National Insurance Company Ltd. v. Ramesh Kumar — 1998 DIGILAW 90 (HP)

JUDGMENT Lokeshwar Singh Panta, J. 1. The Motor Accident Claims Tribunal, Solan, in Claim Petition No. 44-S/2 of 1989 has awarded compensation amount of Rs. 1,66,500/- in respect of the death of Mohan Lal and amount of Rs. 48,021/- towards the loss of goods by judgment and order dated August 24, 1990 to the heirs of the deceased, who expired on the night intervening September 17 and 18, 1998 in the accident. That order is challenged by the Insurance-company by filing this first appeal. 2. Briefly stated, the facts giving rise to the present appeal are that Shri Mohan Lal, aged about 55 years resident of Junga, Tehsil and District. Shimla was travelling in truck bearing registration No. HPR. 89 owned by M/s. Himachal Wholesale Syndicate, Parwanoo and S/Shri Ram Murati and Ramesh Kumar were its partners. The truck was being loaded with goods worth about Rs. 50,000/- belonging to the deceased and the goods were being carried from Parwanoo to Junga. The said truck met with an accident near Barog on the intervening night September 17 and 18, 1988 at about 12.30 hours resulting in the death of Mohan Lal and complete damage to his goods. The legal representatives of deceased Mohan Lal filed a claim petition alleging that the accident took place due to rash and negligent driving of the truck by its driver and they claimed compensation of Rs. 3,00,000/- for the death of Shri Mohan Lal and a sum of Rs. 1,00,000/- due to loss of goods including profit. The claim petition was filed against Respondents No. 6 and 7 being owners of the truck and Insurance Company-Appellant herein with whom the ill-fated vehicle was insured. 3. The claim petition was being resisted and contested by Respondents. In their written statement Respondents 6 & 7 herein admitted that on the relevant date- Mohan Lal was carrying his goods in the truck from Parwanoo to Junga and that he was also travelling in the said truck along with this goods. It was also admitted that Mohan Lal died in the said accident. They, however, denied that the accident was due to rash and negligent driving of the truck by its driver. Their defence was that the accident took place due to jamming of the steering wheel and not due to rash and negligent driving of the vehicle by its driver. It was also admitted that Mohan Lal died in the said accident. They, however, denied that the accident was due to rash and negligent driving of the truck by its driver. Their defence was that the accident took place due to jamming of the steering wheel and not due to rash and negligent driving of the vehicle by its driver. It was further alleged that the deceased was only a small shop-keeper and his income as alleged by the claimants was not Rs. 4,000/- per month. It was also alleged that goods worth about Rs. 35,000/- were being carried in the truck involved in the accident and such goods after the accident were taken to Junga by the claimants and that goods of about Rs. 1,500/- only were damaged. They have further alleged that Respondent No. 7 herein is the owner of the ill-fated truck. Respondent No. 6 herein had no connection with the truck. 4. Appellant-Insurance Company while resisting the claim petition, pleaded that the deceased Mohan Lal at the relevant time was travelling in the truck as a gratuitious and unauthorised passenger and the truck had not carried the goods on the day of the accident. It was alleged that the risk of an unauthorised and gratuitious passenger was not covered under Sections 95 and 96 of the Motor Vehicle Act, 1939 (Act No. 4 of 1939). In the alternative, it was pleaded that the deceased was not a third party and, as such, no claim for compensation for loss of goods could be made against the Appellant-Company. It was also pleaded that the driver of the truck had no valid licence and the truck was being plied without a route permit against the provisions of Act No. 4 of 1939. Appellant-Insurance Company also alleged that the maximum liability of the Company under Section 95 of Act No. 4 of 1939 and in terms of the policy was limited. The Appellant-Company denied that the accident occurred due to rash and negligent driving of the vehicle by its driver. It was next stated that accident took place due to sudden and unavoidable mechanical defect. 5. The Appellant-Company denied that the accident occurred due to rash and negligent driving of the vehicle by its driver. It was next stated that accident took place due to sudden and unavoidable mechanical defect. 5. On the pleadings of the parties, the learned Tribunal on 10.1.1990 framed the following issues: (i) Whether the accident has occurred due to rash and negligent driving of the driver of the truck No. HPR-89?...OPP (ii) If the issue No. 1 is proved in affirmative, to what amount, the Petitioners are entitled to get the compensation, as alleged and from whom and to what extent?...OPP (iii) Relief. The learned Tribunal after appreciation of the evidence and hearing the learned Counsel for the parties returned the findings on all the issues in favour of the claimants and held the Appellant-Company alongwith Respondent No. 7 herein jointly and severally liable to pay the amount of compensation of Rs. 2,14,521/- including loss of goods along with interest and costs to the claimants. Feeling aggrieved, the Appellant-Company has assailed the award of the Tribunal in this appeal. 