Devinder Gupta, J.
1. The four appeals arise out of judgment of learned single Judge of this Court, dismissing the appeals of the Insurance Company against the common award made on 8th November, 1985, by Motor Accident Claims Tribunal (I), Mandi, Kullu and Lauhal Spiti districts at Mandi.
2. On 8th December, 1983, at about 5.45 p.m. truck bearing registration number HPM 1353, owned by respondent Bharat Construction Company and driven by driver Hardev Singh, while carrying some of the employees of the company from Seuali Khud, the place of the work of the company to Lunapani, its sub-station, met with an accident. Some of the employees being carried in the vehicle died on the spot, as a result of the inuries received by them and some of them received injuries. The legal representatives of four of such employees, who died as a result of the accident filed four separate claim petitions, claiming compensation under Section 110-A of the Motor Vehicles Act, 1939 (Act No. 4 of 1939) (hereinafter referred to as 'the Act'). The appellant-company, with whom the vehicle in question had been got insured by the owner was also impleaded as one of the respondents in the claim petitions. The claim petitions were resisted by the owner, driver and the insurance company.
3. The owner, in its reply, admitted thedeceased to be in its emloyment and also admitted the accident. It was also admitted that at the time of the accident, the deceased; being its employees were being taken in the vehicle in question from the place of its work to Lunapani, its sub-station. It was, however, denied that the accident occurred as a result of negligence on the part of the driver. The driver also denied any rashness and negligence on his part, while driving the vehicle. The insurance company took up a stand that the vehicle in question was being driven without any valid permit by an unauthorised and unlicensed person and the occupants were unauthorisedly sitting in the vehicle, which was not a passenger vehicle. It denied its liability to compensate the claimants.
4. The Tribunal allowed the claim petition, holding that the deceased died due to the injuries sustained by them in the accident in question, which took place due to rash and negligent act on the pan of the driver. The owner of the truck was held liable to compensate the legal representatives. It was also held that the four deceased employees were working as labourers along with others in the Bharat Construction Company at the relevant time and that they were given facility of travelling by the truck of the company in between their residence and the work site. At the relevant time, these employees were travelling in the truck in question. It was held that the driver was duly employed driver of the company and held a valid driving licence. The vehicle in question, was not being driven on some unscheduled Kutcha road but was being plied on a National Highway. The Insurance Company was also held liable under the terms of the policy to discharge the liability of the owner by compensating the legal representatives. The claimant Milkhi Ram, son of deceased Rulia Ram, was awarded compensation amounting to Rupees 11,400/-, Savitri Devi and others, legal representatives of deceased Tek Chand, were awarded Rs. 1,01, 300/-, Smt. Parvati and others, the heirs of deceased Nikka Ram, were awarded Rs. 28,800/- and Smt. Tameshwari and others, legal representatives of deceased Tameshwar were awarded a sum of Rupees 76,800/-. The amount of compensation washeld payable by the Insurance Company along with interest at the rate of 6% per annum, from the date of institution of the petition, till payment.
5. The awards of the Claims Tribunal were not challenged by the owner or the driver. The Insurance Company carried the matter in appeal. The appeals were dismissed summarily by the learned single Judge, which are now under challenge in these four appeals.
6. The learned single Judge held that the evidence on record establishes that the deceased were given the facility of travelling by the truck between their residence and the work site. Under these circumstances, since it was not disputed that the insurance policy contained endorsement IMT 16, the insurance cover extends so as to indemnify the insured against the compensation awarded by the Tribunal and the Insurance Company will have to pay the compensation. The legal liability of the Insurance Company will not be confined in such cases only to the extent of the liability arising under the Workmen's Compensation Act, 1923 but will extend also to the liability arising under the Fatal Accidents Act, 1855, as well as at common law. The argument advanced on behalf of the Insurance Company that the workmen carried in the vehicle were in excess of the limit pre-scribed, was negatived for want of proper material on the record, since the Insurance Company had only challenged the Awards made in four claim petitions. The other reason assigned for not considering the validity of such a submission was the fact that Insurance Company by not challenging the Awards in other cases will be deemed to have accepted the awards thereby precluding it from challenging the same on the ground that the persons carried in the vehicle exceeded the permissible limit.
7. The case of the Insurance Company in appeals is that the deceased were unauthorised passengers in the vehicle and under the terms of the policy and the provisions of the Act, the insurance Company was not liable to pay the compensation since the deceased were being carried in the truck, in violation of the terms of the policy and the Act. The othersubmission is that even if it be assumed that the deceased were travelling in the truck as employees of the owner, the Company was not liable since the policy providing for wider legal liability only with respect to driver and cleaner of the truck along with four coolies, whereas in the instant case, the truck was heavily overloaded and there were about 30 persons sitting in the truck.
8. We have heard Mr. K. D. Sood, learned Counsel for the Insurance Company at length and Mr. B. K. Malhotra for the claimants. None appeared at the time of hearing of the appeals on behalf of the owner-company. We have also gone through the record.
9. At the very outset, we may deal with the application filed by the appellant under Order XLI, Rule 27 of the Code of Civil Procedure, seeking permission to lead additional evidence in support of its submission that several unauthorised passengers were travelling in the goods vehicle and they were tranvelling in breach of the terms of policy, which risk was not covered by the terms of the policy. It is alleged that more than 20 persons were travelling and the Insurance Company is not liable to pay the amount. Number of claim petitions were filed before the Claims Tribunal. Nine claim petitions were decided by a common judgment dated 13th November, 1985 by the Tribunal and in two other cases awards were made on 12th June, 1984 and 11th November, 1985. In addition thereto, four claim petitions decided by the Claims Tribunal on 8th November, 1985 are the subject-matter of the instant appeals. What is being sought to be produced on record are the copies of three awards made by the Claims Tribunal along with copy of the insurance policy, containing full terms, including endorsement IMT-16. It is alleged that the copy of the policy on record is not a complete copy but only a certificate of insurance, which had been duly proved and in order to enable this Court to pronounce effective judgment, it will be necessary to peruse the full terms of the policy.
10. Copies of the award, sought to be produced cannot be allowed to be adduced inevidence at this stage of the proceedings forvarious reasons. The application was moved only on 3rd May, 1993, whereas the instant appeals were admitted for hearing in the year 1986. The learned single Judge disposed of the appeals in the month of August, 1986. The appellant was aware of the case set up by it and according to the learned counsel for the appellant there is ample evidence on record to show that persons travelling in the truck were far in excess of the authorised number. On the other hand, we are inclined to take on record the copy of the complete policy, since what has been adduced on record is only a certificate of insurance. Production of the copy of the insurance policy, containing full terms and conditions of the policy, including the endorsement IMT 16 will also enable us to come to a correct conclusion. The application is accordingly allowed in part and the insurance policy is allowed to be taken on record and will be read in evidence as Exhibit 'X'.
