[Cites 13, Cited by 0]
Madhya Pradesh High Court
Divisional Manager Oriental Insurance ... vs Sarita @ Juli And 5 Ors. on 21 January, 2026
NEUTRAL CITATION NO. 2025:MPHC-IND:37738
1 MA-3065-2011
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PAVAN KUMAR DWIVEDI
MISC. APPEAL No. 3065 of 2011
DIVISIONAL MANAGER ORIENTAL INSURANCE CO.LTD.
Versus
SARITA @ JULI AND 5 ORS. AND OTHERS
Appearance:
Shri Bhaskar Agrawal,learned counsel for the appellant / Insurance
Company.
Shri K.K. Kaushal, learned counsel for respondents No 1 and 2.
Shri J.M. Poonegar, learned counsel for respondents No.3 and 4.
ORDER
Heard on : 21.11.2025
Pronounced on : 21.01.2026.
.................................................................................................................
This appeal has been filed under Section 173(1) of the Motor Vehicles
Act, 1988 being aggrieved by the award dated 20.10.2011 passed by the
learned VIII Additional Member, Motor Accident Claims Tribunal, Indore
(M.P.) in Claim Case No.84/2009.
1.1 The present appeal has been filed by the Insurance Company on
the ground that it is not liable to pay compensation as there was no valid
driving licence with the driver of the tractor at the time of the accident.
2. Short facts of the case are that the deceased Vijay Kaushal was
sitting in the trolley on 28.01.2009 in the capacity of a labourer employed by
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the owner of the tractor and trolley, which were carrying potato sacks. The
deceased was employed for unloading the said sacks. When the tractor-
trolley reached Maledy road Naya Kua Tiraha at Village Kodariya, the driver
of the tractor drove the vehicle in rash and negligent manner as a result of
which Vijay fell from the tractor-trolley and suffered grievous injuries due to
which he died on the spot.
2.1 The claimants / respondents No.1 and 2 filed claim petition under
Section 166 of the Motor Vehicles Act claiming compensation for the death
of Vijay. The Claims Tribunal after recording evidence, held that the
accident was caused due to the rash and negligent driving of the tractor driver
and accordingly, awarded total compensation of Rs.7,75,000/- along with
interest at the rate of 8% per annum. While awarding the compensation, the
Tribunal held that the Insurance Company is liable to pay the compensation
amount.
3. However, learned counsel for the appellant would argue that the
findings of the Claims Tribunal are contrary to the material available on
record. He would first contend that the labourer was never covered under the
insurance policy, which was produced before the Tribunal as Ex. D-7. Even
the Insurance Policy of the trolley marked as Ex. D-8 does not cover
labourer. He further submits that the deceased was sitting in the trolley and
therefore, the Insurance Company is not liable to pay compensation as the
trolley has no sitting capacity and was not meant for carrying passengers. He
also submits that in view of the statement of NAW-2, the Insurance
Company has clearly proved that the labourer was not covered under the
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Insurance Policy. He further submits that the owner of the vehicle who
deposed as NAW-4 has categorically stated that the deceased fell from the
trolley due to his own mistake, therefore, the finding of rash and negligent
driving has wrongly been recorded by the Tribunal.
3.1 Learned counsel thus submits that since the labourer was not
covered under the policy, the Insurance Company ought not to have been
held liable to indemnify the owner for payment of compensation.
3.2 In support of his submissions, learned counsel for the appellant /
Insurance Company has placed reliance on the judgment of the Hon'ble Apex
Court in the case of Oriental Insurance Company Limited vs. Brij Mohan
and Others reported in (2007) 7 SCC 56 as well as the Full Bench judgment
of this Court in the case of Bhav Singh vs. Smt. Savirani and Others in 2008
(1) MPLJ 72.
4. Per contra, learned counsel for the claimants / respondents No.1 and
2 support the findings recorded in the award and submits that in view of the
clear pleadings in the written statement, particularly para 16 thereof, it is
evident that the labourer was a third party and was clearly covered under the
terms of the Insurance Policy, especially in view of the fact that an extra
premium of Rs.75/- was charged for an employee / driver. The deceased
Vijay Kaushal was indisputably an employee of the owner of the vehicle and
therefore, was clearly covered under the Insurance Policy.
