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2009 DIGILAW 545 (MAD)

National Insurance Co. Ltd. v. Ellappa & Others

2009-02-13

S.PALANIVELU

body2009
Judgment : These civil miscellaneous appeals have been filed under Section 173 of the Motor Vehicles Act, 1988 to set aside the judgment and decree passed by the Motor Accidents Claims Tribunal (Sub-Judge), Hosur dated 15.04.1997 made in MACT OP Nos.226, 264, 263, 240, 239, 430, 265, 432, 271, 227 and 431 of 1996 respectively. Common Judgment The allegations as regards the accident, as contained in all the petitions, in a nutshell, are as follows:- On 21.06.1991, the petitioner and others were travelling by a tempo bearing Registration No.TN-29 Y-1724 towards Thenkanikottai, Kelamangalam-Parandur Road, near Koottur diversion road, at about 9.00 a.m, since the driver of the tempo vehicle drove the same in a rash and negligent manner, it capsized resulting in the accident by means of which this petitioner and others got injured and some individuals died. Only due to the negligence on the part of the driver, the accident occurred. The first respondent in the claim petition is owner-cum-driver of the vehicle and the second respondent is the insurance company which has insured the vehicle of the first respondent, hence both the respondents are liable to pay compensation to the petitioners. The allegations as to the nature of injuries, avocation and probable monthly income, compensation in various petitions are denied. 2. In the counter filed by the first respondent, the following are stated:- This respondent possessed valid license to drive tempo vehicle and duly insured the vehicle with the second respondent. There was no negligence on the part of this respondent. Due to unavoidable circumstances, the accident took place. Since he had driven the vehicle cautiously, he was able to save so many lives. At any angle, the insurance company alone is responsible to compensate the victims. The claims found in claim petitions are excessive and hence the petitions have to be dismissed. 3. The averments contained in the counter filed by the second respondent are as follows:- a) These petitions are not maintainable. It is true that the goods vehicle belonging to the first respondent involved in the accident, was insured with this respondent. But, as per the policy conditions, passengers could not be carried in a goods vehicle and such travel is not authorised by the policy. It is true that the goods vehicle belonging to the first respondent involved in the accident, was insured with this respondent. But, as per the policy conditions, passengers could not be carried in a goods vehicle and such travel is not authorised by the policy. The first respondent received payment from 52 persons and asked them to travel in his vehicle as passengers, which is violative of the policy conditions and hence this respondent is not liable to pay compensation. Excepting the averments in MCOP No.430/1996 to 432/1996, the other claimants and the three other deceased persons by name Govindappa, Sikkalamma and Iyanarappa had gone to attend the marriage of the brother-in-law of first respondent and on return in the vehicle of first respondent, the accident happened. Since the first respondent has allowed passengers to travel in a goods vehicle, the insurance company is not liable to pay compensation. The allegations as regards the nature of injuries, disablement, pain and suffering, avocation, age and income are denied. Hence the petitions have to be dismissed. b) In the additional counter filed by the second respondent, it is stated thus, at the time of the accident, first respondent did not have any valid licence to drive the vehicle and on this ground, the petitions should be dismissed. .4. The following are the particulars of claim in each claim petition and quantum of compensation awarded by the Tribunal. .Table 5. The learned Tribunal has accepted the oral evidence on record with regard to the accident as well as the possession of licence by the first respondent. It has recorded a finding that since the insurance company has deposited a portion of compensation as interim relief as per the order of the Tribunal in MCOP No.431/1996 and 432/1996, it could not be stated that the insurance company is not liable to pay compensation. It is further observed that by conduct, the insurance company has agreed to deposit the amount and so it cannot refuse to pay compensation. .6. The Tribunal has also candidly held that the first respondent held two capacities as the owner and driver of the vehicle, knowing fully well that he was not authorised to take passengers in a goods vehicle, took them in the vehicle and made them to travel and he has to pay the compensation. .6. The Tribunal has also candidly held that the first respondent held two capacities as the owner and driver of the vehicle, knowing fully well that he was not