ORDER
Ar. Lakshmanan,J.
1. All the letters patent appeals are directed against the common judgment of V. Ratnam, J., as he then was, in C.M.A. Nos. 136 to 144 of 1989 dated 29-10-1993. C.R.P. No. 2655 of 1990 is directed against the order of the Motor Accident Claims Tribunal / Subordinate Judge, Ramanathapuram at Madurai, in M.A.C.O.P. No. 17 of 1988. All the appeals and the revision have been preferred by the owner of the lorry MDT 8827 involved in the accident. The I st respondent in all the matters is the claimant while the 2nd respondent is the insurance company.
2. On 27-3-1985 when some of the claimants and others were travelling in the lorry MDT 8827 with paddy bags between Tirunelveli and Kariyapatti, at about 5-30 a.m., near the garden of one Thanga Pandian on the Virudhunagar Kallakurichi Road, an accident took place in which some persons lost their lives and others sustained injuries. The injured and the legal representatives ofthe deceased passengers who travelled in the lorry claimed compensation in a sum of Rs. 25,000/-, Rs. 25,000/-, Rs. 10,000/-, Rs. 35,000/-, Rs. 25,000/-, Rs. 25,000/-, Rs. 53,000/-, Rs.25,000/- and Rs.25,000/-respectively stating that the lorry involved in the accident was driven rashly and negligently by its driver and that has caused the accident and therefore, compensation should be awarded to them.
3. The appellant/owner of the lorry resisted the claim on the ground that on 27-3-1985 several agricultural coolies were returning from Tirunelveli to Kariapatti along with their paddy bags for their safe carriage on payment of a hire of Rs. 560/-, that between . Virudhunagar and Kallakurichi near the garden of one Thanga Pandian, the lorry was caught in a depression on the road, that with a view to avert any accident, the driver asked all the passengers to get down, that while the driver attempted to pull out the lorry, it capsized and those who were standing near the lorry got involved in the accident and that the accident was not the outcome of the rash and negligent driving of the lorry by its driver. The owner of the lorry has also pleaded that he was not liable for payment of compensation and that in any event, the compensation claimed is excessive and on the high side.
4. The insurance company in the counter put forward the plea that the owner of the lorry had permitted 50 passengers to be carried in the goods vehicle and that was opposed to the provisions of the Motor Vehicles Act (hereinafter referred to as the Act) as well as the conditions in the policy, that the persons accompanying the goods were not covered under the terms of the policy issued by the insurance company and that therefore, no liability for payment of compensation could be fastened on it. The compensation amounts claimed were also stated to be out of all proportions to the loss sustained by the representatives of the deceased persons and the injuries sustained by the injured persons.
5. On a joint memo filed by the parties, the claim petitions were heard together by the Motor Accident Claims Tribunal, The Tribunal, on a consideration of the oral as well as the documentary evidence, found that the accident took place when the driver of the lorry attempted rashly and negligently to pull the lorry out of the ditch into which it had got in, and that the claimants/1st respondent herein were entitled to be paid compensation in a sum of Rs. 10,000/-, Rs. 15,000/-, Rs.10,000/-, Rs. 10,000/-, Rs. 3,000/-, Rs. 12,500/-, Rs.10,000/-, Rs.7,500/- and Rs. 5,000/- respectively together with interest thereon at 12% per annum from the date of the claim petitions till date of payment.
6. So far as the claim in regard to M.A.C.O.P. No. 17 of 1988 is concerned, the Tribunal by order dated 10-7-1990 fastened the liability on the owner of the vehicle and awarded a sum of Rs. 5,300/ - to the claimant Mahalingam against which, the owner of the lorry has filed C.R.P. No. 2655 of 1990 under Art. 227 of the Constitution of India since no appeal lies under the provisions of the Act as the award amount is less than Rs. 10,000/-. It is also stated in the grounds of revision that since legal question of law arises in this revision, the same is filed under Art. 227 of the Constitution.
7. Dealing with the liability of the insurance company, the Tribunal took the view that the persons who travelled in the lorry and had sustained injuries or lost their lives had not been established to have travelled on payment of hire charges and that they were in the lorry only for the purpose of safeguarding their paddy bags and for loading and unloading purposes. In the view so taken, the Tribunal fastened liability on the insurance company for payment of compensation to the claimants in respect of the amounts set out earlier.
8. In the appeals (CM. A. Nos. 136 to 144 of 1989) filed by the insurance company, it was contended on behalf of the insurance company that the permit in respect of the lorry MDT 8827 did not permit carrying of passengers in the goods vehicle and that there was gross violation of the permit conditions and therefore, the insurance company was not liable as per the Act and the terms andconditions of the insurance policy marked as Ex.B-1, which clearly excluded all liabilities of the insurer in respect of persons travelling in the goods vehicle along with their goods. It was also contended that the passengers carried in the lorry were fare paying passengers and were neither non-fare paying passengers (gratuitous passengers) nor passengers travelling in pursuance of contract of employment with the owner of the lorry, and therefore, the Tribunal ought to have seen that the insurance policy did not either cover the extra risk of non-fare paying passengers (gratuitous passengers) only and not for or fare paying passengers. It was further contended that the Tribunal failed to see that there was gross violation of the policy conditions and permit conditions by carrying passengers who were travelling by paying fare and therefore, the insurance company was not liable for payment of any compensation.
9. In the revision filed by the owner of the lorry, he contended that he was not liable to pay the damages and that the insurance company alone was liable to pay the damages, if any.
