Telangana High Court

M/S. Orbit Travels And Tours Private ... vs Mrs. P. Subhapriya And 4 Ors. on 7 June, 2024

Author: P. Sam Koshy

Bench: P.Sam Koshy, N.Tukaramji

         HONOURABLE SRI JUSTICE P. SAM KOSHY
                        AND
         HONOURABLE SRI JUSTICE N. TUKARAMJI

                1. M.A.C.M.A.No.786 OF 2006
                             &
           CROSS OBJECTION (SR) No.33292 of 2006,

                2. M.A.C.M.A.No.591 OF 2006
                              &
           CROSS OBJECTION (SR) No.33337 of 2006,
                            AND
                3. M.A.C.M.A. No.636 OF 2006
                              &
           CROSS OBJECTION (SR) No.33318 of 2006.

COMMON JUDGMENT:

(per Hon'ble Sri Justice N. Tukaramji)

Heard Ms. A. Padma, counsel representing Ms. S.A.V.

Ratnam, learned counsel for the appellants/respondents Nos.1 and 2

and Mr. A.Ramakrishna Reddy, learned counsel for the respondent

No.3/cross objectors.

2. As these appeals and cross objections are against the

common order and the factual and legal aspects to be considered

are selfsame, the appeals and the cross objections are heard

together and are being determined by this common judgment.

3(i) The relevant facts in brief are that on 01.05.1996 while Mr. N.

Prem Kumar/deceased, Mr. Jugjiv Singh/injured and Mr. John

Blackwel/injured were proceeding in a Contessa car bearing

registration No.AHA-7246 (for short, 'the car') to visit factory at PSKJ&NTRJ 2 Macmas_786,591&636_2006&cross objections

Siddipet, in the midway the driver of the car while driving dozed and

drove the car in a negligent manner and caused accident which

resulted severe injuries to all the occupants. The injured were

removed to the hospital for treatment. However, Mr. N.Prem Kumar

succumbed and Mr. Jugjiv Singh and Mr.John Blackwel survived

with severe injuries. The dependants of Mr. N. Prem Kumar filed

O.P.No.991 of 1997 and Mr.Jugjiv Singh and Mr. Blackwel filed

O.P.Nos.982 and 990 of 1997 respectively seeking compensation.

3(ii) The tribunal by common order allowed the petitions in part and

granted Rs.41,20,000/-, Rs.55,000/- and Rs.10,00,000/- respectively

with interest at 6% per annum from the date of the petition till

realization and fixed liability against the respondents 1 and 2/the

owners/insured of the car. However, respondent No.3/insurer was

directed to pay compensation in the first instance on furnishing bank

guarantee and later to recover the same from the owners/insured.

4(a) Against the order in the claim petition filed by the dependants

of Mr. N.Prem Kumar/deceased, the M.A.C.M.A.No.786 of 2006 has

been filed by the respondents 1 and 2/the owner and the insured of

the car assailing the decree and order dated 18.07.2005 in

O.P.No.991 of 1997 on the file of the Motor Accidents Claims PSKJ&NTRJ 3 Macmas_786,591&636_2006&cross objections

Tribunal-cum-Additional Chief Judge, City Civil Court, Hyderabad

which was filed seeking compensation of Rs.75 lakhs for the death.

4(b) Pending this appeal the respondent No.3/insurer of the car

filed cross objections No.33292 of 2006.

5(a) Against the order in the claim petition filed by Mr. Jugjiv Singh,

the M.A.C.M.A.No.636 of 2006 has been preferred by the

respondents 1 and 2/the owner and the insured of the car against

the decree and order dated 18.07.2005 in O.P.No.982 of 1997 on

the file of the Motor Accidents Claims Tribunal-cum-Additional Chief

Judge, City Civil Court, Hyderabad which was filed claiming

compensation of Rs.9,14,000/- for the injuries.

5(b) Pending the appeal the respondent No.3/insurer of the car

filed cross objections No.33318 of 2006.

