National Insurance Company Ltd. Vs. Smt. Asha Devi and ors. - Court Judgment

Excerpt:
motor vehicles - compensation - determination of liability - sections 147(1)(b) of motor vehicles act, 1988 and section 4 of workmen compensation act, 1923 - present appeal filed by appellant/insurance company against award whereby insurance company was held liable for making payment of compenasation amount - insurance company contended that under terms of policy, liability of insurance company in respect of employees/labourers was limited only to amount payable under act, 1923 and, therefore, insurance company could be held liable only to pay amount which could be assessed under act, 1923 and not entire awarded amount - whether insurance company is entitled to raise plea that it cannot be held liable to pay an amount which it had not undertaken to indemnify under terms of policy of insurance? - held, while making award, tribunal should be bound to specify person or persons to whom compensation is to be paid and at same time, tribunal shall specify amount which shall be paid by insurer or owner or driver of vehicle involved in accident - as such, this court do not agree that tribunal is not bound to examine record and search for proof of insurer's limited liability - therefore, insurance company is entitled to raise this point in appeal - so far as liability of insurance company is concerned, same is governed by terms of insurance policy - it clearly shows that any such liability, which is mandatorily required to be covered by a policy under clause (b) of section 147(1) of act, 1988 has to be satisfied by insurance company - therefore, where any such policy has been taken by owner of vehicle, liability of insurance company will be confined to that arising under act, 1923 - there can be no escape from conclusion that liability of insurance company is limited to amount payable under act, 1923 - in this case, deceased was 27 years at time of accident - his income has been assessed at certain amont and if compensation is assessed in consonance with provisions of section 4 of act, 1923 amount payable by insurance company has to be calculated by multiplying 50% of income by relevant factor - therefore, compensation payable under act, 1923 works out to be 50% of amount calculated by tribunal certain amount - in view of above, award is modified to that extent - code of civil procedure, 1908.[c.a. no. 5/1908]. order 14, rule 2 [as amended by amending act of 1976]: [v.k. gupta, cj, deepak gupta & surjit singh, jj] preliminary issue of law and fact court framing all issues both of law and facts together and also tried all the issues together, including the issue relating to jurisdiction of court held, except in situations perceived or warranted under sub-rule (2) of rule 2 of order 14 where a court in fact frames only issues of law in the first instance and postpones settlement of other issues, clearly and explicitly in situations where the court has framed all issues together, both of law as well as facts and has also tried all these issues together, it is not open to the court to adopt the principle of severability and proceed to decide issues of law first, without taking up simultaneously other issues for decision. this course of action is not available to a court because sub-rule (1) does not permit the court to adopt any such principle of severability and to dispose of a suit only on preliminary issues, or what can be termed as issues of law. sub-rule (1) clearly mandates that in a situation contemplated under it, where all the issues have been together and have also been taken up for adjudication during the course of the trial, these must be decided together and the judgment in the suit as a whole must be pronounced by the court covering all the issues framed in the suit.deepak gupta, j.1. a short but interesting question arises for decision in the present appeal.2. the undisputed facts of the case are that truck no. hr-37-a-3532 met with an accident on 21st may, 2004. the said truck was owned by respondent no. 7 ajay kumar and was being driven by respondent no. 8 sh. rehman khan. the truck was insured with the appellant-national insurance company. respondents no. 1 to 6 who are the wife, minor children and parents of one sh. surinder kumar filed a claim petition before the learned motor accident claims tribunal-i, sirmaur, district at nahan for the grant of compensation under section 166 of the motor vehicles act, 1988 (hereinafter referred to as the 'act').3. according to the allegations made in the petition, deceased surinder kumar was traveling in the said truck as a labourer. he sustained grievous injuries on his head and died as a result thereof. the insurance company denied the insurance of the vehicle. it also took the plea that in case the vehicle is found to be insured, the same was being plied in violation of the insurance policy. a specific plea was raised that the deceased was an unauthorized passenger in a good vehicle and hence the insurance company was not liable to pay the claim. on the pleadings of the parties, the learned motor accident claims tribunal framed the following issues:1. whether surender kumar died in accident on 21.5.2004 near village uttari caused by vehicle no. hr-37-a-3532 driven by respondent no. 2 in rash and negligent manner?2. if issue no. 1 is proved in affirmative to what amount of compensation the petitioners are entitled to and from whom?3. whether the insurance has been procured fraudulently? if so its effect.4. whether the vehicle was being plied in contravention of the insurance policy? if so its effect.5. whether the deceased was an authorized passenger?6. whether the petition has been filed in collusion with respondents no. 1 and 2.7. relief.4. the learned tribunal came to the conclusion that the accident occurred due to the negligence of the petitioner. it also came to a finding of fact that the deceased surender kumar was traveling as a labourer in the truck in question. it assessed the compensation payable in respect of the death of the deceased at rs. 4,72,000/- and held