10. Before V. Ratnam, J., as he then was, it was contended, citing an earlier order in C.M.A. No. 571 of 1989 preferred by the insurance company against the award of the Tribunal in M.C.O.P. No. 39 of 1988 arising out of the same accident wherein it was held that there was a violation of one of the conditions of the policy and the insurance company cannot therefore, be made liable for the payment of compensation and that the compensation awarded to the claimant was recoverable from the owner of the goods vehicle, and that therefore, the same conclusion should also be followed in these appeals. It was submitted that the insurance company cannot disown its liability for payment of compensation as the accident had taken place when the injured and other persons were standing outside the lorry and in the process of pulling out the lorry which got stuck in the ditch, the driver drove it rashly and negligently, which led to its capsizing and causing the accident. In other words, an attempt was made to establish that the injured and the dead persons were standing outside on the road when the lorry capsized and fell on them and caused the accident so as to make the insurance company liable for payment of compensation.
11. On a consideration of the evidence relating to the manner in which the accident had taken place, the learned Judge (V. Ratnam, J., as he then was) held that the lorry was driven rashly and negligently and it got into a depression or ditch and capsized as a result of which some persons died and some others sustained injuries. While considering the question in regard to the liability of the insurance company for payment of compensation, the learned Judge, on a consideration of the evidence let in, held that the persons who were injured or who died in the accident had travelled in the lorry on the date of the accident on payment of hire charges not only for the paddy bags but also for their own transport. While considering the question as to whether the owner of the lorry was liable for payment of compensation, the learned Judge held that the driver of the lorry had not been specifically forbidden or not authorised to carry passengers and that when the owner of the lorry had sent his driver on a journey in the lorry, not excluding or prohibiting the carriage of passengers, then, the owner of the lorry is answerable for the consequences flowing from the conduct of the driver acting in the course of his employment. It was also held that the driver of the lorry was acting in the course of his employment. In the concluding part of the judgment the learned Judge has observed as under :
'Unless the insurance company had under the terms of the policy issued by it, agreed to indemnify the owner of the lorry even in relation to such liability arising out of the acts of the driver, in the course of his employment, no liability could be fastened on the insurance company. In these cases, it is seen from the terms of the insurance policy, marked as Ex. R-1, that it has been clearly set out therein under the head of 'limitations as to use', that the policy does not cover the use of the vehicle for conveyance of passengers for hire or reward. In addition, it is also seen that there is a violation of Condition No. 32 of the terms and conditions as found in Ex.R-4, in that, more persons than those permitted had been carried in the lorry without the prior permission of the concerned authorities in writing. This would constitute a gross violation of the terms and conditions and this would also enable the appellant-insurance company to avoid its liability, apart from the provision in the policy to the effect that it does not cover the use of the vehicle for carriage of passengers for reward. Earlier, it had been found that those who had travelled in the lorry at the time of the accident, did so on payment of hire not only in respect of the paddy bags but also for their own transport and under those circumstances, under the terms of the policy issued by the appellant-insurance company, no liability can be fastened on the appellant-insurance company for payment of compensation to the 1st respondents in these appeals. However, the first respondents in these appeals would be entitled to recover the compensation from the 2nd respondent, owner of the lorry. Since no dispute had been raised before this Court regarding the quantum of compensation, it would follow that the first respondents in these appeals would be entitled to recover from the 2nd respondent, owner of the lorry, the compensation amount of Rs. 10,000/-, Rs. 15,000/-, Rs. 10,000/-, Rs. 10,000/-, Rs.3,000/-, Rs. 12,500/-, Rs. 10,000/-, Rs. 7,500/-, Rs. 5,000/- respectively together with interest at 12% per annum from the date of the claim petition till the date of payment. The Civil Miscellaneous Appeals are, therefore, allowed and the award of the Tribunal shall stand modified as indicated above and the liability of the appellant-insurance company will stand deleted. There will, however, be no order as to costs.'
12. Aggrieved by the common judgment, the owner of the vehicle has preferred the above letters patent appeals. Since all the claims for compensation arose out of the same accident, by consent of both parties, all the appeals and the revision filed by the owner of the lorry, were heard together. We have heard Mr. P. Peppin Fernando for the appellant/petitioner, Mr. Gowri Ganesan,Mr. R. K. Ramkumar and Mr. S. Baskaran for the 1st respondent and Mr. David of M/s. Kurian and Associates for the 2nd respondent.
13. Mr. P. Peppin Fernando has raised the following contentions at the time of hearing:
a) The judgment of the learned Judge is vitiated, in that, the learned Judge lias failed to see that mere breach of the exclusion clause in the policy does not absolve of his liability and the onus is on the insurer to establish that the insured himself is guilty of committing the breach of contract of insurance and the learned Judge ought to have held that the immunity sought under S. 96(2)(B)(ii) of the Act was not available to the insurance company in respect of the issue governing the claim in question.
b) The learned Judge ought to have seen that the insured had done everything within his power to engage the vehicle for its due performance for carriage of the named person or persons in respect of the goods to be carried and with express or implied mandate to do such acts as required by the insured, and as such, there can be no breach or violation of the promise on the part of the insured so as to enable the insurer to take shelter under the umbrella of the exclusion clause.
c) The learned Judge should have held that when the insured had not committed any wilful infringement or violation of the terms and conditions of the policy, and unless it is established that the insured was at fault and was guilty of a breach, the insurer cannot escape from its obligation to indemnify the insured,
d) The learned Judge should have seen that when there is a vital difference in respect of the liability in question to be conferred on the insurer where the payment of fare is reflected independent of the carriage of the goods, then, the benefit, if any, would only go to the assured to obtain indemnity from the insurer and the liability arising out of the award cannot he burdened on the insured/owner of the vehicle in the absence of proof of anyinfringement or positive violation of the terms and conditions of the policy,
e) The learned Judge has erred in holding that in terms of the policy covering the risk in question viz., Ex.R-4, the compensation awardable and the liability arising out of the accident could not be fastened on the insurance company and as such, the owner of the lorry alone was liable to satisfy the award in respect of the compensation claimed/ awarded.
f) The learned Judge has committed an error in coming to the conclusion that the injured and the deceased passengers were travelling in the lorry along with their merchandise and as such, they were not covered under the terms and conditions of the policy covering the risk in question.
g) The learned Judge should have held that the claimants in all the M.A.C.O.Ps., were persons who had alighted from the iorry on instructions from the driver to enable the driver to take out the lorry from the pit in which it had got stuck and in such process, the lorry capsized and had caused death and injuries on the claimants.
h) Therefore it is contended by the learned counsel for the appellant/owner of the lorry, that the liability arising out of the accident could not be fastened on the owner of the vehicle and that the insurer alone is liable to satisfy the award.
