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Madhya Pradesh High Court · body

2002 DIGILAW 934 (MP)

KAMLA BAI v. STATE OF MADHYA PRADESH

2002-10-07

ARUN MISHRA

body2002
ARUN MISHRA, J. ( 1 ) THE question for consideration in the instant writ petition is whether the Madhya Pradesh State Road transport Corporation (hereinafter referred to as 'm. P. S. R. T. C. ') is maintaining the account as mandated under section 146 of motor Vehicles Act for payment of compensation to the victims of the accidents caused by its vehicles? Another question for consideration is that when the award passed in claim cases are not honoured by m. P. S. R. T. C. as such it has no right to ply the buses and the respondent No. 2 and its authorities and drivers have rendered themselves liable for prosecution and have no right to ply the buses till they are insured. ( 2 ) PETITIONER submits that petition is not against any particular order, but, challenge is to use of motor vehicles in contravention to provisions of section 146 (3) of the motor Vehicles Act by M. P. S. R. T. C. The petitioner is a widow and she preferred the claim petition for compensation, but, to her surprise even after obtaining the award, m. P. S. R. T. C. has not satisfied it. Petitioner further submits that to her knowledge m. P. S. R. T. C. is not satisfying the award passed against it in several other cases. Few instances have been cited. Petitioner travels in the buses of the M. P. S. R. T. C. Section 146 requires every vehicle be insured, if vehicle is plied without insurance or in violation of provision of section 146, is punishable under section 196 of Motor vehicles Act. Punishment is to the extent of imprisonment for 3 months or fine which may extend to Rs. 1,000. Under section 146 (3) of the Motor Vehicles Act the State or Central Government is authorized to exempt the vehicles owned by certain authorities; State transport undertaking from the policy of insurance subject to condition that it would establish fund and maintain it for meeting any liability arising out of use of any vehicle of that authority which may be incurred by that authority or any person in its employment may incur to third party. Additional amount is charged by M. P. S. R. T. C. beside the fare from passengers travelling in its vehicle for the aforesaid fund, but, still M. P. S. R. T. C. is not. Additional amount is charged by M. P. S. R. T. C. beside the fare from passengers travelling in its vehicle for the aforesaid fund, but, still M. P. S. R. T. C. is not. satisfying the awards passed by the claims Tribunal. It is not maintaining the fund as required by provisions of section 146 (3) of the Act, which is necessary to be established for enjoying exemption for compulsory insurance. As the fund is not being established and maintained, the m. P. S. R. T. C. cannot be allowed to ply the vehicles without insurance. ( 3 ) RESPONDENT Nos. 1 and 3 State of madhya Pradesh in its return contends that in exercise of power conferred under section 146 (3) of the said Act the State Government vide order dated 9. 7. 1999 granted exemption to the M. P. S. R. T. C: from getting its vehicles insured. It is further directed that a fund be created for payment of compensation in terms of the order R/1/1 dated 9. 7. 1999. Fund has been created by state Transport Undertaking as per direction of the State Government. Therefore, insurance is not mandatory. The amount towards compensation is being released in accordance with law. As per order R/l/1 exemption under section 146 (3) of the motor Vehicles Act has been continued and M. P. S. R. T. C. has been authorized to realize Re. 1 per passenger, as surcharge towards the maintenance of compensation account. ( 4 ) RESPONDENT No. 2 has filed return and additional returns, contends that the account 'accident relief fund' is being maintained in the State Bank of India, bhopal; Account No. 01000050231. Out of this fund the payment is being made to the persons who either suffer injuries or to the claimants in the event of fatal accident. Allegation of the petitioner, that in number of cases no amount of compensation has been paid to the claimants cannot be verified in the absence of details. The remedy available to the claimants is to execute the award under the provisions of the Motor Vehicles Act. ( 5 ) THIS court as per the order dated 10. 5. 2001 directed furnishing of more information by the M. P. S. R. T. C. as creation of a fund cannot be an illusory one. The remedy available to the claimants is to execute the award under the provisions of the Motor Vehicles Act. ( 5 ) THIS court as per the order dated 10. 5. 2001 directed furnishing of more information by the M. P. S. R. T. C. as creation of a fund cannot be an illusory one. Opening of an account in a bank would never mean creation of fund, something must establish in the eyes of law and must have concept as it is instance in the common parlance. ( 6 ) AN additional return has been filed pointing out that the M. P. S. R. T. C. has collected a fund at the rate of Re. 1 per passenger with effect from 1. 7. 1999. From 10. 7. 1999 to 31. 3. 2000 an amount of rs. 5,27,38,000 was collected, out of that the respondent has paid an amount of rs. 29,00,000 to the legal representatives of the deceased persons. This additional return was filed on 10. 7. 2001. Another amount of Rs. 10,00,000 has been disbursed to the persons who had suffered injuries in the accidents. Another sum of rs. 13,02,000 was given to the depot for clearing the outstanding amount of award passed by the Motor Accidents Claims tribunals. An amount of Rs. 57,27,000 has been spent for insurance premium and an amount of Rs. 4,13,07,000 was disbursed to the other divisions towards accident cases. The answering respondent has a balance of Rs. 1,02,000 as on 31. 