Channappa Chanavirappa Katti and anr. Vs. Laxman Bhimappa Bajantri and ors. - Court Judgment

Venkatachala, J.

1. M. F. A. Nos. 227 and 363 of 1975 under section 110-D of the Motor Vehicles Act, 1939 (to be referred to as the Act), have arisen from the common order and separate awards dated 28-2-1975 of the Motor Vehicles Accidents Claims Tribunal (to be referred to as the Tribunal), Bijapur, made in Misc. Cases Nos. 38 and 28 of 1973-claim cases filed under Section 110-A of the Act.

2. The material facts and circumstances leading up to these appeals lie in a narrow compass and they may be summarised thus: A goods vehicle bearing registration No. MYR 3739 was being used by its owner, a public carrier, for carriage of goods from Bijapur to Talikot. On 3-3-1973, when the said vehicle was carrying goods from Bijapur to Talikot, it met with an accident at 6 P. M. Near a place called Hitnalli as the driver of the vehicle failed in his attempt to successfully negotiate the vehicle in a sharp curve on the road. As a result of the accident, six persons in the vehicle including one Somappa Mallappa Nidagundi of Talikot, the owner of certain goods who had hired the vehicle for carrying the goods and Balappa Bajentri, the cleaner of the vehicle, sustained fatal injuries and died of those injuries. Laxman Bhimappa Bajentri (to be referred to as Laxman) filed Claim Case No. 38 of 1973 claiming compensation in a sum of Rs. 40,000/- for the death of Balappa Bajentri (Cleaner) and Mallappa Malkajappa Nidagundi (to be referred to as Mallappa) files Claim Case No. 28 of 1973 claiming compensation in a sum of Rs. 4,24,000/- for the death of Somappa Mallappa Nidagundi (owner of the goods). The claims for compensation were made against (1) Yeli Budeppa Bankapur, the owner of the vehicle, (2) Channappa Channaveerappa Katti, agent of the owner who was in charge of the management of the vehicle, (3) Bhimappa Balappa Bajentri, driver of the vehicle, and (4) Madras Motor and General Insurance Co., Ltd., later merged with United India fire and General Insurance Co., Ltd., the insurer of the vehicle. In the claim applications made before the Tribunal at Bijapur by Laxman and Mallappa, it was alleged that the driver of the vehicle was guilty of rash and negligent conduct in driving the vehicle and the accident was the result of such rash and negligent conduct of the driver giving rise to an actionable wrong. The owner of the vehicle and the agent of the owner of the vehicle, in the common objection-statement filed in the cases, besides denying the allegations of rash and negligent conduct of the driver in driving the vehicle, specifically pleaded that since the agent was in charge of the management of the vehicle on behalf of the owner, the agent cannot become liable for payment of the compensation. The driver of the vehicle, in the objection-statement filed by him, denied the allegations of rash and negligent conduct in driving the vehicle made against him. In the objection-statement files by the insurer in Claim Case No. 38 of 1973, though it admitted that the risk for the cleaner was covered by the insurance policy issued in respect of the vehicle, it pleaded its non-liability to the claim for compensation made against it on the ground that the ownership of the vehicle on the date of the accident was not with the policy-holder. Again, in the objection-statement filed by the insurer in Claim case No. 28 of 1973, it pleaded its non-liability to the claim made against it for compensation on two grounds, namely, (i) that the ownership of the vehicle was not with the policy-holder on the date of the accident, and (ii) that the claim for compensation did not relate to the death of a person whose risk was required to be insured against compulsorily under the Act. Thus, from the objection-statements of the insurer, it can be seen that the non-liability pleaded by the insurer on the ground of ownership of the vehicle not being with the policy-holder on the date of the accident was common to both cases; and the non-liability for the claim for compensation made in respect of the death of the owner of the goods on the ground that the risk of such a person was not covered by the insurance policy issued in respect of the vehicle inasmuch as such risk was not required to be insured against compulsorily under the Act, was confined to Claim Case No. 28 of 1973.

