National Insurance Co. Ltd. vs Chennaiammal and Others

P.R. Shivakumar, J.—The insurance company which figured as the respondent No. 3 before the Tribunal has brought forth this appeal against the judgment and award dated 15.11.2000 made by Motor Accidents Claims Tribunal (Second Additional District Judge), Erode in M.C.O.P. No. 448 of 1997.

The respondent Nos. 1 to 6 herein were the petitioners in M.C.O.P. No. 448 of 1997 on the file of Motor Accidents Claims Tribunal (II Additional District Judge), Erode. The respondent Nos. 7 and 8 herein and the appellant herein were respectively the respondent Nos. 1, 2 and 3 in the above said M.C.O.P. The respondent Nos. 1 to 6 herein had filed the said M.C.O.P. claiming a sum of Rs. 4,00,000 as compensation from the appellant and the respondent Nos. 7 and 8 herein together with future interest and cost for the death of one Raman (husband of the respondent No. 1 and father of the respondent Nos. 2 to 6). The claim was made based on the allegation that, on 23.2.1997, while the deceased Raman was travelling in a Tempo van belonging to the respondent No. 8 herein (respondent No. 2 in the M.C.O.P.) and bearing registration No. TN 38-A 9159, the same was driven by respondent No. 7 herein (respondent No. 1 in the M.C.O.P.) in a rash and negligent manner, as a result of which, at about 9 p.m. on the said date the said vehicle capsized and turned turtle near the then Jeeva Transport Corporation shed on Perundurai-Seenapuram Road. Contending that rash and negligent driving of the vehicle by its driver was the sole cause of accident and that the same led to the death of deceased Raman on 26.2.1997 after having been treated as an inpatient in TAT Medical College & Hospital, Perundurai, the respondent Nos. 1 to 6 herein had made the above said claim against the respondent Nos. 7 and 8 herein and the appellant herein as respectively the driver, owner and the insurer of the said vehicle involved in the accident.

The driver and owner of the vehicle, namely, the respondent Nos. 7 and 8 herein (respondent Nos. 1 and 2 in the M.C.O.P.) did not contest the case and chose to remain ex parte. The appellant insurance company which figured as the respondent No. 3 in the M.C.O.P. alone contested the case by filing a counter statement denying the petition averments and contending that appellant insurance company was not liable to pay any amount as compensation to the respondent Nos. 1 and 2 herein (petitioner Nos. 1 and 2) since the goods vehicle had been used for carrying passengers in violation of the permit and policy conditions.

The Tribunal framed necessary issues and conducted trial in which two witnesses were examined as PW 1 and PW 2 and six documents were marked as Exhs. Al to A6 on the side of the respondent Nos. 1 and 2 herein/claimants. On the side of the appellant herein/respondent No. 3 in the M.C.O.P., two documents were marked as Exhs. B1 and B2 and no witness was examined. At the conclusion of inquiry, the Tribunal heard the arguments advanced on either side, considered the pleadings and evidence in the light of the arguments advanced and upon such a consideration, came to the conclusion that rash and negligent driving of the vehicle belonging to the respondent No. 8 herein by its driver, namely, the respondent No. 7 herein, was the sole cause of the accident. It also came to the conclusion that the respondent No. 8 herein/respondent No. 2 in M.C.O.P., being the owner of the vehicle was liable to pay compensation to the dependants of the deceased. It was also the finding of the Tribunal that respondent Nos. 2 to 6 herein/petitioner Nos. 2 to 6 in the M.C.O.P. being the married children of the deceased were not entitled to get compensation as they were not dependants and that respondent No. 1 herein being the widow of the deceased Raman, alone was entitled to get compensation as the sole dependant. The Tribunal quantified the amount of compensation at Rs. 1,31,000 and directed the appellant and the respondent No. 8 herein/ respondent Nos. 2 and 3 in the M.C.O.P. to pay the said amount to the respondent No. 1 herein together with an interest for the said amount, from the date of petition till realization, at the rate of 12 per cent per annum and proportionate costs.