11. Before proceeding to deal with the submission made on behalf of the learned counsel for the appellant, the terms of the policy in question are being dealt with first. The insured is Bharat Construction Company. The vehicle is described as T.D.V. Tipper truck bearing registration No. HPM 1353. The policy is subject to endorsement IMT numbers 2(c) and 16. In addition to the basic premium and premium against theft, an additional premium of Rs. 48/- for coverage of wider legal liability has been charged.
12. The certificate says that limit of the amount of the company's liability under Section II-l(i) of the policy, in respect of any one accident will be such amount as is necessary to meet the requirement of the provisions of the Motor Vehicles Act, 1939, hereinafter referred to as the Act, and under Section II-l(ii) of the policy the extent of its liability in respect of any one claim or series of claim, arising out of one event is Rs. 50,000/-.
13. The policy further stipulates limitation as to the use of vehicle under a 'public carriers permit', within the ambit of the Act. It stipulates that the policy does not cover:
(1) Use for organised racing, pace-making,reliability trial or speed testing;
(2) Use whilst drawing a trailer except the towing (other than for reward) of any one disabled mechanically propelled vehicle;
(3) Use for the conveyance of passenger for hire or reward. There is an important note, appended to the certificate to the following effect: 'Important notice the insured is not indemnified if the Vehicles is used or driven otherwise than in accordance with this Schedule. Any payment made by the Company by reason of wider terms appearing in the certificate to (should be 'in') order to comply with the Motor Vehicles Act, 1939 is recoverable from the insured. See the Clause headed' Avoidance of Certain Terms and Right of Recovery.'
14. Section I in the terms and conditions of the policy deals with the loss or damage to the insured or to the motor vehicle or its accessories, which the insurer has agreed to indemnify. Section II deals with the liability to third parties and says:
'Section II -- Liability to Third Parties.
1. Subject to the limits of liability the company will indemnify the insured against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of:
(i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the Motor vehicle;
(ii) damage to property caused by the use (including the loading and/or unloading) of the Motor Vehicle Provided Always that:--
(a) xx xx xx xx xx xx
(b) Except so far as is necessary to meet the requirements of S. 95 of the Motor Vehicles Act, 1939, the company shall not be liable in respect of death of or bodily injury to any person in the employment of the insured arising out of and in the course of such employment;
(c) Except so far as is necessary to meet the requirements of Section 95 of the Motor Vehicles Act, 1939, in relation to liability under the Workmen's Compensation Act, 1923, the Company shall not be liable in respect of death of or bodily injury to any person (other than a passenger carried by reason of or in pursuance of a contract of employment) being carried in or upon or entering or mounting or alighting from the motor vehicle at the time of the occurrence of the event out of which any claim arises.
(d) to (g) xx xx xx xx xx xx xx 2. xx xx xx xx xx xx xx xx xx'
15. The endorsement I.M.T. 16 is for the coverage of the legal liability to persons employed in connection with the operation and/or maintenance and/or loading and/or unloading of the vehicle and says:
'The premium having been calculated at the rate of Rs. 8/- per driver (and/or cleaner or conductor and/or person employed in loading and/or unloading) the insured shall certify at the expiry of such period of insurance the maximum number of drivers and/or cleaners and/or conductor and/or persons employed in loading and/ or unloading employed at any one time during such period in connection with the Motor Vehicle belonging to him and the premium shall be adjusted accordingly provided always that:
(1)This Endorsement does not indemnify the insured in respect of any liability in cases where the insured holds or subsequently effects with any insurance company or group of underwriters policy of the insurance in respect of liability as herein defined for his general employees.
(2) The insured shall take reasonable precautions to prevent accidents and shall comply with all statutory obligations.
(3) The insured shall keep a record of the name of each driver cleaner, conductor or person employed in loading and/or unloading and the amount of wages, salary and other earnings paid to such employees and shall at all times allowed the company to inspect such records.
(4) In the event of the policy being cancelled at the request of the insured no refund of the premium paid in respect of this Endorsement will be allowed;
Subject otherwise to this terms, exceptions, conditions and limitations of the policy except for as necessary to meet the requirements of Section 95 of the Motor Vehicle Act, 1939.'
16. The policy admittedly allowed the use of the vehicle in question only under a 'public carriers permit', within the meaning of the Act and in order to cover wider legal liability a sum of Rs. 48/- has been charged by way of premium, which has been calculated @ Rs. 8/- per person, namely, driver, cleaner and four persons employed in loading and unloading of the vehicle.
17. Section 42, which is in Chapter-IV of the Act deals with the control of transport vehicles and specifies the necessity for permits and it prohibits the owner of the transport vehicle from using or permitting the use of the vehicle in any public place, except in accordance with the conditions of a permit, granted or counter-signed by a Regional or State Transport Authority, authorising the use of the vehicle in that place, in the manner in which the vehicle is being used. The third proviso to Section 42 says that a 'public carrier's permit1 shall, subject to any conditions that may be specified in the permit, authorise the holder to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him.
18. The contention of the learned counsel for the appellants is that under the terms of the policy, the authorised use of the vehicle was only under A 'Public carrier's permit', for carriage of goods, in connection with the trade or business, carried on by the owner-company. The authorised persons, which could be carried in the vehicle, in view of the coverage for wider legal liability, could be only the driver, cleaner and four coolies, for the purpose of loading and unloading.
19. Clause (23) of Section 2 defines 'publiccarrier' to mean an owner of a transport vehicle who transports or undertakes to transport goods, or any class of goods, for another person at any time and in any public place for hire or reward, whether in pursuance of the terms of a contract or agreement or otherwise, and includes any person, body, association or .company engaged in the business of carrying the goods of person 'associated with that person, body, association or company for the purpose of having their goods transported.
20. The Goods vehicle has been defined in Clause (8) of Section 2, which reads:
' 'Goods vehicle' means any mother vehicle constructed or adapted for use for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods solely or in addition to passengers;'
21. A private carrier has been defined in Clause (22) of Section 2 to mean an owner of a transport vehicle other than a public carrier, who uses that vehicle solely for the carriage of goods, which are his property or the carriage of which is necessary for the purposes of his business, not being a business of providing transport, or who uses the vehicle for any of the purposes specified in Sub-section (2) of Section 42.