3. Having regard to the claims made by the claimants in the cases and the objections to the claims raised by the contestants, common evidence was let in by the parties and, at the conclusion of the trial, the Tribunal found in its common order made in the cases as follows: (1) Having regard to the nature of the road on which the vehicle was driven at the time of the accident and the manner in which the accident had taken place, the driver of the vehicle was guilty of rash and negligent conduct in driving the vehicle and such conduct of the driver was responsible for the occurrence of the accident which caused the death of the owner of the goods and the cleaner of the vehicle; (2) that a sum of Rs. 24,000/- would be the amount of reasonable compensation payable to the claimant in Misc. Case No. 28 of 1973 on account of the death of the owner of the goods and that a sum of Rs. 12,000/- would be the reasonable amount of compensation payable to the claimant in Misc. Case No. 38 of 1973 on account of the death of the Cleaner; (3) that the owner of the vehicle was not Yeli Budeppa, the insurance policy-holder, at the time of the accident and as such Yeli Budeppa, the insured and the insurer were not liable for the claim for compensation made in the cases; (4) that even if the ownership of the vehicle was assumed to continue with Yeli Budeppa, the insurance policy-holder, the insurer was not liable for the claim for compensation made in respect of the death of Somappa the owner of the goods, who was being carried in the vehicle at the time of the accident, for, such owner of the goods was not entitled to travel in a goods vehicle which carried his goods and such person's risk could not be considered to have been covered under the compulsory policy of insurance issued by the insurer, in respect of the vehicle; (5) that the agent was in fact the owner of the goods vehicle at the time of the accident and as such, he alone was liable to pay compensation in respect of the death of the cleaner; and (6) that the compensation payable in respect of the death of the owner of the goods was liable to be paid only by the driver of the vehicle as the owner of the goods carried in the vehicle by him was an unauthorised passenger. On the basis of the findings in the order, the Tribunal made two separate awards in the cases. The correctness of the common order and separate awards are challenged before this Court in the two appeals under consideration.

4. The appellant in M. F. A. No. 227 of 1975 Channappa Channaveerappa Katti, is the agent while the appellant in M. F. A. 363 of 1975 Mallappa Malkajappa Nidagundi is the claimant in Case No. 28 of 1973. In these appeals, the other parties in the Claim Cases are impleaded as respondents. The findings of the Tribunal that the driver's rash and negligent conduct was responsible for the occurrence of the accident and that the accident caused the death of the owner of the goods and the cleaner are not challenged before us. So also the findings of the Tribunal that the claimant in Misc. Case No. 28 of 1973 is entitled to a sum of Rs. 24,000/- as compensation and that the claimant in Misc. Case No. 38 of 1973 is entitled to a sum of Rs, 12,000/- as compensation are not challenged before us. But the other findings of the Tribunal by which the owner of the vehicle and the insurer are relieved of the liability to pay the amounts of compensation fixed by it, are challenged before us by the appellants rather very seriously on the ground that those findings are based upon non-consideration of the material evidence on record and the relevant provisions of the Act and R. 161 of the Mysore Motor Vehicles Rules, 1963 (to be referred to as the Rules).

5. Bearing in mind the nature of the challenge directed against the said findings of the Tribunal, we purpose to examine the points that arise for our decision giving due thought and consideration to the divergent views canvassed at the Bar on the said points. However, as we fell that all the points excepting the one relating to the liability of the insurer of the goods vehicle for the death of the owner of the goods who was travelling at the time of the accident in the goods vehicle carrying his goods, can be decided by us without embarking upon much discussion, we shall deal with them at the first instance.

6. Whether Yeli Budeppa was the owner of the vehicle in question as contended by the appellants or whether Yeli Budeppa had parted with the ownership of the vehicle in favour of C. C. Katti, the agent, as found by the Tribunal, is one of such points.

7. For finding that it was not Yeli Budeppa that was the owner of the vehicle in question at the time of the accident, but it was C. C. Katti that was the owner of the vehicle, the Tribunal has construed Exhibit D-2, the letter of authority issued by Yeli Budeppa in favour of C. C. Katti, as one which has the effect of transferring the ownership of the vehicle from the former to the latter. It has to be mentioned that the Tribunal has failed to notice a significant factor in the letter of authority, namely, that even the stamp paper on which the letter of authority is given has been issued by the stamp vender on 5-3-1973 while the accident with which we are concerned has occurred on 3-3-1973. As the letter of authority is issued subsequent to the date of the accident, it cannot have the effect of transferring the ownership of the vehicle from an anterior date even if such letter is assumed, as held by the Tribunal, to have the effect of transferring the ownership of the vehicle from Yeli Budeppa to C. C. Katti. The evidence of Channappa Channaveerappa Katti (C. C. Katti), examined as D.W. 2 in the case, is to the effect that he was not the owner of the vehicle and that Exhibit D-2 was executed after the accident. That Yeli Budeppa was the owner of the vehicle at the time of the accident was not contested on behalf of the insurer and rightly. Having regard to the fact that exhibit D-2, on which the Tribunal has relied upon to come to the conclusion that C. C. Katti was the owner of the vehicle, had come into existence on a date subsequent to the date of the accident. Further, Sri S. G. Sundaraswamy, learned counsel for Yeli Budeppa, when questioned by us in the course of the arguments, did not dispute, very fairly and rightly, that Yeli Budeppa was the owner of the vehicle at the time of the occurrence of the accident. Hence, we find that it was not C. C. Katti who was the owner of the vehicle on the date of the accident, but it was Yeli Budeppa who was the owner of the vehicle in question on the date of the accident.

8. The next point which arises for our consideration is whether Yeli Budeppa, the owner of the vehicle, is liable for the claims for compensation made in the cases under appeal.