14. Arguing contra, Mr. David, learned counsel for the 2nd respondent/insurance company, submitted that the terms and conditions of the insurance policy clearly exclude all liabilities of the insurer in respect of persons travelling in the vehicle along with their goods and when there is gross violation of the terms and conditions of the policy, the insurance company was not liable as per the provisions of the Act and the terms and conditions of the insurance policy,
15. In support of his contention that the immunity sought under S. 96(2)(B)(ii) of the Act was not available to the insurance company in respect of the issue governing the claim in question and that when the insuredhad done everything within his power to engage the vehicle for its due performance for carnage of the named person or persons in respect of the goods to be carried and with express or implied mandate to do such acts as required by the insured, there can be no breach or violation of the promise on the part of the insured so as to enable the insurer to take shelter under the umbrella of the exclusion clause, Mr. P. Peppin Fernando, learned counsel for the appellant cited the following decisions.
16. The first decision cited by Mr. P. Peppin Fernando is reported in Pushpabai Parshottam Udeshi v. M/s. Ranjit Ginning & Pressing Co. Pvt. Ltd. : [1977]3SCR372 , wherein the Supreme Court held as follows:
'For the master's liability to arise the test is whether the act was done on the owner's business or that it was proved to have been impliedly authorised by the owner. The law is settled that master is vicariously liable for the acts of his servants acting in the course of his employment. Unless the act is done in the course of employment, the servant's act does not make the employer liable.'
17. The next decision cited by Mr. P. Peppin Fernando is reported in Channappa Chanavirappa Katti v. Laxman Bhimappa Bajantri : AIR1979Kant93 , wherein a Division Bench of the Karnataka High Court held as follows:--
'The accident which gave rise to the claims for compensation on account of death of the cleaner of the goods vehicle and the owner of the goods occurred due to rash and negligent conduct of the driver in driving the goods vehicle in the course of his employment as a servant of the owner of the vehicle. The cleaner was employed as such by the owner and was travelling in the vehicle at the time of the accident in his capacity as the cleaner. The driver was acting within his authority at the time of the accident in carrying the owner of the goods along with the goods in the vehicle as permitted under the Rules. In the circumstances, the owner of the vehicle was vicariously liable for compensation ..... Fromthe exception contained in the second part of the second proviso to S.95(1)(b) it follows that passengers mentioned in that part are excluded from the coverage of compulsory insurance contemplated in Chapter VIII of the Act. But enacting a further exception in the first part of the proviso to the exception contained in the second part thereof, the Legislature imposes a duty on the insured to take out a policy of compulsory insurance in respect of the vehicle so as to provide insurance against any liability to passengers carried for hire or reward or by reason of or in pursuance of a contract of employment, incurred by ihe person using the vehicle. Therefore, passengers carried for hire or reward or by reason of or in pursuance of a contract of employment falling under the class of passengers within the meaning of the exception contained in the first part of the proviso are restored to the status of 'any person' found in S.95(1)(b)(i). Thus, if a passenger carried for hire or reward or by reason of or in pursuance of a contract of employment in a vehicle which is compul-sorily insured, dies or suffers bodily injury by the use of the insured vehicle making the insured liable in damages, it must necessarily be construed as a liability which requires to be reimbursed by the insurer by reason of the policy of compulsory insurance taken in respect of the insured vehicle by the insured.'
18. The third decision cited by Mr. P. Peppin Fernando, learned counsel for the appellant is reported in United India Insurance Co. Ltd. v. Gangamma 1982 ACJ 357 : AIR 1982 Kar 261, wherein a Division Bench of the Karnacaka High Court held that the person concerned who was travelling in a goods vehicle along with his goods on payment of hire charges died in the accident, the insurance company was liable to pay compensation.
19. Mr. P. Peppin Fernando next relied on the decision reported in Nasibdar Suba Fakir v. M/s. Adhia & Co., : AIR1984Bom1 , wherein a Division Bench of the Bombay High Court, while construing the provisions of S. 95(1)(b) of the Motor Vehicles Act, 1939, and Rule 118 of the Bombay Motor Vehicles Rules, 1959, held that the insurer of the goods vehicle was liable to such passenger for payment of compensation because the hirer was carried by the driver of the truck for reward at the relevant time.
20. The next decision cited by Mr. P. Peppin Fernando is reported in Abdul Razaq v. Sharifunnisa 1984 A CJ 44 : AIR 1983 All 400, wherein a Division Bench of the Allahabad High Court has held that the insurance company is liable to pay compensation to the passenger since a goods vehicle is permitted to carry the hirer or an employee of the hirer of the goods vehicle. The Bench has also held that the owner of the goods travelling in the goods vehicle along with the goods died as the vehicle capsized and, therefore, the insurance company is liable to pay compensation since as per the terms of the policy, such risk was otherwise covered by the terms of the policy. The decision of a Division Bench of the Karnataka High Court in T. M. Renukappa v. Fahmida : AIR1980Kant25 is also to the same effect. In that case, the Division Bench has held that the owner of the goods carried in a truck who died in an accident is entitled for payment of compensation by the insurance company.
