New India Assurance Company Ltd. Vs. Sm. Basmati Devi and ors. - Court Judgment

Sukumar Chakravarty, J.

1. This appeal is directed against the Award passed on 30th Mar., 1977 by Sri R. C. Ghosh, learned Motor Accidents Claims Tribunal for Calcutta and 24-Parganas in M.A.C. Case No. 177 of 1971 at the instance of the appellant-insurer, New India Assurance Company Limited, which was one of the objectors in the aforesaid claim case filed by the claimant-respondents.

2. It was the case of the claimant, in brief, that the deceased Basanta Prosad Yadav, aged about 26 years at the time of the accident on 9th Aug., 1971, was the husband of the claimant-petitioner 1 and son of the claimant-petitioner 2 and that he was an employee in the Citizen's Garage of Sri Bhola Singh, the owner of the Jeep No. WBG 6264, at the monthly salary of Rs. 150/- with other allowances. Basanta Prosad Yadav was being carried in that Jeep along with some other mistries on 9-8-71 to attend another vehicle and the said Jeep collided with the Lorry No. WBK 7993 of the Corporation of Calcutta, at the crossing of Motilal Nehru Road and Rash Behari-Avenue due to the negligence and rash driving of the vehicles by the driver of the Jeep who was also the employee of the owner of the Jeep and also by the driver of the Lorry belonging to the Corporation of Calcutta. As a result of such collision, Basanta Prosad Yadav fell down from the Jeep and was run over also by the aforesaid Lorry of the Corporation. Basanta Prosad Yadav succumbed to the injuries sustained. The widow of the deceased was to maintain her three children also. The claimants-applicants claimed a compensation for Rs. 50,000/-.

3. The opposite party No. 1, who was the owner of the Jeep, filed the written statement holding the driver of the Corporation Lorry responsible for the collision.

4. The opposite party No. 2, namely, the Corporation of Calcutta filed the written statement holding the driver of the Jeep responsible for the accident. The opposite party No. 3, namely, New India Assurance Company Limited (insurer of the Jeep) denied the alleged collision of the vehicles in question and also the alleged service and monthly income of the deceased, although the opposite party No. 3, admitted in Para 6 of the written statement that Basanta Prosad Yadav was the employee of the owner of the motor vehicle (Jeep). It was contended that the Jeep was being driven by a driver without the valid licence and without the permission of the owner of the Jeep. It was further contended that the accident, if there be any, was due to the rash and negligent driving of the Corporation Lorry.

5. The learned Motor Accidents Claims Tribunal on consideration of the materials in the record found that the driver of the Jeep in question and the victim of the accident were employees of the owner of the Jeep and that accident resulting in the death of the victim Basanta Prosad Yadav took place due to the rash and negligent driving of the Jeep by its driver. The learned Tribunal accepted the monthly income of the victim and his age as alleged by the petitioners and awarded the compensation of Rs. 30,000/- against the opposite party No. 1 (owner of the Jeep) and opposite party No. 3 (insurer of the Jeep) on the basis of the annual dependence and suitable multiplier as worked out by him with a direction that opposite party No. 3, the insurer, would pay the compensation and dismissed the claim application against opposite party No. 2 (Corporation of Calcutta) by the impugned order.

6. Mr. Chowdhury appearing for the appellant, insurer, has submitted that he does not challenge the findings of the learned Tribunal that the victim Basanta Prosad Yadav was the employee of the owner of the Jeep in question and that the accident which took away the life of the victim Basanta Prosad Yadav, occurred due to the rash and negligence on the part of the driver of the Jeep in question in the course of the employment of the Jeep owner and that he does not dispute the quantum of the compensation as awarded by the learned Tribunal. Mr. Chowdhury, however, submits that he strongly challenges the liability of the insurer of the Jeep to pay the awarded compensation in this case as no insurance policy was required to cover the liability in respect of the death of a person like Basanta Prosad Yadav in view of the proviso to the provisions of Section 95(1) of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act). Mr. Chowdhury further submits that the proviso having Clauses (i), (ii) and (iii) to Section 95(1) of the Act dispenses with the requirement of the policy to cover the liability in such cases as mentioned therein and that the case of the deceased Basanta Prosad Yadav does not come under the exception to the Clause (i) or Clause (ii) of the said proviso. In support of his submission Mr. Chowdhury has drawn our attention to the decision in the case of Pushpabai Purushottam Udeshi v. Ranjit Ginning and Pressing Company reported in : [1977]3SCR372 and also in the case of D. Rajapathi v. University of Madurai reported in : AIR1980Mad219 .