22. The vehicle, being a truck and its use being under a public carrier's permit admittedly was a goods vehicle. Rule 4.60 of the Punjab Motor Vehicle Rules, 1940, as applicable to the State of Himachal Pradesh, permitted carriage of certain categories of persons in goods vehicle to be carried in goods vehicle. Sub-rule (1) contains the general prohibition in respect of the goods vehicle that no person shall be carried in a goods vehicle other than a bona fide employee of the owner or the hirer of the vehicle. Sub-rule (2) prescribes the limit of maximum six persons to be carried in the cab of a goods vehicle. More than 6 persons may be allowed to be carried in the cab by the State Transport Authority in case the vehicle is owned by the Government provided the number does not exceed maximum 12, as per provisions of Sub-rule (2).
23. Sub-rule (4) is an exception to Sub-rule (2). On being authorised by the Regional Transport Authority, maximum persons, which can be allowed to be permitted to be carried in a goods vehicle is 12 and Sub-rule (3) says no person shall be carried upon the goods or otherwise in such a manner that such person is in danger of falling and while in sitting posture no part of his body should be above the height exceeding the surface limit from the surface upon which the vehicle rests.
24. Rule 4-60 of the Punjab Motor Vehicles Rules, for convenience, is being extracted in extenso as follows :
'4.60. (1) Save in the case of a vehicle which is being used for the carriage of troops or police or in the case of a stage carriage in which goods are being carried in addition to passengers, no person shall be carried in a goods vehicle other than a bona fide employee of the owner or the hirer of the vehicle and except in accordance with this rule. The owner of goods vehicle may also travel in it for a purpose connected with the bona fide business of the vehicle.
(2) No person shall be carried in the case of a goods vehicle beyond the number for which there is seating accommodation at the rate of 380 millimetres (measured along the seat excluding the space reserved for the driver) for each person, and not more than six persons in all in addition to the driver shall be carried in any goods vehicle;
Provided that -
xx xx xx xx xx xx xx xx
(3) No person shall be carried upon the goods or otherwise in such a manner that such person is in danger of falling from the vehicle, and in no case shall any person be carried in a goods vehicle in such a manner that any part of his person, when he is in a sitting position, is at a height exceeding 3.048 metres from the surface upon which the vehicle rests.
(4) Notwithstanding the provisions of Sub-rule (2) a Regional Transport Authority may, as a condition of a permit granted for any goods vehicle, specify the conditions subjectto which a larger number of persons may be carried in the vehicle, provided that such lumber shall not exceed the area in square metre of the floor of the vehicle divided by .63 Subject to a maximum of 12.
(5) Nothing contained in this rule shall be deemed to authorise the carriage of any person for hire or reward in any vehicle unless there is. in force in respect of the vehicle a permit authorising the use of the vehicle for such purpose, and save in accordance with the provisions of such permit.
(6) The provisions of this rule shall not apply to motor vehicles registered under Section 39 of the Act.'
Bare reading of the aforesaid Rule 4.60 makes it clear that carrying of bona fide employees o'f the owner or hirer of the goods vehicle is not at all prohibited. Bona fide employees of the owner or hirer of the goods vehicles can be carried. Limit of such bona fide employees depends upon various factors, such as, size of cabin, in case the employees are being carried in the cabin, the height of the rear portion of the vehicle from the surface on which the vehicle rests and its area, in case the employees are being carried in the back portion. For ascertaining the number of bona fide emplo-yees, which can be carried in the vehicle under lawful authority, it is necessary to refer to the permit, which in the instant case has not been produced. In the absence of permit it is not possible to hold that only six employees, including the driver and cleaner, alone were authorised. It will also not be possible to hold that the vehicle was being plied in violation of the permit and consequently the policy.
25. Section 94 in Chapter VIII of the Act lays emphasis upon the necessity for insurance against third party risk and provides that no person shall use, except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force, in relation to the use of the vehicle by that person, or that other person, as the case may be, a policy of insurance, complying with the requirements of this chapter. The policy of insurance lias thus to comply with the requirement of Chapter VIII. under whichchapter are included Sections 95 and 96.
26. Sub-section (1) of Section 95 of the Act deals with the requirement of policy and says :
'95. 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 or by a cooperative society allowed under Section 108 to transact the business of an 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 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, 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 vehicle, being carried in the vehicle, or
(ii) exept where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out ofwhich a claim arises, or
(iii)to cover any contractual liability.'
Sub-section (2) of Section 95 provides for the limits of the liability in the following words :--
'(2) Subject to the proviso to Sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident upto the following limits, namely:
(a) where the vehicle is a goods vehicle, in limit of one lakh and fifty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding six in number, being carried in the vehicle;
(b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of, in pursuance of, a contract of employment -
(i) in respect of persons other than passengers, carried for hire or reward, a limit of fifty thousand rupees in all;
(ii) in respect of passengers, a limit of fifteen thousand rupees for each individual passenger;
XX XX XX XX XX XX XX XX'
27. Sub-section (1) of Section 95 lays down the statutory liability of the insurer in respect of a policy and in clear words, Sub-Clause (i) of Clause (b) of Sub-section (1) of Section 95 enjoins that such policy must be against any laibility, which may be incurred by the insured in respect of the death of or bodily injury to, any person or damage to any property of a third party, caused by or arising out of, the use of the vehicle in a public place. Irrespective of the class of the vehicle, the risk of any person, which is of very wide import is required to be covered. Risk against the 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 is required to be covered by policy by virtue of Sub-Clause (ii) of Clause (b) of Sub-section (1) of Section 95 of the Act. , , ; ;
28. On the plain meaning of the words used in Clause (i) to the proviso, the same apply to the employee of the insured engaged in (a) driving the vehicle, (b) a conductor or examiner of tickets in the case of a public service vehicle and (c) any other category of employee, if it is a goods vehicle. In the case of such of the employees Clause (i) to the proviso says that policy shall not be required to cover the liability in respect of death arising out of and in the course of his employment, of the employee of the insured; other than the liability arising under the Workmen's Compensation Act, 1923.
29. Clause (ii) to the proviso to Sub-section (1) of Section 95 in fact is an exception to an exception and when the case falls within the ambit of Sub-Clause (ii) of the proviso to Subsection (1), on a bare reading of which it would be clear that there is a statutory requirement to cover the liability in respect of the death of or bodily injury to all persons being carried in or upon or entering or mounting and alighting from the vehicle provided the vehicle is a vehicle in which passengers are carried for hire or reward, or where the persons are carried by reason of or in pursuance of a contract of employment. In this Sub-Clause (ii) to the proviso to Sub-section (1) the legislature has not specified the class of vehicle but has in clear terms referred to the vehicle being 'such a vehicle, in which passengers are carried 'for hire or reward' or 'by reason of or in pursuance of a contract of employment.'