the respondents jointly and severally liable to pay the same.5. the insurance company in this appeal has raised only one ground that under the terms of the policy, the liability of the insurance company in respect of the employees/labourers was limited only to the amount payable under the workmen compensation act, 1923 and, therefore, the insurance company could be held liable only to pay the amount which could be assessed under the workmen compensation act and not the entire awarded amount.6. i have heard sh. rajiv jiwan, learned counsel for the insurance company, sh. anil chauhan, learned counsel for the claimants and sh. karan singh kanwar, learned counsel for the owner of the vehicle.7. sh. karan singh kanwar raised a preliminary objection that the insurance company cannot be permitted to raise this ground in the appeal since the insurance company had not taken the plea of limited liability in its written statement nor had led any evidence to prove this fact. he also submits that in view of the fact that no issue was framed, the insurance company cannot be permitted to raise this plea.8. in support of this contention, sh. kanwar has cited a number of judgments.9. in new india assurance co. ltd. v. prahlad singh and ors. : 1994 (2) acj 1049 a learned single judge of the rajasthan high court held that since the plea with regard to the limited liability had not been raked up before the tribunal, the insurance company could not agitate it at the time of appeal.10. in oriental insurance co. ltd. v. narinder kour and ors. : 1998 (2) acj 1140, a learned single judge of the jammu and kashmir high court held that that the appellant-insurance company in its objections before the tribunal had raised a specific plea that the liability of the insurer is limited as per the terms of the policy. an issue was also framed as to whether the claimants were entitled to receive compensation from the respondent and if so, in what proportions and to what amount? he further went on to hold that the proceedings before the tribunal had continued for 18 years and the appeal had been pending for 5 years and after 23 years, the insurance company could not be permitted to raise such an objection especially when the amount of compensation was only rs. 50,000/-.11. a division bench of the madhya pradesh high court in koushal bai and ors. v. aabid ali and ors. : 2000 (1) acj 569 held that it is the duty of the insurance company to raise the defence that its liability is limited to a particular amount and that it is not the duty of the tribunal to examine the record and search for a proof of the insurer's limited liability. it further went on to hold that there can be no dispute with the settled position of law that the tribunal cannot shut its eyes to any crucial insurance document on record and brush it aside where its genuineness is not otherwise in dispute between the parties.12. in dhanraj and anr. v. jeewan singh and ors. : 2002 (1) acj 187, a division bench of madhya pradesh high court held that even if the plea of limited liability is taken, mere filing of photocopy of the cover note is not sufficient and the pleadings must be proved in accordance with the law of evidence. it went on to though hold that the liability under the act may be restricted, there is nothing which prevents the insurance company from covering liability to a larger extent and it is for the insurance company to prove that the liability is limited. similar view has been taken in snehlata sharma and ors. v. mohammad ali and ors. : 2002 (2) acj 1129.13. as far as last two decisions are concerned, i am of the considered view that these judgments do not apply on the facts of the present case. in those cases, the plea of the insurance company was rejected on the ground that the policy of insurance has not been proved in accordance with law.14. the question which arises for consideration is whether the insurance company is entitled to raise this plea that it cannot be held liable to pay an amount which it had not undertaken to indemnify under the terms of the policy of insurance. under the provisions of the motor vehicle act, insurance is compulsory except in cases of vehicles of government and semi-government organizations which are specially exempted under the provisions of section 146 of the motor vehicle act, 1988. it is mandatory for every owner of a motor vehicle except those exempted under the section itself to get their vehicle insured in respect of the third party risk. the policy of insurance even if it is an act policy must confirm with the conditions laid down in section 147 of the act. it is bound to cover the liability mentioned under section 149. it is the duty of the insurer to satisfy the award passed against the persons insured in respect of a third party risk. under section 149(2), the insurance company has to be given notice by the claims tribunal of the bringing of the proceedings or of the making of an award and the insurance company can defend the claim on any of the grounds mentioned therein. section 149 of the motor vehicle act reads as under:149. duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.(1) if, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) 1[for under the provisions of section 163a] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable there under, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.(2) no sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment of award is given the insurer had notice through the court or, as the case may be, the claims tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:(a) that there has been a breach of a specified 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(b) for organised racing and speed testing, or(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or(d) without side-car being attached where the vehicle is a motor cycle; or(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or(b) that the policy is void on the ground that it was obtained by the nondisclosure of a material fact or by a representation of fact which was false in some material particular.