4.1 In support of his submissions, learned counsel for the claimants
has placed reliance on the judgment of the Hon'ble Apex Court passed in the
case of Amrit Lal Sood vs. Kaushalya Devi Thapar in (1998) 3 SCC 744 .
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5. Learned counsel for the owner reiterated the arguments advanced by
learned counsel for respondents No.1 and 2. However, he added that the
driving licence of the driver was found to be available and valid by the
Tribunal as recorded in para 13 of the award. As such, no interference with
the findings of the award is warranted and the appeal deserves to be
dismissed.
6. Heard learned counsel for the parties and perused the record.
7. The main thrust of the arguments advanced by learned counsel for
the appellant / Insurance Company is that there is no statutory or contractual
liability on the Insurance Company to indemnify the owner in the present
case. However, before adverting to the said contention, it would be apposite
to first deal with the issue regarding the availability of valid driving licence.
The Tribunal considered this aspect in paras 12 and 13 of the impugned
award.
7.1 While dealing with this issue, the Tribunal referred to the
statement of Sanjay Sharma (NAW-1), On the basis of document Ex. D-2,
the Insurance Company sought to establish that the driver of the tractor was
not holding a valid licence and it passed only an LMV licence. However, the
Tribunal recorded that the said witness admitted that he was no the
investigator; rather, one Vitthal Katare was the investigator and due to his
death, Sanjay Sharma had appeared to depose before the Tribunal.
7.2 The Tribunal further recorded clear finding that neither any
dispatch number nor the date of issuance was mentioned on the said
document and therefore, the same appeared to be a doubtful document. It was
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5 MA-3065-2011
also recorded that the driver had placed on record a photocopy of his driving
licence.
8. A perusal of the same would show that the tractor was duly covered
under the insurance policy. These findings of fact were assailed; however,
the Court has also perused the driving licence i.e. Ex. D-5 as well as
document Ex. D-2 and finds no perversity in the findings recorded by the
Claims Tribunal. As such, it is hereby held that the finding recorded by the
Tribunal that the driver of the tractor was holding a valid driving licence is
proper and justified.
9. As regards the issue of liability of the Insurance Company, the main
thrust of the argument advanced on behalf of Insurance Company is that the
policy in question did not cover the labourer, as he was not a third party in
view of the fact that he was a labourer engaged by the owner of the tractor.
By referring to the Insurance Policy (Ex. D-7), learned counsel for the
appellant / Insurance Company submits that the policy covers basic liability
and that an additional premium of Rs.100/- was paid towards P.A. (Personal
Accident) cover and a further sum of Rs.75/- was paid towards legal liability
for an employee / driver.
10. He submits that the labourer would not fall within the definition of
an 'employee'. He further submits that the Tribunal has incorrectly recorded
that the labourer would be covered under the term 'employee' as he was not a
salaried employee receiving a monthly salary from the owner.
11. The Full Bench of this Court in the case of Bhav Singh (Supra)
held in paras 5, 8 and 12 as under :
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"5. We find on a perusal of the decision of the Full
Bench in Jugal Kishore (supra) and particularly
paragraphs 17 and 18 of the judgment that the Full
Bench has taken a view that the expression 'third party'
would mean a party other than the contracting parties to
the insurance policy and would include everyone, be it a
person travelling in another vehicle, one walking on the
road or a passenger in the vehicle itself which is the
subject-matter of the insurance policy. In a Full Bench
judgment delivered by us in Smt. Sunita Lokhande and
others vs. The New India Assurance Company Limited
and others, 2008(1) MPLJ 54 = I.L.R. (2007) M. P.
1145, we have quoted paragraph 17 of the judgment of
the Full Bench in Jugal Kishore (supra) to hold that the
insured who is a party to the insurance is not a third
party for the purpose of Chapter XI of the Act,
particularly section 147 thereof. Thus, any person other
than the insurer and the insured who are parties to the
insurance policy is a "third party'. The insurer,
however, would not be liable for any bodily injury or
death of a third party in an accident unless the liability
is fastened on the insurer under the provisions of
section 147 of the Act or under the terms and conditions
of the policy of insurance. Hence, the mere fact that a
passenger is a third party would not fasten liability on
the insurer unless such liability arises under section 147
of the Act or under the terms and conditions of the
insurance policy.