30. The learned counsel for the appellant-insurance company has urged that goods vehicle has been specifically covered under Clause (i) to the proviso of Sub-section (1) and such goods vehicle cannot be considered as a vehicle referred to in Clause (ii) since the same is not a vehicle in which passengers are carried for hire or reward. This submission of the learned counsel for the appellant, in view of specific Rule 4.60 of the Punjab Motor Vehicle Rules, 1940, as applicable to the State ofHimachal Pradesh, has no force. Rule 4.60 permits the carrying of persons in goods vehicle, subject to limitation of number of persons, sitting capacity etc. The category of persons to be carried in goods vehicle being 'bona fide employees' only.
31. In case of a goods vehicle, in which employees are being carried an such of the employees happen to be under the employment of the insured and are included in categories (a) (b) and (c) thereof, namely, driver and conductor, the case would be covered by Clause (i) of proviso to Sub-section (1) of Section 95. Incase of the other categories of employees, carried in such a vehicle, in pursuance of acontract of employment, there is no reason why the case would not be covered under Sub-clause (ii) to the proviso to Sub-section (1) of Section 95. The reason being the absence of the mention of type of vehicle and use of of the words 'in pursuance of contract of employment' in Clause (ii) of the proviso to Sub-section (1) of Section 95 of the Act.
32. Where it is a case of 'bona fide employees', being carried in the vehicle, other than the driver or conductor, this relevant Clause (ii) of the proviso to Sub-section (1), which, as stated above, being an exception to an exception can be read to mean: In order to comply with the requirement of this chapter a policy of insurance may be a policy which insures the person specified in the policy to the extent specified in Sub-section (2), to cover his liability in respect of death of or bodily injury to person being carried in the vehicle at the time of the occurrence when the vehicle is a vehicle in which passengers are carried in pursuance of contract of employment.
33. There has been divergence in the views expressed by the High Courts with respect to liability of insurance company in the case of the owner of the goods travelling in the goods vehicle alongwith the goods, that his case will be covered under the provisions of Clause (ii) of proviso to Sub-section (1) of Section 95 or whether his case would fall under any other provision. High Courts of Allahabad, Andhra Pradesh, Bombay, Gujarat, Karna-taka, Kerala and Orissa have held the view that the hirer of goods vehicle, for the carriage of goods, when travelling in the said vehicle, in connection with the carriage of goods with the consent of the driver or the owner of the goods vehicle in question, would be covered by the word 'passenger' in the vehicle within the meaning of Clause (ii) to proviso to Sub-section (1) of Section 95 of the Act and as such, the tortious liability of the owner towards him must be covered by the insurance policy contemplated by the said section. Under Clause (ii) to the proviso to Sub-section (1) would also be covered the persons who are travelling in the goods vehicle as employees of the owner of goods, since they are travelling in the vehicle in pursuance of a contract of employments. Such contract of employment need not be with the insured but may be with the hirer of the vehicle.
34. A Division Bench of the High Court of Kerala in State Insurance Department, State Insurance Officer, Trivandrum v. Sosamma Mani, 1978 Acc CJ 504: (AIR 1979 Kerala 15), held that the employee or employees of the owner of goods, which are being carried, who go out on the lorry with the goods and return home in the lorry after the goods are delivered, such employees may properly be regarded as 'passengers' carried in pursuance of a contract with some one other than the insured and their case will be covered by part (ii) of proviso. The court in para 6 of the report held (at p. 17 of AIR):
'....In the case of a public service vehicle the liability is in respect of the death of or bodily injury to any passenger of that vehicle. But the insistence for insurance by Sub-section (1) is subject to the proviso to that sub-section. The proviso consists of three parts and as per the proviso, in the case of three kinds of liabilities mentioned therein there need not be any insurance coverage. The proviso itself is an exception to the general rule regarding insurance coverage and the second part of the proviso provides for exceptions to the exception made by the proviso itself by insisting that the policy should cover the liability of persons carried where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. The first part of theproviso deals with the employees of the insured. So the mention in the second part need not be about those employees. The only other kind of employees who can be expected to be carried by a goods vehicle is the employees of the owner of the goods carried by it. They accompany the goods in pursuance of a contract of employment because they are asked to do that by their employer to safeguard the goods. So, as per the exception contained in part (ii) of the proviso to the exceptions provided for by the proviso an employee of the owner of the goods who accompanies the goods in the vehicle gets insurance coverage u/Section 95'of the Act.......'
35. The High court of Karnataka in Channappa Chanavirappa Katti v. Laxman Bhimappa Bajantri, AIR 1979 Kant 93, held that the goods vehicle, which carries the owner of goods as a passenger can be construed as a vehicle in which passengers are carried for hire or reward as would answer the exception contained in the first part of the second proviso so as to make the coverage of risk of such a person compulsory under Chapter VIII of the Act. The reasons which prevailed with the court in holding so may be quoted as under:
'........The policy of the law in makingprovision for compulsory insurance of vehicles is to cover the risk of innocent third parties. The owner of the goods (hirer of goods vehicles) who wants to convey his goods through a public goods-vehicle, will be an innocent third party when he dies or suffers injury while accompanying his goods carried by a public goods vehicle, in the course of the user of the vehicle. The simple reason is that, in the normal course of things, it would not be possible for him to ascertain beforehand, the financial stability of the user of the vehicle, the expertise of the driver of the vehicle in driving it, or the rodd-worthy condition of the vehicle, as would ensure his safety. When such a person travels as a passenger in a goods-vehicle which is used to advance the business interests of its owner and is permitted by law, it cannot be said that it is not a vehicle meant for carrying passengers for hire or reward, provided for in the exception to the firstpart of the Second Proviso to Section 95 (l)(b)'
This decision was followed later in United India Insurance Company Ltd. v. Gangamma, 1982 Acc CJ 357 : (AIR 1982 Kant 261).
36. By virtue of Rule 118 of the Motor Vehicles Rules applicable in the State of Gujarat, a goods vehicle under its permit is entitled to carry the owner or hirer or bona fide employees of the owner or hirer of the vehicle, when he is so carried free of charge, to the extent of limits specified therein, namely, six. A Full Bench of the High Court of Gujarat in Ambaben v. Usmanbhai Amir-miya Sheikh, 1979 Ace CJ 292 : (AIR 1979 Gujarat 9), held (at p. 14 of AIR):''
'......so far as the policy contemplated byS, 95(l)(b) is concerned, it does not cover the risks to (A) persons other than those who were carried for hire or reward at the time of occurrence of even which gives rise to the claim against the insurer and (B) passengers other than those who were bona fide employees of the owner or hirer of the vehicle not exceeding six in number, carried in pursuance of or by reason of acontract of employment.'