21. In the decision reported in SkandiaInsurance Co. Ltd. v. Kokilaben Chandravadan AIR 1937 SC 1184, cited by Mr. P.Peppin Fernando, learned counsel for theappellant, the Supreme Court has observed asfollows :
'In order to divine the intention of the Legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Section 94 requiring the owner of the motor vehicle using it in a public place has been inserted in order to protect the members of the community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobileaccident or compensation to the dependents of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recovered from the person held liable who may not have the resources. To overcome this ugly situation the Legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle without the requisite third party insurance being in force is a penal offence. The Legislature was also faced with another problem. The insurance policy might provide for liability walled in by conditions which may be specified in the contract of policy. In order to make the protection real, the Legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by Sec. 96 and by providing that except and save to the. extent permitted by S. 96 it will be the obligation of the insurance company to satisfy the judgment obtained against the persons insured against third party risks.'.
22. Mr. P. Peppin Fernando next cited the decision reported in Kashiram Yadav v. Oriental Fire & General Insurance Co. : [1989]3SCR811 , wherein the Supreme Court held as follows :---
'Section 96 of the Motor Vehicles Act, 1939 imposes duty on the insurer to satisfy judgments against persons insured in respect of third party risks. Sub-section (2) thereof provides exception to the liability of the insurer. Sub-section 2(b) of S.96 provides that the insurer is not liable to satisfy the judgments against the persons insured if there has been a breach of a specified condition of the policy. One of the conditions of the policy specified under clause(ii) is that the vehicle should not be driven by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining driving licence during the period of disqualification. It is not in dispute that the certificate of insurance concerned in this case contains this condition. Tf, therefore, there is a breach of this condition, the insurer will not be liable to indemnify the owner.
Counsel for the appellants however, submitted that insurer alone would be liable to pay the award amount even though the tractor was not driven by a licensed driver. In support of the contention, he placed reliance on the decision of this Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandra-vadan : [1987]2SCR752 . We do not think that that decision has any relevance to the present case. There is facts found were quite different. The vehicle concerned in that case was undisputedly entrusted to the driver who had a valid licence. In transit the driver stopped the vehicle and went to fetch some snacks from the opposite shop leaving the engine on. The ignition key was at the ignition lock and not in the cabin of truck. The driver had asked the cleaner to take care of the truck. In fact the driver had left the truck in care of the cleaner. The cleaner meddled with the vehicle and caused the accident. The question arose whether the insured (owner) had committed a breach of the condition incorporated in the certificate of insurance since the cleaner operated the vehicle on the fatal occasion without driving licence. This Court expressed the view that it is only when the insured himself entrusted the vehicle to a person who does not hold a driving licence, he could be said to have committed breach of the condition of the policy. It must be established by the insurance company that the breach is on the part of the insured. Unless the insured is at fault and is guilty of a breach of the condition, the insurer cannot escape from the obligation to indemnify the insured. It was also observed that when the insured has done everything within his power inasmuch as he has engaged the licensed driver and has placed the vehicle in his charge with the express or implied mandate to drive himself, it cannot be said that Ihe insured is guilty of any breach.'
The Supreme Court has also affirmed and reiterated the statement of law laid down in : [1987]2SCR752 . The Supreme Court has also observed that without the knowledge of the insured, if by driver's acts or omission others meddle with the vehicle and cause an accident, the insurer would be liable to indemnify the insured, and that the insurer, in such a case, cannot take the defence of a breach of the condition in the certificate of insurance.
23. Mr. P. Peppin Fernando then relied on the decision of the Supreme Court reported in State of Maharashtra v. Kanchanmala Vijaysing Shirke . This appeal was filed by the State of Maharashtra against the judgment of the Bombay High Court holding that the appellant/State shall be vicariously liable for the payment of compensation to the heirs of the deceased who was the victim of the accident. At the time of the accident, one Vijay Singh, who died in the accident, was driving the scooter and the jeep which belonged to the State Government dashed against the scooter because of which the victim sustained serious injuries and he ultimately succumbed to those injuries in the hospital The 3rd appellant was the driver of the jeep but at the time of accident, the 4th respondent, who was then a clerk in Engineering Fishing Project Division, Ratnagiri, was driving the jeep. The claimants claimed a sum of Rs. 4 lakhs as compensation for the death of Vijai Singh. It was contended that the 4th respondent was driving the jeep in a rash and negligent manner which resulted in the accident and the death of Vijai Singh and that the 4th respondent was driving the jeep, with the knowledge and consent of the 3rd appellant, the driver of the jeep, and as such the appellants and the 4th respondent were jointly and severally liable to pay compensation for the accident. In the written statement filed on behalf of the Slate it was admiited that the 4th respondent was driving the jeep although he had no licence to drive the same. It was also admitted that he was under the influence of liquor. However, it was pleaded on behalf of the appellants that the said 4th respondent had snatched the keys of the jeep from the driver/3rd appellant and started driving the jeep from the office premises, and therefore, the State could not be held to be vicariously liable for the compensation to be paid to the claimants. The 4th respondent filed a separate written statement and denied that he was driving the vehicle at the time of the accident. The Tribunal, on the materials on record, came to the conclusion that it was the 4th respondent who was driving the vehicle at the relevant time and he caused the accident because of his rash and negligent driving. It was also held that he was having no licence to drive the jeep in question. The Tribunal ultimately directed the 4th respondent to pay a sum of Rs. 1,50,000/- as compensation to the claimants. The High Court affirmed the finding of the Tribunal that it was the 4th respondent who was driving the jeep at the time of accident. However, it came to the conclusion that the case put forward on behalf of the appellants that the 4th respondent has snatched the keys forcibly from the driver was not correct. On the materials on record, the High Court directed payment of Rupees 2,06,000/- as compensation along with 12% interest per annum from the date of the application till the date of deposit/realisation. The State Government, the driver and the 4th respondent were jointly and severally held liable to pay the same. The State preferred the appeal before the Supreme Court. The Supreme Court after referring to the several earlier decisions of the said Court, held as follows:
'The facts of the present case disclose and demonstrate that an authorised act was being done in an unanthorised manner. The accident took place when the act authorised was being performed in a mode which may not be proper but nonetheless it was directly connected with 'in the course of employment' -- it was not an independent act for a purpose or business which had no nexus or connection with the business of the State Government so as to absolve the appellant-State from the liability. The driver of the vehicle had been fully authorised to drive the jeep for a purpose connected with the affairs of the State and the dispute is only in respect of the manner and the mode in which the said driver performed his duties by allowing another employee (respondent 4 herein) of the State Government, who was also going on an official duty, to drive the jeep, when the accident took place. Once it is established that negligent act . of the driver and respondent 4 were 'in the course of employment', the appellant-State shall be liable for the same ... The crucial test is whether the initial act of the employee was expressly authorised and lawful. The employer, as in the present case the State Government, shall nevertheless be responsible for the manner in which the employee, thai is, the driver and respondent 4 executed the authority. This is necessary to ensure so that the injured third parties who are not directly involved or concerned with the nature of authority vested by the master to his servant are not deprived from getting compensation. If the dispute revolves around the mode or manner of execution of the authority of the master by the servant, the master cannot escape the liability so far third parties are concerned on the ground that he had not actually authorised the particular manner In which the act was done ..... A person who is a servant has always a personal independent sphere of life and at any particular time he may be acting in that sphere. Different considerations might arise if the servant or some stranger was using the vehicle for purposes other than the purpose of his master's business and the accident occurred while the vehicle was being used for that other purpose. But once it is found and established that vehicle was being used for the business of the employer, then the employer will be held vicariously liable even for the lapse, omission and negligence of his driver to whom the vehicle had been entrusted for being driven for the business of the employer. When the act of the servant causes injury to a third parly the question is not answered by merely applying the test whether the act itself is one which the servant was ordered or forbidden to do. The employer has to shoulder the responsibility on a wider basis. In some situation he becomes responsible to third parties for acts which he has expressly or implicitly forbidden the servant to do.'
24. Learned counsel for the appellantthen cited the decision of a learned single Judge of the Jammu and Kashmir High Court reported in Oriental Insurance Co. Ltd. v. Rajinder Kumar . In that case, the vehicle was entrusted by the owner to its driver, who was a duly licensed driver. The licensed driver by mistake, carelessness or omission or in ne-galect of his duties, allowed the vehicle to be driven by a person who was not a licnesed driver. It was held thai the insured could not be blamed for this as he. on his part, had taken all care to ensure that the vehicle was entrusted to a licensed driver and if such a lincensed driver committed any breach, that could not be a ground available to the insurer to avoid its liability. The appeal filed by the insurance company was dismissed.
25. The last decision in the series cited by Mr. P. Pcppin Fernando, learned counsel for the appellant is reported in B. V. Nagaraju v. Oriental Insurance Co. Ltd. : AIR1996SC2054 . The question of importance arose in that case was, whether the alleged breach of carrying humans in a goods vehicle more than the number permitted in terms of the insurance policy is so fundamental a breach so as to afford ground to the insurer to eschew liability altogether. Another ancillary question is as to whether the terms of the policy of insurance need be construed strictly or be read down to advance the main purpose of the contract as viewed by the Supreme Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan : [1987]2SCR752 . In that case, the owner of the vehicle, who was covered by a comprehensive insurance policy duly insured with the Oriental Insurance Company covering risk to the limit of Rs. 2,09,000/-only. The vehicle sustained major damage in an accident with a gas tanker. At the time of accident, the truck was carrying nine persons while the policy did not cover use for carrying passenger in the vehicle except employees (other than the driver) not exceeding six in number coming under the purview of the Workmen's Compensation Act. The owner's claim relating to repair of the vehicle having been Spurned by the insurance company, he moved the State Consumer Forum, which allowed his claim to the extent of OfficialSurveyor's estimate of the repairs, viz., Rs. 75,700/- plus interest at 18% plus costs Rs. 2,000/-. This was upset by the National Commission relying on the above term of the policy. In appeal before the Supreme Court it was pointed out that the presence of nine persons (when upto six were permissible), irrespective of their being employees or not, had not contributed in any manner to the occurring of the accident as also when the claim did not relate to any injuries to those nine persons (who were owner of the goods loaded) or any loss incurred by them, the claim pristinely relating to the damage caused to the vehicle insured, which could not have been denied in the facts and the circumstances. The Supreme Court allowed the appeal. While construing the terms of the insurance policy, the Supreme Court held that the driver of the vehicle was not responsible for the accident and by merely lifting a person or two. or even three, by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The 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. Therefore, the Supreme Court held that the exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy that is to indemnify the damage caused to the vehicle. The Supreme Court allowed the appeal and restored the order of the State Commission.