9. It is not disputed before us that the accident which has given rise to the claims for compensation in the cases under consideration occurred due to rash and negligent conduct of B. B. Bajantri, the driver, in driving the vehicle in the course of his employment as a servant of Yeli Budeppa, the owner of the vehicle. It is also not disputed before us that Balappa Bajantri, the cleaner of the vehicle was employed as such by Yeli Budeppa and that Balappa Bajantri was travelling in the vehicle at the time of the accident in his capacity as the cleaner of the vehicle. It is further not disputed before us that the driver of the vehicle was acting within his authority in carrying the owner of the goods, along with the goods, in the vehicle of Yeli Budeppa at the time of the accident inasmuch as R. 161 of the Rules also authorises carrying of the hirer of the vehicle along with his goods in the goods vehicle. These undisputed facts, in our opinion, are sufficient to find that Yeli Budeppa, the owner of the goods vehicle is liable for the claims for compensation made in the cases. The liability of Yeli Budeppa for the awards of compensation made in the cases was, in fact, conceded very rightly by Sri S. G. Sundaraswamy, learned counsel for Yeli Budeppa.

10. The further point which arises for our consideration is the liability of the insurer to indemnify the owner of the goods vehicle for the compensation payable by him in respect of the death of the cleaner when the said vehicle has met with an accident. When we questioned in the course of the arguments Sri C. Srinivasa Iyengar, learned counsel appearing for the insurer, as to whether it will be open to the insurer, to avoid its liability in respect of the cleaner of the vehicle in view of the term of the Policy of Insurance, Exhibit D-1, which specifically provided coverage of the risk of the cleaner of the vehicle insured, it was conceded by him that the in surer cannot escape its liability for the death of the cleaner, which resulted on account of the accident to the vehicle of which he was the cleaner. We may here mention that so far as the quantum of compensation granted by the Tribunal for the death of the cleaner is concerned, it is not contested on behalf of the insurer inasmuch as such contest is not permissible in law. In the said view of the matter, we find that the insurer is liable for the amount of compensation awarded by the Tribunal to the claimant in Misc. Case No. 38 of 1973 out of which M. F. A. No. 227 of 1975 arises.

11. The other crucial and controversial point which remains for our examination and decision is the one relating to the liability of the insurer of the goods vehicle for the death of the owner of the goods, who was, at the time of the accident, travelling in the goods vehicle carrying his goods. As our decision on the point has to necessarily rest on the view we take of the terms and conditions of the contract of insurance entered into between the insurer of the goods-vehicle on the one hand, and its owner, the insured, on the other, and the true construction which we may place on the provisions of the Act and the Rules made thereunder, which have a bearing on the contract of insurance, we propose to examine the point with reference to them.

12. It is not in dispute that the provisions of Chapter VIII of the Act are intended for the protection of 'third parties' against risks arising out of the use of a motor vehicle without depending upon the financial condition of either the person using such vehicle or its owner.

13. The Supreme Court in the case of New Asiatic Insurance Co., Ltd. v. Pessumal Dhanamal Aswani : [1964]7SCR867 speaking through Raghubar Dayal, J., has given expression to its views with regard to the object, scope and ambit of Chap. VIII of the Act and its provisions thus:

'Chapter VIII of the Act, it appears from the heading, makes provision for insurance of the vehicle against third-party risks, that is to say, its provisions ensure that third-parties who suffer on account of the user of the motor vehicle would be able to get the damages for injuries suffered and that their ability to get damages will not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment.

Section 94 prohibits, as a matter of necessity, for insurance against third-party risk, the use of a motor vehicle by any person unless there exists a policy of insurance in relation to the use of the vehicle by that particular person and the policy of insurance complies with the requirements of Chap. VIII. The policy must therefore provide insurance against any liability to third party incurred by that person when using that vehicle. The policy should therefore be with respect to that particular vehicle. It may, however, mention the person specifically or generally by specifying the class to which that person may belong, as it may not be possible to name specifically all the persons who may have to use the vehicle with the permission of the person owning the vehicle and effecting the policy of insurance. The policy of insurance contemplated by S. 94 therefore must be a policy by which a particular car is insured.

Sub-Section (5) of S. 95 makes the insurer liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purport to cover in the case of that person or those classes of persons. It the policy covers the insured for his liability to third parties, the insurer is bound to indemnify the person or classes of persons specified in the policy. The same is the effect of sub-s (1) of S. 96 which provides that the insurer is bound to pay to the person entitled to the benefit of a decree he obtains in respect of any liability covered by the terms of the policy against any person insured by the policy irrespective of the fact whether the insurer was entitled to avoid or cancel or might have avoided or cancelled the policy. This means that once the insurer has issued a certificate of insurance in accordance with sub-s. (4) of S. 95 he has to satisfy any decree which a person receiving injuries from the use of the vehicle insured obtains against any person insured by the policy.

