Eagle Brand Soapnut Company vs Rangasamy and Another

A.R. Lakshmanan, J.—Heard Mr. R. Srinivasan, counsel for the appellant and Mr. R. Balachandran for the respondent/ claimant No. 1.

The respondent No. 2 insurance company was served as early as on 17.5.1993. The respondent No. 2 is also represented by their counsel M/s.

Joseph and Rao. Their names were printed in the cause list even on 23.1.1991. When the matter was pending in the court, the learned single Judge

of this Court (Ratnam, J.) passed an order dismissing the appeal for non-prosecution on 23.1.1991. This main appeal was listed for hearing on

21.1.1997, 27.1.1997 and also today. The names of the counsel for the insurance company are printed in the cause list and in spite of their names

being printed in the list, there is no representation on all these days. So we proceed to hear the appeal on merits.

The owner of the vehicle (van) is the appellant in this appeal. On 2.7.1983 when the injured was travelling in the van belonging to the appellant,

to help the mechanic, the vehicle met with an accident. As a result one person was crushed to death and the claimant''s right leg was also crushed

and the claimant was admitted as an in-patient from 2.7.1983 to 26.10.1983 to the Government Headquarters Hospital, Trichy, where the right

foot of the claimant was amputated at knee-joint and skin-grafting was done. The claimant filed M.A.C.T.O.P. No. 52 of 1984 on the file of the V

Additional Sub Judge, Trichy, claiming a compensation of Rs. 50,000/-. The Tribunal awarded a sum of Rs. 30,000 and directed the owner of the

vehicle, the appellant herein, to pay the said compensation. It is against this award, the owner of the vehicle, has preferred this appeal.

According to the claimant, apart from the severe pain, he is not able to stand on his right foot and not able to walk and requires assistance for

going to the bathroom and for moving about. He had also suffered loss of income, pain, suffering and mental agony and has become permanently

disabled due to the amputation of the right foot at knee-joint. Apart from that he has lost his health and has to provide for extra nourishment. The

appellant being the owner of the van and the insurance company both are, therefore, jointly and severally liable to pay the compensation to the

claimant. It is also the specific case of the claimant that the vehicle was driven in a rash and negligent manner by its driver and because of the rash

and negligent driving, the vehicle dashed against the right rear side of the lorry MDT 8126 and capsized.

The appellant who is the respondent No. 1 before the Tribunal filed a statement of objection. According to him the vehicle was driven with care

and caution and was not driven in a rash and negligent manner as alleged. He had insured the vehicle with the insurance company under policy No.

42187120909/527, certificate No. 54349 with effect from 12.11.1982 to 11.11.1983 and that policy acknowledges the liability of the insurance

company in addition to the owner''s liability. In other words the policy covers also the liability of the owner in whatever manner arisen included in

the Amended Act No. 47 of 1982. The insurance policy took effect from 12.11.82 after the Act No. 47 of 1982 came into force on 1.10.1982

and hence the insurance company alone is liable to pay the compensation awarded.

The respondent No. 2 insurance company filed a statement of objection. According to them there was no rashness or negligence on the part of

the person who drove the vehicle at the time of the accident and it was only the lorry bearing the registration No. MDT 8126 that was responsible

for the accident. The insurance company is in no way liable to pay the compensation amount. It is further contended that as per the terms and

conditions of the policy since the vehicle was driven by a person other than a driver and not during the course of employment of the respondent

No. 1, the insurance company is not liable to pay any amount, if any compensation is awarded. It is further contended that the claimant was only

the occupant of the vehicle and the policy taken by the owner of the vehicle does not cover a mechanic who was occupying the vehicle at the time

of the accident and, therefore, the insurance company is not liable to indemnify the owners if any award is passed against them.

The Motor Accidents Claims Tribunal by its order dated 10.7.1994 passed a common award in M.C.O.P. No. 288 of 1983 (with which we

are not concerned) and M.A.C.T.O.P. No. 52 of 1984. The Tribunal on a consideration of the facts and circumstances of the case and on the

evidence let in before it came to the conclusion that the vehicle was driven by one Muthazhaghu in a rash and negligent manner which is the cause

of the accident. He answered the said issue accordingly. The Tribunal, however, fixed the liability on the owner of the vehicle.