authorised to take passengers in a goods vehicle, took them in the vehicle and made them to travel and he has to pay the compensation. However, placing reliance upon the decisions in AIR 1997 Jummu and Kashmir 40 – New India Assurance Company Vs. Smt.Shakunthala Devi and others and 1997 TNLJ 172 – Muthu Thangiah Thevar Rice Mill, Corenipuram, Orathanadu Taluk, Thanjavur vs. Mariyayee and others, it is observed that the insurance company cannot be imposed the liability of paying compensation, but, however having deposited the interim relief, as per the order of the court, without making any demur or objection by not preferring any appal or revision, the insurance company shall also be made liable to compensate the claimants. The learned Tribunal finally held that both the respondent/owner and the insurance company have to pay compensation to the claimants. 7. The above said observations and the conclusion of the Tribunal face scathing attack from the appellant insurance company. 8. The learned counsel for the appellant Mr.S.Vadivel would submit that inasmuch as the Tribunal has found the owner of the vehicle liable, it should not have fastened the liability on the insurance company and the award passed by the Tribunal in this regard is not in consonance with the settled principles of the Supreme Court. 9. The learned counsel for the appellant placed much reliance upon the decisions of the Honble Supreme Court of India wherein it has expressed a view that carrying of passengers in goods carriage is not contemplated in the Act. He has stressed upon the point that the Supreme court has been repeatedly holding that the provisions of the Motor Vehicles Act do not mulct any responsibility on the insurance company to pay compensation for the passengers who travel in a goods vehicle and consequently there would be no question of liability of the insurance company to indemnify the victims who travelled as passengers in a goods vehicle. 10. Conversely, the learned counsel for the respondent would submit that inasmuch as the Tribunal has rendered appropriate findings in its award as to the liabilities of the owner and the insurance company, on the strength of the decisions of the High Court, the award has to be confirmed. 10. Conversely, the learned counsel for the respondent would submit that inasmuch as the Tribunal has rendered appropriate findings in its award as to the liabilities of the owner and the insurance company, on the strength of the decisions of the High Court, the award has to be confirmed. .11. In 2008 (2) TN MAC 29(SC) between National Insurance Co. Ltd. and Cholleti Bharatamma and others, Their Lordships have elaborately dealt with the subject by referring to earlier decision of the Supreme Court and finally concluded that travel in the goods vehicle by the passengers not being the owner of any goods carried thereon, are not expected to be covered by the policy and the insurance company could not be anchored with the liability to pay compensation. The Supreme Court has also clarified the earlier positions settled already and laid down law in this regard. 12. In the above case, the earlier decision of the Supreme Court rendered by a larger bench in 2003(2)SCC 223 – New India Assurance Co. Ltd. v. Asha Rani and Others has been followed and the view has been expressed in paragraph 10 as follows:- " 10. The effect of the 1994 Amendment came up for consideration in National Insurance Co. Ltd. v. Baljit Kaur and others, 2004 (1) TN MAC 1(SC): 2004 (2) S.C.C. 1 , wherein this Court following Asha Rani, 2004(2) TN MAC 387 (SC) (supra) opined that the words "injury to any person" would only mean a third party and not a passenger travelling on a goods carriage whether gratuitous or otherwise. The question came up for consideration again in National Insurance Co. Ltd. v. Bommithi Subbhayamma, 2995 (1) TN MAC 169 (SC) : 2005(12) S.C.C. 243 , wherein upon taking into consideration a large number of decisions, the said view was reiterated." 13. In New India Assurance Co. Ltd. v. Vedwati and others, reported in 2007(1) TN MAC 205(SC) : 2007(3) SCALE 397, the Honble Supreme court has held as follows:- " 13. The difference in the language of "goods vehicle" as appearing in the old Act and "goods carriage" in the Act is of significance. A bare reading of the provisions makes it clear that the legislative intent was to prohibit goods vehicle from carrying any passenger. This is clear from the expression "in addition to passengers" as contained in the definition of "goods vehicle" in the old Act. A bare reading of the provisions makes it clear that the legislative intent was to prohibit goods vehicle from carrying any passenger. This is clear from the expression "in addition to passengers" as contained in the definition of "goods vehicle" in the old Act. The position becomes further clear because the expression used "goods carriage" is solely for the carriage of goods. Carrying of passengers in a goods carriage is not contemplated in the Act. There is no provision similar to Clause (ii) of the proviso appended to Section 95 of the old Act prescribing requirement of insurance policy. Even Section 147 of the Act mandates compulsory coverage against death of or bodily injury to any passenger of "public service vehicle". The proviso makes it further clear that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in goods vehicle would be limited to liability under the Workmen’s Compensation Act, 1923 (in short "W.C. Act"). There is no reference to any passenger in "goods carriage". 