As against the dismissal of the claim in respect of respondent Nos. 2 to 6/peti-tioner Nos. 2 to 6 in the M.C.O.P., none of them has chosen to prefer any appeal or cross-objection. Respondent Nos. 7 and 8, who remained ex parte in the M.C.O.P., also have not chosen to file any appeal or cross-objection. The appellant insurance company/respondent No. 3 in M.C.O.P. alone has preferred this civil miscellaneous appeal challenging the award of the Tribunal so far as it relates to the appellant alone.

The short point that arises for consideration in this appeal is "whether the appellant insurer is to be held liable to pay compensation on the basis of the insurance policy to the dependants of the victim who died in an accident that took place while he was travelling in a goods vehicle?"

This Court heard the arguments advanced by Mr. R. Sunil Kumar, learned Counsel appearing for Mr. R. Yashod Vardhan, learned Counsel for the appellant and Mr. N. Manoharan, learned Counsel for the respondent Nos. 1 to 6 herein. The materials available on record were also perused.

Relying upon the judgment of the Hon''ble Supreme Court pronounced in National Insurance Co. Ltd. Vs. Bommithi Subbhayamma and Others, and another judgment of the Hon''ble Supreme Court pronounced in National Insurance Co. Ltd. Vs. Cholleti Bharatamma and Others, , the learned Counsel for the appellant argued that apart from the owner of the goods transported in a goods vehicle or his authorised representative, others could not be transported in the goods vehicle as passengers; that if at all passengers are transported in a goods vehicle, the same would be in violation of the permit conditions; that the policy taken for the vehicle involved in the accident in question did not cover the risk involved to such passengers and that hence the award of the Tribunal mulcting the liability on the appellant insurance company also should be set aside as unsustainable.

On the other hand, learned Counsel for the respondent Nos. 1 to 6/claimants would rely on the judgment of a Division Bench of this Court pronounced in Oriental Insurance Company Ltd., Dhanabackiam and Kuppan Vs. Dhanabackiam, Kuppan, Kesavan and Oriental Insurance Company Ltd., and a judgment of learned single Judge of this Court in a batch of cases in National Insurance Co. Ltd. v. K. Ellammal 2007 (1) TN MAC 433 and a judgment of yet another Division Bench of this Court pronounced in United India Insurance Co. Ltd. Vs. P. Jaya and Others, , to contend that in case of an accident to gratuitous passengers in a goods vehicle, though the policy does not cover the risk involved to them, the insurance company may be directed to pay the compensation at the first instance and then recover the same from the owner of the vehicle by directly initiating execution proceedings without having the necessity to file a suit.

After going through the judgments relied on by the learned Counsel for the appellant on the one hand and by the learned Counsel for the respondent Nos. 1 to 6/claimants on the other hand, this Court comes to the conclusion that the contention of the learned Counsel for the appellant has got to be countenanced.

The judgment of the Hon''ble Apex Court in National Insurance Co. Ltd. Vs. Bommithi Subbhayamma and Others, , was decided on 21.2.2005. In the said judgment, after referring to the earlier judgments of the Hon''ble Supreme Court in New India Assurance Company Vs. Shri Satpal Singh and Others, and New India Assurance Co. Ltd. Vs. Asha Rani and Others, , the Hon''ble Supreme Court held that 1994 amendment to Section 147 of the Motor Vehicles Act, 1988, made it imperative that the owner of the goods vehicles to take a policy covering the risk involved to the owner of the goods or his authorised representative travelling along with the goods in the goods vehicle and that it was not the intention of the legislature to provide for the liability of the insurer with respect to passengers especially, gratuitous passengers, who were neither contemplated at the time of entering into the contract of insurance nor any premium was paid to extend the benefit of insurance to such category of people. Of course it is true that the judgments of this Court, one of a single and the other two of Division Benches came to be pronounced subsequent to the above said judgment of the Apex Court, and it was held that even in cases of accident to unauthorised passengers travelling in goods vehicle in order to facilitate payment to the claimants, the insurance company should be directed to pay compensation to the claimants at the first instance and then recover the same from the owner of the vehicle. But the position has been again made clear by the Hon''ble Apex Court in National Insurance Co. Ltd. Vs. Cholleti Bharatamma and Others, . The Hon''ble Supreme Court, in the said case which is the latest case in this regard, has held that insurance company was not liable for the death or injury sustained by the passengers travelling in a goods vehicle gratuitously. So far as the owner of the goods transported in the goods vehicle or his representative is concerned, the Hon''ble Supreme Court has made a clear observation that they shall be entitled to claim compensation from the insurance company provided they travelled in the cabin of the vehicle without exceeding the seating capacity of the cabin. In view of the emphatic declaration of law in this regard by the Hon''ble Apex Court in Cholleti Bharatamma''s case (supra), the question of directing the insurance company to pay compensation to the claimants at the first instance and then recover the same from the owner of the vehicle will not arise in this case.