(3) where any such judgment as is referred to in sub-section (1) is obtained from a court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of the code of civil procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the insurance act, 1938 (4 of 1938) and whether or not he is registered under the corresponding law of the reciprocating country) shall he liable to the person entitled to the benefit of the decree in the manner and to be the extent specified in sub-section (1), as if the judgment were given by a court bin india:provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled hinder the corresponding law of the reciprocating country, to be made a party to he proceedings and to defend the action on grounds similar to those specified in sub-section (2).(4) where a certificate of insurance has been issued under sub-section (3) of section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any condition 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 147, 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.(5) if the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.(6) in this section the expression 'material fact' and 'material particular' means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression 'liability covered by the terms of the policy' means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.(7) no insurer to whom the notice referred to in sub-section (2) or sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (3) otherwise than in the manner provided for in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be.explanation: for the purposes of this section, 'claims tribunal' means a claims tribunal constituted under section 165 and 'award' means an award made by that tribunal under section 168.15. a bare reading of sub-section (1) of section 149 shows that notwithstanding the fact that the insurer may be entitled to cancel or may have cancelled the policy, the insurer shall, subject to the provisions of the section, pay to the persons entitled to the benefit of the award any sum not exceeding the sum assured payable there under. sub-section (5) specifically provides that if the amount which an insurer becomes liable to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would be liable under the policy, the insurer is entitled to recover the excess from that person. a conjoint reading of sub-section (1) and (5) makes it clear that the insurance company cannot be made liable to pay the amount beyond that which is covered under the policy of insurance. even if such amount is paid, under sub-section (5), the insurance company has a right to recover the excess amount from the owner. it is a well settled principle of law that an insurer by issuing the policy agrees to indemnify the insured under the terms of the policy. when a person seeks indemnification of an amount, the amount payable is that which is payable under the terms of the policy and no other amount.16. another aspect of the matter is that in the present case, the insurance company took up the plea that the deceased was an unauthorized passenger in the truck which would mean that it had no liability in respect of a gratuitous passenger. this plea was rightly not accepted by the tribunal. the deceased was held to be a labourer. the plea being now raised is that if the deceased is found to be a labourer then the liability of the insurance company is limited. when a larger defence is raised, the smaller defence will be covered under the ambit of the larger defence.17. another aspect is that a specific issue was framed as to what compensation is payable to the petitioner and by whom it is to be paid. this issue was wide enough to cover the question as to the extent of liability of the insurance company. we cannot loose sight of the fact that proceedings under the motor vehicles act are not governed by the strict rules of the procedure. the procedure has to be just and fair. when the insurance company is being held liable to pay compensation under the terms of a policy which is on record, it is in the fairness of things that the tribunal while passing the award must ensure that the insurance company is made liable in terms of the policy. to this extent, i am in respectful dis-agreement with the judgment of the madhya pradesh high court in koushal bai's case supra. i am of the view that it is the duty of the tribunal to see what are the terms of the policy and to fix the liability of the respondents in terms of the policy.18. in taking this view, i am fortified by the provisions of section 168 of the motor vehicles act which clearly specify that the claims tribunal while making the award shall specify the person or persons to whom the compensation is to be paid and at the same time, the claims tribunal shall specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident. thus under the terms of section168 itself a duty is cast on the tribunal to specify the amount payable by the insurer. the tribunal can exercise this function only if it goes through the terms of the policy and the act. as such, i do not agree with the law laid down in koushal bai's case that the tribunal is not bound to examine the record and search for the proof of the insurer's limited liability.19. as far as judgment in prahlad singh's case is concerned, no law has been laid down in the said judgment and the judgment was given in view of the fact that only a meagre sum had been awarded for the death of a minor. similarly in narinder kour's case, the jammu and kashmir high court rejected the plea of the insurance company mainly on the ground that the plea had been raised after 23 years. these two cases were decided in their own peculiar facts and cannot be treated as precedents.20. therefore, i am of the considered view that the insurance company is entitled to raise this point in the appeal.21. as far as the liability of the insurance company in the present case is concerned, the same is governed by the terms of the insurance policy which is ext.r/1. the heading of the policy reads as follows:goods carrying commercial vehicle (open) policy and