a. The Tribunal has also considered the submissions of the Insurance Company regarding the liability and after discussing the provisions of Section 147 of the Motor Vehicles Act and after considering various judgments cited at the bar, the Tribunal has found that it is not permissible for the Insurance Company to avoid its liability as the breach was not so fundamental in nature. Therefore, the liability is fastened on the Insurance Company by the Tribunal. It is this judgment and award which is under challenge at the hands of the appellant - Insurance Company before this Court.

3. Learned advocate Mr.Maulik Shelat for the appellant - Insurance Company has submitted that the 'Act Policy' covering tractor is not liable to pay as driver of the tractor could not be allowed any person on the board either sitting and in the tractor. The Insurance Company has denied the factum of the accident. The appellant - Insurance Company has, in his written statement, disputed the monthly income of the deceased as Rs.3,000/-. The appellant has also disputed the age of the deceased. The appellant has submitted that the accident has occurred in the middle of the road. The Insurance Company is not liable to pay any compensation. Learned advocate for the appellant has relied on the provision of Section 147 of the Motor Vehicles Act and has submitted that the risk of passenger travelling in the vehicle other than the public vehicle was not covered under the Act as this is the 'Act Policy'. The appellant has submitted that the policy of tractor bearing registration No.GJ-1-R-8099 is only the 'Act Policy', the deceased was

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sitting on the right side fan wheel, therefore, no risk is covered except driver. It was also contended that the deceased was not a third party and therefore, the Insurance Company is not liable to pay any amount of compensation. He has submitted and raised main contention regarding risk of the deceased is not covered as the policy issued by the Insurance Company is the 'Act Policy'. He has also pointed out that in the policy, the carrying capacity, including the driver and cleaner, is mentioned as - one and no additional premium is paid by the insured. In support of his arguments, he has relied on the recent judgment of this Court in First Appeal No.4088 of 2017 and First Appeal No.505 of 2015 dated 04.02.2020. He has further submitted that it is now well settled position of law that the risk of the passenger travelling in the goods vehicle was not covered in view of the judgment in the case of National Insurance Comany Limited versus Balakrishnan reported in (2013) 1 SCC 731. He has submitted that the Insurance Company is not liable to pay compensation in the case of 'Act Policy'. He has further submitted that it is an undisputed fact that, the deceased was travelling as passenger on insured tractor along with the other passengers hiring tractor and the tractor is insured under the 'Act Policy' only, statutorily risk of the passenger i.e. deceased travelling in the tractor, is not covered.

4. Mr. Shelat, learned advocate for the appellant has also relied on the decisions of the Hon'ble Apex Court in the case of Oriental Insurance Co. Ltd., versus Brij Mohan & Ors., reported in AIR 2007 SC 1971 and in the case of United India Insurance Company Limited versus Serjerao and others reported in AIR 2008 SC 460 as well as the judgment in the case of New India Assurance Co. Ltd., versus L.H. of deceased Ravinsinh

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Ranubha Zala reported in 2013 (2) GLR 1580. He has further submitted that when the statutory provision of Section 147 of the M.V. Act does not cover risk of any person travelling on vehicle other than the driver, then neither the Tribunal nor this Court may direct Insurance Company to pay compensation and then recover it when the 'Act Policy' is issued in view of the judgment in the case of 2012(2) GLR 1681 reported in 2012 (2) GLR 1681. He has also relied on the decision of the Hon'ble Apex Court in the case of Bharat Petroleum Corporation Ltd., versus N.R. Vairamani reported in (2004) 8 SCC 579 and in case of Mehboob Dawood Shaikh versus State of Maharashtra reported in (2004) 2 SCC 362 and has submitted that in the facts of the present case, the 'Act only Policy' is issued by the Insurance Company, no such direction for pay and recover can be issued. He has further submitted that the Insurance Company cannot be directed by either Tribunal or by this Court to pay to the claimants and then recover it from the owner. Therefore, he has submitted that the appeal may be allowed and the judgment and award impugned may be modified by exonerating the appellant - Insurance Company, as no liability can be fastened on the Insurance Company.