The views of the Supreme Court adverted to above, in our opinion, can be put in a nut-shell thus: (1) The object which is sought to be achieved by the Legislature by enacting the provisions contained in Chap. VIII of the Act is that 'third parties' who suffer on account of the user of the vehicle should get damages for injuries without depending upon the financial condition of the person using the vehicle and hence a duty is imposed on Courts to construe those provisions in such a manner as would ensure the object of the enactment. (2) The policy should be taken in respect of the vehicle so as to provide insurance against any liability to 'third party' incurred by the person using the vehicle. (3) The combines effect of sub-Ss. (4) and (5) of S. 95 and sub-s. (1) of S. 96 is that when a person receiving the injuries by the use of the vehicle insured obtains a decree against any persons who is insured under the policy, the insurer is bound to pay the person entitled to the benefit of the decree irrespective of whether the insurer was entitled to avoid or cancel or might have avoided or cancelled the policy.

14. It is not in dispute that the policy of insurance is taken in respect of the goods vehicle concerned in the case so as to provide for insurance against any liability to 'third party' incurred by the person using the vehicle and the terms and conditions of the policy are those contained in Exhibit D-1. Though at one stage the learned counsel for the insurer made a faint attempt to support the finding of the Tribunal that the Insurance Policy taken in respect of the goods vehicle in question has ceased to be in force on the date of the accident on the assumed basis that the owner of the vehicle had, well before the accident and without the consent of the insurer, transferred the ownership of the vehicle, the attempt, instead of being pursued, was in fact given up. However, it may be mentioned here that we have, on a consideration of the material evidence on record, reversed the finding of the Tribunal that the ownership of the goods vehicle was not with the policy-holder as on the date of the accident. In this context, it may also be mentioned that we have already held that the policy of insurance as contained in Exhibit D-1 was in force on the date of the accident and, therefore, the question concerning the liability of the insurer has to be examined with reference to the terms and conditions of the policy. The relevant terms and conditions of the said policy are:

'COMMERCIAL VEHICLES COMPREHENSIVE (INDIA)

Now this policy witnesseth:

That Subject to the Terms, Exceptions and Conditions contained herein or endorsed or otherwise expressed hereon

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 cost 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

THE SCHEDULE

The Insured: Name Shri Yeli Budeppa S/o Y. Benakappa

Address At & Post GABBUR

Dist. Raichur

Carrying on or engaged in the business or occupation of and no other for the purpose of this insurance

Period of Insurance: (a) From 10-10-1972 to 9-10-1973

(Both dates inclusive)

The Motor Vehicle: Any of the following:Registration Mark & No. Make Type of Body H.P Year of manufacture Licensed carrying capacity Goods Passengers including driver Insured's Estimate of Vehicle including accessories MYR: 3739 T. M. Benz Open 30.2 1967 7 tons Rs. 40,000/- Limits of Liability:Limit of the amount of the Company's liability under S. II-1(I) respect of any one accident .. Rs. 50,000/- Limit of the amount of the Company's liability under S. II-1(ii) in respect of any one claim or series of claims arising out of the one event ... Rs. 50,000/- Limitations as to Use: Use only under 'PUBLIC CARRIER'S ' permit within the meaning of the Motor Vehicles Act, 1939.THE POLICY DOES NOT COVER:-1. ** **2. ** **3. Use for the conveyance of passengers for hire or reward.

15. There cannot be any doubt and it is not disputed that 'any person' mentioned in S. II-1(1) can only be 'third party' mentioned in the heading of Section II. As it is provided in S. II-1(I) that the insurer will indemnify the insured against all sums including claimant's cost and expenses which the insured shall be legally liable to pay in respect of death of 'any person' caused by or arising out of the use of the motor vehicle, the insurer is bound to indemnify the insured in respect of all sums liable to be paid by the insured due to the death of 'third party' arising out of the use of the insured vehicle. That the expression 'any person' employed in Section II-1 (i) of the policy is referable to the expression 'any person' found in sub-clause (i) of clause (B) of sub-s. (1) of S. 95 of the Act is beyond dispute.

16. We have held, hereinbefore that the policy-holder under Exhibit D-1, Policy of Insurance, who is the owner of goods vehicle, is liable to pay compensation with costs for the death of Somappa Mallappa Nidagundi which arose out of the use of the insured goods vehicle. But, unless we find that deceased Somappa Mallappa Nidagundi was the person who answered the description of 'any person' used in S. 95(1)(b)(i), we cannot find the insurer liable for the amount of compensation and costs to be paid by the owner of the compulsorily insured goods vehicle. Again, for us to say that the deceased came within the description of 'any person' mentioned in Section 95(1)(b)(i), we have to rule out the possibility of the deceased falling in the excepted category of persons referred to in the second part of the proviso to clause (b) of sub-s. (1) of S, 95, because, the Policy need not cover compulsorily the liability for risk of persons falling in that excepted category. We may mention here that it is necessary for us to place a construction on the provisions contained in S. 95, if it is possible, so as to ensure the object of the Legislature in enacting the provisions contained in Chap. VIII of the Act as laid down by the Supreme Court in the decision adverted to earlier,. The second proviso to cl.(b) of Sub-section (1) of S. 95 which is material for purposes reads thus:

'Provided that a Policy shall not be required-

(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of 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 of which the claim arises, or...............'