6. The learned Counsel for the Appellant-Company contended that the deceased Mohan Lal at the time of travelling in the truck was not a passenger but he was travelling as a gratuitous and unauthorised passenger and, therefore, under the contract of Insurance Policy Ext. R-1, the truck involved in the accident had been insured with the Appellant-Company covering only four coolies, cleaner and driver, therefore, the impugned award is not sustainable in the eyes of law. She next contended that the maximum limits of the amount of the Appellant-Company's liability in respect of one claim or series of claim arising out of one event is Rs. 50,000/- only and the Appellant-Company cannot be held to pay excess amount than the amount of the Company's liability and, therefore, the award is bad in law and deserves to be set aside. The learned Counsel also contended that under Section II-1 (i) of the policy liabilities to the third party is limited to Rs. 50,000/- and under Section II(1) (ii) of the Policy, the Appellant-Company shall not be liable in respect of damage to the property carried in the truck in question. Therefore, in the present case, the learned Tribunal below has wrongly held the Appellant-Company liable for compensating the claimants for the loss of goods. 50,000/- and under Section II(1) (ii) of the Policy, the Appellant-Company shall not be liable in respect of damage to the property carried in the truck in question. Therefore, in the present case, the learned Tribunal below has wrongly held the Appellant-Company liable for compensating the claimants for the loss of goods. She also contended that the limit of liability for the loss of goods in the accident under the Motor Vehicle Act, 1988 and as amended by the Motor Vehicles (Amendment) Act, 1994 is limited to Rs. 6,000/- and the present case is not covered under the provisions of the new Act as the accident had occurred when Act No. 4 of 1939 was in force. Thus, the compensation for the loss of goods awarded in favour of the claimants and against the Appellant-Company is wholly illegal and the award on this ground too deserves to be set aside. 7. In opposition to the contentions of the learned Counsel for the Appellant-Company, the learned Counsel for the Respondents contended that if the owner of the goods travels in the vehicle along with his goods, the liability of the Insurance Company is covered by Section 95(1)(b)(i) and a hirer of a goods vehicle will be deemed to be a passenger in the vehicle and hence the tortious liability of the owner towards him is covered by the insurance Policy. They contended that in the present case, Appellant-Company is liable to indemnify the insured against all sums in respect of (i) death of or bodily injury to any person caused by or arising out of the use including the loading and/or unloading of the Motor Vehicle Act and (ii) damage to property caused by the use (including the loading and/or unloading) of the Motor Vehicle. They also contended that in the schedule of premium of the Insurance Policy (Ext. R-1), the owner of the vehicle has paid Rs. 100/- for increased T.P. Limits and, thus, the truck was insured under a comprehensive policy and the liability of the Appellant-Company is unlimited. They also contended that under IMP. They also contended that in the schedule of premium of the Insurance Policy (Ext. R-1), the owner of the vehicle has paid Rs. 100/- for increased T.P. Limits and, thus, the truck was insured under a comprehensive policy and the liability of the Appellant-Company is unlimited. They also contended that under IMP. 14(b) the Appellant-Company will indemnify the insured against his legal liability in respect of death of or bodily injury to authorise non-paying passengers not being an employee of the insured not carried for hire or reward provided the person is (a) the owner or representative of the owner of the goods and (c) any person directly connected with the journey in one form or another. They contended that the Appellant-Company had agreed in the Policy to indemnify the insured in respect of damage to goods of a third party, therefore, the Appellant-Company could be saddled with damage for the loss of the goods of the deceased and the learned Tribunal has rightly held the Appellant-Company liable to pay the damages. 