liability only.22. in the table of premium, basic third party premium of rs. 3580/- has been charged and wc for 6 employees amounting to rs. 150/- has been charged. wc obviously means workmen compensation. there is no other premium which has been charged. this clearly shows that the policy in question covers only 'act liability' under section 147 of the act. in respect of the employees, the insurance company is only required to cover liability confined to the amount payable under the workmen compensation act, 1993. reference in this regard may be made to the judgment of the apex court in national insurance co. ltd. v. prembai patel and ors. : 2005-06 (6) scc 172 wherein the apex court held as follows:12. the heading of chapter xi of the act is insurance of motor vehicles against third party risks and it contains sections 145 to 164. section 146(1) of the act 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 chapter xi. clause (b) of sub-section (1) of section 147 provides that a policy of insurance must be a policy which insures the person or classes of persons specified in the policy to the extent specified in sub-section (2) against any liability which may be incurred by him in respect of death of or bodily injury to any person or passenger or damage to any property of a third party caused by or arising out of the use of the vehicle in public place. sub-clauses (i) and (ii) of clause (b) are comprehensive in the sense that they cover both 'any person' or 'passenger'. an employee of owner of the vehicle like a driver or a conductor may also come within the purview of the words 'any person' occurring in sub-clause (i). however, the proviso (i) to clause (b) of sub-section (1) of section 147 says that a policy shall not be required to cover liability in respect of 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 act if the employee is such as described in sub-clauses (a) or (b) or (c). the effect of this proviso is that if an insurance policy covers the liability under the workmen's act in respect of death of or bodily injury to any such employee as is described in sub-clauses (a) or (b) or (c) of proviso (i) to section 147(1)(b), it will be a valid policy and would comply with the requirements of chapter xi of the act. section 149 of the act imposes a duty upon the insurer (insurance company) to satisfy judgments and awards against persons insured in respect of third party risks. the expression _ 'such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy)' _ occurring in sub-section (1) of section 149 is important. it clearly shows that any such liability, which is mandatorily required to be covered by a policy under clause (b) of section 147(1), has to be satisfied by the insurance company. the effect of this provision is that an insurance policy, which covers only the liability arising under the workmen's act in respect of death of or bodily injury to any such employee as described in sub-clauses (a) or (b) or (c) to proviso (i) to section 147(1)(b) of the act is perfectly valid and permissible under the act. therefore, where any such policy has been taken by the owner of the vehicle, the liability of the insurance company will be confined to that arising under the workmen's act.13. the insurance policy being in the nature of a contract, it is permissible for an owner to take such a policy where under the entire liability in respect of the death of or bodily injury to any such employee as is described in sub-clauses (a) or (b) or (c) of proviso (i) to section 147(1)(b) may be fastened upon the insurance company and insurance company may become liable to satisfy the entire award. however, for this purpose the owner must take a policy of that particular kind for which he may be required to pay additional premium and the policy must clearly show that the liability of the insurance company in case of death of or bodily injury to the aforesaid kind of employees is not restricted to that provided under the workmen's act and is either more or unlimited depending upon the quantum of premium paid and the terms of the policy.23. in view of the law laid down by the apex court, there can be no escape from the conclusion that the liability of the insurance company is limited to the amount payable under the workmen compensation act. in this case, the deceased was 27 years at the time of the accident. his income has been assessed at rs. 3000/- per month and if the compensation is assessed in consonance with the provisions of section 4 of the workmen compensation act, the amount payable by the insurance company has to be calculated by multiplying 50% of the income by the relevant factor. 50% of the income of the deceased is rs. 1500/-. the relevant factor by taking into consideration the age of the deceased is 213.57. therefore, the compensation payable under the workmen compensation act works out to rs. 3,20,355/-24. in view of the above discussion, the award is modified to the extent that the insurance company shall be held liable to pay a sum of rs. 3,20,355/- alongwith proportionate interest from the date of filing of the petition till the date of deposit of the awarded amount and the balance amount shall be paid by the owner and the driver jointly and severally.25. i am of the considered view that apportionment made by the tribunal is not at all in consonance with the well-settled principles. it has apportioned 50,000/- each to both the parents of the deceased and has also awarded similar amount of rs. 50,000/- to the minor child aged only one year. this is grossly dis-apportioned and, therefore, the amount of rs. 4,72,000/- is re-apportioned as follows:smt. asha devi rs. 1,30,000/-kumari pinkimaster virender rs. 90,000/- eachmaster pankaj kumar sh. mani ram rs. 22,000/-smt. bhago devi rs. 50,000/26. since the insurance company has deposited the amount in the registry of this court, the amount so deposited shall be paid to the claimants. the insurance company shall have the right to recover the excess amount paid from the owner.27. the appeal is disposed of in the aforesaid terms. no order as to costs.