(Underlining is ours).

If we read the proviso excluding the portion forming the first part of the proviso (portion underlined by us), it would mean that the person answering the description 'any person' referred to in clause (b) of sub-s(1) of S. 95 will not be covered by the policy of compulsory insurance if he dies or suffers bodily injury when he is carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which the claim arises. If the case of deceased Somappa Mallappa Nidagundi is looked at with reference to the exception, interpreted without reference to the underlined portion, the only possible conclusion would be that he comes within the excepted category of person referred to in the exception forming the second part of the proviso and is not a person required to be covered by the policy of compulsory insurance under Chap. VIII. But, if we place a construction which we propose to place on the underlined portion of the proviso, the result would be quite the opposite. If so, what is that construction which we purpose to place on the underlined portion of the proviso ?

17. The Legislature by enacting the exception contained in the second part of the proviso excludes a specific category of persons from the requirement of compulsory insurance against liability which may be incurred by the insured in respect of the use of the vehicle insured. Such category of persons are those carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event (accident) out of which the claim arises. From this it would follow that passengers carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which the claim arises are excluded from the coverage of compulsory insurance contemplated in Chap. VIII of the Act. If we remember that on the construction of the provisions contained in Chap. VIII of the Act, the Supreme Court has held, as already pointed out, that the policy should be taken in respect of the vehicle so as to provide insurance against any liability to third party incurred by the person using the vehicle; by reason of the exception referred to by us, the policy need not be taken in respect of the vehicle so as to provide insurance against any liability to passengers incurred by the person using the vehicle. 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 the reason of or in pursuance of a contract of employment, incurred by the person using the vehicle. In our opinion, 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 compulsorily insured, dies or suffers bodily injury by the use of the insures 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. As there is a contention advanced on behalf of the insurer which has a bearing on the point, we consider it appropriate to deal with it at this stage. The contention is that the exception contained in the first part of the proviso relates to passengers carried in public service vehicles. Elaborating the contention, the learned counsel appearing for the insurer submitted that he first part of the proviso since (it) governs the provisions contained in Section 95(1)(b)(ii) of the Act, where the word 'passenger' is used with reference to a public service vehicle, the word 'passenger' used in the first part of the proviso, should necessarily pertain to the 'passenger' in a public service vehicle. We do not think that we can accept the said contention of the learned counsel for the insurer since placing of such a construction would not only result in the introduction of a qualification 'public service' to the word 'vehicle' contained in the first part of the proviso, but also would result in narrowing the scope of the exception contained in the first part of the proviso. In fact, if the contention advanced on behalf of the insurer is accepted, it would not be in keeping with the principle of law enunciated by the Supreme Court that in construing the provisions of Chap. VIII of the Act, a duty is imposed on Courts to construe the provisions of Chap. VIII in manner as would ensure the object of the enactment. Hence, we reject the said contention advanced on behalf of the insurer.

19. The next question which arises for our consideration is as to whether the goods vehicle insured under Exhibit D-1 could be construed as a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. It is now well settled that a goods vehicle which carried a passenger, a servant or an agent of the owner of the goods carried in the goods vehicle, is a vehicle in which passengers are carried by reason of or in pursuance of contract of employment. Vide Pannalal Bantia v. Saraswathamma (1977) 1 Kant LJ 313 and Venguard Insurance Co., Ltd. v. Chinnalal. : AIR1970Mad236 .

20. Therefore, the other question which requires our consideration is whether a goods vehicle which carries the owner of the goods as a passenger can be construed as a vehicle in which passengers are carried for hire or reward so as to attract the application of the exception contained in the first part of the proviso. While it was argued on behalf of the insurer that a goods vehicle cannot be construed as a vehicle in which passengers are carried for hire or reward, it was argued on behalf of the owner of the vehicle that a goods vehicle is a vehicle in which passengers are carried for hire or reward. We now propose to examine the said rival contentions with reference to the definition of 'goods vehicle' contained in Section 2 of the Act and the authority conferred on the permit-holder of a goods vehicle to carry passengers as provided for in the proviso to Rule 161 of the Rules, in the first instance.

