National Insurance Co. Ltd. vs Chandra Devi and Others

V.K. Gupta, C.J.—Since the common question of law is involved for adjudication in these two appeals, both are being disposed of by this common judgment.

Both the appeals have been filed by the insurance companies appellants u/s 173 of Motor Vehicles Act, 1988 (''1988 Act'', for short) against the awards passed by Motor Accidents Claims Tribunals awarding compensation in favour of the claimants-respondents and against the appellants insurance companies. Whereas in F.A.O. (MVA) No. 275 of 1993 award dated 22.7.1993 passed in M.A.C. Case No. 4-S/2 of 1990 by the Motor Accidents Claims Tribunal, Shimla, is under challenge, in F.A.O. (MVA) No. 156 of 1993, award dated 14.1.1999 passed in M.A.C.T. No. 91-S/2 of 1993 by Motor Accidents Claims Tribunal (II), Shimla, is under challenge.

In both the cases the deceased were travelling in trucks and in both the cases they, on the own showing of the claimants-respondents, were travelling in the trucks as owners of the goods being carried in the respective trucks. In both the cases the accidents occurred after July, 1989, i.e., the date of the enforcement of 1988 Act and before 1994, i.e., the date of amendment of Section 147 of 1988 Act. Whereas in F.A.O. (MVA) No. 275 of 1993 the accident in question occurred on 12.8.1989, in F.A.O. (MVA) No. 156 of 1999, the accident occurred on 9.8.1993. In both the cases the appellants insurance companies had taken specific plea before the Motor Accidents Claims Tribunals that since the deceased were travelling as passengers in trucks and since this amounted to violation of the policy conditions, in terms of Section 147 of the 1988 Act, appellants insurance companies were not liable to indemnify the insured-owners of the trucks, nor were they liable to pay the award amounts.

Whether an insurer is liable to pay compensation to dependants of a deceased passenger, while the deceased passenger was travelling in a goods vehicle that met with an accident on account of which he died, even though is the common question of law involved for consideration, interpretation and adjudication in both these appeals, it can now clearly be said that this question is no more res integra, based as it is upon the interpretation of Section 147 of 1988 Act, to a fact situation as it stood prior to its amendment in 1994 because of the authoritative pronouncement by a three-Judge Bench of the Apex Court in case of New India Assurance Co. Ltd. Vs. Asha Rani and Others, Section 147 (1) (b) (i) of 1988 Act, as it stood before its amendment in 1994 which alone is relevant for our consideration, read as under:

"(i) 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 the vehicle in a public place;"

The following observations made in Asha Rani (supra), interpreting the expression ''any person'' as used in Section 147 (1) (b) (i) (supra) are apposite and I quote:

"(9) In New India Assurance Company Vs. Shri Satpal Singh and Others, the court assumed that the provisions of Section 95 (1) of the Motor Vehicles Act, 1939, are identical with Section 147 (1) of the Motor Vehicles Act, 1988, as it stood prior to its amendment. But a careful scrutiny of the provisions would make it clear that prior to the amendment of 1994 it was not necessary for the insurer to insure against the owner of the goods or his authorised representative being carried in a goods vehicle. On an erroneous impression this court came to the conclusion that the insurer would be liable to pay compensation in respect of the death or bodily injury caused to either the owner of the goods or his authorised representative when being carried in a goods vehicle the accident occurred. If the Motor Vehicles (Amendment) Act of 1994 is examined, particularly Section 46 of Act 54 of 1994 by which expression ''injury to any person'' in the original Act stood substituted by the expression ''injury to any person'' including owner of the goods or his authorised representative carried in the vehicle the conclusion is irresistible that prior to the aforesaid Amendment Act of 1994, even if widest interpretation is given to the expression ''to any person'' it will not cover either the owner of the goods or his authorised representative being carried in the vehicle. The objects and reasons of Section 46 also states that it seeks to amend Section 147 to include owner of the goods or his authorised representative carried in the vehicle for the purposes of liability under the insurance policy. It is no doubt true that sometimes the legislature may amend the law by way of amplification and clarification of an inherent position which is there in the statute, but a plain meaning being given to the words used in the statute, as it stood prior to its amendment of 1994, and as it stands subsequent to its amendment in 1994 and bearing in mind the objects and reasons engrafted in the amended provisions referred to earlier, it is difficult for us to construe that the expression including the owner of the goods or his authorised representative carried in the vehicle which was added to the preexisted expression ''injury to any person'' is either clarificatory or amplification of the pre-existing statute. On the other hand, it clearly demonstrates that the legislature wanted to bring within the sweep of Section 147 and making it compulsory for the insurer to insure even in case of a goods vehicle, the owner of the goods or his authorised representative being carried in a goods vehicle when that vehicle met with an accident and the owner of the goods or his representative either dies or suffers bodily injury. The judgment of this court in Satpal''s case, therefore, must be held to have not been correctly decided and the impugned judgment of the Tribunal as well as that of the High Court accordingly are set aside and these appeals are allowed. It is held that the insurer will not be liable for paying compensation to the owner of goods or his authorised representative on being carried in a goods vehicle when that vehicle meets with an accident and the owner of goods or his representative dies or suffers any bodily injury."

Writing a separate but concurring judgment His Lordship S.P. Sinha, J. made the following observations in the same case and I quote:

"(26) In view of the changes in the relevant provisions in 1988 Act vis-a-vis 1939 Act, we are of the opinion that the meaning of the words ''any person'' must also be attributed having regard to the context in which they have been used, i.e., ''a third party''. Keeping in view the provisions of 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor.

(27) Furthermore, Sub-clause (i) of Clause (b) of Sub-section (1) of Section 147 speaks of liability which may be incurred by the owner of a vehicle in respect of 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 the vehicle in a public place, whereas Sub-clause (ii) thereof deals with liability which may be incurred by the owner of a vehicle against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place.

(28) An owner of a passenger carrying vehicle must pay premium for covering the risks of the passengers. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid. But if the ratio of this court''s decision in New India Assurance Company Vs. Shri Satpal Singh and Others, is taken to its logical conclusion, although for such passengers, the owner of a goods carriage need not take out an insurance policy, they would be deemed to have been covered under the policy wherefore even no premium is required to be paid."

His Lordship S.P. Sinha, J., for coming to the aforesaid conclusions very elaborately referred to the definitions of ''goods vehicle'', ''public service vehicle'', ''stage carriage'' and ''transport vehicle'' as occurring in Section 2 of Motor Vehicles Act, 1939 and similarly ''goods carriage'', ''public service vehicle'', ''stage carriage'' and ''transport vehicle'' as occurring in Section 2 of 1988 Act for their inter se comparison to demonstrate and highlight the legal position that, whereas under Motor Vehicles Act, 1939 a passenger could be carried in a goods vehicle, under the 1988 Act passengers could not be carried in a goods carriage.

New India Assurance Co. Ltd. Vs. Asha Rani and Others, came to be noticed in a subsequent two-Bench judgment of the Apex Court in the case of Oriental Insurance Company Ltd. Vs. Devireddy Konda Reddy and Others etc. etc. and Jogi Subbamma and Others etc. etc., in which again their Lordships of the Apex Court in a very elaborately analysed comparison of the above referred expressions used in the Motor Vehicles Act, 1939 and 1988 Act came to the conclusion that these provisions very clearly indicated the legislative intent that it was not permissible to carry passengers in any goods vehicle as far as 1988 Act is concerned, even though under Motor Vehicles Act, 1939 this could have been done. The following observations are apposite in Devireddy Konda Reddy (supra) and I quote:

"(10) The inevitable conclusion, therefore, is that provisions of the Act do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the insurer would have no liability therefor."

