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2016 DIGILAW 207 (JK)

Kamla Devi v. Oriental Insurance Company Ltd.

2016-04-20

JANAK RAJ KOTWAL

body2016
JUDGMENT : Janak Raj Kotwal, J. This appeal by the Insurance Company is directed against the judgment and award dated 04.11.2004, rendered by the learned Motor Accident Claims Tribunal, Kathua (hereinafter to be referred as the Tribunal) in Claim No. 81, filed by legal representatives of one Sanjiv Gupta alias Sanjay Gupta (hereinafter to be referred as the deceased) who died due to a motor accident that occurred on 24.03.1994. 2. Heard Mr. D.S. Chauhan, learned counsel for the appellant and Mr. Ved Bhushan Gupta, learned counsel for the claimant, herein respondent No. 1 and perused the record. 3. Few facts necessary for disposal of this appeal are these: Deceased was engaged as a Daily Wager with respondents-2 to 4, that is, Sewa Hydel Project, Division No. III. Basholi. On 24.03.1994 the deceased and the Executive Engineer of the Division were travelling by a jeep of the Division bearing registration No. JK 02B-6501(hereinafter to be referred as the offending jeep) from Basholi towards village, Mashka. The jeep met with accident and fell down the road near village, Jaterh. Deceased succumbed to the injuries suffered by him in this accident. Legal representatives of the deceased, that is, his parents, filed claim for compensation under Section 166 of the Motor Vehicles Act (hereinafter to be referred as the Act) against respondents-2 to 4 and the insurer, herein appellant. Learned Tribunal after inquiry vide the impugned judgment and award found that the accident had occurred due to negligence of the driver of the offending jeep, awarded compensation of Rs. 3,60,000/-in favour of the claimants and foisted liability of paying the compensation on the appellant. 4. Appellant's assail to the impugned judgment and award relates to its liability to satisfy the award by paying the compensation to the claimants. That the appellant/insurer had issued a certificate of insurance and a policy of insurance in respect of the offending jeep in favour of the Executive Engineer, Sewa Hydel Project, Division, Basholi is admitted ground of both the sides. That the appellant/insurer had issued a certificate of insurance and a policy of insurance in respect of the offending jeep in favour of the Executive Engineer, Sewa Hydel Project, Division, Basholi is admitted ground of both the sides. The stand of the insurer before the learned Tribunal was that the deceased was an employee of the insured, liability of the insured in respect of the death of his employee was not covered under the certificate of insurance/insurance policy issued by it nor such a liability was required to be covered under the Act and therefore, insurer was not liable to indemnify the insured by satisfying the award. Following issue in this regard was framed by the learned Tribunal: "5. Whether the deceased being an employee of the Respondents Nos. 1 and 2 was not covered under the Insurance policy and as such Respondent No. 4 is not liable to indemnify the insurer? OPR4." 5. Learned Tribunal decided the issue so framed against the insurer taking the view, firstly, that 'the contracting parties in the insurance policy happen to be the insurer and the insured and all other persons are 3rd parties' and secondly, that 'deceased Sanjay Gupta S/o Gian Chand-a daily wager was a person as defined under Section 347 (1) (i) of M.V. Act and the insurer viz. Respondent-4 is bound to satisfy the award that may be passed against insured Res.-3 Executive Engineer, 'Sewa Hydel Project'. 6. Assail in this appeal is based on the grounds identical to the stand taken by the insurer before the learned Tribunal. It is contended that the policy of insurance issued by the insurer was 'Act only policy', which did not cover risk arising out of the death of an employee of the insured travelling by the offending jeep while on duty and such an employee cannot be treated as 'a 3rd party'. 7. Dilating the stand of the appellant/insurer, learned counsel, Mr. D.S. Chauhan argued that 'Act only policy' is the one which the owner of a vehicle is required under the Act to obtain before a vehicle can be put to use at a public place and the authorised insurer is required to issue. 7. Dilating the stand of the appellant/insurer, learned counsel, Mr. D.S. Chauhan argued that 'Act only policy' is the one which the owner of a vehicle is required under the Act to obtain before a vehicle can be put to use at a public place and the authorised insurer is required to issue. In terms of the proviso to Section 147 (1) of the Act a policy of insurance does not cover liability in respect of death of an employee of the insured arising out of his employment nor does it cover the liability in respect of a gratuitous passenger. Such a policy covers only the statutory liability under the Act. Mr. Chauhan sought to explain that 'an Act only policy' covers risk in regard to those persons only which are covered under Section 147 of the Act and does not cover any risk relating to an employee of the insured when travelling by the insured vehicle in the course of his duty. 8. Per contra, Mr. Ved Bhushan Gupta, learned counsel for the claimants, argued that any person other than the insured is to be treated as a third party as contemplated under Section 146 of the Act and a person is not excluded from the category of third party only for the reason that he happens to be an employee of the insured. Mr. Gupta argued also that the vehicle was insured for four persons sitting in the vehicle so liability cannot be escaped by the insurer. 