21. 'Goods vehicle' is defined in Section 2(8) of the Act thus:

''goods vehicle' means any motor 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 in addition to passengers;'

From the said definition, it would be clear that a 'goods vehicle' can be a vehicle meant to carry passengers also. Then, when we see Rule 161(1) with the proviso, it reads thus:

'161. Carriage of persons in goods vehicles.-(1) Subject to the provisions of this rule, no person shall be carried in a goods vehicle:

Provided that the owner or the hirer or a bona fide employee of the owner or the hirer of the vehicle may be carried in a goods vehicle, the total number of persons so carried in a light transport goods vehicle not being more than three and in any other goods vehicle, not being more than seven including the driver '. (Underlining is ours).

From the proviso to the said Rule it becomes clear that the owner of the goods (hirer of the goods vehicle) can be carried in a goods vehicle as a passenger. Thus, there is no difficulty for us in reaching the conclusion that a goods vehicle is also a vehicle which can lawfully carry passengers.

22. But, this conclusion in itself it not sufficient to bring the 'goods vehicle' within the scope of the exception contained in the first part of the proviso so as to make it obligatory for the user of such goods vehicle to insure the vehicle compulsorily covering his liability for the risk of passengers carried in the vehicle. It is so for the reason that the exception contained in the first part of the proviso requires in specific terms not merely the use of the vehicle for carrying passengers for hire or reward. Therefore, what has to be seen is as to whether the goods vehicle in which the owner of the goods travelled was a vehicle in which passengers are carried for hire or reward as would answer the exception contained in the first part of the proviso so as to make the coverage of risk of such a person compulsory under Chap. VIII of the Act

23. It has to be mentioned at the outset that the policy of the law in making provision for compulsory insurance of vehicles is to cover the risk of innocent third parties. The owner of the goods (hirer of goods vehicle) 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 vehicles, 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 road-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 first part of the proviso. In fact, in our opinion, the hire payable for carrying the goods must be deemed to include the hire for carrying the owner of the goods or his agent or servant who travels in the vehicle along with the goods for their safety, inasmuch as it is impossible for us to think of a binding obligation on the part of the owner of the goods, who hires the goods vehicle for carrying the goods. Moreover, such obligation to carry the owner of the goods along with his goods in a goods vehicle can only be as a business proposition as opposed to a gratuitous proposition as opposed to a gratuitous proposition. Hence, we have no doubt in our minds that the Legislature by enacting the exception contained in the first part of the proviso has thought or compulsory coverage by insurance the risk of owners of goods who are entitled to travel in a goods vehicle along with their goods in the event of any risk arising in the course of the user of the vehicle.

24. From this, it would follow that the goods vehicle with which we are concerned was a goods vehicle which was meant to carry along with the goods, passengers for hire or reward and fell within the exception contained in the first part of the proviso so as to require coverage of risk of the owners of goods travelling as passengers by compulsory insurance required to be taken in respect of the vehicle under Chapter VIII of the Act and Exhibit D-1 is the policy of insurance which had been taken accordingly.

25 In this context, we consider it necessary to deal with another point which has a bearing on the question under consideration. From the terms and conditions of the Insurance Policy which have been extracted hereinbefore, it will have seen that under the heading 'Limitations' it is stated that the policy does not cover 'use for the conveyance of passengers for hire or reward.' But the said limitation, in our view, if upheld, will have the effect of nullifying the provisions contained in the exception in the first part of the proviso and therefore, the insurer cannot be allowed to take advantage of the same to deny its liability to indemnify the insured for the compensation payable in respect of the death of the owner of the goods who travelled in the goods vehicle. In this context the provision contained in Section 96(3) of the Act is noteworthy. It reads:

'96 (3) Where a certificate of insurance has been issued under sub-section (4) of Section 95 to the person by whom a policy had been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub-section (1) of Section 95, be of no effect:

Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.'

Section 96(2)(b)(i) (a) which has a bearing on the point reads 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 judgment is given the insurer has notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of 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 specific condition of the policy, being one of the following conditions, namely:--

(i) a condition excluding the use of the vehicle-

(a) for hire or reward, 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, or

The proviso to R. 161(1) of the Rules since specifically authorises the use of the goods vehicle for carrying the owners of goods carried in the vehicle as passengers, it cannot be said that the vehicle which carries such passengers is not the one covered by a permit to ply for hire or reward. In the said view of the matter, the term relating to the limitation of liability contained in the policy adverted to by us, does not enable the insurer to escape its liability for the risk of the owner of the goods.