5. Per contra, learned advocate Mr. Hiren Modi for the claimants has submitted that risk of the person is covered under the 'Act Policy' and he is supporting the judgment and award impugned passed by the Tribunal. Alternatively, he has submitted that even if the Court is found that the Insurance Company is not liable to pay the amount of compensation to the claimants, then also in view of the directions issued in the case of Manuara Khatun and others versus Rajesh Kumar Singh and others reported in 2017 ACJ 1031, more particularly in Para : 22, which is quoted as under.

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"22. In view of the foregoing discussion, we are of the view that the direction to United India Insurance Co. Ltd., respondent No.3, they being the insurer of the offending vehicle which was found involved in causing the accident due to negligence of its driver needs to be issued directing them (United India Insurance Co. Ltd., 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 25 of Saju P. Paul's case, 2013 ACJ 554 (SC)."

5.1 Mr. Modi, learned advocate for the claimants has also relied on the decision of Mangla Ram versus Oriental Insurance Company Limited reported in 2018 ACJ 1300, whereby the Hon'ble Apex Court has considered the liability of the Insurance Company in Para 26 of the judgment, which is quoted as under and has directed by relying on the principle of 'pay and recover'.

"26. The next question is about the liability of insurer to pay the compensation amount. The Tribunal has absolved the insurance company on the finding that no premium was received by the insurance company nor any insurance policy was ever issued by the insurance company in relation to the offending vehicle. The respondents no.2 and 3 had relied on a Cover Note which according to respondent No.1 -

Insurance Company was fraudulently obtained from the then Development Officer, who was later on sacked by respondent No.1 Insurance Company. The possibility of misuse of some cover notes lying with

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him could not be ruled out. The respondent Nos.2 & 3 have relied on the decision of this Court in Rula (supra). That decision will be of no avail to respondent Nos.2 & 3. In that case, the Court found that the insurance policy was already issued after accepting the cheque; whereas in the present case, the respondent No.1 Insurance Company has been able to show that no payment was received by the company towards the 35 insurance premium nor any insurance policy had been issued in respect of the offending vehicle (jeep). However, the claim of respondent Nos.2 & 3 to the extent that they possessed a cover note issued by the then Development Officer of the Oriental Insurance Company (respondent No.1) will have to be accepted coupled with the fact that there is no positive evidence to indicate that the said Cover Note is ante dated. Pertinently, the Cover Note has been issued by the then Development Officer at a point of time when he was still working with respondent No.1 Insurance Company. It must follow that the then Development Officer was acting on behalf of the Insurance Company, even though stricto sensu the respondent No.1 Insurance Company may not be liable to pay any compensation as no insurance policy has been issued in respect of the offending vehicle, much less a valid insurance policy. But for the Cover Note issued by the Development Officer of respondent No.1 Insurance Company at a point of time when he was still working with respondent No.1, to do substantial justice, we may invoke the principle of "pay and recover", as has been enunciated by this Court in the case of National Insurance Co. Ltd. Vs. Swaran Singh & Ors. 2004 ACJ 1 (SC)."

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5.2 Mr. Modi, learned advocate for the claimants has also relied on the decision of this Court in the case of Hemendrasinh Mansinh Jadav versus Sanjaybhai Govindbhai Dabhai and others reported in 2019 (2) GLR 983, where this Court has considered the provisions of the 'Act only Policy', more particularly in Paras : 36 37 and 43, which are quoted as under.

"36. Insurance Companies have been allowed no other defence except: (1) Use of vehicle for hire and reward not permit to ply such vehicle; (2) For organizing racing and speed testing; (3) Use of transport vehicle not allowed by permit; (4) Driver not holding valid driving license or have been disqualified for holding such license and (5) Policy taken is void as the same is obtained by nondisclosure of material fact.