8. The learned Counsel have placed reliance on the judgment in Divisional Manager, Oriental Insurance Co. Ltd. v. Jasoda Mohanta and Ors. 1997 ACJ 284, in support of their claim. It is held in that case that under Section 147(1)(b)(i) of Motor Vehicles Act, 1988 if a person travelling in a goods vehicle along with his goods when the vehicle met with an accident, the Insurance Company cannot escape its statutory liability to pay compensation as the words 'any person' used in Section 147(1)(b)(i) include persons carried by even a goods vehicle and are not confined to third party only. In support of their1 contention that the liability of the Appellant-Company is unlimited reliance is placed in New India Assurance Co. Ltd. v. Kamlaben Sultansinh Jadav and Ors. AIR 1993 Guj 171. In that case, the extent of statutory limit of the Insurance-Company to indemnify the insured in case where the passenger is travelling by a goods vehicle by paying fare was held to be covered by clause (a) of Sub-section (2) of Section 95 of Act No. 4 of 1939 and it was also held that after amendment in clause (a) of Sub-section (2) of Section 95, from 1st October, 1982, the limit for statutory coverage is Rs. 1,50,000/- for goods vehicle. 1,50,000/- for goods vehicle. Reliance has also been placed on the judgment of Bombay High Court in United India Insurance Co. Ltd. v. Kantabai and Ors. 1991 ACJ 22. In that judgment, it is held that liability of third party risk will not become unlimited or higher than the statutory liability in case of a comprehensive policy under Section 95(2)(a) of Act No. 4 of 1939. In arriving at the conclusion, the learned Judges placed reliance in National Insurance Co. Ltd. v. Jugal Kishore 1998 ACJ 270 (SC). In National Insurance Co. Ltd. v. Faqir Chand and Ors. AIR 1995 J&K 91, relied by the learned Counsel for the Respondents, it is held that third party includes passenger travelling in bus. 9. In the present case, the claimants examined Smt. Sheela Devi (PW.3) widow of the deceased who stated that the age of the deceased was about 55 years at the time of the accident and his monthly income was about Rs. 4,000/- from business. She stated that the deceased used to give her Rs. 4,500/- per month towards household expenses. Copies of Income Tax assessment orders Exts. PW 6/A and PW 6/B pertaining to the assessment years 1986-87 and 1987-88 respectively placed on record would go to show that during the assessment year 1986-87 the income of the deceased was Rs. 35,000/- per annum that is Rs. 2,871/per month. According to assessment order Ext. PW 6/B the deceased had a net assessable income of Rs. 27,200/- per annum, that is, Rs. 2,767/per month during the assessment year 1987-88. The Appellant-Company and Respondents No. 6 and 7 have not brought on record evidence in rebuttal of the income of the deceased. The learned Tribunal after taking into consideration the entire evidence placed on the record assessed the income of the deceased Rs. 3,000/- per mensem. The learned Tribunal concluded that the deceased was contributing Rs. 2,500/- towards household expenses. PW Smt. Sheela Devi has admitted that the business of her husband is being now looked after by her son Ramesh Kumar, who is contributing only Rs. 1,500/- per month towards household expenses, since the business has suffered due to the death of her husband. The learned Tribunal based upon the evidence of PW Smt. Sheela Devi assessed Rs. 1,000/- per month actual loss of dependency. The multiplier of 12 years was applied and the claimants were awarded compensation of Rs. 1,500/- per month towards household expenses, since the business has suffered due to the death of her husband. The learned Tribunal based upon the evidence of PW Smt. Sheela Devi assessed Rs. 1,000/- per month actual loss of dependency. The multiplier of 12 years was applied and the claimants were awarded compensation of Rs. 1000 X 12 X 12=1,44,000/-. In addition to the above compensation, further sum of Rs. 15,000/- as loss of consortium and Rs. 7,500/- as compensation for the loss due to sufferings were also awarded. The total compensation awarded in favour of the claimants was Rs. 1,66,500/- we find no illegality and perversity in the assessment of the compensation of the Tribunal based upon sound appreciation of evidence and reasoning. 10. The first contention of the learned Counsel for the Appellant-Company that deceased Mohan Lal was travelling in the truck involved in the accident was not a passenger in the vehicle for hire or reward within the meaning of the Act, is not tenable. In New India Assurance Co. Ltd. v. Mrs. Usha Rani 1989 (2) Shim L.C. 313, the learned Single Judge of this Court has held that when a hirer of goods vehicle is travelling by the same vehicle along with his goods, he must be deemed to be a passenger in the vehicle for hire or reward within the meaning of clause (ii) of the proviso to Section 95 (1) of the Act and hence the tortious liability of the owner towards him is covered by the Insurance Policy. Similar view has been taken by a Full Bench of Gujarat High Court in New India Assurance Co. Ltd. v. Kamlaben Sultansinh Jadav and Ors. AIR 1993 Guj 171 and learned Single Judge of Orissa High Court in Divisional Manager, Oriental Insurance v. Jasoda Mohanta and Ors. 1997 ACJ 284. In Amrit Lal Sood and Anr. v. Kaushalya Devi Thapar and Ors. (1998) 3 SCC 744, the Hon'ble Judges dealing with the provisions of Sections 94 and 95 of Motor Vehicles Act, 1939 held that under the policy insurer agreeing to indemnify the insured against ail sums which the insured shall become legally liable to pay in respect of death of or bodily injury to any person, words 'any person' would include 'gratuitous' passenger. Thus, based upon the law laid down in the above-cited judgments, the Appellant-Company has been rightly held liable to pay compensation in respect of the death of Mohan Lal who was admittedly travelling in the truck involved in the accident. 