United India Insurance Co. Ltd. Vs. Mst. Sharief Jan W/O YashIn Shah and ors. - Court Judgment

G.D. Sharma, J.

1. This is a Letters Patent Appeal against the judgment and order dated 28-4-95 passed by the learned single Judge in CIMA No. 174/93 (titled Mst. Sharief Jan v. Jasbir Singh). Brief facts of the case are that on 2-4-90, Manzoor Hussain (a young boy of 18 years) was travelling as a gratuitous passenger in Truck No. JKP 5275 which met with an accident at a place known as 'Gundi' in Poonch District. Manzoor Hussain died an instantaneous death. The accident was the result of rash and negligent driving of the said truck by respondent 4 (Jeet Singh). Respondent 3 was the owner of the said offending vehicle who had insured the same with the Insurer (appellant herein).

2. Respondents Nos. 1 and 2 are the parents of the said deceased and they filed claim petition in the Motor Accidents Claims Tribunal, Poonch (hereinafter referred to as MACT) which was resisted by the appellant and respondents Nos. 3 and 4. On the pleadings of the parties, the following four issues were raised :--

'1. Whether vehicle No. 5275-JKP met with an accident at Gundi Tehsil Haveli due to the rash and negligent act of driver Jeet Singh? OPP

2. Whether the petitioners are entitled to recover compensation to the tune of Rs. 7,50,000/-? OPP

3. Whether the deceased was a gratuitous passenger, if so, what is the effect on the claim? OPD.

4. Relief.'

3. The learned Presiding Officer MACT decided all the issues against respondents No.s 1 and 2 (petitioners therein) and the petition was dismissed. This order was challenged in appeal by respondents Nos. 1 and 2 and the learned single Judge of this Court vide impugned order held that the learned Presiding Officer (MACT) had wrongly decided the claim petition under the provisions of old Motor Vehicles Act (Act No. 4 of 1939) when the same stood repealed and new Act (Act No. 59 of 1988) had been substituted. The findings on issue No. 1 were set aside and it was held that the accident was caused by rash and negligent act of the driver Jeet Singh. Relying upon the ratio decidendi of the Full Bench case of Gujarat High Court namely, New India Assurance Co. Ltd. v. Kamlaben Sultan Singh Jadav, AIR 1993 Guj 171, as well as that of Skandia Insurance Co. Ltd. v. Kikilaben Chandravadean, AIR 1987 SC 1184, it was also held that the appellant herein was liable to indemnify the insured (respondent 3). Further, the learned Presiding Officer (MACT) was directed to decide issue No. 2 on the basis of the evidence which the parties had let in. The scope of this remand order was broadened when it was specifically mentioned that parties could also lead additional evidence if they desired so.

4. These findings of the learned single Judge have been challenged through this LPA. The memorandum of the appeal is a morass of incoherent narration of facts as well as law. From the sketchy averments it can be articulated that the appellant has set out a case that the insured (respondent 3) had infracted the terms of the policy of Insurance by allowing the deceased to be carried as a gratuitous passenger in his vehicle which undoubtedly is a 'goods vehicle'. The burden of proof was on the insured (respondent No. 3) to prove that either in terms of the conditions of Route permit or the Insurance Policy the carriage of such a passenger wasjustified. Since the insured never discharged this burden so the Insurer (appellant) could not be fastened with the liability to indemnify him. Lastly, it is averred that the impugned order was passed after misappreciating the evidence. Heard the arguments.

5. The learned counsel appearing for the appellant has reiterated the grounds of appeal in his arguments and further contended that the deceased was travelling as a passenger in the 'goods vehicle' for hire or reward. That by such conduct, he committed breach of the terms of insurance policy in force and as such the insurer is not liable to indemnify him. In support of his contention, he has cited the cases of New India Assurance Co. Ltd. v. Kanchan Bewa, 1994 ACJ 138 and Onkar Lal Garg v. New India Assurance Co. Ltd., 1994 ACJ 352.

