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2006 DIGILAW 1509 (RAJ)

National Insurance Co. Ltd. v. Mohani Bai

2006-05-05

DINESH MAHESHWARI, S.N.JHA

body2006
Judgment 1. These special appeals are directed against the common order of the learned Single Judge dated 02.02.2005 in bunch appeals under Section 173 of the Motor Vehicles Act, 1988 arising from the award of the Motor Accident Claims Tribunal, Udaipur allowing compensation to the claimants. The claim petitions related to the same incident in which 16 persons lost their lives and 48 suffered injuries in the motor accident. The appeals before the Single Judge were dismissed against the claimants but admitted against the owner on 14.07.2004. While dismissing the stay application, the learned Judge directed the appellant Insurance Company to deposit the amount of compensation awarded by the Tribunal which could be paid to the claimants in terms of the award. The owner later filed application on 14.01.2005 seeking reconsideration of the said direction on the basis of the decisions of the Supreme Court in New India Assurance Co. Ltd. vs. Asha Rani 2003 (2) SCC 223 and Oriental Insurance Co. Ltd. vs. Devireddy Kona Reddy, 2003 (2) SCC 339 . While considering the said application, at the request of learned Counsel for the parties, the appeals were finally heard and dismissed. The learned Single Judge held that the ground on which the appellant Insurance Company sought to avoid the award was not available to it and dismissed the appeals. 2. Case of the appellant-Insurance Company is that the vehicle in question had a sitting capacity of 38 passengers, besides Driver and Conductor and thus in all upto 40 persons could travel in the bus. Under the contract of insurance, the owner had paid premium for third party risk @ Rs. 110/-per passenger and Rs. 30/-each for the Driver and Conductor. At the time of accident, however the vehicle was carrying about 70-80 passengers which is evident from the number of passengers dead and injured. Allowing passengers to travel in excess of the sitting capacity according to the appellant was a contravention of the condition of permit as well as insurance policy within the meaning of Clause (c) of Section 149(2)(a)(i) of the Act and, therefore, the liability of compensation could not be passed on to the appellant Company. Allowing passengers to travel in excess of the sitting capacity according to the appellant was a contravention of the condition of permit as well as insurance policy within the meaning of Clause (c) of Section 149(2)(a)(i) of the Act and, therefore, the liability of compensation could not be passed on to the appellant Company. The Tribunal found that the vehicle was carrying passengers in excess of the capacity but did not accept the case of the Insurance Company that it amounted to contravention of policy with the meaning of Section 149(2)(a)(i)(c) of the Act and accordingly passed the award against the appellant. The learned Single Judge affirmed the award of the Tribunal and the Insurance Company has come to the Division Bench in these appeals. 3. The only point for consideration is whether carrying passengers in excess of the prescribed capacity constitutes breach of condition of policy within the meaning of Clause (c) of Section 149(2) (a)(i) of the Motor Vehicles Act and the appellant can avoid the liability cast upon it under Section (1) of Section 149 read with Sub-sections (2) and (5) of the Section 147 of the Act on such ground. Section 146 of the Motor Vehicles Act prohibits use of motor vehicle except as a passenger, in a public place, without a policy of insurance complying with the requirements of Chapter XI. The section may be quoted so far as relevant as under:- “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: ........................ ............................ .......................... Section 147 of the Motor Vehicles Act deals with the requirements of policies and limits of liability. The relevant part thereof runs as under:-“147. ............................ .......................... Section 147 of the Motor Vehicles Act deals with the requirements of policies and limits of liability. The relevant part thereof runs as under:-“147. Requirements of policies and limits of liability.-(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- .(a) is issued by a person who is an authorised insurer; and .(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2) .(i) against 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 authorised 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; .(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place: ........................ ............................ .......................... .(2) Subject to the proviso to Sub-section (1), a policy of insurance referred to in Sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:- .(a) save as provided in Clause (b), the amount of liability incurred; .(b) in respect of damage to any property of a third party, a limit of rupees six thousand: ........................ ............................ .......................... .(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.” Section 149 deals with the obligation of the insurer to satisfy Judgment s and awards against the insured in respect of third party risks. So far as relevant for the purpose of this case the section may be quoted as under:-“149. So far as relevant for the purpose of this case the section may be quoted as under:-“149. Duty of insurers to satisfy Judgment s and awards against persons insured in respect of third party risk.-(1) If after a certificate of insurance has been issued under Sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, Judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147 (being a liability covered by the terms of the policy) [or under the provisions of Section 163-A] is obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the Judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactement relating to interest on Judgment s. .(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any Judgment or award unless, before the commencement of the proceedings in which the Judgment or award is given the insurer had notice through the Court or, as the case may be, the claims Tribunal of the bringing of the proceedings, or in respect of such Judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:- .(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:- (i) a condition excluding the use of the vehicle:- .(a) ......................... .(b) ......................... .(c) for a purpose not allowed by the permit under which the vehicle is used. Where the vehicle is transport vehicle...............” ................... ................................ ........................ 4. .(b) ......................... .(c) for a purpose not allowed by the permit under which the vehicle is used. Where the vehicle is transport vehicle...............” ................... ................................ ........................ 4. From a conjoint reading of the above provisions it would appear that it is mandatory to obtain a policy of insurance covering third party risks where a motor vehicle is used in a public place. Any liability in respect of any accident is covered by the policy of insurance upto the limits as mentioned in Sub-section (2) of section 147 and the insurer is liable to indemnify the person (s) specified in the policy in respect of any liability covered by the person. Under Sub-section (1) of Section 149, after a certificate of insurance has been issued under Section 147 (3), and a Judgment or award in respect of any liability covered by a policy in terms of Section 147(1)(b) of Section 163-A is obtained against any person insured, notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, subject to the provisions of this section, he is liable to pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured, as if he was the Judgment debtor in respect of the liability. Under Sub-section (2), the insurer is not liable unless he has had notice of the proceedings or the Judgment or award; further, on receipt of notice of the proceedings, the insurer is entitled to be made a party to the proceedings and to defend himself on the grounds mentioned under various clauses/sub-clauses of the sub-section. The insurer cannot defend the action on any ground other than those specified in these clauses and sub-clauses. 5. Shri Jagdish Vyas, learned Counsel for the appellant submitted that carrying excess passengers amounted to breach of the condition of policy in terms of Sub-clause (c) of Clause (a)(i) of Sub-section (2) of Section 149 and, therefore, the appellant can successfully challenge the award and avoid the burden of compensation. Clause (c) refers to purpose of use of the vehicle and the question is whether carrying excess passengers amounts to breach of purpose within the meaning of Sub-clause (c) of Clause (a)(i) of Section 149(2). The point is not res integra as would appear from decisions hereinafter referred to. 6. Clause (c) refers to purpose of use of the vehicle and the question is whether carrying excess passengers amounts to breach of purpose within the meaning of Sub-clause (c) of Clause (a)(i) of Section 149(2). The point is not res integra as would appear from decisions hereinafter referred to. 6. The first decision which we may notice is B.V. Nagaraju vs. M/s. Oriental Insurance Co. Ltd., AIR 1996 SC 2054 = 1996(4) SCC 647 . That was a case of goods vehicle which was entitled to carry six workmen excluding the driver. The vehicle met with an accident and suffered major damages. At the time of accident it was carrying nine persons. The appellant lodged claim under the Consumer Protection Act, 1986 for reimbursement of the repair charges/damages. The company denied the liability altogether on the ground that the vehicle was a goods vehicle which could not be used for carrying passengers. The State Commission allowed the claim to the extent of Rs. 75,700/-. On appeal by the Insurance Company, the National Commission took the view that the policy did not cover use for carrying passengers in the vehicle except employees (other than the Driver), not exceeding 6 in numbers, and set aside the decision of the State Commission. The Supreme Court held that:- "Misuse of the vehicle was somewhat irregular though but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident. In the instant case however, we find no such contributory factor." The Court relied on Skandia Insurance Co. Ltd vs. Kokilaben Chandravadan, AIR 1987 SC 1184 = 1987 (2) SCC 654 , in which while considering the question of liability of the Insurance Company in accident claim cases, it was observed that:-"when the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependants on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice. The Court could not but opt for the former view. 7. The Court could not but opt for the former view. 7. The decision in S.V. Nagaraju, it may be mentioned, has been consistently followed in subsequent cases and similar objection of the Insurance Company regarding the alleged breach of the condition specified under Section 149(2)(a)(i)(c) on account of carrying of excess passengers than permitted under the permit, has been rejected. 8. Before referring to the subsequent decisions we feel tempted to notice the observations of Justice Krishna Iyer of Kerala High Court, as he then was, while considering a similar plea in Kesavan Nair vs. State Insurance Officer, 1971 KLT 380 , decided in the context of the corresponding provisions of the old Motor Vehicles Act of 1939, as under:- "The argument is fallacious and confuses between the purpose for which the vehicle is used and the conditions subject to which such purpose is effectuated. The purpose of the stage carriage was to carry passengers and, in this case, it is obvious that the bus was carrying passengers. If it had been used not for carrying human beings but goods like a truck, there might have been user for an unwarranted purpose. On the other hand if in carrying out the sanctioned purpose, namely transporting passenger, any conditions are violated either by overspeeding or overloading, for example there may be a violation of the conditions of the permit, but one cannot say that by that breach, the vehicle is used for a purpose different from the one authorised by the permit." 9. In United India Insurance Co. Ltd. vs. Sabeer Ali, 2000 ACJ 839, the vehicle was carrying 17 persons as against limit of 6 passengers including Driver under the permit. Repelling the objection of the Insurance Company that the carrying of excess passengers amounted to breach of condition of policy, a Division Bench of the Kerala High Court held that under Section 149(2)(a)(i)(c), the Insurance Company can be absolved if the vehicle involved in the accident was being used for a purpose not allowed by the permit under which the vehicle was used. Where more passengers than the number permitted were found travelling in the vehicle, it cannot be said to be use for a purpose other than purpose for which permit was granted. Where more passengers than the number permitted were found travelling in the vehicle, it cannot be said to be use for a purpose other than purpose for which permit was granted. The Court observed that if the vehicle was used for carrying goods - and not passengers - then it would have come within the purview of Clause (c). So also, if it was permitted to be used as a public goods carrier but was used to carry passengers then also it could come under Clause (c). Merely because more number of passengers than was allowed under the permit were travelling, it cannot be said that the vehicle was used for a purpose not allowed by the permit. It may amount to a violation of permit conditions regarding number of persons to be carried in the vehicle. But that will not be a ground under Clause (c). We are in complete agreement with these observations. 10. In Madras Motor & General Insurance Co. Ltd. vs. Nanjamma, 1977 ACJ 241, a Division Bench of the Karnataka High Court held that so long taxi car was being used for carrying passengers, merely because there was overloading, it cannot be said that the car was used for a different purpose. 11. In National Insurance Co. Ltd. vs. Zaina & Ors., 2001 ACJ 1614, where taxi was insured for carrying five passengers but was actually carrying more resulting in death of all of them in the accident, the Jammu and Kashmir High Court taking similar view held that it could not be said that there was violation of the purpose for use of the vehicle constituting breach of the condition of policy of insurance. Such a breach may be an offence otherwise but does not fall under Section 149(2)(a)(i) (c) of the Act. 12. Another Division Bench of Kerala High Court in Parukutty vs. Kerala State Road Transport Corporation & Ors., 2004 ACJ 1858, observed that merely because the vehicle was overloaded it cannot be said that the vehicle was used for a purpose other than the purpose for which the permit is granted. The purpose for which the autorickshaw was registered was to carry passengers as a taxi vehicle and mere overloading of the vehicle will not oust the liability of the Insurance Company as there is no violation of Section 149(2)(a)(i)(c). 