8. Similarly, an employee is a third party inasmuch as
he is not a party to the insurance policy. But merely
because an employee is a third party, the insurance
company would not be liable to compensate in case
such employee suffers bodily injury or dies in an
accident in which the motor vehicle is involved unless
section 147 of the Act fixes such liability on the insured
or unless the terms and conditions of the contract of
insurance fixes liability on the insurer. Section 147(1)
(b) of the Act provides that in order to comply with the
requirements of Chapter XI of the Act, a policy of
insurance must be a policy which insures the person or
classes of persons specified in the policy to the extent
specified in sub-section (2) against the liabilities
mentioned in clauses (i) and (ii) thereunder. The
Proviso to sub-section (1) of section 147 of the Act,
however, states that a policy shall not be required to
cover liability other than the liability arising under the
Workmen's Compensation Act, 1923 in respect of the
death of, or bodily injury to any of the three categories
of employees mentioned in sub-clauses (a), (b) and (c)
of clause (i) of the proviso to sub-section (1) of section
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147 of the Act. Hence, even if an employee is a
passenger or a person travelling in a motor vehicle
which is insured as per the requirements of sub-section
(1) of section 147 of the Act, the insurer will not be
liable to cover any liability in respect of death or bodily
injury of such employee unless such employee falls in
one of the categories mentioned in sub-clauses (a), (b)
and (c) of clause (i) of the Proviso to sub-section (1) of
section 147 of the Act and further in cases where such
employees fall under categories mentioned in sub-
clauses (a), (b) and (c) of clause (i) of the Proviso to
sub-section (1) of section 147 of the Act, the insurer
is liable only for the liability under the Workmen's
Compensation Act, 1923.
12. Regarding the Division Bench judgment in
Sarvanlal and others (supra), we find that the Division
Bench has relied on not only the judgment of the Full
Bench in Jugal Kishore (supra) but also clause (vii) of
Rule 97 of the Motor Vehicles Rules, 1994 (for short
'the Rules of 1994') made by the State of M. P. So far
as the judgment of the Full Bench in Jugal Kishore
(supra) is concerned, we have already clarified the
position of law. Regarding clause (7) of Rule 97 of the
Rules of 1994, we find that the Rules of 1994 have been
made by the State of M. P. under section 96 of the Act
and in particular sub-section (2)(xxxi) which provides
that without prejudice to the generality of the foregoing
power, rules under section 96 may be made with respect
to the carriage of persons other than the driver in goods
carriages. Section 96 is placed in Chapter- V of the Act
which relates to 'Control of Transport Vehicles'. Sub-
section (1) of section 96 of the Act states that the State
Government may make rules for the purpose of carrying
into effect the provisions of Chapter-V. Hence, Rule 97
of he Rules of 1994 has been made by the State
Government to give effect to the provisions of Chapter-
V of the Act, which, as we have seen, relates to 'control
of transport vehicles'. These rules obviously cannot
have a bearing in interpreting the provisions of Chapter-
XI of the Act including sections 145 and 147 of the Act.
As we have indicated above, the liability of the insurer
to indemnify the insured in respect of death or bodily
injury suffered by a passenger or an employee would be
covered by the provisions of section 147 of the Act or
the terms and conditions of the insurance policy. Thus,
the decision of the Division Bench in Sarwan Lal
(supra) insofar as it relies on Rule 97 of the Rules of
1994 to hold the insurer liable for death or bodily injury
suffered by the passenger does not lay down the correct
law."
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12. Again the Hon'ble Apex Court in the case of Amrit Lal Sood
(Supra) held in paras 4 and 8 as under :
"4. The liability of the insurer in this case depends on
the terms of the contract between the insured and the
insurer as evident from the policy. Section 94 of the
Motor Vehicles Act, 1939 compels the owner of a
motor vehicle to insure the vehicle in compliance with
the requirements of Chapter VIII of the Act. Section 95
of the Act provides that a policy of insurance must be
one which insures the person against any liability which
may be incurred by him in respect of death or bodily
injury to any person or damage to any property of third
party caused by or arising out of the use of the vehicle
in a public place. The section does not however require
a policy to cover the risk to passengers who are not
carried for hire or reward. The statutory insurance does
not cover injury suffered by occupants of the vehicle
who are not carried for hire or reward and the insurer
cannot be held liable under the Act. But that does not
prevent an insurer from entering into a contract of
insurance covering a risk wider than the minimum
requirement of the statute whereby the risk to gratuitous
passengers could also be covered. In such cases where
the policy is not merely a statutory policy, the terms of
the policy have to be considered to determine the
liability of the insurer.