11. Now, the only question for determination is whether the liability of the Appellant-Company is limited to Rs. 50,000/- or unlimited as contended by the learned Counsel for the Respondents and the amount of compensation awarded by the Motor Accident Claims Tribunal was beyond the said liability, on account of the death of Mohan Lal. We have meticulously examined the terms and conditions of Insurance Policy (Ext. R-1) under Section II-1(i) of Insurance policy the limits of liability of the Appellant-Company in respect of any one claim or series of claims arising out of one event is Rs. 50,000/-. On perusal of the schedule of premium, it cannot be said that additional amount of premium was paid by the owner of the vehicle making the Insurance Policy comprehensive and thereby raising the limits of liability of the Appellant-Company unlimited. In New India Assurance Co. Ltd. v. Shantibai (Smt.) and Ors. (1995) 2 SCC 539, it is held that under Section 95(2)(b) of Motor Vehicles Act, 1939 the comprehensive insurance of the vehicle and payment of higher premium on this score, however, did not mean that the limit of the liability with regard to third party risk become unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act. For this purpose a specific agreement has to be arrived at between the owner and the Insurance-Company and separate premium has to be paid on the amount of liability undertaken by the Insurance-Company in this behalf. In United India Insurance Co. Ltd. v. Kamla Rani and Ors. 1997 ACJ 1081, the Full Bench of Punjab and Haryana High Court held that under Section 95 (2)(a) of Motor Vehicles Act, 1939 if the policy envisages that liability of Insurance-Company of goods vehicle is limited to meet the requirements of Section 95 of the Act, the liability of Insurance Company is limited to Rs. 50,000/- only. In the present case, the premium which has been paid is at the rate of Rs. 8/- per coolies and Rs. 16/- for cleaner under Section 95 (2)(b) (II) of the Motor Vehicles Act, 1939. 50,000/- only. In the present case, the premium which has been paid is at the rate of Rs. 8/- per coolies and Rs. 16/- for cleaner under Section 95 (2)(b) (II) of the Motor Vehicles Act, 1939. There is no specific contract between Appellant-Company and Respondents No. 6 and 7 herein to cover unlimited liability in respect of accident to a passenger. In the absence of such an express agreement, the Policy covers only statutory liability. Even if the Insurance Policy is a comprehensive policy, the mere fact will not help the claimants in any manner. The contention of the learned Counsel for the Respondents that the liability of the Appellant-Company under Insurance Policy (Ext. R-1) is unlimited is unsustainable. The settled law of the Supreme Court in New India Assurance Co. Ltd. v. Shantibai (Smt.) and Ors. case (supra) is that liability of the third-party risk does not become unlimited or higher than the statutory liability in case of a comprehensive policy as well. In the present case, the limits of the amount of the Appellant-Company's liability under Section II-1 (ii) in respect of any one claim or series of claims arising out of one event is limited to Rs. 50,000/-. The mere fact that the Insurance Policy is a comprehensive policy will not help the claimants in any manner. As pointed out by the Supreme Court in the case of National Insurance Co. Ltd. v. Jugal Kishore (1988) 1 SCC 626, comprehensive policy only entitles the owner to claim reimbursement of entire amount of loss or damage suffered up to the estimated value of the vehicle. It does not mean that the limit of liability with regard to third-party risk becomes unlimited or higher than the statutory liability. Reference in this connection is also made to the case of M.K. Kunhimohammed v. P.A. Ahmedkuty (1987) 4 SCC 284. In the present case, specific agreement is absent and the statutory liability of the Appellant-Company under the Insurance Policy is limited to Rs. 50,000/- for each individual passenger under Section 95 (1)(b)(ii) of the Motor Vehicles Act, 1939. 12. The claimants made claim of Rs. 50,000/- as compensation for the loss of goods which were being carried by deceased in the ill-fated truck. Respondents No. 6 and 7 alleged in their written statement that goods were worth Rs. 50,000/- for each individual passenger under Section 95 (1)(b)(ii) of the Motor Vehicles Act, 1939. 