6(a) Against the order in claim petition filed by Mr. John Blackwel,

the M.A.C.M.A.No.591 of 2006 has been filed by the respondents 1

and 2/the owner and the insured of the car challenging the decree

and order dated 18.07.2005 in O.P.No.990 of 1997 on the file of the

Motor Accidents Claims Tribunal-cum-Additional Chief Judge, City

Civil Court, Hyderabad which was filed seeking compensation of

Rs.30,64,000/- for the injuries.

PSKJ&NTRJ 4 Macmas_786,591&636_2006&cross objections

6(b) Pending this appeal the respondent No.3/insurer of the car

filed cross objections (SR) No.33337 of 2006.

7. In spite of due service of notice the respondent(s)/claim

petitioner(s), chose to remain silent.

8. In all the appeals, the learned counsel for the

appellants/respondents 1 and 2/owner and insured of the car (for

short, 'the appellants') would contend that the tribunal by relying on

impermissible and inadmissible evidence concluded the fact as to

violation of policy condition. The tribunal should have considered the

statement that the car has been provided by the PW-1 gratuitously

without hire charges. The witness of the respondent No.3/insurer

respondents' witness i.e. RW-1 had confirmed this fact in his

evidence. Further the RW-2 also deposed that the

appellants/respondents 1 and 2 provide cars on hire to the

customers of lodger in Taj Krishna and the hire charges would be

collected in the final bill. The tribunal should have considered that

the occupants of the car at relevant time are not the witnesses to the

fact of Director/RW-1 giving instructions to provide the car free of

hire charges. Accordingly obliging the request, the car was sent to

receive the injured at Airport, whereafter the deceased also joined

them. Further the manner of accident narrated by the injured is in PSKJ&NTRJ 5 Macmas_786,591&636_2006&cross objections

contradiction to the pleaded version, as there is reference of another

vehicle and contributory negligence. It is also evident by the

investigators report/Ex.B-14 that the service of car was extended as

complement through the deceased. The tribunal ought to have

considered the fact that the compensation for the damage of car was

paid by the insurance company. The tribunal erred in considering

Exs:B-11 and B-15 to conclude that the car and other 21 cars of the

appellants are being for rental purpose. The tribunal has granted

excessive compensation to the claimants and should have

calculated damages as per Schedule II of the Motor Vehicles Act.

Thus, the fact of using the car on hire at relevant time has not been

established by the insurer to repudiate the liability and the victims of

the accident being third party the insurer shall be held liable as per

the contract.

9. The learned counsel for the respondent No.3/insurer (for short,

'the insurer') in cross objections would contend that when the

tribunal had concluded policy violation and the insurer is not liable to

pay compensation directing to pay the compensation and to recover

from the insured is improper, particularly when the insured/owners is

solvent company with business activity. The insurer should not have

been burdened with liability particularly when the policy conditions PSKJ&NTRJ 6 Macmas_786,591&636_2006&cross objections

are violated with all knowledge by the appellants. Thus prayed for

completely absolving the insurer by setting aside the direction of pay

first and later to recover the amount from the insured/respondents 1

and 2.

10. During hearing the learned counsel for the appellants clearly

submits that they are restricting the appeals to the extent of liability

to pay compensation fixed by the tribunal.

11. We have considered the rival contentions pleaded by the

learned counsel and perused the materials on record.

12. At the outset, the accident, rash and negligent driving of the

driver of the car, death and injuries to the occupants, compensation

awarded, interest and other directions in the impugned order are not

in dispute.

13. The singular contest in all the appeals is in regard to fastening

the liability in payment of compensation. As per the appellants the

service of the car was extended as complimentary without hire

charges, as such, the use of car at relevant time should be

considered as one within private use. Per contra the contest of the

insurer was that as the car was used for hire as it is violation of

policy condition, in effect, the insurer is absolved from the liability.

PSKJ&NTRJ 7 Macmas_786,591&636_2006&cross objections

However through its Administrative Officer/RW-3 admitted that by

the relevant date the car is covered under comprehensive policy.

14. Thus the issue for consideration would be (a) whether hiring of

the car by the owner would exempt the insurer from the liability? (b)

If so, whether the direction of pay first and then recover from the

insured is sustainable?