26. Per contra, Mr. David, learned counsel for the 2nd respondent/insurance company, in support of his contention that (he insurance company was liable to pay compensation for the death of a passenger carried in a truck or a vehicle by reason of or in pursuance of a contract of employment only, cited the following decisions reported in South India Insurance Co. Ltd. v. Hcerabai 1967 ACJ 65 -- A Division Bench judgment of Madhya Pradesh High Court; Parkash Vati v. The Delhi Dayal Bagh DairyLtd. 1967 ACJ 82 -- a Division Bench judgment of the Circuit Bench of Punjab High Court at Delhi; Oriental Fire and General Insurance Co. Ltd. v. Gurdev Kaur . A Full Bench judgment of the Punjab and Haryana High Court; Vanguard Insurance Co. Ltd. v. Chinnammal : AIR1970Mad236 . A single Judge judgment of Madras High Court; Commonwealth Assurance Co. Ltd. v. V. P. Rahim Khan Sahib : AIR1971Mad415 . A single Judge Judgment of Madras High Court; South India Insurance Co. Ltd. v. P. Subramanium : AIR1972Mad49 . A single Judge judgment of the Madras High Court; Hindustan Idea) Insurance Corporation Ltd. v. Manne Chimperamma, : AIR1974AP120 . A single Judge judgment of she Andhra Pradesh High Court; C. Narayanan v. Madras State Palm Gur Sammelan : AIR1974Mad281 . A Division Bench judgment of the Madras High Court; Indian Mutual General Insurance Society Ltd. v. Manzoor Ahsan : AIR1977Cal34 . A Division Bench Judgment of the Calcutta High Court; Ambaben v. Usman-bhai Amirmiya Sheikh : AIR1979Guj9 . A Full Bench decision of the Gujarat High Court; and M. Kandaswami Pillai v. Chinnaswami : AIR1985Mad290 . A Division Bench judgment of the Madras High Court.
27. Learned counsel for the insurance company also cited the decision reported in G. Dhyanand v. Zaamni Bi : AIR1982Mad311 for the proposition that the insurance company is not liable to pay compensation for the death of a passenger who is also the owner of the goods, but the claim was maintainable only against the owner of the vehicle,
28. We do not propose to consider all the above judgments cited by the learned counsel for the insurance company in view of the latest pronouncement of law on the subject in question by the Supreme Court reported in Sohan Lal Passi v. P. Sesh Reddy : AIR1996SC2627 (Three Judges Bench) -- affirming the views expressed by the Supreme Court in the following earlier decisions reported in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan : [1987]2SCR752 ; Kashiram Yadav v. Oriental Fire and General Insurance Co. : [1989]3SCR811 ; and State of Maha-rashlra v. Kanchanamala Vijaysingh Shirke, .
29. In : AIR1996SC2627 , an accident took place on 8-6-1980 at Panaji between a bus and a scooter as a result whereof one Dr. P. Ramachandra Reddy, who was driving the scooter, fell down and succumbed to the injuries. A claim petition was filed before the Motor Accident Claims Tribunal claiming compensation. The appellant before the Supreme Court is the owner of the bus which had been insured with the 3rd respondent/insurance company. According to the claimants, the 4th respondent, who was the cleaner/conductor of the bus, was driving the bus at the relevant time when the accident took place resulting in the death of Dr. P. Ramachandra Reddy, on account of his rash and negligent driving. The claim for compensation was resisted by the owner of the vehicle contending that when the accident took place, the bus was driven by Gurbachan Singh who was employed by him as a driver and who had the licence to drive the bus in question and as such, the insurance company was liable to pay the compensation. The insurance company took the defence that as the bus was being driven by the 4th respondent (cleaner/conductor), who was not holding the driving licence, the insurance company cannot be held liable to pay compensation because under the terms of the policy, only person holding a driving license could have driven the bus in question.
30. The Tribunal came to the conclusion that the accident was the result of rash and negligent driving of the bus by the 4th respondent who did not have a driving license. On that finding, the Tribunal discharged the liability of the insurance company and directed the owner and the driver of the bus to pay an amount of Rs.66,000/- along with interest at the rate of 6% per annum to the claimants as compensation. One appeal was filed on behalf of the claimants for enhancement of the amount of compensation, whereas another appeal was filed on behalf of the appellant along with the 4th respondent for setting aside the award of the Tribunal. The High Court enhanced the amount of compensation from Rs. 66,000/-to Rs. 1,57,500/- and directed payment of interest at the rate of 12% per annum to the claimants, In respect of dispute regarding the liability to pay the compensation between the appellant/owner of the bus, vis-a-vis the insurance company, the High Court came to the conclusion that the insurance company was not liable because the vehicle was being driven by a person at the time of the accident, who was not holding a driving license.
31. It is seen from the order of the . Tribunal and of the High Court that Gurba-chan Singh was the regular driver of the bus, but, at the time of the accident, Rajinder Pal Singh, who was cleaner/conduct or of the bus, was driving the bus. obviously with the consent and authority of the regular driver Gurbanchan Singh. On behalf of the owner of the vehicle/appellant, a stand was taken that as he had appointed Gurbachan Singh to drive the vehicle in question and if the said driver allowed the cleaner/conductor to drive the vehicle without any authority from the owner, then, in that event, the owner/appellant shall not be liable to pay any compensation to the heirs and legal representatives of the victim. The Supreme Court held that a master is liable even for acts which he had not authorised provided they are so connected with the acts which he had authorised. In this regard, the Supreme Court followed its earlier decision reported in referred to supra. The Supreme Court further observed that the facts of the case disclosed and demonstrated an authorised act was being done in an unauthorised manner and that the accident took place when the act authorised was being performed in a mode which may not be proper but, nonetheless, it was directly connected with in the course of employment.