37. The Insurance Company cannot avoid the liability except on the grounds and not any other ground, which have been provided in Section 149(2). Hon'ble the Supreme Court has, while dealing with the provisions of Motor Vehicle Act, held that even if the defence has been pleaded and proved by the Insurance Company, they are not absolve from liability to make payment to the third party but can receive such amount from the owner-insured. The courts one after another have held that the burden of proving availability of defence is on Insurance Company and Insurance Company has not only to lead evidence as to breach of condition of policy or violation of

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provisions of Section 149(2) but has to prove also that such act happens with the connivance or knowledge of the owner. If knowledge or connivance has not been proved, the Insurance Company shall remain liable even if defence is available.

43. It seems that unfortunately insurance companies are either failed to realize above position or selectively submits that though they are liable to pay compensation to 3rd party, the occupant of the vehicle is "Occupant of the Vehicle and not a 3rd party". I fail to realize that when there is no definition of `3rd party' in the Act and, thereby when we are talking about 3rd party we have to identify 1st party and 2nd party which are certainly with reference to the policy document being a contract between 1st party and 2nd party i.e. insured - owner of the vehicle and Insurance Company which enters into an agreement whereby Insurance Company accept the liability to indemnify the owner - insured against any liability which includes "any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorized representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place". It is also clear and obvious that the above words "including the owner of the goods or his

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authorized representative carried in the vehicle" were absent in Section 95 of the M.V. Act, 1939 otherwise Section is pari-materia same with the Section 147 which goes to show that though there is several amendment in the M.V. Act, 1988, the basic principle of Statute is not changed so as to wipe out the basic principle of judicial pronouncement based upon the provision of M.V. Act, 1939 at the relevant time."

5.3 Mr. Modi, learned advocate for the claimants has also relied on the decision recorded on First Appeal No.1975 of 2005 and other allied appeals dated 10.05.2019 in the case of United India Insurance Company versus Janubhai Radvabhai Vasava and others, more particularly Para : 7.2, which is quoted as under.

"7.2 Thus, it is clear from the tenor of clause

(x) of para 105 that, 'where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Sections 149(2) read with sub-

section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal

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to the Collector in the same manner under Section 174 of the Act as arrears as land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by subsection (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal."

5.4 Mr. Modi, learned advocate for the claimants has also relied on the judgment recorded on First Appeal No.673 of 2009 dated 24.04.2009 in the case of United India Insurance Co. Ltd. Versus Vishnubhai Somdas Patel & Ors., and has drawn the attention of this Court towards Paras : 11, which are quoted as under.

"11. On careful consideration of the facts and evidence adduced on record and submissions made by learned advocates of both sides, it is not in dispute that the deceased Vishnubhai had hired the tractor from the respondent No.3 Bhikhabhai Ramabhai Patel who was the owner of the tractor.

Therefore, there is clear breach of the Insurance Policy at Exh.31 as the tractor was used for other then agriculture purpose by the insured. In view of the decision of this Court rendered in United India Insurance Co. Ltd. v. Manjulaben Purshottamdas Patel and Others(supra), the Insurance Company cannot be made liable for the payment of compensation to the claimants. However, as submitted by the learned advocate for the

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claimants relying upon the decision of the Apex Court in case of Shivraj v. Rajendra and Another (supra),the Insurance Company is directed to pay the compensation amount to the claimants at the first instance and recover the same from the owner of the offending tractor in accordance with law. Therefore, the impugned judgment and award passed by the Tribunal is modified to the extent that the appellant, original respondent No.3-

Insurance Company is not liable to pay compensation to the claimants. However, the Insurance Company shall pay the compensation as determined by the Tribunal in the impugned judgment and award to the original claimants - respondents Nos. 1/1 to 1/3 herein at the first instance and recover the same from the original opponent No.2- respondent No.3 herein, who is owner of the tractor involved in the accident by filing mere execution proceedings of the award without filing any further suit against the owner of the offending vehicle. Appellant insurance company Rest of the judgment passed by the Tribunal shall remain unaltered.