3. 2001. During the above period there were 110 cases in which the persons suffered fatal injuries and 307 sustained injuries. In gurumukhi v. Madhya Pradesh State Road trans. Corpn. , Case No. 88 of 1990 the award is of Rs. 40,000 and amount of rs. 14,340 has been deposited. Rest of the amount would be paid by demand draft. Similarly, in Toda v. Madhya Pradesh State road Trans. Corpn. , Case No. 8 of 1989, 50 per cent of the amount has been deposited. In Claim Case No. 111 of 1997, out of Rs. 87,000, Rs. 50,000 has been paid. Remaining would be shortly deposited. There is no mala fide. Additional reply has been filed pointing out that for the period april, 2000 to March, 2001 an amount of rs. 7,75,13,000 was received and for the period April, 2001 and October, 2001 an amount of Rs. 87,000, Rs. 50,000 has been paid. Remaining would be shortly deposited. There is no mala fide. Additional reply has been filed pointing out that for the period april, 2000 to March, 2001 an amount of rs. 7,75,13,000 was received and for the period April, 2001 and October, 2001 an amount of Rs. 4,48,23,000 was received, from July, 1999 to October, 2001 total amount received is Rs. 17,46,75,000 and sum of Rs. 17,26,65,000 has been spent as per document No. 1. ( 7 ) THE learned counsel Mr. Ashok Lalwani, appearing for the petitioner submits that large number of awards are lying unsatisfied even for a decade or more. The respondents have not given the details how many awards are unsatisfied. As per own showing of the respondents, award in the claim Case Nos. 88 of 1990 and 111 of 1997 has not been satisfied. The learned counsel further submits that opening of an account is not enough. Maintenance of the account means that the award should be satisfied as per the mandate of law under section 146 (3) read with section 196 of the Act, since the awards are not being satisfied for years together, it be held that exemption granted is inoperative and the m. P. S. R. T. C. be directed to get the vehicles insured so that persons who suffer injuries or the claimants in fatal accident cases are able to receive the compensation forthwith as mandated by law. ( 8 ) MR. A. G. Dhande, the learned senior counsel appearing for the respondent m. P. S. R. T. C. submitted that an account has been opened and an effort is made by m. P. S. R. T. C. to honour the award and the remedy of execution of the award is available to the claimants. Exemption has been granted under section 146 (3) of the Motor vehicles Act, which is operative, as such no interference in the writ petition is required to be made. ( 9 ) MR. Sanjay K. Agrawal, the learned counsel appearing for respondent Nos. 1 and 3 submitted that exemption has been granted and M. P. S. R. T. C. has been authorized to realize Re. 1 per passenger for accident claim fund. It is for the M. P. S. R. T. C. to satisfy the award. ( 9 ) MR. Sanjay K. Agrawal, the learned counsel appearing for respondent Nos. 1 and 3 submitted that exemption has been granted and M. P. S. R. T. C. has been authorized to realize Re. 1 per passenger for accident claim fund. It is for the M. P. S. R. T. C. to satisfy the award. ( 10 ) BEFORE adverting to rival submissions, it is relevant to notice the provision of section 146 of Motor Vehicles Act, 1988. Section 146 of the new Act corresponds to section 94 of the old Act of 1939. Section 146 provides that no person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of Chapter XI. Provided that in the case of a vehicle carrying, or meant to carry, dangerous or hazardous goods, there shall also be a policy of insurance under the Public Liability Insurance act, 1991. Under clause (c) of sub-section (3) of section 146 it is open to the appropriate Government to exempt from the operation of sub-section (1) any vehicle owned by State transport undertaking. However, this power is subject to a rider as per proviso to sub-section (3) of section 146 that no such order shall be made in relation to any such authority unless a fund has been established and is maintained by that authority to meet any liability which that authority or any person in its employment may incur to third parties. Sub-sections (1)and (3) of section 146 are relevant and they are quoted below:"146. Necessity for insurance against third party risk, (1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this chapter: provided that in the case of a vehicle carrying, or meant to carry, dangerous or hazardous goods, there shall also be a policy of insurance under the Public liability Insurance Act, 1991. (3) The appropriate Government may, by order, exempt from the operation of sub-section (1) any vehicle owned by any of the following authorities, namely: (a) the Central Government or a State government, if the vehicle is used for government purposes connected with any commercial enterprise; (b) any local authority; (c) any State transport undertaking: provided that no such order shall be made in relation to any such authority unless a fund has been established and is maintained by that authority in accordance with the rules made in that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties. " ( 11 ) THE above quoted provision of section 146 of the Act has the public policy behind it. Number of vehicles on the road has increased phenomenally leading to an increase in road accidents. The provision is to provide sufficient means to