26. In the case of Albert v. Motor Insurers' Bureau (1971) 2 All ER 1345 the House of Lords have reviewed the case-law in relation to the construction to be placed on provisions contained in the Road Traffic Act, 1930, Road Traffic Act, 1956 and Road traffic Act, 1960, the provision in each of which Act is similar to one another and in turn similar to the one contained in the exception in the first part of the proviso to Section 95(1)(b) of the Act. It has to be mentioned that the provisions of Chapter VIII of the Act, with which we are concerned, are virtually an adaptation of the law of England on the subject as contained in the Road traffic Acts adverted to earlier. This is what is said by Lord Donovan as regards the legislative intent which was sought to be served by the proviso in the 1930 Act and the 1960 Act:

'Neither the 1930 Act nor the 1960 Act proceeds, however, in this direct way. The relevant part of each begins by compelling all users of motor vehicles to insure against liability to third parties in respect of death or bodily injury by or arising out of the use of a motor vehicle on the road. If each Act had stopped there it would have been compulsory to insure all passengers. But the next thing that each Act does is to provide that passengers need not be insured. It then enacts the opposite if the vehicle is one in which passengers are carried for hire or reward. The reasoning behind this legislative structure would seem to be this. Passengers, like the driver himself, can properly be left look after themselves. After all, if the passenger elects to go by private transport he will usually know the driver, often have some idea as to the condition of the vehicle, and if he thinks that either presents a risk he need not run it. There is, therefore, no justification for imposing the additional burden on all private car-owners to insure all potential passengers. But where public transport is concerned the position is different. The passenger must almost invariably take the vehicle and the driver as he finds them, and the same is true of the private hire vehicle if it is chauffeur driven; in these cases it is eminently reasonable that the operator of such vehicles should insure passengers, and this obligation is now expressed by the proviso.'

'The test which I favour, namely, has there been a systematic carrying of passengers for reward which goes beyond the bounds of mere social kindness ?-which I may call for short the 'business test'-is in line I think with the reasoning of the judges of the First Division in Meanen's case (1971) 2 All ER 1372 (who all attach importance to the features of duration and regularity) and with Lord Denning MR's view in Connell (1969) 3 All ER 752 that the existence of a binding contract is too narrow a test. Of course, if the 'business test' is applied one will normally find a contract. But not necessarily so.'

The learned Lord has ultimately found that when a vehicle is by the application of the 'business test' found to be a vehicle carrying passengers for hire or reward, the vehicle comes within the scope of the exception contained in the first part of the proviso requiring compulsory insurance of persons carried by it. Lord Pearson in his concurring judgment having referred to the material provisions in the Road Traffic Act, 1960 and having expressed his views as regards the construction to be placed on them, concludes thus:

'In my opinion, the vehicle was at the material time one of which it could be said, 'In this vehicle passengers are carried for hire or reward'. The insurance policy in respect of the vehicle ought to have covered liability in respect of passengers. Therefore the appellant 's unsatisfied judgment is one for which the Motor Insurers' Bureau have assumed liability'.

Lord Diplock in his concurring judgment has stated thus:

'It would, I think, reflect discredit on the administration of justice in the Untied Kingdom if the way in which opinions are divided in this House were to leave still unsettled the meaning of the words in an Act of Parliament which are currently being applied in different senses by the Court of Appeal in England and the Court of Session in Scotland. The only way in which this consequence can be averted is by my expressing my concurrence with the reasons for allowing this appeal which have been given by Lord Donovan and Lord Pearson. And so, I do '.

Thus, the views of the majority of the House of Lords expressed in the said case support the conclusions which we have reached on consideration of the provisions of the Act.

27. Our views on the interpretation of the various provisions of the Act receive support from the judgment of a Division Bench of the Gujarat High Court in Sakinabibi v. Gordhanbhai Prabudas Patel (1974) 15 Guj LR 428.

28. There is one other contention advanced on behalf of the insurer based on the judgment of this Court in Radhabai Govindrao v. P. Krishna Murthy ILR (1976) 1 Kant 133. It was a case where this Court held that the Insurance Company was not liable to pay compensation for the death of the owner of the goods who travelled in the goods vehicle. The contention on behalf of the insurer is that since the said judgment lays down that the insurer was not liable to make good the liability of the insured in respect of the death of the owner of the goods who travelled in the goods vehicle it was necessary for us to relieve the insurer of its liability in the case on hand as well. Having gone through the judgment of this Court very carefully, we have found that the decision in the said case turned solely on the question whether the owner of the goods was travelling in the goods vehicle pursuant to a contract of employment or not. When it is remembered that the question that has been considered in the case on hand is as to whether the owner of the goods who travels in a goods vehicle along with his goods is a passenger travelling in the goods vehicle which carries passengers for hire or reward, it becomes clear that the ratio of the said decision cannot be attracted. Hence the contention urged on behalf of the insurer placing reliance on the aforesaid decision of this Court has to be negatived as one without substance.