37. Another Full Bench of the Gujarat High Court in National Insurance Company Ltd. Ahmedabad v. Nathibai Chaturabhuj 1982 Acc CJ 153 : (AIR 1982 Gujarat 116), answered the question that where the vehicle is, on the date of the contract of insurance, a vehicle not covered by a permit to ply for hire or reward, whether a passenger on payment will get the benefit of statutory insurance as follows:
'The liability in respect of the death of or bodily injury to a passenger carried for hire or reward on the insured vehicle when the. accident giving rise to the claim occurred, including the liability in respect of the owner . or hirer of the insured vehicle or his bona fide employees within the permissible limit will be covered by the statutory insurance either by virtue of Section 95(l)(b)(i) read with the second clause of the proviso or by reason of Section 95(l)(b)(ii) of the Act. In such a case the insurer will have to pay to the person entitled to the benefit of the award the sum assured, which shall not be less than the sum specifiedin Section 95(2), subject, however, to the right of the insurer to disclaim the liability, inter alia, under Section 96(2)(b)(i)(a)....'
38. It was further held that in order to successfully disclaim its liability the insurer will have to establish the following facts and if the facts'are established, the benefit of statutory insurance will not be available in respect of such passenger:
'(1) That on the date of the contract of insurance, the insured vehicle was expressly or implicitly not covered by a permit to carry any passenger for hire or reward;
(2) That there was a specified condition in the policy which excluded the use of the insured vehicle for the carriage of any passenger for hire or reward; and*
(3) That the vehicle was, in fact, used in breach of such specified condition on the occasion giving rise to the claim by reason of the carriage of the passenger therein for hire or reward.'
39. Question of liability of the insurance company for the death or bodily injury to the hirer of a goods vehicle when he is a passenger in the same vehicle came up for consideration before a Division Bench of High Court of Bombay in Nasibdar Suba Fakir v. M/s. Adhia and Company, 1983 Ace CJ 264: (AIR 1984 Bom I). Rule 118 of Bombay Motor Vehicles Rules, 1959, which is almost similar to Rule 4.60 of the Punjab Motor Vehicles Rules permitting certain persons to be carried free of charge in a goods vehicle was also noticed. It was held that the hirer of the goods vehicle, who is the owner of the goods carried by the vehicle is a passenger of the vehicle at the time of carriage but does not answer the description of being an employee either of owner or hirer of the truck but that does not mean that he does not fall in the other category of passengers, who are required to be covered by the insurance. Following the view held by the Gujarat and Karnataka High Courts in the aforementioned cases, the question was answered by saying :
'.... We are of the view that when a hirer ofa goods vehicle for carriage of his goods is travelling by the said vehicle in connection with the carriage of the goods with the consent of the driver or owner of the goods vehicle in question, he must be deemed to be a passenger on the vehicle for reward within the meaning of Clause (ii) of the proviso to Section 95(1) of the Act and hence the tortious liability of the owner towards him must be covered by the insurance policy contemplated by the said section.'
40. The view expressed by the High Court of Karnataka in Channappa's case (AIR 1979 Kant 93) (supra) and that of the two Full Benches of Gujarat High Court in Amba Ben's (AIR 1979 Guj 9) and Nathiben Chaturbhuj(AIR 1982 Guj 116) cases (supra), was also followed by a Division Bench of the Allahabad High Court in Abdul Razaq v. Sharifunnisa, 1984 Ace CJ44 : (AIR 1983 All 400). Holding that the first part of proviso (ii) to Section 95(l)(b) of the Act relates to carrying of passengers for hire or reward in the vehicle, while the second part contemplates carriage of passengers by reason of or in pursuance of a contract of employment. Placing reliance upon the judgment of Supreme Court in Pushpabai Purshottam Udesi v. Ranjit Ginning & Pressing Co. Pvt. Ltd., 1977 Ace CJ 343 : (AIR 1977 SC 1735), the Bench held that a gratuitous passenger being carried in a vehicle is not covered by the compulsory policy of insurance but in agoods vehicle which permits carriage of owner of goods for hire or reward fall within the exception contained in the first part of second proviso so as to require the coverage of the risk of the persons travelling as passengers by compulsory insurance. On the second part of proviso (ii) to Section 95(I)(b) of the Act, the Court held:
'..... if a person hires a vehicle for the transport of his goods and his employee accompanies the goods in the vehicle, he would be covered by the expression 'by reason of or in pursuance of a contract of employment' and his risk will be covered by compulsory policy.'
41. In para 15 of the report, on an analysis of various judgments the expression 'byreason of or in pursuance of a contract of employment' under proviso (ii) was held to mean that the person travelling in the vehicle must be doing so in pursuance of an employment with the insurer or with some other person. The reasonings were recorded in the following words:
'.....There is, however, a significant difference in the two provisions. Under the proviso (ii) to Section 95( 1 )(b) the expression used is 'by reason of or in pursuance of a contract of employment1 which according to some of the High Courts means that the person travelling in the vehicle must be doing so in pursuance of an employment with the insurer or with some other person. Clause(l)(c) of Section II of the policy, however, uses a different phraseology, it states that the company shall not be liable in respect of death or bodily injury to any person other than a passenger being carried 'by reason of or in pursuance of a contract or employment' in the vehicle at the time of the occurrence. The use of the word 'or' between the words 'contract' and 'employment' is significant. The policy does not insist on a contract of employment. Under the terms of the policy the insurance company has undertaken to cover risk of a passenger carried by reason of or in pursuance of a contract or employment, thus if a person is being carried in the vehicle in pursuance of a contract or he is being carried in pursuance of employment, in both the cases the company has undertaken to indemnify the owner for the liabilities arising against the owner. The terms contained in the policy do not necessarily require that the passenger being carried in the vehicle should be travelling in pursuance of a contract of employment, instead the company has undertaken to indemnify the owner for the death of a passenger who may be travelling in the vehicle in pursuance of contract also. Owner of goods is entitled under the rules to be carried in the goods vehicle by reason of his contract of hiring the vehicle for the transport of his goods. His risk is thus covered by the term of the policy. Under the aforesaid terms the insurance company has clearly undertaken to indemnify the owner for his liability for the death ofowner if travelling in the vehicle as a passenger in pursuance of a contract of hiring. We are, therefore, of the opinion that even if there be any doubt relating to the liability of the insurance company on the interpretation of proviso (ii) to Sec. 95(l)(b), it is fully liable in view of the express terms and conditions of the policy.'