9. Sections 146 the Act deals with the statutory necessity of taking out insurance against 'third party risk' before a motor vehicle can be used in a public place. It makes it obligatory for the owner of a vehicle to take out 'third party risk' insurance of his vehicle before putting the vehicle to use on the road. Section 147 lays down the requirements of a policy of insurance and limits of liability of the insurer. Section 149 (1) casts an obligation on an insurer to indemnify the insured by satisfying a judgement or award in respect of such liability as is required to be covered by a policy of insurance required to be obtained in terms of Section 147. Section 147(1) is more relevant in this case. It reads: "147. Section 149 (1) casts an obligation on an insurer to indemnify the insured by satisfying a judgement or award in respect of such liability as is required to be covered by a policy of insurance required to be obtained in terms of Section 147. Section 147(1) is more relevant in this case. It reads: "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: Provided that a policy shall not be required- (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee- (a) engaged in driving the vehicle, or (b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or (c) if it is a goods carriage, being carried in the vehicle, or (ii) to cover any contractual liability. Explanation.-For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place." 10. Section 147 (1) of the Act provides that a policy of insurance must be a policy, which is issued by an authorised insurer and must insure the person or classes of persons (owner of the vehicle) to be specified in the policy to the extent as provided under sub-section (2) thereof against any liability which may be incurred by the owner (insured) in respect of the death or bodily injury or damage to any property of a third party including owner of the goods or his authorised representative carried in the vehicle caused by or arising out of the use of the vehicle in a public place. In addition the policy has to cover liability in respect of 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. 11. To say precisely, under the Act it is obligatory for the owner of a motor vehicle to take out 'third party risk' insurance of his vehicle from an authorised insurer and obligatory for the authorised insurer to issue a policy of insurance that shall cover any liability of the owner (insured) to a third party and owner of the goods or his authorised representative carried in the vehicle caused by or arising out of the use of the vehicle and against death 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. It is such a policy that generally is called as 'Act Policy', that is, the policy issued in terms of the Act. 12. The appellant/insurer in this case claims exemption from its liability to indemnify the insured by relying upon proviso to Section 147 (1) of the Act. It is such a policy that generally is called as 'Act Policy', that is, the policy issued in terms of the Act. 12. The appellant/insurer in this case claims exemption from its liability to indemnify the insured by relying upon proviso to Section 147 (1) of the Act. The Proviso to Section 147 (1) on its plain reading provides that the policy of the insurance shall not be required to cover liability in respect of death of or bodily injury to an employee of the insured arising out of and in the course of his employment, other than a liability arising under the Workmen's Compensation Act, 1923 in respect of the death of or bodily injury to any such employee engaged in driving the vehicle, or if it is public service vehicle, engaged as a conductor of the vehicle or for examining tickets on the vehicle, or an employee who travels in the vehicle of the employer carrying goods, if it is a goods carriage. 13. The deceased in this case was an employee of the insured not engaged as the driver of the offending jeep. The offending jeep neither was a public service vehicle nor a goods carriage. It being not disputed that the liability is not one arising under the Workmen's Compensation Act, their seems prima facie substance in the plea of the appellant/insurer that the liability in respect of the death of the deceased is not covered under the policy of insurance in terms of proviso to Section 147 of the Act. The plea, however, reflects a lopsided view of the proviso to Section 147 of the Act, shorn of interpretation of the legal position in its entirety and true perspective. 14. What is clear after reading proviso to Section 14(1) of the Act is that the insurance policy required to be taken out by the owner of a vehicle and to be issued by an authorised insurer shall not be required to cover the liability in respect of the death of or bodily injury to an employee of the insured arising out of and in the course of his employment other than an employee engaged as a driver of the offending vehicle, or conductor or ticket examiner, if it is a public service vehicle, or an employee who travels in the vehicle of the employer carrying goods, if it is a goods carriage. Even in their case such a liability would extend to an award that may be passed under Workmen's Compensation Act only. 15. Section 147 of the Act in its sum and substance lays down the ambit of risks and liabilities covered under a third party risk insurance policy issued by an authorised insurer. It provides for the requirements of a policy of insurance taken out and issued under the Act, what may be called as the 'Act Policy' or, as named by the appellant in this case, an 'Act only policy'. As said above, Section 149 (1) casts an obligation on an insurer to indemnify the insured by satisfying a judgement or award in respect of all such liabilities as are required to be covered by a policy required to be obtained in terms of Section 147. It is important to note, however, that Section 147 neither bars nor rules out possibility of obtaining additional insurance cover in respect of the risks or liabilities other than those required to be covered under the Act. Owner of a vehicle, while taking out the Act Policy, can by paying additional premium to the insurer obtain insurance coverage in respect of the risks or liabilities other than those specified in Section 147 and insurance coverage to that effect, if obtained, gives rise to a 'contractual liability' of the insurer. I may hasten to state here that coverage of risks or liabilities other than those required under Section 147 of the Act is a matter of contract between the parties, that is, the owner of the vehicle on the one hand and the insurer, on the other, which they may enter into or not. This is indicative from clause (ii) of the proviso to Section 147 itself which provides that a policy of insurance issued under the Act shall not be required 'to cover any contractual liability'. The concept of contractual liability of the insurer is inbuilt in the scheme of the Act though to create a contractual liability by paying additional premium