8. Thus under Section II(1)(a) of the policy the insurer
has agreed to indemnify the insured against all sums
which the insured shall become legally liable to pay in
respect of death of or bodily injury to "any person".
The expression "any person" would undoubtedly
include an occupant of the car who is gratuitously
travelling in the car. The remaining part of clause (a)
relates to cases of death or injury arising out of and in
the course of employment of such person by the
insured. In such cases the liability of the insurer is only
to the extent necessary to meet the requirements of
Section 95 of the Act. Insofar as gratuitous passengers
are concerned there is no limitation in the policy as
such. Hence under the terms of the policy, the insurer is
liable to satisfy the award passed in favour of the
claimant. We are unable to agree with the view
expressed by the High Court in this case as the terms of
the policy are unambiguous."
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13. It is thus clear that there can be statutory policy or comprehensive
policy meaning thereby that the insurer while entering into a contract of
insurance may charge an extra premium for covering a risks wider then the
minimum required under the statute as held by the Full Bench. A 'third party'
would mean a party other than the contracting parties to the Insurance Policy
and would include everyone else.
14. Be it a person travelling in another vehicle, a pedestrian walking
on the road or a passenger in the vehicle itself which is the subject matter of
the Insurance Policy, all such contingencies are covered vis-a-vis a third
party.
15. In the present case, the deceased was travelling in the insured
vehicle itself. The question that arises for consideration is whether such a
person was covered under the Insurance Policy or not. The Full Bench of this
Court in the case of Bhav Singh (Supra) has held that the insurer would not
be liable for death or bodily injury to a third party in an accident unless such
liability is fastened on the insurer either under the provisions of Section 147
of the Motor Vehicles Act or under the terms and conditions of Insurance
policy. Thus, the mere fact that a passenger is a third party would not fasten
liability on the insurer unless such liability arises either in terms of Section
147 of the Act or under the terms of the Insurance Policy.
15.1 Therefore, it is required to be examined whether under the terms
of the present policy, the deceased was covered or not. It has come on record
that the vehicle was being used for transportation of potato sacks. It is thus
established that the vehicle was being used for agricultural purposes for
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which it was insured. The next question to be considered is whether the
deceased was travelling in connection with the goods being transported or
was merely a gratuitous passenger having no relation with the owner of the
vehicle.
15.2 In view of the clear evidence that has come on record, the
Tribunal has correctly found that the deceased was travelling as an employee
of the owner of the vehicle for the purpose of unloading potato sacks. It is
thus evident that the deceased was sitting in the tractor-trolley in the capacity
of an employee of the owner. The Insurance Policy (Ex. D-7) specifically
provides for payment of an additional premium of Rs.75/- towards coverage
to an employee / driver. Therefore, in the considered view of this Court, the
Tribunal has rightly recorded its finding in para 6 of the award that the
Insurance Company is liable to pay the compensation as the vehicle was not
being operated in breach of the terms of the Insurance Policy.
16. As regards the judgment cited by the appellant / Insurance
Company in the case of Brij Mohan (Supra) , the facts of that case were
different. The Court found that the labourer was injured while travelling in
trolley attached to tractor carrying earth to brick kiln. The vehicle was not
being used for agricultural purposes, which was the only purpose for which
the tractor was insured. The Court held that the tractor was being used in
breach of the Insurance Policy, which is not the case in the present matter.
17. It is also to be kept in mind that it has indisputably come on record
that the vehicle was being driven in a rash and negligent manner, which was
the cause of the accident. Therefore, it was the tractor which caused the
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accident and not the trolley as the driver of the tractor was driving it in rash
and negligent manner. Accordingly, the Tribunal has correctly held the
insurer of the tractor liable to indemnify the owner of the vehicle and pay
compensation. In the considered view of this Court, there is no infirmity in
the impugned award of the Tribunal. Resultantly, the appeal fails and is
hereby dismissed.
Certified copy as per rules.
(PAVAN KUMAR DWIVEDI)
JUDGE
Anushree