42. In Oriental Fire & Genl. Ins. Co. v. B. Parvathamma, 1984 Acc CJ 680 : (AIR 1986 Kant 63), the Division Bench of Karnataka High Court, reiterating the view expressed in the case of Channappa Chanavirappa (AIR 1979 Kant 93) (supra), which was followed in later judgments of the same court in T. M. Renukappa v. Fahmida, 1980 Acc CJ 86 : (AIR 1980 Kant 25); Agappaiah v. New India Assurance Co., 1982 Acc CJ 176 : (AIR 1982 Kant 183) and Gangmma's cases (AIR 1982 Kant 261) (supra) and by the High Court of Bombay in Nasibdar Suba Fakir's case (AIR 1984 Bom 1) (supra) and by the High Court of Orissa in Oriental Fire and General Insurance Company Ltd. v. Narayanibai, 1984 Acc CJ 106 : (AIR 1984 Ori 43), that the risk of the owner of the goods, travelling in the goods vehicle along with the goods would be covered by the compulsory insurance in respect of the vehicle, held that where the vehicle is permitted to run as a goods vehicle and not a public service vehicle, it does not cover the risk of fare paying passengers in general apart from the passengers contemplated under Rule 161 of the Karnataka Motor Vehicles Rules. The rule prohibited use of the goods vehicle for the conveyance of passengers for hire or reward. It was held that endorsement in the policy covers only an employee and any other person who is a non-fare paying passenger. Thus bona fide employees' were held to be covered within the ambit of passengers carried in the goods vehicle in pursuance to the contract of employment, whose risk is required to be statutorily covered by the second proviso to Section 95(l)(b) of the Act.
43. In Rajasthan, Rule 133 of the Rajas-than Motor Vehicles Rules, 1951, provides for the carriage of persons in the goods vehicle, which is more or less similar toRule 4.60 applicable to Himachal Pradesh. Considering the divergence of opinion on the question between different High Courts, the view held by the Karnataka and Gujarat,,was followed and the following principles were deduced by a Full Bench of High Court of Rajasth.an in Santra Bai v. Prahlad, 1985 Acc CJ 762 : (AIR 1988 Raj 101):
'(i) In case of gratuitous passengers going on joy-ride or on his own responsibility, insurance company is not liable;
(ii) in case of passengers carried for hire or reward or by reason of or in pursuance of a contract of employment in any vehicle, the insurance company is liable. This would include owner of the goods as well as his employees;
(iii) the insurer shall not be liable to cover liability in respect of employee of the insured in respect of the death of or bodily injury, to any such employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 if such employee is (a) engaged in driving such 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 vehicle being carried in the vehicle;
(iv) the insurer shall not be liable to cover any contractual liability.'
44. Absence of the term 'public service vehicle' in Clause (ii) of proviso to Subsection (1) of Section 95 of the Act was held as an expression of the intention of the legislature in keeping wide open this clause for any vehicle in which passengers may be carried either for hire or reward or in pursuance of a contract of employment. In para 10 of the report the Bench speaking through N. M. Kasliwal, J. (as his Lordship then was) observed:
'The legislature has not used the term 'public service vehicle' in Clause (ii) of the proviso to Sub-section (1) of Section 95 of the Act and on the contrary has used the language 'whether the vehicle is a vehicle in which passengers are carried....' 'public servicevehicle', no doubt has been defined in Section 2(25) of the Act as 'any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage'. But in Clause (ii) of proviso to subsection (1) of Section 95 of the Act neither the term 'goods vehicle' nor 'public service vehi-cle'has been used and as such the intention of the legislature clearly appears to keep it wide open for any kind of such vehicle in which passengers may be carried for hire or reward or by reason of or in pursuance of a contract of employment. Thus, if passengers are allowed to be carried in a goods vehicle, a goods vehicle will certainly come within the purview of the above provision.'
45. The contrary view held by the High Courts of Punjab and Haryana, Madras, Madhya Pradesh and Calcutta is to the effect that the hirer of a truck, being the owner of the goods carried on in the goods vehicle cannot be said to be on the vehicle in pursuance of a contract of employment since he will not be a person employed by anybody but he being only the owner of the goods carried by it. In other words, the view has been that there cannot be any contract of employment between hirer of the truck or the owner of the goods with the owner of the vehicle. The question whether such persons could be considered as a passenger carried for reward or not has not bet,a decided.
46. The judgment of the Punjab and Haryana High Court holding such a view is of its Full Bench in Oriental Fire and General Insurance Co. Ltd. v. Gurdev Kaur, 1967 Acc CJ 158 : (AIR 1967 Punj & Har 486). It was a case of hirer of the goods vehicle in which the owners of the goods being carried in the goods vehicle along with their goods died as a result of the accident. The question about the liability of the insurer had arisen. It was held that Rule 4.60(I) of the Punjab Motor Vehicle Rules recognises that the hirer of the vehicle may travel as a passenger in a goods carrier but proviso to Sub-rule (2) of the Rule limits the number of such persons to a maximum of six. The liability of the insurer was not considered vis-a-vis the owners of the goodsas a passenger carried for reward. It was held that the terms 'are carried for hire or reward' or 'are carried by reason of or in pursuance of a contract of employment' go with the word 'passengers' and not with the vehicle. After observing that (at p. 490 of AIR):
'...The normal and the ordinary meaning and the scope of the expression 'a contract of employment' points to a person being employed to do something or to carry out something for another person. It has the element of rendition of some service in one shape or another for the employer. So it cannot refer to the hiring of a goods carrier as a contract of employment or to the owner of such a carrier as the person with whom a contract of employment has been made...'
insurer was held not liable on the ground that there cannot be any contract of employment between the hirer of the vehicle/the owner of the goods with the owner of vehicle.