12. The claimants made claim of Rs. 50,000/- as compensation for the loss of goods which were being carried by deceased in the ill-fated truck. Respondents No. 6 and 7 alleged in their written statement that goods were worth Rs. 35,000/- only and that the entire goods were collected by the claimants after the accident and taken to Junga and stated that at the most they had suffered the loss of Rs. 1,500/-. To substantiate their stand, the claimants have produced on record the copies of bills (Exts. PW 4/A, PW4/B, PW 5/A to PW5/G) in respect of the goods purchased by the deceased at Parwanoo which were being transported by him in the truck involved in the accident. A careful perusal of the said bills, goods worth Rs. 48,021/- were purchased by the deceased at Parwanoo on September 17, 1988 and for carrying these goods he hired the said truck. The learned Tribunal below has noticed that there is no evidence on record to show that such goods were carried away by the claimants from the site of the accident and it could not be, believed that the Appellant-Company and Respondents No. 6 and 7 would have allowed the claimants to carry away the goods without obtaining the requisite receipt from them. Besides, a case regarding accident must have been registered by the Police and the Police must have taken possession of the truck involved in the accident and other articles including goods loaded therein. No such evidence is forthcoming and the only conclusion drawn by the Tribunal is that no goods whatsoever were carried by the claimants and, therefore, they were held entitled for compensation to the tune of Rs. 48,021/-. It has been stated by the learned Tribunal that Respondent No. 7 herein has specifically stated that the ill-fated truck was owned by him and that Respondent No. 6 herein had nothing to do with the same, therefore, Respondent No. 6 was not held liable to pay any compensation to the claimants. The Appellant-Company and Respondent No. 7 herein were held liable to pay the compensation to the claimants. We find no evidence on record to differ with the finding of the learned Tribunal below that goods worth of Rs. The Appellant-Company and Respondent No. 7 herein were held liable to pay the compensation to the claimants. We find no evidence on record to differ with the finding of the learned Tribunal below that goods worth of Rs. 48,021/- were not destroyed in the accident and the claimants have been rightly held entitled to receive the loss of goods under Section 95 (1)(b)(i) of the Motor Vehicles Act, 1939. 13. The only question which involves for consideration is whether the Appellant-Company has been rightly held to pay the entire amount of compensation awarded for the loss of the goods or the liability of the Appellant-Company is limited. As regards the liability of the Appellant-company, the learned Counsel has pointed out that the Appellant-company was under no statutory obligation to cover any contractual liability as has been provided in proviso (iii) to Section 95(1)(b) of the Act and the Appellant-company has in its policy not agreed to indemnify the vehicle owner in respect of damage to goods of the 'third party' arising during transport under the contract of carriage. 14. The Insurance Policy marked Ext. R-1 provides for no liability of the Insurance Company to 'third party in respect of damage to the goods under transport. The relevant clause (d) of Section II of the Policy dealing with the liability to 'third parties' reads thus: The company shall not be liable in respect of damage to property belonging to or held in trust by or in the custody or control of the insured or a member of the insurer's house-hold or being conveyed by the Motor Vehicle. From the Insurance Policy, therefore, it is apparent that the Appellant-company has not agreed to indemnify the insured in respect of damage to property being conveyed by the Motor Vehicle. The insured owner of the vehicle was under a contractual obligation to transport the goods belonging to the deceased to destination in safe condition. But because of the damage to the goods in transit, the owner of the vehicle i.e. Respondent No. 7 herein under contractual liability was to compensate for the loss of the goods and this contractual liability has not been covered under Insurance Policy. As such, the liability to pay damages in respect of goods damaged in the Motor Accident during the transport is of Respondent No. 7 herein and not of the Appellant-Company. As such, the liability to pay damages in respect of goods damaged in the Motor Accident during the transport is of Respondent No. 7 herein and not of the Appellant-Company. The award of the Tribunal holding the Appellant-company liable to pay the compensation amount for the loss of the goods of the deceased is unsustainable. No other point has been urged by the learned Counsel for the parties. 15. The appeal is, therefore, partly allowed. The liability of the Appellant-Company and Respondent No. 7 herein to pay the amount of the award was joint and several. We make it clear that the fact that the appeal is allowed to the above extent and the liability of the Appellant-Company is limited to Rs. 50,000/- along with interest for the loss of the life of Mohan Lal deceased in the accident but it does not affect in any manner the liability of Respondent No. 7 herein who is admittedly owner of the truck involved in the accident, to pay the amount of compensation in excess of the statutory limited liability of the Appellant-company and damages to the goods awarded by the Tribunal below along with interest. There will be no order as to costs.