In coming to the other conclusion the Tribunal has referred to some of the decisions cited before it. In arriving at the said conclusion, the

Tribunal has also specifically relied upon a decision in D. Rajapathi Vs. The University of Madurai and Others, . On the question of quantum, the

Tribunal on a consideration. of the evidence placed before it awarded a total compensation of Rs. 30,000/- together with subsequent interest and

costs. The Tribunal has awarded a sum of Rs. 1,200/- towards the loss of income, Rs. 1,300/- towards medical expenses and Rs. 7,500/- for pain

and suffering and Rs. 20,000/- towards permanent disability.

We have gone through the award of the Tribunal. In our opinion, the compensation awarded is just and reasonable. The claimant also has not

filed any cross-appeal against the award of the Tribunal. In fact the counsel appearing for the claimant submitted that the compensation awarded

by the Tribunal for a sum of Rs. 30,000/- on different heads is just and equitable. We have already seen that the Tribunal has passed the award

directing the owner of the vehicle alone to pay the compensation and absolved the insurance company from its liability. Mr. Srinivasan, learned

Counsel appealing for the appellant owner of the vehicle submitted that the Tribunal has erred in holding that the appellant''s driver, while taking the

vehicle to the workshop took the claimant for testing and therefore failed to see that the vehicle was sent to the workshop and accident took place

before the mechanic delivered the vehicle to the owner. He further contended that the Tribunal has failed to notice that the respondent No. 1 has

travelled in the vehicle as an employee of the mechanic and not as volunteer permitted by the driver and hence the owner of the vehicle is not liable

at all. He also would contend that the respondent No. 1 was travelling pursuant to a contract of employment either with the owner of the vehicle or

the mechanic, the insurance company is liable to pay the compensation. Mr. Srinivasan in support of his contention has also laid his strong reliance

on the judgment in Gum Govekar v. Filomena F. Lobo 1988 ACJ 585 (SC).

The only short point involved in this case is whether the insurer who has issued a policy insuring any person specified in the policy against any

liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused

by or arising out of the use of a motor vehicle in a public place, is liable to pay compensation to such third party or to his or her legal

representatives as the case may be when the liability arises when the motor vehicle is in the custody of a repairer. Similar question arises for

consideration before the Supreme Court in the above case. In that case one Sayed Hussain was a partner of a firm by name International Ship

Repairers carrying on business at Vasco-de-Gama, Goa which was the owner of an Ambassador car, entrusted the car to the proprietor of Auto

Electrical Works with instructions to carry out the electrical repairs to the car and handed over the keys of the car to the repairer for that purpose.

The car had been insured by the owner with Oriental Insurance Co. Ltd., as required by the provisions of the Motor Vehicles Act. On the fateful

day one Lobo aged about 27 years was returning home along with her friend and was walking on the left side of the road. She also noticed a car

parked near Damodar Mandap and proceeded further only to be knocked down by the very car which had reversed and dashed against her back.

She had to be treated in the hospital and thereafter in a Medical Research Centre. She was also advised further treatment at Jaslok Hospital,

Bombay. She instituted a claim petition before the Tribunal impleading the firm which was the owner of the vehicle and the proprietor of the Auto

Electrical Works and the employee of the repairer who was repairing the car at the time of the accident and the insurer Oriental Insurance Co. Ltd.

The owner of the car, i.e., the insured and the insurance company, pleaded that the car had been entrusted to the repairer to do electrical repairs

job as an independent contractor and that the employee attached to the garage of the repairer had taken away the car for driving without holding a

valid driving licence and without the consent of the owner of the motor vehicle. Therefore, they contended that neither the insurer nor the insured

was liable to pay any compensation. The employee of the repairer pleaded that he did not drive the vehicle involved in the accident at any time and

that the vehicle had been entrusted to one Guru, the repairer, that he being a mechanic was carrying on the repairs by sitting on the front seat, that

suddenly the vehicle got into motion and started going in the reverse direction and that before he could take the driver''s seat and apply the brakes

the vehicle got into the ditch and stopped. Therefore, he denied his liability. The Tribunal on a consideration of the oral and documentary evidence

placed before it found that the claimant had suffered injuries on account of the rash and negligent handling of the motor vehicle by the mechanic,

that the claimant was not guilty of any contributory negligence and, therefore, she was entitled to a compensation of Rs. 90,000/- for the injuries

suffered by her. The Tribunal also held that the car had been entrusted by the owner to the repairers for carrying out the repairs and that one

Momad Donttach was an employee of Guru, that the accident had taken place when the repairs have been effected to the car and that the insurer

and all other respondents were liable to pay the compensation jointly and severally with interest. Aggrieved by decision of the Tribunal the insurer

and the owner of the workshop to whom the car had been entrusted for carrying out the repairs filed appeals before the High Court of Bombay,