14. The inevitable conclusion, therefore, is that provisions of the Act do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the insurer would have no liability therefore." 14. The learned counsel for the appellant also garnered support from another decision of Supreme Court in 2008 (1) TNMAC 59 (SC) – Smt.Thokchom Ongbi Sangeeta alias Sangi Devi and Another V. Oriental Insurance Co. Ltd. and others, in which, Their Lordships had held that the passenger travelling in a goods vehicle is not deemed to have been covered by insurance since there is no statutory liability upon the insurer to compensate him since there is no contract to that effect. The operative portion of the judgment is extracted hereunder:- " 10. The inevitable conclusion, therefore, is that provisions of the Act do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the Insurer would have no liability therefor." 15. Similar view has been highlighted in Oriental Insurance Company Ltd. v. Devireddy Konda Reddy and Ors – AIR 2003 S.C. 1009 : 2004 (2) TNMAC 383(SC) and National Insurance Company Ltd. v. Ajit Kumar and Ors. reported in AIR 2003 S.C.3093 : 2004 (1) TNMAC 9 (SC). 16. Similar view has been highlighted in Oriental Insurance Company Ltd. v. Devireddy Konda Reddy and Ors – AIR 2003 S.C. 1009 : 2004 (2) TNMAC 383(SC) and National Insurance Company Ltd. v. Ajit Kumar and Ors. reported in AIR 2003 S.C.3093 : 2004 (1) TNMAC 9 (SC). 16. An identical view has been echoed by a Full Bench decision of this court in a decision rendered in 2009-I-CTC-1 between Branch Manager, United India Insurance Company Ltd., Dharmapuri Town vs. Nagammal and others. The decision is outcome of the following reference, made by a learned single judge of this court raising some doubts regarding applicability of the ratio contained in a Division Bench decision of this court reported in 2006(1) MLJ 154 (M/s.United India Insurance vs. Selvam and others). The reference is as follows:- " 28. In the light of the latest decisions of the Supreme Court, exonerating the Insurance Company from its liability to pay compensation for the death/injury to the gratuitous passenger travelling in a goods vehicle, substantial doubt arises whether the decision of the Division Bench of this Court made in 2006(1) MLJ 154 could be followed. 29. In view of the latest decisions of the Supreme Court, in my considered view, the decision of the Division Bench of this Court made in 2006(1) MLJ 154 is to be clarified." 17. In Selvams case supra, it was decided by the Division Bench that eventhough the liability to pay compensation was fastened upon the owner of the vehicle, in whose vehicle certain passengers were travelling, who are the claimants, direction was issued to the effect that for the claims which occurred as regards the accident which took place before 06.01.2004, in case of gratuitous passengers, the insurance company shall pay and recover from the owner of the vehicle. The Full Bench of this court, after referring and following various decisions of the Supreme Court on this point, concluded that the insurance company is not liable to cover the liability in respect of a passenger travelling in a goods vehicle. Full Bench has followed the ratio laid down in the decisions of the Apex court and formulated guidelines. 18. The principle laid down in New India Assurance Co. Full Bench has followed the ratio laid down in the decisions of the Apex court and formulated guidelines. 18. The principle laid down in New India Assurance Co. Ltd. v. Satpal Singh and others reported in 2000(1)CTC 370 : 2000 ACJ 1 : 2000 (1) SCC 237 with reference to the requirement of coverage of liability for a passenger travelling in goods vehicle, was discussed in Asha Ranis case supra and ratio is laid down by the Supreme Court and in subsequent decisions of the Supreme Court also the same view has been expressed. Hence the proposition of law is that the person/persons who are travelling in goods vehicle, whether they are gratuitous or non-gratuitous, are not entitled to get compensation from the insurance company. The insurance company is not statutorily expected to extend the cover of insurance to such persons inasmuch as there is no scope for any contract between the insured and the insurance company. The