13. In National Insurance Co. The purpose for which the autorickshaw was registered was to carry passengers as a taxi vehicle and mere overloading of the vehicle will not oust the liability of the Insurance Company as there is no violation of Section 149(2)(a)(i)(c). 13. In National Insurance Co. Ltd. vs. Raghuvir Singh & Ors., 2005 (IV) ACC 438, a Division Bench of the Uttranchal High Court rejected the similar contention on behalf of the Insurance Company. The Court held that permit of vehicle was for carrying the passengers. Carrying passengers beyond the permitted limit does not amount to fundamental breach of policy and does not provide ground to the Insurance Company to avoid the liability. The Madhya Pradesh High Court took similar view in Oriental Insurance Co. Ltd. vs. Bare Lal & Ors., 1998 ACJ 248 . 14. A special mention may be made of State of Maharashtra vs. Nanded-Parbhani Z.I.B.M.V. Operator Sangh, AIR 2000 SC 725 = 2000 (2) SCC 69 . In that case, the vehicle was detained under Section 207 of the Motor Vehicles Act and penal action was taken against the owner for carrying passengers more than the number specified in permit. The question arose as to whether carrying passengers more than number specified in the permit amounts to contravention of Section 207(1) of the Motor Vehicles Act. Section 207(1) empowers the police officer or any person authorised in this behalf by the State Government to seize and detain the vehicle if it has been used in contravention of any condition of permit relating to the purpose for which the vehicle could be used. Upholding the decision of the Bombay High Court, allowing compensation for detaining and seizing the vehicle, the Supreme Court considered the meaning of term purpose in Secion 207(1) of the Act. though the term came to be interpreted in a somewhat different context, the observations appear to be apposite and relevant in the instant case and they may usefully be quoted as under:- "In our opinion, the purpose would only refer to a contingency when a vehicle having a permit of stage carriage is used as a contract carriage or vice versa or where a vehicle having a permit for stage carriage or contract carriage is used as a goods vehicle and vice versa. But carrying passengers more than the number specified in the permit will not be a violation of the purpose for which the permit is granted." 15. Shri Jagdish Vyas, Counsel appearing for the appellant Insurance Company referred to the dictionary meaning of the term purpose from the New International Webstors Student Dictionary (1996 Edition) wherein the word has been defined as "an end of effort or action; something to be attained; plan, design, aim." We do not think it would be safe to accept the dictionary meaning of the term de hors the context. 16. On a plain reading of the Section 149(2)(a)(i)(c), it is obvious that the term purpose therein refers to the purpose for which the vehicle is to be used. This is apparent from the words "a condition excluding the use of the vehicle" in Clause (i) of which Sub-Clause (c) is part. The purpose in Sub-clause (c) refers to the use of the vehicle, and where the vehicle is used for carrying passengers, merely because the number of passengers was more than specified in the permit, it cannot be said that there was any violation of the purpose, that is to say, the vehicle was being used for a purpose other than allowed under the permit. The purpose refers to the permit, that is, allowed by the permit. Unless there is some major deviation from the purpose in the matter of use, it cannot be said that there was breach of condition of policy. 17. The interpretation in State of Maharashtras case (Supra), though decided in a different context, in our opinion can be applied while interpreting the term purpose in the context of Section 149(2)(a)(i)(c). The point admits of no doubt and the attempt of the Insurance Company to avoid the award on the specious ground of the vehicle carrying more than the permitted number of passengers must be rejected. 18. Shri Jagdish Vyas referred to National Insurance Co. Ltd. vs. Challa Bharathamma & Ors., 2004 (8) SCC 517 and Almora Magnesite Ltd. vs. Deoki Devi & Ors., 1996 ACJ 978 . In the former case, there was no permit at all and, therefore, the decision can be of no help to the appellant. In the latter case decided under the Motor Vehicles Act, 1939 the point for consideration was validity of an interim award. In the former case, there was no permit at all and, therefore, the decision can be of no help to the appellant. In the latter case decided under the Motor Vehicles Act, 1939 the point for consideration was validity of an interim award. This decision also does not lend any help to the appellant. 19. We are of the view that the case in hand is squarely covered by the decisions referred to above and in this view of the matter we find no error in the order of the learned Single Judge upholding the award of the Claims Tribunal and dismissing the appeals. 20. In the result, the appeals are dismissed.