Panaji Bench. The High Court allowed the appeal filed by the insurer. But, however, held that u/s 92-A of the Act the insurer was liable to the

extent of Rs. 7,500/- only. The appeal filed by Guru was dismissed holding that he and his mechanic alone were jointly and severally liable to pay

the compensation. Aggrieved by the decision of the High Court, Guru the repairer of the car filed a SLP before the Supreme Court. The Supreme

Court on a consideration of Section 94(1) and Section 95 of the Act, held that the insurer is under an obligation to pay the compensation payable

to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of

the third party caused by or arising out of the use of the vehicle at a public place. The Supreme Court held that this is in compliance with the

requirements of Chapter 8 of the Act. The Apex Court, however, held that the liability to pay the compensation in respect of death or injury

caused to the person or property of a third party undoubtedly arises when such injury is caused when the insured is using the vehicle in a public

place. It also arises when the insured has caused or allowed any other person to use his vehicle in a public place and the death of or injury to the

person or property of a third party is caused on account of the use of the said vehicle during such period, unless such other person has himself

taken out a policy of insurance to cover the liability arising out of such an accident. On the facts of the case the Supreme Court was of the view

that the insurer is liable to pay compensation found to be due to the claimant as a consequence of the injuries suffered by the injured in a public

place on account of the car colliding with her on account of the negligence of the mechanic who had been engaged by the repairer who had

undertaken to repair the vehicle by virtue of the provisions contained in Section 94 of the Act which 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 VIII of the Act. The

Supreme Court also held that any other view will expose innocent third parties to go without compensation when they suffer injury on account of

such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act.

In the case on hand, the facts are very identical. The vehicle was entrusted to the repairer by the owner of the vehicle. Admittedly, the vehicle

was driven by the mechanic of the repairer and due to the rash and negligent driving of the mechanic of the repairer, the accident occurred and

resulted in inflicting serious and grievous injuries of permanent nature on the claimant. It is also not in dispute that the accident had occurred in a

public place. Therefore, the view taken by the Tribunal in the instant case passing the liability on the owner of the vehicle is not correct. The

Tribunal has taken the said view following the decision in D. Rajapathi Vs. The University of Madurai and Others, , referred above. In fact the

Supreme Court had considered the very same judgment in Guru Govekar v. Filomena F. Lobo 1988 ACJ 585 (SC), and expressly held that they

did not agree with the decision in D. Rajapathi Vs. The University of Madurai and Others, in which it has been held that the doctrine of vicarious

liability cannot be extended to a case where the accident had taken place on account of the negligence of the driver employed by an independent

contractor even when the claim is made not under the law of Torts but under the provisions of the Act. In the instant case neither the repairer nor

his employee/mechanic had taken the policy covering the liability to pay compensation payable to third party. The insurer has also not discharged

his burden nor the insured has breached any conditions of permit or the contract of insurance. Therefore, we hold that the insurance company has

not discharged its burden. Therefore, the insurance company cannot be absolved from its liability to pay compensation to the claimants.

We, therefore, set aside the order of the Motor Accidents Claims Tribunal dated 10.7.1994 in M.A.C.T.O.P. No. 52 of 1984 on the file of

the V Additional Sub Judge, Trichy and direct for the payment of Rs. 30,000/- being the entire compensation awarded together with interest by

the insurance company. The owner of the vehicle is not liable to pay any compensation. The Tribunal while awarding Rs. 30,000/- has awarded

the payment of interest at 9 per cent per annum from 10.7.1984. We feel the award of interest at 9 per cent is on the lower side. We feel that

award of interest at 12 per cent per annum is just and reasonable. We, therefore, direct payment of interest at 12 per cent per annum on Rs.

30,000/- from 10.7.1984 till realisation.

Mr. R. Srinivasan, counsel for the appellant represents that pursuant to the order in C.M.P. No. 13218 of 1984 dated 26.9.1984 a sum of Rs.

10,000/- was deposited which has been withdrawn by the claimant. Therefore, the appellant is entitled for reimbursement of the said sum from the

insurance company. The insurance company shall pay the same to the appellant and pay the balance of the compensation awarded together with

interest and costs to the claimant. The insurance company shall deposit the sum within two months from today and on such deposit the claimant is

at liberty to withdraw the same without furnishing any security.