insured is also not required to pay any premium to this class of persons and the policy issued by the company would cover those persons who are specifically mentioned therein. Other persons who may be gratuitous passengers travelling in a goods vehicle are not at all covered by the policy and it has to be necessarily held that such persons cannot plead that they are being indemnified by the insurance company. The insurer is not liable to pay compensation to such passenger since the statute has not imposed any duty or liability upon it for that purpose. In such view of this matter, it is also held that the owner-cum-driver of the vehicle, namely the first respondent in MCOPs has to pay compensation to the claimants. .19. The next aspect to be decided in this case is whether there could be a direction on the principle of "pay and recover". In A.I.R. 2001 SC 1419 : 2001 (4) SCC 342 – New India Assurance Co. v. Kamla and Others, the Apex Court has held that if the insurance company succeeds in establishing that there was breach of policy conditions, the Claims Tribunal shall direct the insured to pay that amount to the insurer and in default the insurer shall (sic – not?) be allowed to recover the amount (which the Insurer is directed to pay the claimant third parties) from the insured person. 20. 20. The Supreme Court has also held in AIR 2004 SC 1531 : 2004(3)SCC 297 (National Insurance Co. Ltd. v. Swaran Singh and Others) that the Tribunal has power to direct the insurance company to satisfy the decree at the first instance and then direct the recovery from the same owner. 21. In 2004 ACJ 721 : 2004 (13) SCC 224 (Oriental Insurance Co. Ltd. v. Nanjappan and others, the Supreme Court has observed that before release of the amount to the claimants, owner of the vehicle shall be issued a notice and he shall be required to furnish security for the entire amount which the Insurer will pay to the claimants and the offending vehicle shall be attached as a part of the security. It is also held therein that the insurer shall pay the quantum of compensation fixed by the Claims Tribunal and for the recovery of money, the insurer shall not be required to file a suit. It may initiate a proceeding before the executing Court as if it is the dispute between the insured and the insurer and the subject matter was of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. 22. So also it is held as such in National Insurance Co. Ltd. v. Kusum Rai & others reported in 2006 (4) SCC 2005. .23. However, in Vedwatis case cited supra, in National Insurance Co. Ltd. v. Kaushalaya Devi and others reported in 2008 ACJ 2144 and National Insurance Co. Ltd. v. Prema Devi reported in 2008 ACJ 1149 , the Supreme Court had not issued any such direction as to "pay and recover". In A.I.R. 2007 SC 1609 : A.I.R. 2007 SC 1609 between Oriental Insurance Co. Ltd. v. Meena Variyal & Others, it is decided that the appellant insurance company is not liable to indemnify the insured and is also not obliged to satisfy the award of the Tribunal/Court and then have recourse to the owner of the vehicle and the High Court was in error in modifying the award of the Tribunal in that regard. 24. In another decision of the Supreme Court in AIR 2007 SC 2870 between the National Insurance Co. 24. In another decision of the Supreme Court in AIR 2007 SC 2870 between the National Insurance Co. Ltd. v. Anjana Shyam & Others, the Apex Court is of the view that it will be necessary for the Tribunal, even at the initial stage, to make an appropriate orders to ensure that the amount could be recovered from the owner by ordering attachment or by passing other restrictive orders against the owner so as to ensure the satisfaction in full of the awards that may be passed ultimately. .25. In the recent decision of the Supreme Court in 2008(2) Supreme 451 (Sardari & Others v. Sushil Kumar & Others), option is left to the discretion of the court which deals with the matter with reference to the situations available therein. It is held in the judgment as follows:- ." Where the breach of conditions of contract is ex-facie apparent from the records, the Court will not fasten the liability on the Insurance Company. In certain situations, however, the Court while fastening the liability on the owner of the vehicle may direct the Insurance Company to pay to the claimants the awarded amount with liberty to it to recover the same from the owner." 26. The Full Bench of this court in Nagammal and Others case supra, after referring the above said decisions and following the principles laid down thereon, has formulated the following principles/guidelines to be followed in the like matters. They are as follows:- .(i) The Insurance Policy is required to cover the liability envisages under Section 147, but wider risk can always be undertaken. .