32. The Supreme Court while considering the recent trend of law referred to the decisions reported in Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co. (P) Ltd. : [1977]3SCR372 and Sitaram Motilal Kala v. Santanu-prasad Jaishankar Bhau : [1966]3SCR527 and observed as follows :--
'Same is the position in the present case. The appellant had authorised Gurbachan Singh to drive the vehicle, but Gurbachan Singh allowed Rajinder Pal Singh, the cleaner/ conductor who was also the employee of the appellant to drive the vehicle because of which the accident took place. It is not the stand of the appellant that Rajinder Pal Singh was driving the vehicle without the knowledge or consent of Gurbachan Singh, for his personal pursuit. He was driving the bus for the business of the appellant, that is to carry the passengers. In this background, the appellant cannot escape the liability so far the third parties are concerned on the ground that he had not actually authorised the particular manner in which the act was done. As it has been established that the negligent act of Gurbachan Singh and respondent Rajinder Pal Singh was 'in the course of employment' the appellant shall be liable for the same. In the present case, the accident took place when the act authorised was being performed in a mode which may not be proper but nonetheless it was directly connected within the course of employment. It was not an independent act for a purpose which had no nexus or conncction with the business of the appellant so as to absolve the appellant from the liability.'
33. While examining the liability to pay the compensation by the insurance company, the Supreme Court has also observed in paragraph 11 as under:
'Some of the aforesaid significant amendments introduced in the Motor Vehicles Act, 1939 and Motor Vehicles Act, 1988 have been referred to above only to indicate that even Parliament is conscious that right to claim compensation by the claimants in connection with the motor vehicles accidents should not be defeated on technical grounds.'
34. While considering the question as to whether the insurance company can repudiate its liability to pay compensation in respect of the accident by a vehicle only by showing that at the relevant time it was being driven by a person having no licence, the Supreme Court observed as follows:
'In the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan : [1987]2SCR752 in respect of this very defence by the insurance company, it was said:
'The defence built on the exlcusion clause cannot succeed for three reasons, viz.,
(1) On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour and fulfil the promise and he himself is not guilty of a deliberate breach.
(2) Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver.
(d) The exclusion clause has to he 'read down' in order that it is not at war with the 'main purpose' of the provisions enacted for the protection of victims of accidents so that the promisor is exculpated when he does everything in his power to keep the promise.'
35. On behalf of the insurance company, a stand was taken before the Supreme Court that when Section 96(2)(b)(ii) of the Act has provided that the insurer shall be entitled to defend the action on the ground that there has been breach of a specified condition to the policy, i.e., the vehicle should not be driven by a person who is not duly licensed, then the insurance company cannot be held to be liable to indemnify the owner of the vehicle. In other words, once there has been a contravention of the condition prescribed in sub-section (2)(b)(ii) of Section 96, the person insured shall not be entitled to the benefit of subsection (1) of Section 96. Dealing with the said contention, the Supreme Court has held as under:
'According to us, Section 96 (2)(b)(ii) should not be interpreted in a technical manner. Sub-section (2) of Section 96 only enable the insurance company to defend itself in respect of the liability to pay compensation on any of the grounds mentioned in sub-section (2) including that there has been a contravention of the condition excluding the vehicle being driven by any person who is not duly licensed. This bar on the face of it operates on the person insured. If the person who has got the vehicle insured has allowed the vehicle to be driven by a person who is not duly licensed then only that clause shall be attracted. In a case where ihe person who has got insured the vehicle with the insurance company, has appointed a duly licensed driver and if the accident takes place when the vehicle is being driven by a person not duly licensed on the basis of the authority of the driver duly authorised to drive the vehicle whether the insurance company in that event shall be absolved from its liability? The expression 'breach' occurring in Section 96(2)(b) means infringement or violation of a promise or obligation. As such the insurance company will have to establish that the insured was guilty of an infringement or violation of a promise. The insurer has also to satisfy the Tribunal or the Court that such violation or infringement on the part of the insured was wilful. If the insured has taken all precautions by appointing a duly licensed driver to drive the vehicle in question and it has not been established that it was the insured who allowed the vehicle to be driven by a person not duly licensed, then the insurance company cannot repudiate its statutory liability under sub-section (1) of Section 96. In the present case far from establishing that it was the appellant who had allowed Rajinder Pal Singh to drive the vehicle when the accident took place, there is not even any allegation that it was the appellant who was guilty of violating the condition that the vehicle shall not be driven by a person not duly licensed. From the facts of the case, it appears that the appellant had done everything within his power inasmuch as he has engaged a licensed driver Gurbachan Singh and had placed the vehicle in his charge. While interpreting the contract of insurance, the Tribunals and Courts have to be conscious of the fact that right to claim compensation by heirs and legal representatives of the victims of the accident is not defeated on technical grounds. Unless it is established on the materials on record that it was the insured who had wilfully violated the condition of the policy by allowing a person not duly licensed to drive the vehicle when the accident took place, the insurer shall be deemed to be a judgment-debtor in respect of the liability in view of sub-section (1) of Section 96 of the Act. It need not be pointed out that the whole concept of getting the vehicle insured by an insurance company is to provide an easy mode of getting compensation by the claimants, otherwise in normal course they had to pursue their claim against the owner from one forum to the other and ultimately to execute the order of the Accident Claims Tribunal for realisation of such amount by sale of properties of the owner of the vehicle. The procedure and result of the execution of the decree is well known.'
36. In the concluding portion, the Supreme Court in paragraphs 14 and 15 has observed as follows:
'As in the facts of the present case, the appellant shall be deemed to be liable to pay compensation applying the principle of vicarious liability because the accident took place when the act authorised was being performed in a mode which may not be proper but was directly connected with in the course of employment, sub-section (1) of Section 96 of the Act shall come into play and the insurance company shall be deemed to be the judgment-debtor, so far the claim made by the heirs and legal representatives of the deceased is concerned.
Accordingly, the appeals are allowed and the orders of the Claims Tribunal and the High Court are modified where only the appellant has been held to be liable to pay the compensation and the respondent-insurance company has been absolved of the liability. The respondent-insurance company shall be jointly and severally liable to pay the compensation to the claimants. There shall be no order as to costs.'