7. Mr. Seth, appearing for the respondents-claimants has, however, submitted that the present case squarely comes under the exception to Clause (ii) of the proviso to Section 95(1) of the Act as it has been established and found by the learned Tribunal that the victim Basanta Prosad Yadav was being carried in the Jeep in question by reason of or in pursuance of the contract of the employment at the time of the accident. Mr. Seth in support of his such submission has relied on the decisions in : AIR1982Guj212 , (United India General Insurance Company Ltd. v. Shantaben Jerambhai); (FB), (Santrabai v. Prahlad) and (FB), (Oriental Fire and General Insurance Company Limited v. Gurudev Kaur) and also in : [1977]3SCR372 as already relied on by Mr. Chowdhury.

8. Mr. Seth has further submitted that even if the insurer is entitled to avoid or cancel the policy, the insurer is under statutory obligation in view of the provisions of Section 96 of the Act to pay the awarded compensation first and then may recover the same from the insured, i.e., the owner of the vehicle.

9. On due consideration of the materials in the record including the evidence both oral and documentary and the nature of the registered number of the Jeep itself, we find that the Jeep in question, namely, WBG 6264 was registered as a private car for private use, that the victim Basanta Prosad Yadav, an employee of the owner of the Jeep, was being carried in the Jeep by reason of or in pursuance of the contract of employment at the time of the accident, that the driver of Jeep was in employment of the owner of the Jeep and the accident resulting in the death of the victim Basanta Prosad Yadav took place due to the rash and negligent driving of the Jeep. We agree to the findings of the learned Tribunal in these respects. We also agree to the findings of the learned Tribunal as regards the age of the victim and his monthly income at the time of the accident. There is no dispute to the aforesaid findings. The quantum of compensation, as awarded by the learned Tribunal, has also not been disputed.

10. The grievance of the Insurer Company, the appellant in this case, is that in the facts and circumstances of the case, the insurer is not liable to indemnify the insured in respect of the policy although covering the third party risk. Mr. Chowdhury, the learned Advocate for the appellant, has submitted that the policy was not the comprehensive policy. It is true that the concerned insurance policy has not been exhibited although it is in the record of the Tribunal. Our attention has been drawn to the same which does not appear to be a comprehensive policy. The claim form, Ext. A, and the claim petition also do not assert that the policy was comprehensive.

11. We no doubt agree to the findings of the learned Tribunal that the insured owner of the Jeep is liable to pay the compensation awarded. Under Sub-section (5) of Section 95 of the Act the insurer shall be liable to indemnify the insured owner. But the said Sub-section (5) is subject to the provisions of the proviso to Section 95(1) of the said Act. Section 94 of the Act deals with mandatory necessity for insurance against third party risk in respect of the use of the motor vehicle in a public place. Section 95(1)(a) and (b) of the Act deals with the requirements of policies and limits of liability. Proviso to Section 95(1) of the Act is an exception to the requirements of such policy. The said proviso runs as follows :

'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 in the vehicle, or

(c) if it is a goods vehicle, being carried in the vehicle, or

(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 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 of which a claim arises, or

(iii) to cover any contractual liability.'

12. Mr. Chowdhury submits that the victim Basanta Prosad Yadav does not come under the exception to Clause (i) of the aforesaid proviso nor does he come under the exception to Clause (ii) of that proviso. Mr. Seth admits that the victim's case does not come under the exception to Clause (i) of the aforesaid proviso but submits that the victim's case does come under the exception to Clause (ii) of that proviso, because according to him the vehicle need not be that class of vehicle having the necessary permit according to the provisions of the Act, in which the passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment; and even the private car like the Jeep by its user for that purpose of the relevant time, may be such vehicle as contemplated in the exception to Clause (ii) of the proviso. Mr. Seth has relied on the decisions in : AIR1982Guj212 (FB) and (FB) in this respect.

13. In the case reported in : AIR1982Guj212 the facts in brief were that the victim Jerambhai was travelling in a Tempo which was a goods vehicle along with the milk cans for being delivered to a party. As a 'result of the accident caused by the vehicle, Jerambhai fell down from the vehicle and ultimately expired. In the Motor Accident Claim case in spite of insurer's objection the compensation was awarded directing the insurer to indemnify the insured for the compensation. The insurer challenged its liability to indemnify. The Division Bench of the Gujarat High Court held the insurer liable on the finding that Jerambhai was being carried in the aforesaid goods vehicle as passenger by reason of or in pursuance of a contract of employment. The Tempo carrying Jerambhai along with the milk cans was the goods vehicle. The Tempo as the goods vehicle under its permit under R. 118 of the Bombay Motor Vehicles Rules was entitled to carry the owner or hirer or bona fide employee of either of them.