6. In the case of New India Assurance Co. Ltd. v. Kanchan Bewa (supra) the full bench of the Court has held that owner of goods who had hired the goods vehicle did not become a person travelling on the vehicle in pursuance of a contract of employment and even if he was carrying his goods after hiring the vehicle, the vehicle did not become a vehicle meant for carrying passengers for hire or reward and consequently, would not come within the proviso (ii) to Section 95(1)(b).

7. In the case of Onkar Lal Garg v. New India Assurance Co. Ltd. (supra), the Insurance Company was held not liable to pay the compensation for the death of a passenger who was travelling in a Tractor as a gratuitous passenger. The policy of the Insurance had the limits to cover the use ot'the Tractor for agricultural purposes and the same was not meant to carry any passenger.

8. The counsel appearing for the respondents has controverted these arguments by urging that the law cited hereinabove had a bearing with the provisions of Section 95 of the old Act, but the case in hand is governed by the provisions of Section 147 of the new Act which does not contain restrictive clauses as were in the unamended Act. The Act now stands amended to ameliorate the sufferings of the victims of the accidents in a more benevolent way without observing the procedural wranglings and technical considerations. It is also contended that the appellant herein has failed to prove the terms of the insurance policy in question and in view of the law laid down by the Apex Court in Skandia Insurance Co. Ltd. v. Kikilaben Chandravadan (supra) it cannot be said that a mere breach of clause had absolved the insurer of his liability. In the Skandia's case mere breach of clause of insurance policy had not absolved the insurer of his liability. Furthermore, the learned counsel has also cited the case of B.V. Nagaraju v. Oriental Insurance Co. Ltd., 1996 ACJ 1178, wherein the Apex Cout disagreed with the contention of the insurance company that complainant in complaint filed before the National Consumer Disputes Redressal Commission, New Delhi had . violated the terms of the policy by carrying , passengers in the goods vehicle more than the number permitted in terms of the policy because the breach was not so fundamental so as to afford grounds to eschew liability altogether. The following observations in the case are of significant importance :--

'.......Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle without the knowledge of owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which by themselves had gone to contribute to the causing of the accident. In the instant case, however, we find no such contributory factor'..........

9. While deciding the said case the Apex Court had relied upon its earlier decision in Skandia's case (supra) and payed the way towards reading down the contractual clause by observing as follows (at page 1191) :--

'.......When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependents on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by it, by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to the doctrine of reading down the exclusion clause in the light of the 'main purpose' of the provision so that the 'exclusion clause' does not cross swords with the 'main purpose' highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose........'

10. Be that as it may, this Court recently in the case of New India Assurance Co. v. Smt. Shakuntla Devi, AIR 1997 J & K 40, has held (at page 51) :--

'Section 147 is quite comprehensive in scope and meaning. It has to be given wider, effective and practical meaning so that the object of the legislature which was faced with divergent views of various Courts of the country giving different intepretations to the provisions of Section 95 (old) causing immense harm to many categories of persons by dis-entitling them from claiming compensation either from the insurer or the insured or both. In the facts and circumstances of the case, new provision, therefore, covers such kind of cases as well. The legislature clearly intended that every policy of insurance statutorily required to cover the risk of liability in respect of classes of persons relating to all types of vehicles without exception and with no defence to the Insurance Company disclaiming the liability with respect to particular class of persons or particular kind of vehicles, Thus the deceased being a labourer travelling in the truck, engaged by either of the parties, is covered under Section 147 of the Motor Vehicles Act, 1988 and the liability to pay the compensation has to fall on the insurance company.'

11. In the instant case, the appellant insurer is invoking the contractual clause the contents whereof have not been proved by way of evidence. It was for the appellant to prove specifically that the insured (respondent 3) had intentionally committed the breach of the insurance contract either directly or impliedly but there is not even an iota of evidence on the record which lends assurance to this view. Undoubtedly, the present controversy now falls within the ambit of Section 147 of the Act which has been substituted for old Section 95. If the aims and objects on the basis of which amending Act No. 59 of 1988 was enacted are seen then it becomes necessary to have a look on the modifications which were suggested by the 'working group' of the Committee which the legislature had constituted in January, 1984 to review all the provisions of the Motor Vehicles Act of 1939 (old Act). Some of the more important modifications so suggested related for taking care of-

a) the fast increasing number of both commercial vehicles and personal vehicles in the country;

b) the need for encouraging adoption of higher technology in automative sector;

c) the greater flow of passengers and freight with the least impediments so that islands of isolations are not created leading to regional or local imbalances;

d) concern for road safety standards and pollution-control measures, standards for transportation of hazardous and explosive materials;

e) simplification of procedure and policy liberalisation for private sector operations in the road transport field; and

f) need for effective ways of tracking down traffic offenders.