37. In our opinion, the principles laid down by the Supreme Court in the aforesaid Sohan Lal Passi's case : AIR1996SC2627 would squarely apply to the case on hand. In the instant case, the owner of the vehicle had appointed the licensed driver to the vehicle and the accident-in-question has taken place when the vehicle was transporting goods. There is no evidence adduced by the insurer that the owner of the vehicle authorised or permitted the owners of the goods which was being transported in the vehicle at the time of the accident, to travel in the transport vehicle-in-question, nor is there any evidence to show . that the driver was authorised to carry ihe owners of the goods along with the goods in the transport vehicle in question. There is no evidence to infer that there was even an implied consent for doing it by the owner of the vehicle. There is also no evidence to show that with the knowledge of the owner of the vehicle the owners of the goods were taken along with the goods in the vehicle. Further, it is also not proved that they are the gratuitous passengers. Thus, this is a case in which the driver on his own accord appears to have allowed the owners of the goods to travel in the transport vehicle along with their goods. There is no evidence to show that the owner of the vehicle wilfully allowed the transport vehicle in question to be used for the purpose which was not allowed by the permit.
Section 96 (2)(b)(i)(c) provides thus:
'96. (2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment unless, before or after the commencement of the proceedings in which the judgement is given, the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed therein 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) ... ..
(b) that there has been a breach of a specified condition of the policy being one of the following conditions, namely;
(i) .....
(a) .....
(b) .....
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle;
Sohan Lal Passi's case : AIR1996SC2627 was referred to a three-Judge Bench, in the light of the stand taken by the Insurance Company that when Section 96 (2) (b)(ii) has provided that the insurer shall be entitled to defend the action on the ground that there has been breach of a specified condition to the policy i.e. the vehicle should not be driven by a person who is not duly licensed, the insurance company cannot be held to be liable to indemnify the owner of the vehicle. On this point the view taken in Skandia Insurance Co. Ltd. : [1987]2SCR752 was against the insurer. The relevant portion of thejudgment in Skandia Insurance Co. Ltd.'s case is as follows:--
'The defence built on the exclusion clause cannot succeed for three reasons, viz.
(1) On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licenced is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour and fulfil the promise and he himself is not guilty of a deliberate breach.
(2) Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver.
(3) The exclusion clause has to be 'read down' in order that it is not at war with the'main purpose' of the provisions enacted for the protection of victims of accidents so that the promisor is exculpated when he does everything in his power to keep the promise.'
It was to examine the correctness of the aforesaid view as pointed out above, the Sohan Lal Passi's case : AIR1996SC2627 was referred to a larger Bench of three Judges, in which it was held thus (at pp. 2632-33):--
'According to us, Section 96(2)(b)(ii) should not be interpreted in a technical manner. Sub-section (2) of Section 96 only enables the insurance company to defend itself in respect to the liability to pay compensation on any of the grounds mentioned in sub-section (2) including that there has been a contravention of the condition excluding the vehicle being driven by any person who is not duly licensed. This bar on the fact of it operates on the person insured. If the person who has got the vehicle insured has allowed the vehicle to be driven by a person who is not duly licensed then only that clause shall be attracted. In a case where the person who has got insured the vehicle with the insurance company, has appointed a duly licensed driver and if the accident takes place when the vehicle is being driven by a person not duly licensed on the basis of the authority of the driver duly authorised to drive the vehicle whether the insurance company in that event shall be absolved from its liability? The expression 'breach' occurring in Section 96(2)(b) means infringement or violation of a promise or obligation. As such the insurance company will have to establish that the insured was guilty of an infringement or violation of a promise. The insurer has also to satisfy the Tribunal or the Court that such violation or infringement on the part of the insured was wilful. If the insured has taken all precautions by appointing a duly licensed driver to drive the vehicle in question and it has not been established that it was the insured who allowed the vehicle to be driven by a person not duly licensed, then the insurance company cannot repudiate its statutory liability under sub-section (1) of Section 96.'
Therefore, it is clear from the rule laid down inSonah Lal Passi's case : AIR1996SC2627 that the burden of proving the breach of condition of permit or the contract of insurance by the insured is on the insurer, viz. the insurance company. In the instant case, that burden has not been discharged. Therefore, the Insurance Company cannot absolve from its liability to pay the compensation to the claimants. In the view we take, the contention of the learned counsel for the Insurance Company based on the exclusion clause contained in the contract of insurance has to fail. It is accordingly rejected. What is said about the appeals will also apply to the C.R.P. 2655 of 1990-in-question.
38. For the foregoing reasons, all the appeals filed by the owner of the vehicle are allowed in part and the orders of the learned single Judge in C.M.A. Nos. 136 to 144 of 1989 and in M.A.C.O.P. Nos. 20, 23, 25, 26, 34, 35, 41, 42 and 95 of 1988 by the Motor Accident Claims Tribunal are modified where oniy the appellant/owner of the lorry has been held to be liable to pay compensation and the insurance company has been absolved of the liability. Since no dispute has been raised by the claimants either before the learned single Judge or before us regarding the question of compensation, it would follow that the claimants/1st respondents in these appeals would be entitled to recover the amount of compensation awarded from the owner of the vehicle and the insurance company viz., appellant and 2nd respondent, respectively, shall be jointly and severally liable to pay the compensation amount to the claimants/1st respondent in these appeals. There will be no order as to costs.
39. The Civil Revision Petition is alsoallowed in part and the claimant/ 1st respondent is entitled to recover the compensation amount awarded by the Tribunal from the insurance company/2nd respondent as well as from the owner of the vehicle/revision petitioner, who shall be jointly and severally liable to pay the compensation amount to the 1st respondent/claimant. There will be no order as to costs.
40. Order accordingly.