In the case on hand, it is seen from evidence that several persons including the deceased, travelled in the goods vehicle to attend a marriage function that was scheduled to be held near Thingalur and while they were thus proceeding as passengers in the goods vehicle, it capsized resulting in the accident leading to the death of the deceased. It is also evident from the materials available on record that the deceased and the other persons were travelling either seated or standing on the container portion of Tempo van meant for carrying goods. It is abundantly clear from Exh. B1, copy of the policy, that a specific clause has been included in the policy to the effect that the policy does not cover the risk involved to the passengers transported in the vehicle except employees (other than driver) not exceeding 6 in number coming under the purview of the Workmen''s Compensation Act. It is obvious from the evidence of PW 1 that Tempo van (vehicle involved in the accident) was engaged for transporting passengers who were more than 15 in number. Therefore, it is quite obvious that the policy not only did not cover the risk involved to such passengers but also the vehicle was used for a purpose which was prohibited specifically as per the terms of the insurance policy.

It is not a case in which the risk involved to the victim is covered by the insurance policy but the liability of the insurer is eschewed by rescinding the contract of insurance for violation of any condition of policy. Only in such cases, in order to safeguard the interest of the victim or dependants of the victim, the insurer who alleges violation of the contract as a ground for revoking its liability under the insurance policy, can be directed to pay the compensation at the first instance and then recover the same from the owner of the vehicle. In the case of non-coverage of insurance, there would not be any justification in mulcting the liability at the first instance on the insurer with a rider permitting the insurer to recover the same from the insured after satisfying the claim of the claimants. The said principle is embedded in the latest judgment of the Apex Court in National Insurance Co. Ltd. Vs. Cholleti Bharatamma and Others, . Therefore, this Court, comes to the conclusion that the appeal has got to be allowed and that part of the award of the Tribunal holding appellant insurance company jointly and severally liable with the owner of the vehicle and directing the appellant to make payment of the compensation at the first instance to the claimants and then recover the same from the respondent No. 8 should be set aside. However, it is brought to the notice of this Court that the entire award amount was deposited by the respondent pursuant to a direction and the claimants were permitted to withdraw 50 per cent of the award amount and that the balance 50 per cent alone remains invested in a nationalised bank. Therefore, while allowing the appeal, the interest of justice can be subserved by permitting the respondent No. 1 to retain the amount already received and recover the balance from the respondent No. 8 (owner of the vehicle) and at the same time giving liberty to the appellant to recover the portion of the award amount which was allowed to be withdrawn by the respondent No. 1 from the respondent No. 8 by levying execution without having any necessity to file a separate suit.

In the result, the appeal is allowed to the extent indicated above. Appellant is permitted to withdraw the balance amount available in the deposit made to the credit of the M.C.O.P. No. 448 of 1997 on the file of the Motor Accidents Claims Tribunal (II Additional District Court), Erode. The respondent No. 1 is permitted to retain the amount already received from the Tribunal representing 50 per cent of the award amount. She has to recover the balance amount from the owner of the vehicle, respondent No. 8. The appellant is permitted to recover the amount already paid to the respondent No. 1-claimant No. 1 from the respondent No. 8-respondent No. 2 in the M.C.O.P. together with interest. There shall be no order as to costs so far as the appeal is concerned.