14. The case reported in (FB), is also on the question of liability of insurance company (insurer) in respect of the death caused to a person who travelled in the goods vehicle with the goods either as owner of the goods or his representative or by reason of or in pursuance of the contract of service of the owner of the vehicle or otherwise. In that case the Special Bench of Rajasthan High Court (Jaipur Bench) has held that the goods vehicle carrying such passenger, can be considered as the vehicle in which passengers are carried for hire or reward or in pursuance of the contract of employment as the Rule 133 of Rajasthan Motor Vehicles Rules permits carrying of persons in goods vehicles subject to limitation of number of persons and sitting capacity. Such goods vehicle being involved in the accident as referred to in the aforesaid case fits in with the observation of the High Court in the aforesaid case to the following effect :

'But in Clause (ii) of proviso to Sub-section (1) of Section 95 of the Act neither the term 'goods vehicle' nor 'public service vehicle' 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.'

The underline in the above quoted portion is ours.

15. In the case reported in (FB) the truck which is also a goods vehicle, carrying the goods along with the owner of the goods, met with an accident and the owner of the goods died. The question in that case was whether the Insurance Company was liable to indemnify the insured with regard to the compensation awarded. The Special Bench of the Punjab and Haryana High Court held that the Insurance Company (Insurer) was not liable as deceased was not travelling under any contract of employment. It appears that the said High Court did not consider the question whether the deceased who was the owner of the goods was being carried in the Truck along with the goods for reward. Be that as it may, in the aforesaid case, the High Court has observed that the words by reason of or in pursuance of a contract of employment' in Clause (ii) of the proviso to Section 95(1) of the Act refer to the word 'passengers' and not 'vehicle' in that clause. On perusal of Clause (ii) itself, we are, however, of the view that the words either 'for hire or reward' or 'by reason of or in pursuance of a contract of employment' refer to the words 'the vehicle in which passengers are carried'. Be that as it may, in the case referred to above, the goods vehicle which no doubt had the permit under the rules to carry some person along with the goods was involved. The 'goods vehicle' as defined in Section 2(8) of the Act also shows that a goods vehicle may be used for carriage of goods as well as passengers.

16. In the light of the above discussions and on plain reading of Clause (ii) of the proviso to Sub-section (1) of Section 95 of the Act, we cannot accept as tenable the view of Mr. Seth when he submits that even a private car registered as such for private purpose, in which a passenger is carried occasionally either for hire or reward or by reason of or in pursuance of a contract of employment without taking any permit under the Act for that purpose, will be the vehicle as contemplated in the exception to Clause (ii) of the aforesaid proviso to make the insurance company liable for the risk coverage of such person. It cannot be conceived that a statutory body like the Insurance Company which covers the risk of the third party in case of his death or injury under the provisions of the Act, shall be made liable for the commission or omission of the act by the insured owner of the vehicle, in flagrant violation of the provisions of the Motor Vehicles Act.

17. The decisions in the cases reported in : [1977]3SCR372 and : AIR1980Mad219 as referred to by Mr. Chowdhury also support the principle of law as enunciated in the cases as referred to by Mr. Seth and as discussed above.

18. In view of what has been discussed above, we find and hold that the present case does not come under the exception to Clause (ii) of the proviso to Section 95(1) of the Act and that accordingly in view of that proviso, the policy is not required to cover the liability as in this case and that the insurer i.e. the Insurance Company is not liable to indemnify the insured under the law in this case.

19. Mr. Seth's second line of submission that as the Insurance Company is avoiding the policy, the insurer must pay the awarded compensation and then may recover the same from the insured in terms of the provisions of Section 96 of the Act is not at all sustainable. The question of avoidance or cancellation of the policy as contemplated in Section 96 of the Act arises in a case where a valid policy was made with the Insurance Company under the law. In order to cover the risk, as in the instant case, it has already been held that no policy under the law was required. So the question of entitlement of avoiding or cancelling the policy does not arise at all in this case, and accordingly, the provisions of Section 96 of the Act have no scope of their application in this case.

20. Mr. Seth took another point that the appellant here did not raise any question before the learned Tribunal that the Jeep in question was not permitted to carry the passengers either for hire or reward or for by reason of or in pursuance of the contract of employment. Even if such point was not taken by the insurer, before the Tribunal, still to make the insurer liable it will have to be proved by the claimant that the Jeep was permitted under the provisions of the Motor Vehicles Act and the Rules made thereunder to carry passengers either for hire or reward or by reason of or in pursuance of a contract of employment.

21. In the circumstances, we allow the appeal in part and modify the award to the extent that the compensation awarded shall be payable by the opposite party-respondent No. 1, insured owner of the Jeep alone and that the insurer, namely, the opposite party No. 3 New India Assurance Company Limited shall not be liable to indemnify the insured in this respect. We make no order as to costs in this appeal.

22. The award amount deposited by the appellant may be withdrawn after the expiry of three months from this date.

Gobinda Chandra Chatterjee, J.

23. I agree.