is a choice of the owner of the vehicle and a matter of contract between the owner and the insurer and not a requirement under the Act. The concept of contractual liability of the insurer is inbuilt in the scheme of the Act though to create a contractual liability by paying additional premium is a choice of the owner of the vehicle and a matter of contract between the owner and the insurer and not a requirement under the Act. Legal position in this regard is well settled and I may for instance quote para 13 of a judgment of Hon'ble Supreme Court in New India Assurance Company Ltd. v. Sadanand Mukhi and Ors., AIR 2009 SCW 1372 : "13. The provisions of the Act, therefore, provide for two types of insurance one statutory in nature and the other contractual in nature. Whereas the insurance company is bound to compensate the owner or the driver of the motor vehicle in case any person dies or suffers injury as a result of an accident; in case involving owner of the vehicle or others are proposed to be covered, an additional premium is required to be paid for covering their life and property." 16. Even the appellant/insurer seems to be aware of the aforementioned legal position in regard to difference between liability under an 'Act Policy' and 'contractual liability' as is evident from the statement contained in para 03(e) of the memorandum of appeal, which I quote: "The statutory insurance does not cover the occupants of the vehicle, who are not carried for higher or reward and the insurer cannot be held liable under the Act. But that does not prevent an insurer from entering into a contract of insurance covering a risk wider than minimum requirement of a statute, whereby, the risk to gratuitous passenger/passengers would also be covered. The liability of the insurer in this case, depends upon the terms of the contract of insurance entered into between the insured and the insurer, as is evident from Insurance Policy itself, especially when the insured had paid Rs. 240/- as premium for third party risk and Rs. 15/- as premium for covering the liability with respect to the driver." (underlining by me) 17. The appellant/insurer in this case had issued policy of insurance bearing No. 234105/31/94/01472/311/00000, as also a certificate of insurance. The insured vehicle is a diesel jeep. The certificate of insurance was valid as on the date of accident. The insurance cover as per certificate/policy of insurance was granted in terms of the Act. The appellant/insurer in this case had issued policy of insurance bearing No. 234105/31/94/01472/311/00000, as also a certificate of insurance. The insured vehicle is a diesel jeep. The certificate of insurance was valid as on the date of accident. The insurance cover as per certificate/policy of insurance was granted in terms of the Act. In the relevant column 'seating capacity' of the vehicle is shown as 4+1' and 'net premium' as 'Rs. 243/-'. Insurer's witness, Sh. Jai Krishan Raina, a Senior Assistant of the appellant/insurance company, has explained in his cross-examination that five persons, that is, driver and four others were covered under the policy of insurance. He, however, stated also that risk of an employee of the insured was not covered under the policy of insurance issued by the insurer. What is proved from the evidence of the appellant's witness is that the appellant/insurer had obtained premium in respect of four persons sitting in the offending jeep, besides the driver and issued the policy accordingly. 18. It can thus be stated that the policy of insurance issued by the Insurer in this case covered the statutory liability of the insured in respect of death of or bodily injury or damage to any property of a third party arising out of the use of the offending jeep as per the requirement of Section 147 of the Act. It also covered the statutory liability in respect of the driver of the vehicle, though to the extent of a claim under Workmen's Compensation Act. Liability to this effect was incurred by the appellant by the very issue of the certificate/policy of insurance in favour of the insured. The offending jeep, however, not being a public service vehicle, neither the owner was required to obtain nor the insurer was required to grant insurance coverage in respect of death or bodily injury to any passenger being carried in the offending vehicle. Nonetheless, such coverage could have been obtained by the owner by entering into a contract with the insurer by paying additional premium, giving rise to contractual liability between the two. This was clearly and indisputably done by both the parties in this case. 19. The appellant/insurer by accepting premium for four persons had undertaken a contractual liability in respect of four persons being carried in the offending jeep other than its driver. This was clearly and indisputably done by both the parties in this case. 19. The appellant/insurer by accepting premium for four persons had undertaken a contractual liability in respect of four persons being carried in the offending jeep other than its driver. Such a liability cannot be escaped by the appellant by taking a plea that the deceased was an employee of the insured and liability in respect of an employee was not covered under the policy of insurance issued by it. To take such a plea would amount to say that even though the insurer is liable in respect of liability arising out of injury or death up to four persons travelling by the offending jeep but there would no liability if the said four persons or any one of them happened to be employee(s) of the insured. It is not understandable as to how an employee can be excluded from the category of those four persons travelling by the jeep in respect of whom the insurer has accepted premium and incurred contractual liability. I would, thus, hold that liability of the insured in respect of the death of the deceased is covered within the contractual liability of the appellant/insurer and is not absolved merely for the reason that he happened to be an employee of the insured. 20. Viewed thus, this appeal has no merit and is dismissed. The award amount, if deposited in this Court, be released in favour of the claimants as per the judgment and award of the learned Tribunal. 21. Record of the trial court be remitted back along with a copy of this order. 22. Disposed of.