(ii) Section 149 envisages the defences which are open to the Insurance Company. Where the Insurance Company is not successful in its defence, obviously it is required to satisfy the decree and the award. Where it is successful in its defence, it may yet be required to pay the amount to the claimant and thereafter recover the same from the owner under such circumstance envisaged and enumerated in Section 149(4) and Section 149(5). (iii) Under Section 147 the Insurance Company is not statutorily required to cover the liability in respect of a passenger in a goods vehicle unless such passenger is the owner or agent of the owner of the goods accompanying such goods in the concerned goods vehicle. (iii) Under Section 147 the Insurance Company is not statutorily required to cover the liability in respect of a passenger in a goods vehicle unless such passenger is the owner or agent of the owner of the goods accompanying such goods in the concerned goods vehicle. .(iv) Since there is no statutory requirement to cover the liability in respect of a passenger in a goods vehicle, the principle of "pay and recover", as statutorily recognised in Section 149(4) and Section 149(5), is not applicable ipso facto to such cases and, therefore, ordinarily the Court is not expected to issue such a direction to the Insurance Company to pay to the claimant and thereafter recover from the owner. .(v) Where, by relying upon the decision of the Supreme Court in Satpal Singhs case, either expressly or even by implication, there has been a direction by the Trial Court to the Insurance Company to pay, the appellate court is obviously required to consider as to whether such direction should be set aside in its entirety and the liability should be fastened only on the driver and the owner or whether the Insurance Company should be directed to comply with the direction regarding payment to the claimant and recover thereafter from the owner. .(vi) No such direction can be issued by any trial court to the Insurance Company to pay and recover relating to liability in respect of a passenger travelling in a goods vehicle after the decision in Baljit Kaurs case merely because the date of accident was before such decision. The date of the accident is immaterial. Since the law has been specifically clarified, no trial court is expected to decide contrary to such decision. (vii) Where, however, the matter has already been decided by the trial court before the decision in Baljit Kaurs case, it would be in the discretion of the appellate court, depending upon the facts and circumstances of the case, whether the doctrine of "pay and recover" should be applied or as to whether the claimant would be left to recover the amount from the person liable i.e., the driver or the owner, as the case may be. 27. Now the discretion to pass direction to the insurance company to "pay and recover" remains with the discretion of this Court. 27. Now the discretion to pass direction to the insurance company to "pay and recover" remains with the discretion of this Court. The claimants appeared to be poor village residents who had already been engaged in the litigation right from 1996. If they are to execute the award for recovery of compensation from the first respondent in the MCOPs, much time will be lost and they cannot enjoy the fruits of the award. The object behind the direction to "pay and recover" is on a principle that adjudication of their claims inte rse might delay the claim of the victims, as held in Swaransinghs case supra. In order to shorten the litigation and as the claimants, being the beneficiaries receiving the benefits flowing from the Motor Vehicles Act, a Social Welfare Legislation, are entitled to get their compensation without undergoing cumbersome legal proceedings, a direction of "pay and recover" is inevitable. Bearing in mind the plight of the claimants, under the circumstances available in these proceedings, this court is of the considered view that the appellant be directed to pay the compensation first to claimants and to recover the same from the owner of the vehicle/first respondent in the MCOPs. 28. As far as the quantum of compensation made available to each of the claimants is concerned, this court does not find any infirmity in the observations of the Tribunal. The common award as to the quantum of compensation is confirmed. The appellant insurance company is at liberty to institute execution proceedings against the owner of the vehicle/first respondent in the MCOPs directly before the court concerned as per the procedure set out in Nanjappas case. With the above said observations and directions, these civil miscellaneous appeals have to be disposed of and the common award passed by the Tribunal is modified in this regard. 29. In the result, all the civil miscellaneous appeals are disposed of with the directions as contained in this judgment. Consequently all the connected miscellaneous petitions are closed. Time for deposit is eight weeks. No cost.