47. Similar view was held by a Division Bench of Madhya Pradesh High Court in South India Insurance Co. Ltd., Indore v. Heerabai, 1967 Acc CJ 65. The decision in Gurdev Kaur's case (AIR 1967 Punj & Har 486) (FB) (supra) was relied in a later judgment of the same High Court in Oriental Fire & General Insurance Co. v. Kasturi Lal, 1968 Acc CJ 227. Following the view held by Full Bench of Punjab and Haryana High Court relied on in Kasturi Lal's case (supra) and that of Madhya Pradesh High Court in Heerabai's case (supra), learned single Judge of Madras High Court in the Common Wealth Assurance Co. Ltd., Bombay v. V. P. Rahim Khan Sahib, 1971 Acc CJ 295 : (AIR 1971 Mad 415), recorded a similar reasoning to the effect that hirer of a vehicle for carriage of goods while accompanying the goods cannot be said to be a passenger carried by reason of or in pursuance of a contract of employment within the ambit of Clause (ii) of proviso to Sub-section (1) of Section 95 of the Act. Similar view was held in a later judgment of the High Court of Madras in South Indian Ins. Co. Ltd. v. P. Subramaniam, 1972 Acc CJ 439: (AIR 1972 Mad 49).
48. A Division Bench of Calcutta in Indian Mutual General Insurance Society Ltd. v. Manzoor Ahsan, 1977 Acc CJ 85 : (AIR 1977 Cal 34), also held the view that a hirer of a vehicle is not a person who enters with a 'contract of employment' with the owner of the vehicle and as such the Insurance Company is not liable, which was by following the decision in Gurdev Kaur's case (AJR 1967 Punj & Har 486) (FB) (supra).
49. The employees of the hirer of the goods being carried in the vehicle have been held to be covered by the wider term used in Clause (ii) to the proviso to Sub-section(l) of Section 95 'being the passengers carried by reason of or in pursuance of a contract of employment', in which case the insurer was required to indemnify the insured for covering the liability in respect of death or bodily injury to such persons carried in the vehicle. This view taken by various High Courts is founded on the ratio of the judgment of House of Lords in Izzard v. Universal Insurance Company Ltd., (1937) AC 773, which in turn has also been followed in Gurdev Kaur's case (supra) and some other decisions in The Vanguard Insurance Company Ltd. v. Chinnamal, 1969 Acc CJ 226 : (AIR 1970 Mad 236); Hukam Chand Insurance Co. Ltd. v. Badruddin, 1980 Acc CJ 164 (Madh Pra); United India General Insurance Co. Ltd. v. Shantaben Jerambhai Parmar, 1983 Acc CJ 74 : (AIR 1982 Guj 212); Nasibdar Suba Fakir's case (AIR 1984 Bom 1) (supra); National Insurance Co. Ltd. v. Laxmi Devi, 1985 Acc CJ 48 : (AIR 1984 Ori 197) and Patharibai Karansingh v. Firm Laljit Shankarlala, 1985 Acc CJ 526 : (AIR 1985 Madh Pra 103). The preponderance of the view is that the employees of the owner of the goods or hirer of the vehicle would be the persons carried for hire or reward or by reasons of a contract of employment and the Act requires that the policy of insurance should cover the risk of such persons, who are carried for hire or reward or by reason of the contract of employment.
50. In Pushpabai Purshottam Udeshi's case (AIR 1977 SC 1735) (supra), the apex Court dealing with the case of a passenger,who was allowed free lift in the vehicle, while referring to the first part of Clause (i) to proviso to Sub-section (1) of Section 95 of the Act observed that it is not required that a policy of insurance should cover the risk to passengers, who are not carried for hire or reward. In case of gratuitous passengers unless there is a special contract of insurance, their case would not be covered as well by Clause (ii) to the proviso to Sub-section (1) of Section 95 of the Act.
51. In the case of the employees of the hirer of the goods vehicle, reference may be made to the Izzard's case (1937 AC 773) (supra), in which a commercial policy of the lorry was taken by the owner of vehicle containing a proviso that the Insurance Company shall not be liable in respect of death of or bodily injury to any person in the employment of the insured in the course of such employment and the death of or bodily injury to any person (other than a passenger carried by reason of or in pursuance of a contract of employment) being carried in or by the said vehicle. It was held that the language in Clause (ii) of policy to the effect that the company shall not be liable in respect of death of or bodily injury to any person (other than a passenger carried by reason of or in pursuance of a contract of employment), being carried in or upon such vehicle was not to be construed as applying only to the death of or bodily injury to a person in the employment of the owner while being carried in the vehicle. It applied to any person being carried in pursuance of a contract of employment with another employer and, therefore, when such a person, while being carried on in the vehicle was killed, due to negligence of driver, the Insurance Company was bound to indemnify the owner in respect of his liability to the representative of deceased person. In term 'contract of employment' was construed thus:
'I cannot accept the respondent's contention that 'contract of employment' should be construed in the Act as subject to the implied limitation 'with the person insured by the policy'. Such a departure from the clear language used cannot, I think, be justified. I think the Act is dealing with persons who areon the insured vehicle for sufficient practical or business reasons, and has taken a contract of employment in pursuance of which they are on the vehicle as the adequate criterion of such reasons. But there is no sufficient ground for holding that this criterion should be limited to employees of the insured person. Such employees, if injured or killed, would ordinarily fall under Exception (1), though I am not prepared to say that there might not be in certain events an employee of the assured who could claim as a passenger. But such cases must be rare. The most probable case is where the man killed or injured was on the vehicle in pursuance of a contract not with the owner of the vehicle but with someone else, for instance, with the person whose goods were being carried on the vehicle; thus a commercial vehicle carrying a contractor's or merchant's goods would frequently and perhaps even normally have on it an employee of the goods owner to see to loading or unloading or delivering the goods or caring for them in transit. For these purposes such a man may be carried as a passenger.'
52. The Karnataka, Bombay and Gujarat High Courts, in view of the specific rules in the respective States, permitting carriage of the employees of the owners of the vehicle up to a particular limit, in B. Parvathamma (AIR 1986 Kant 63); Nasibdar Suba Fakir's (AIR 1984 Bom 1) and Nathibai Chaturabhuj's cases (AIR 1982 Guj 116) (FB) (supra), held the employees of the owners of the vehicle to be covered under Clause (ii) of the proviso to Section 95(l)(b) of the Act on account of wide interpretation of the words 'passengers carried by reason of or in pursuance of a contract of employment'. A Full Bench of the Rajas-than High Court in Santrabai's case (AIR 1986 Raj 101) (supra) held that the policy is not required in three categories of cases falling in Sub-clauses (a), (b) and (c) of Clause (i) to the proviso to Sub-section (l)(b) of Section 95 of the Act but in other cases of the employees of owner of vehicle, it must be treated as covered by Clause (ii) of the proviso to Section 95( 1 )(b) of the Act thereby making the insurer liable.