compensate the persons afflicted and to avoid hardship. In England, law of Torts have been recognized in the shape of Road Traffic Act, 1930, the Third Parties' Rights against insurer Act, 1930 and Road Traffic Act, 1934. A system of compulsory insurance was enacted by Road Traffic Act, 1930. Its object was to reduce the number of cases where judgment for personal injury obtained against a motor owner was not met owing to lack of means in the running down action and his failure to insure against such a liability. This is how compulsory insurance was introduced to cover the liability which the owner of the vehicle may incur. The said principle has found statutory recognition under section 146 of the Act so that third parties who suffer on account of user of motor vehicle would be able to get damage for the injuries suffered and for their ability to get the damage will not depend on the financial condition of the driver of the vehicle or user causing of injuries. The Apex Court in New Asiatic insurance Co. Ltd. v. Pessumal Dhanamal aswani, 1958-65 ACJ 559 (SC), held that object of corresponding old section 94 was to enable a third party to recover whatever sum he is in law entitled despite the ability of the owner or driver to pay. The Apex Court in New Asiatic insurance Co. Ltd. v. Pessumal Dhanamal aswani, 1958-65 ACJ 559 (SC), held that object of corresponding old section 94 was to enable a third party to recover whatever sum he is in law entitled despite the ability of the owner or driver to pay. Same is the law laid down by the Full Bench of this court in Mangilal v. Parasram, 1970 ACJ 86 (MP ). ( 12 ) SECTION 146 ordains that no person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the vehicle, a policy of insurance complying with the requirements of Chapter XI. Law enacted as per section 146 has created a compulsion for insurance against third party risk. Section does not create any liability. The 'public place' in section 146 has a reference to the definition under section 2 (34) of the Act which means a road, street, way or other place, whether a thoroughfare or not, to which the public have a right of access, and includes any place or stand at which passengers are picked up or set down by a stage carriage. ( 13 ) STATUTORY obligation is cast under section 146 on every owner to get the insurance done and in case of an exemption granted under sub-section (3), similar object is fulfilled by establishment of a fund which is required to be maintained by that authority to meet any liability of authority or any person in its employment may incur to third parties. Until and unless a fund is established and maintained to honour the claim, vehicle cannot be plied. Sub-section (1) of section 146 makes insurance against third party risk compulsory, but, in case of vehicles which are owned, inter alia, by the State transport undertaking, the appropriate Government is authorized to exempt them from this provision. But, obligation is cast to establish and maintain fund for meeting any liability arising out of use of any vehicle. Section 196 of Motor Vehicles act, 1988 makes driving of uninsured vehicle an offence punishable with imprisonment which may extend to three months or fine which may extend to Rs. 1,000 or with both. Section 196 runs as under:"196. Driving uninsured vehicle. Section 196 of Motor Vehicles act, 1988 makes driving of uninsured vehicle an offence punishable with imprisonment which may extend to three months or fine which may extend to Rs. 1,000 or with both. Section 196 runs as under:"196. Driving uninsured vehicle. Whoever drives a motor vehicle or causes or allows a motor vehicle to be driven in contravention of the provisions of section 146 shall be punishable with imprisonment which may extend to three months, or with fine which may extend to one thousand rupees, or with both. " ( 14 ) IN the backdrop of aforesaid statutory mandate it is incumbent upon the state transport undertaking to establish and maintain the 'fund' in order to satisfy the claims arising out of use of its motor vehicles to third parties. ( 15 ) THE submission of the petitioner is that the 'fund' has been established, but, it cannot be said to be 'maintained' as large number of awards remain unsatisfied even for the period of a decade or more. There are large number of such cases as urged by mr. Ashok Lalwani, in which the award has not been satisfied. Thus, he submitted that it cannot be said that the M. P. S. R. T. C. is maintaining the 'fund' when it is unable to satisfy the award from its 'fund' which has been established. It has no right to ply the vehicle. ( 16 ) FIRSTLY, the action of non-payment of compensation by the M. P. S. R. T. C. even in cases where there is no stay order by the court in an appeal or other proceedings cannot be said to be a justified action. It is not in dispute at Bar that the awards passed against M. P. S. R. T. C. remain unsatisfied for the years together and claimants are made to execute the award for years together often without success. They come and go back in the corridor of the courts without seeing any fruits of the award passed in their favour by various Motor Accidents Claims Tribunals which is against the mandate of section 146 of the Act. Award on being passed has to be satisfied forthwith which is the intention of providing compulsory insurance. The M. P. S. R. T. C. is bound to carry mandate of section 146. It cannot be allowed to frustrate object of the said provision. Award on being passed has to be satisfied forthwith which is the intention of providing compulsory insurance. The M. P. S. R. T. C. is bound to carry mandate of section 146. It cannot be allowed to frustrate object of the said provision. The M. P. S. R. T. C. in its return filed on 14. 