Because of the aforesaid very clear and categorical legal position and the aforesaid authoritative pronouncements, as far as the legal position existing prior to the amendment of Section 147 of 1988 Act by the Amending Act, 1994 is concerned, it is very clear that an insurance company was not liable to indemnify the insured or to pay the award amount if the deceased was travelling as a passenger, either as a gratuitous passenger or as a passenger in the capacity of the owner of goods, being carried in the truck because by carrying passengers in the truck, of either type, the truck was being plied in violation of the provisions of the route permit and hence this was a valid defence available to an insurer to avoid its liability to pay the award amount.

In the result, therefore, it can safely be held that the awards in both these appeals whereby the liability has been fastened upon the insurer appellants were bad in law, passed as these were on a misinterpretation of the above quoted legal provisions.

A three-Judge Bench of the Supreme Court in case of National Insurance Co. Ltd. Vs. Baljit Kaur and Others, dealing with the aforesaid question in the light of the ratio earlier laid in New India Assurance Co. Ltd. Vs. Asha Rani and Others, and Oriental Insurance Company Ltd. Vs. Devireddy Konda Reddy and Others etc. etc. and Jogi Subbamma and Others etc. etc., and other cases on the subject came to hold that in all such fact situations where the deceased was travelling in a truck as a passenger, owner of the vehicle shall be liable to satisfy the award and that the insurer shall not be liable to satisfy the award. However, their Lordships were also of the opinion and

explicitly said so in Baljit Kaur (supra) that since the law so far was not very clear on the subject, the pronouncements in Asha Rani (supra), Devireddy Konda Reddy (supra) as well as in Baljit Kaur (supra) would be of prospective effect and that the interests of justice would be subserved if the insurance companies are directed to satisfy the awards and pay the awarded amounts in favour of the claimants and recover the same from the owners of the vehicles. On the basis of this doctrine of prospective application, therefore, in Baljit Kaur (supra), despite the legal proposition having clearly and succinctly been explained earlier in Asha Rani (supra) and other related cases, for the first time the Apex Court held that since these judgments have a prospective application, the insurer would be liable to satisfy the awards and pay the awarded amounts to the claimants and, recover the same from the owners of the vehicles. For ready reference para 21 of the judgment in Baljit Kaur (supra), is reproduced hereunder, which reads thus:

"(21) The upshot of the aforementioned discussions is that instead and in place of the insurer the owner of the vehicle shall be liable to satisfy the decree. The question, however, would be as to whether keeping in view the fact that the law was not clear for so long such a direction would be fair and equitable. We do not think so. We, therefore, clarify the legal position which shall have prospective effect. The Tribunal as also the High Court had proceeded in terms of the decision of this court in New India Assurance Company Vs. Shri Satpal Singh and Others, The said decision has been overruled only in New India Assurance Co. Ltd. Vs. Asha Rani and Others, We, therefore, are of the opinion that the interest of justice will be subserved if the appellant herein is directed to satisfy the awarded amount in favour of the claimant, if not already satisfied and recover the same from the owner of the vehicle. For the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate proceedings before the executing court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. We have issued the aforementioned directions having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988, in terms whereof, it is not only entitled to determine the amount of claim as put forth by the claimant for recovery thereof from the insurer, owner or driver of the vehicle jointly or severally but also the dispute between the insurer on the one hand and the owner or driver of the vehicle involved in the accident inasmuch as can be resolved by the Tribunal in such a proceeding."

Because of the aforesaid mandate of the Supreme Court, even though on the legal proposition I have found in favour of the appellants insurers, I direct that the appellants insurers shall be liable to satisfy the awards and pay the awarded amounts to the respondents-claimants, but they shall be entitled to recover the same from the owners of the vehicles in question.

Appeals disposed of accordingly. Whatever amounts have been deposited by the appellants insurers in this court and which have not been paid to respondents-claimants so far, or which have been lying in deposit in this court, shall now be paid to the claimants-respondents.