29. The only other question with which we are concerned is the one which related to the extent of liability of the insurer under the Policy of Insurance. Sub-section (2) of Section 95 of the Act, which has a bearing on the point reads thus:

'95 (2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely:--

(a) where the vehicle is a goods vehicle, a limit of fifty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 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 or in pursuance of a contract of employment.-

(i) in respect of person other than passengers carried for hire or reward, a limit of fifty thousand rupees in all;

(ii) in respect of passengers.-(1) a limit of fifty thousand rupees in all where the vehicle is registered to carry not more than thirty passengers;

(2) a limit of seventy-five thousand rupees in all where the vehicle is registered to carry more than thirty but not more than sixty passengers;

(3) a limit of one lakh rupees in all where the vehicle is registered to carry more than sixty passengers; and

(4) subject to the limits aforesaid, ten thousand rupees for each individual passenger where the vehicle is a motor cab, and five thousand rupees for each individual passenger in any other case;

(c) save as provided in clause (d), where the vehicle is a vehicle of any other class, the amount of liability incurred;

(d) irrespective of the class of the vehicle, a limit of rupees two thousand in all in respect of damage to any property of a third party'.

Sub-section (2)(a) limits the liability of the insurer to Rs. 50,000/- in respect of a vehicle which is a goods vehicle. The liability of the insurer under the Policy of Insurance, in clauses (b), (c) and (d) related to vehicles other than goods vehicles. Clause (a) of sub-section (2) is in the nature of inclusive definition. Therefore, in the case of passengers carried for hire or reward in a goods vehicle who die or suffer bodily injury, the limit of liability cannot exceed Rs. 50,000/- as provided in the clause. When the Legislature has made a specific provision fixing the liability of the insurer in respect of goods vehicle we are of the view that the liability for the death of passengers in goods vehicle has to be made good by the insurer in its entirety if the amount does not exceed Rs. 50,000/- as provided for specifically in clause (a) of sub-section (2) of Section 95. The contention advanced on behalf of the insurer that limits of the liability in respect of risk of passengers should be based on clause (b) of sub-section (2) of Section 95, if upheld, may lead to the necessity of the insurer becoming liable to pay compensation in excess of Rs. 50,000/- where passengers for hire or reward travelling in a goods vehicle die or suffer injury. Our view of the matter gains support from a term in the Insurance Policy (Exhibit D-1) which reads thus:

'Limits of Liability:

Limit of the amount of the Company's liability under S. II-1(i) in respect of any one accident....Rs. 50,000/-

Hence, we are of the opinion that the limit of the liability of the Insurance Company for the death of passengers in a goods vehicle has to be fixed with reference to the terms in clause (a) of sub-section (2) of Section 95 of the Act and the terms referred to in the Policy and not with reference to clause (b) of Sub-section (2) of Section 95 of the Act.

30. For the foregoing reasons, we conclude-

(i) that the owner of the goods vehicle bearing registration No. MYR 3739 on 3-3-1973, the date of the accident, was no C. C. Katti, as held by the Tribunal, but Yeli Budeppa, respondent No. 4 in M.F.A No. 227 of 1975 and respondent No. 1 in M.F.A. No. 363 of 1975;

(ii) that the compensation payable in respect of the death of Somappa Mallappa Nidagundi at Rs. 24,000/- fixed by the Tribunal has to be affirmed;

(iii) that the compensation in respect of the death of Balappa Laxman Bajantri at Rs. 12,000/- fixed by the Tribunal has to be affirmed;

(iv) that Yeli Budeppa is vicariously liable to pay the compensation with costs of the proceedings for the death of Balappa Laxman Bajantry (Cleaner) to the claimants in Misc. (MV) 38 of 1973 for negligent conduct of B. B. Bajantri, the driver, along with the latter;

(v) that Yeli Budeppa is vicariously liable to pay compensation and cost of the proceedings for the death of Somappa Mallappa Nidagundi (owner of the goods) for the negligent conduct of B. B. Bajantri, the driver of the vehicle, along with the latter;

(vi) that the Policy of Insurance contained in Exhibit D-1 was in force on the date of the accident;

(vii) that as the insurer has, under the terms of the Policy, undertaken to meet the liability of the insured for the risk of the death of the cleaner, the insurer is also liable for compensation payable by the insured to the claimant in Misc. (MV) 38 of 1973;

(viii) that the goods vehicle bearing registration No. MYR 3739 was a vehicle in which passengers are carried for hire or reward within the meaning of the exception contained in the first part of the second proviso to S. 95(1)(b) of the Act ;

(ix) that the risk for the death of Somappa Mallappa Nidagundi, owner of the goods, is covered by the comprehensive policy of Insurance contained in Exhibit D-1, since he was a passenger for hire in the insured vehicle which was also authorised to carry passenger for hire or reward requiring compulsory coverage of risk to such passengers under Chapter VIII of the Act and therefore, the insurer is also liable for compensation payable by the insured to the claimant in Misc. (MV) 28 of 1973 for the death of the said Somappa Mallappa Nidagundi.

31. In the result, the appeals are allowed to the extent mentioned above and the decrees of the Tribunal are modified in terms of the above conclusions. Having regard to the facts and circumstances of the case, there will be no order as to costs in these appeals.

32. Appeals allowed.