8. 2001 has made a bald statement that:" (3) That the petitioner's contention that in number of cases, no amount of compensation have been paid to the claimants cannot be verified at this juncture in the absence of details. The remedy available to the claimants is to execute the award under the provisions of Motor Vehicles Act. The petitioner has unnecessarily quoted the statutory provision of sections 196 and 146. " ( 17 ) THE stand taken by M. P. S. R. T. C. that it is for the claimants to execute the award is no solution to the obligation mandated under section 146. The question is whether it is maintaining the 'fund' in order to satisfy the award as per the statutory mandate carved out as per section 146 read with section 196 of Motor Vehicles act. There is an obligation cast, in my opinion, whenever an award is passed and has not been stayed or has attained finality to make the payment forthwith out of the fund maintained by M. P. S. R. T. C. and fund should be enough to make the payment of compensation. In other words, the maintenance of fund should be in such manner that it is adequate to honour the awards. In other words, there is a duty cast on the m. P. S. R. T. C. to satisfy the amount of award forthwith which have been passed or have attained finality and have not been stayed. This is what is intended by section 146. Right to enjoy exemption from insurance is obligated with responsibility to honour the award as is cast on the insurer. There are instances where execution of the award is pending for years together, attachment warrants are required to be issued with respect to movable and immovable property of the M. P. S. R. T. C. and large number of the awards are still left unsatisfied. There are instances where execution of the award is pending for years together, attachment warrants are required to be issued with respect to movable and immovable property of the M. P. S. R. T. C. and large number of the awards are still left unsatisfied. The action of M. P. S. R. T. C. of not honouring the award on attaining the finality ignores and overlooks the mandate of section 146 of the Act. In my opinion, it does not end in remedy of the right of execution which is available to the claimants but independent of it duty is cast on the m. P. S. R. T. C. to take steps to satisfy the awards. It is the duty cast on the State transport undertaking to voluntarily satisfy such awards which have attained finality or have not been stayed by the appellate court or there is direction to make the payment even without execution. ( 18 ) IN my opinion, M. P. S. R. T. C. has to take steps to make the payment of such award which have been passed or have attained finality or in cases where there is no stay on time frame basis, outer limit of which should not be beyond one year. Otherwise, the very purpose of establishing and maintaining the 'fund' stands frustrated. ( 19 ) LEARNED counsel for the petitioner submitted that since the awards have not been honoured for years together and simply 'fund' has been established and is not being maintained, as such vehicles plied by M. P. S. R. T. C. be not allowed to ply until and unless the vehicle is insured with the insurance company and exemption should be held to be inoperative as it is conditional on such 'fund' being established and maintained, in my opinion, the m. P. S. R. T. C. has been granted exemption by the State Government, on the condition of establishing and maintaining the account which is also otherwise statutorily prescribed as per proviso to sub-section (3) of section 146, a duty is cast on M. P. S. R. T. C. to maintain the account in such manner that it is able to satisfy the awards when they are passed in a reasonable time. [in case of failure to maintain such 'fund' day is not away when court may be compelled to say that its vehicles should be insured before they are driven at a public place]. However, such extreme step is not necessary to be adopted as fund has been created and the State Government has authorized the m. P. S. R. T. C. to recover Re. 1 per passenger as contribution towards fund, the duty is cast on M. P. S. R. T. C. if the fund is falling short to contribute such amount as may be necessary to meet deficit in the fund and to make the payment of awards which have attained finality in a reasonable time which is coextensive liability, a condition to enjoy exemption from insurance. The amount of fund which is realized has to be spent only towards the permissible items as such fund is created under the statutory mandate of section 146 (3 ). ( 20 ) IN the circumstances it is directed that the M. P. S. R. T. C. to take effective steps to maintain the 'fund' as mandated under section 146 (3) of the Motor Vehicles Act. The 'fund' be maintained in such manner that amount is enough at all times to meet the liability arising out of use of motor vehicle and the amount of this fund be used only for the purposes allowed under section 146 (3 ). The M. P. S. R. T. C. is also directed to satisfy all the awards passed by M. A. C. Ts. which have not been stayed or awards which have attained finality within outer limit of one year on the date they are passed on not being stayed or on attaining finality. Let awards passed before 1. 10. 2001 be satisfied in case they have not been stayed or have attained finality in 4 months. Let M. P. S. R. T. C. satisfy the awards as directed above. Costs on parties. Orders accordingly. .