15. The appellants through their witnesses made every effort to

portray that the car was given in gratuitous service and the insurer

by pointing the inconsistencies in the evidence strived to probabalise

the fact of lending the car on hire. Howsoever, the insurer has not

referred to any covenant in the insurance policy to attest that hiring

of vehicle would exonerate its liability and pleaded that indemnity to

hirer is covered under Indian Motor Tariff (IMT-44) which is equally

applicable to the parties to the insurance contract and its

contravention amounts to violation of policy condition.

16. To examine the liabilities and limitations of IMT-44, for ready

reference the provision is extracted hereunder:

"IMT 44. INDEMNITY TO HIRER - PACKAGE POLICY -

NEGLIGENCE OF THE OWNER OR HIRER - It is hereby

declared and agreed that in consideration of payment of an PSKJ&NTRJ 8 Macmas_786,591&636_2006&cross objections

additional premium of rupees, the insurer will indemnify any

hirer of the vehicle insured against loss, damage and liability

as defined in this policy arising in connection with the vehicle

insured while let on hire.

Provided that any such hirer shall as though he/she the

insured observe fulfill and the subject to the terms, exceptions,

conditions and limitations of this policy is so far as they apply."

17. In this context, it is pertinent to note a decision of full bench of

the Hon'ble Erstwhile High Court of Andhra Pradesh in APSRTC,

Hyderabad and another v. Kanakaratna Bai and others reported in

2012 SCC Online AP 381 in regard to the liability of the insurer

against the hired vehicle, wherein held as follows:

"86. It is however to be noticed that in all the cases, premium towards liability towards passengers and third party risk was collected. Once separate premium was collected by the Insurance Companies for covering the risk to the passengers and third parties, it is no longer open to them to escape their liability in this regard. The failure in paying the additional premium as per IMT. 44, at best, would absolve the Insurance Companies from covering the liability and loss, if any, of the APSRTC. It would not extend to protect the Insurance Companies from their acknowledged liability towards third parties as is evident from the policy documents. The Supreme PSKJ&NTRJ 9 Macmas_786,591&636_2006&cross objections

Court in Rikhi Ram AIR 2003 SC 1446 : (2003) 3 SCC 97 : 2003 ACJ 534, in no uncertain terms, held that whenever a vehicle covered by an Insurance Policy was transferred to a transferee, the liability of the insurer would not cease so far as the third party/victim is concerned, even if the owner or purchaser did not give intimation as required under the provisions of the Act. The cases on hand stand on a better footing as the insured, being the owner of the vehicle, did not transfer the title or ownership of the vehicle but only its possession. IMT. 44, as pointed out earlier, has application when the hirer of the vehicle requires protection and it does not apply to or abridge the liability of the Insurance Company in so far as third party risks are concerned.

87 xxx

88. On principle, it is not open to the Insurance Companies to absolve themselves of liability towards passengers/third party risks on the short ground that the insured vehicle has been given on hire without following the prescribed procedure. This Court in Madineni Kondaiah AIR 1986 AP 62 (FB) has already held that even transfer of the ownership of an insured vehicle without following the due procedure would not absolve the Insurance Company of liability towards third party risks. Mere transfer of possession, through hire of the vehicle, cannot stand on a worse footing or exempt the Insurance Companies from liability in this regard."

18. A careful reading of the provision and dictum in the above

noted judicial pronouncement it is evident clear that the restriction in PSKJ&NTRJ 10 Macmas_786,591&636_2006&cross objections

IMT 44 would become live as and when the hirer seeks

indemnification from the insurer, regarding the liabilities accepted in

the policy by the insured and unless additional premium has been

paid by the hirer, extension of liability of indemnification in favour of

the hirer, stands absolved for the insurer, in absence of existing

contract between them. In such position, at any stretch this

provision does not come in aid to the insurer, to repudiate the third

party/passengers/claims. In this view, restricting the liability to the

owner and exonerating the insurer is contrary to the legal position.

Hence the liability fixed by the tribunal to the hirer and