5.5 Mr. Modi, learned advocate for the claimants has submitted that even if in view of the judgment of Shivraj versus Rajendra and another reported in 2018 ACJ 2755, this Court if comes to the conclusion that if the Insurance Company is not liable to indemnify the award, then also, the principle of pay and recover can be applied and the Insurance Company may be directed to pay and then recover it from the owner of the offending vehicle.

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6. I have heard the submissions made by both the learned advocates for the respective parties at length. I have perused the record of the Tribunal and also considered the documentary evidence like; FIR - Exh.45, Panchnama - Exh.46, Inquest Panchnama - Exh.47, Driving License, P.M. Note - Exh.48, R.C.Book - Exh.49 and Insurance particulars - Exh.50 are produced on record. Learned advocate for the appellant - Insurance Company or learned advocate for the claimants have not made any submission on the aspects of quantum.

7. The short question arises for determination of this Court in the present case is that, when the deceased person was going on the tractor and sitting on the fan wheel of the tractor and he died due to the accident, and it is an admitted position that the policy of the tractor is an 'Act Policy', the risk of only one person is covered. It is further found from the record that the risk of the passenger travelling in a goods vehicle is not covered by the insurance policy. It is also further transpired from the record that there is clear breach of the insurance policy as the tractor was used other than the agricultural purpose by the insured and in view of the judgment rendered in United India Insurance Company Limited versus Manjulaben Purshottamdas Patel & Ors., reported in 1994(1) GLR 269, I found that the Insurance Company cannot be made liable for the compensation to the claimants, however, I am of the opinion that the provisions of the Motor Vehicles Act are beneficial legislation and relying on the decision of Hon'ble Apex Court in the case of Shivraj (supra), the Insurance Company is directed to pay the amount of compensation to the claimants at the first instance and then recover the same from the owner of the offending vehicle, in accordance with law.

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8. It is noteworthy to mention here that the provisions of the Motor Vehicles Act, 1988 gives paramount importance to the concept of the just and fair compensation. It is the beneficial legislation which has been framed with the object of providing relief to the victims. Section 168 of the Motor Vehicles Act deals with the concept of 'Just Compensation', which ought to be determined on the foundation of fairness, reasonableness and equitability. Although, such determination can never be arithmetically exact or perfect, an endeavour should be made by the Court to award just and fair compensation irrespective of the amount claimed by the claimants, without becoming hyper-technical in considering the claim petitions.

9. Therefore, the impugned judgment and award passed by the Tribunal is required to be modified and is modified to the extent that the appellant can not held liable to pay the amount of compensation and the Insurance Company first pay the amount to the claimant and then recover from the owner. The claimants - respondents No.1/1 to 1/4 at the first instance be received the amount lying in F.D.R. and then Insurance Company can recover the amount from the owner of the vehicle - respondent No.3 herein - Smt. Kokilaben, by merely filing execution proceedings of the award in accordance with law without filing any further suit against the owner of the offending vehicle. Rest of the judgment passed by the Tribunal shall remain unaltered.

10. This Court has passed some order(s) of investment and disbursement at the time of admitting the appeal.

11. In view of the final disposal of the present appeal, it is directed

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to the Tribunal concerned that the amount which is lying with the Tribunal and/or in Fixed Deposit Receipts, pursuant to the judgment and award passed by the Tribunal, shall be paid to the respondents No.1/1 to 1/4 - original claimants, after due verification and after following proper due procedure, forthwith.

12. Accordingly, the appeal is partly allowed, by modifying the impugned award to the aforesaid extent.

13. Record and proceedings be sent back to the Tribunal concerned, forthwith.

(SANDEEP N. BHATT,J) M.H. DAVE