12. The Supreme Court in M.K. Kunhimohammed v. P.A. Ahmed Kutty, (1987) 4 SCC 284 : (AIR 1987 SC 2158), had made certain suggestions to raise the limit of compensation payable as a result of motor accidents in respect of death and permanent disablement in the event of there being no proof of fault on the part of the person involved in the accident and also in hit and run motor accidents and to remove certain disparities in the liability of the insurer to pay compensation depending upon the class or type of vehicles involved in the accident. The above suggestions made by the Supreme Court were incorporated in the bill and finally in the Act the provision for payment of compensation by the insurer to the extent of actual liability to the victims of motor accidents irrespective of the class of vehicles was vindicated. This was a departure from the scheme of the old Act.

13. Section 147 prescribes requirements of policies and limits of liability. The section lays down that in order to comply with the. requirements of this Chapter, a policy of insurance must be a policy which-

(a) is issued by a person who is an authorised insurer; and

(b) insures the person or classes of personsspecified in the policy to the extent specified inSub-section (2)-

(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods, or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place; against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place.

14. The proviso added to the section provides 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 (Act No. 8 of 1923) in respect of death of or bodily injury to, any such employee-

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged, as a conductor of the vehicle or in examining tickets on the vehicle, or;

(c) to cover any contractual liability.

Explanation-- For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be. deemed to have been caused by or to have arisen out of the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of accident, if the act or omission which led to the accident occurred in a public place;

Sub-section (2) is dependant upon the above said Proviso to Sub-section (i) and prescribes that a policy of insurance shall cover any liability incurred in respect of any accident, upto the following limits namely-

(a) save as provided in Clause (b), the amount of liability incurred;

(b) in respect of damage to any property of a third party, a limit of rupees six thousand : x x x x x x x.

Sub-section (5) states that, 'Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.'

15. After stating the relevant portions of the section, it emerges that an insurance policy is not required to cover liability in the course of the employment of an employee of a person insured by the policy or in respect of bodily injury sustained by such an employee as has been enumerated in the proviso of the section stated above. A gratuitous passenger carried in a 'goods carrier' or 'heavy goods vehicle' either gratuitiously or for hire or reward does not become an employee of the person insured so as to attract disallowing proviso I of the section. A policy of insurance has to cover any liability incurred in respect of any accident upto the limits prescribed in Sub-section (2) and in the instant case upto the extent of amount of liability incurred. In view of the mandates of Sub-section (5), the insurer (appellant herein) is liable to indemnify the person orclasses of persons specified in the policy in respect of any liability which policy purports to cover in the case of that person or those classes of persons. As has already been stated above that the appellant herein has failed to prove the contents of the policy that the carriage of either a gratuitous passenger or a person for hire or reward was specifically excluded from the purview of the policy so there can be found no deeming provision in the section to the effect that the insured (respondent 3) has either directly or impliedly flouted the terms of the said policy. The language of the section does not allow the exclusion of the purpose of main contract by showing obeisance to the exclusion clause contained in the insurance policy in a general way. Viewing the case in its true perspective, it is found that the appellant herein cannot absolve itself from the liability to indemnify the insured (respondent 3). In the final analysis, the appeal is found meritless which is dismissed with costs, quantified at Rs. 2000/-. The learned Presiding Officer, MACT, Poonch is directed to dispose of the claim petition as per the directions of the learned single Judge (vide his order dated 28-4-95) in CIMA 174/93 as far as possible within a period of four months from the receipt of the record. The office is directed to immediately send back the record.