53. In the instant case, facts are neither in dispute, nor are capable of being disputedthat the deceased, at the relevant time were given facility of travelling in the vehicle in question by the owner-company from their respective residence to the work-site. By virtue of their employment at the relevant time by the insured, they were being taken from one work-site to another Sub-station of the Company at Lunapani. The relevant Rule 4.60 of the Punjab Motor Vehicles Rules, applicable in this behalf did not prohibit carrying of bona fide employees of the owner in the vehicle. The policy stipulated the use of the vehicle under the 'public carriers permit', which read with Section 2(23) of the Act would mean as authorising the insured to undertake the transportation of goods for hire or reward whether in pursuance of a term of contract or otherwise. The third proviso to Section 42 of the Act authorises the holder of public carriers permit, subject to the conditions specified in the permit, to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him. By virtue of Rule 4.60(4) of the Rules, which is an exception to Sub-rule (2) of Rule 4.60, a permit may also authorise its holder to allow more than six persons to be carried in the vehicle subject to its floor area, which may be up to a maximum of 12.
54, At the relevant time the vehicle was being used for carriage of employees by reason of or in pursuance of a contract of employment. They would thus be covered by the wider meaning of the word 'passenger carried in the vehicle', within the ambit of Clause (ii) to the proviso to Section 95( 1 )(b) of the Act, 'by reason of contract of employment' or 'passengers carried in pursuance of contract of employment'. It being an exception to exception, in order to cover the liability in respect of death of or bodily injury to such persons being carried in the vehicle, the risk is required to be statutorily covered under the Act thereby making the insurance company liable. The extent of liability would be as specified in Sub-section (2) of Section 95, namely, under Sub-Clause (ii) of Clause (b) of Section 95(2), that is, in respect of passengers when they are carried by reason of or in pursuance of contract of employment a limit of Rs. 15000/ -for each individual passenger.
55. The contention that the breach of the condition of policy in the instant case in using the vehicle for carriage of persons will not entitle the claimants to enforce the award against the insurance company, cannot be accepted in view of the following observations made by the Supreme Court in New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani, AIR 1964 SC 1736 (Para 21) :
'The Act contemplates the possibility of the policy of insurance undertaking liability to third parties providing such a contract between the insurer and the insured, that is, the person who effected the policy, as would make the company entitled to recover the whole or part of the amount it has paid to the third party from the insured. The insurer thus acts as security for the third party with respect to its realising damages for the injuries suffered, but vis-a-vis the insured, the company does not undertake that liability or undertakes it to a limited extent. It is in view of such a possibility that various conditions are laid down in the policy. Such conditions, however, are effective only between the in-sured and the company, and have to be ignored when considering the liability of the company to third panics. This is mentioned prominently in the policy itself and is mentioned under the heading 'Avoidance of certain terms and rights of recovery', as well as in the form of 'an important notice' in the Schedule to policy. The avoidance clause says that nothing in the policy or any endorsement thereon shall affect the right of any other person indemnified by the policy or any other person to recover an amount under or by virtue of the provisions of the Act. It also provides that the insured will repay to the company all sums paid by it which thecompany would not have been liable to paybut for the said provisions of the Act. The'Important Notice' mentions that any payment made by the company by reason ofwider terms appearing in the certificate inorder to comply with the Act is recoverablefrom the insured, and refers to the avoidanceclause.'
56. In the certificate of insurance, which has been proved in this case, there is a similarImportant Notice that any payment made by the company by reason of wider terms in the certificate, in order to comply with the provisions of the Act is recoverable from the insured. Thus, in view of this the conditions of the policy are effective only between the insurer and insured and have to be ignored when considering the liability of the owner of the vehicle, to the third parties.
57. No doubt, it is true that evidence on record do suggest that passengers were being carried in the vehicle and as is contended by the learned Counsel for the appellant the number was definitely more than 20, but in view of Sub-rule (4) of Rule 4.60 of the Punjab Motor Vehicles Rules, it was permissible for the Authority to incorporate as a condition in the permit allowing carriage of more persons than the limit of six, as prescribed in Sub-rule (2), in the absence of permit being produced on the record, we are unable to accept the contention of the learned Counsel for the appellant. The question, whether the vehicle was being plied in breach of condition of the permit can only be considered and decided provided permit was brought on the record. The breach of condition of permit is not the same thing as breach of the purposes for which it is issued. The contravention of the one or the other condition of permit is not a contravention of the purpose for which the permit is issued. The contravention in the instant case where the rule permitted the use of the vehicle for carriage of bona fide employees will not be a contravention of any part of Clause (b) of Section 96(2) of the Act, which clause alone can be pressed into service on behalf of the Insurance Company in order to avoid its liability. An insurer can only avoid the liability if the conditions enumerated in Section 96(2) of the Act are satisfied and not otherwise. Similar contention as is made by the learned Counsel for the appellant was negatived by a Division Bench of High Court of Bombay in Ragunath Eknath Hivale v. Shardabai Karbhari Kale, 1986 Acc CJ 460 : (AIR 1986 Bom 386) by saying (at p. 389 of AIR):
'The insurer can avoid his liability only if the conditions specified in Section 96(2) aresatisfied, and not otherwise. The contract between 'the insurer and the insured may permit the insurer to avoid his liability under various circumstances. However, if those circumstances do not satisfy the provisions of Section 96(2), the insurer cannot escape his liability for the third party risks. The statute recognises no condition for an insurer to escape his liability except those given in Section 96(2), whatever the terms of the contract between the insurer and the insured. The terms of the contract between the insurer and the insured determining their rights and liability towards each other are not and should not be confused with the statutory liability of the insurer for the third party risks. If there is a breach of the contract on the part of the insured, the insurer may proceed against the insured. As far as the third party risks are concerned, the liability being statutory, it cannot be overridden by the terms of the contract of insurance, between the parties.'
58. In view of what has been held by us above, we see no force in the submissions made on behalf of the appellant that the Insurance Company is not liable. On the question of the extent of liability, we have held that in such like cases, where employees are being carried by the owner of the vehicle as 'passengers', in pursuance of or by reason of the contract of employment, the Insurance Company shall be liable to indemnify the claim to the extent of Rs. 15,000/- for each individual passenger.
Consequently, while partly allowing the appeals, we modify the award of the Claims Tribunal as upheld by the learned single Judge of this Court by holding that the claimants shall be entitled to recover the amount of compensation from the owner, driver and the Insurance Company, subject to the condition that the liability of the Insurance Company in each case will be limited to Rs. 15,000/- only along with interest and costs, if any, thereupon.
In the peculiar circumstances of the case, we leave the parties to their respective costs.