New India Assurance Company vs Motiram and Others

N.Y. Hanumanthappa, J.—Since the question of law involved in all these appeals is common these appeals are disposed of by a common order.

The question of law to be decided in these appeals, is whether an unauthorized passenger travelling in a vehicle which met with an accident is entitled to claim compensation u/s 166 of the Motor Vehicles Act?

Under similar circumstances, a Division Bench of this Court in New India Assurance Company Limited v. Pesala Kishore Kumar and Ors. 1994 (4) ALT 107 held that the claimants are entitled for compensation only from the owner of the vehicle and also observed that any direction to Insurance Company to pay compensation under no fault liability is incorrect.

From the evidence it is clear that the injured victims in all the cases were unauthorized passengers or in other words gratuitous passengers. In view of the law laid down by the Supreme Court in National Insurance Co. Ltd. Vs. Jethu Ram and Others, the liability to pay the compensation is only on the owner of the motor vehicle and not on the Insurance Company.

The Supreme Court in Smt. Mallawwa Etc. Vs. The Oriental Insurance Co. Ltd. and Others, held as follows:

For the purposes of Section 95 ordinarily a vehicle could have been regarded as a vehicle in which passengers are carried if the vehicle was of that class. Keeping in mind the classification of vehicles, by the Act, the requirement of registration with particulars including the class to which it belonged, the requirement of obtaining a permit for using the vehicle for different purposes and compulsory coverage of insurance risk, it would not be proper to consider a goods vehicle as a passenger vehicle on the basis of a single use or use on some stray occasions of that vehicle for carrying passengers for hire or reward. For the purpose of construing a provision like proviso (ii) to Section 95(1)(b), the correct test to determine whether a passenger was carried for hire or reward, would be whether there has been a systematic carrying of passengers. Only if the vehicle is so used then that vehicle can be said to be a vehicle in which passengers are carried for hire or reward. The High Courts have expressed divergent views on the question whether a passenger can be said to have been carried for hire or reward when he travels in goods vehicle either on payment of fare or along with his goods. It is not necessary to refer to those decisions which were cited at the Bar as we find the all the relevant aspects were not taken into consideration while expressing one view or the other. We may only refer to the decision of the Orissa High Court in New India Assurance Company Ltd. Vs. Kanchan Bewa and Others, , where Hansaria. J, speaking for the Full Bench observed as under:

"18. The aforesaid is not enough to take any view as to whether goods vehicle can or cannot come within the fold of proviso (ii) with which we are concerned. Our primary reason for differing, with respect, with the Rajasthan Full Bench is that allowing goods vehicle to be taken within the fold of proviso (ii) would introduce uncertainties in law as that would depend upon various factors to which we shall advert; the result would be that the law would cease to be certain which it has to be at least in a case of the present nature. We have said so because reference to the definition of goods vehicle shows that the first part of it does not deal with carrying of passengers. It is the second part which speaks about the same and that too when the vehicle is used for such a purpose. The word ''use'' has been defined in Chambers English Dictionary in its intransitive sense to mean ''to be accustomed; (to; used chiefly in the past tense)'', ''to be in the habit of so doing "to resort''. Reference to the meaning of this word, as given in Black''s Law Dictionary, 5th Edition, would show that even one user may amount to ''use'' or it may be that for a thing being said to be ''used'', it has to be ''employed habitually''.

Being concerned with beneficial legislation like the one at hand, we would have normally preferred liberal interpretation, but the question is whether, without any extra premium having been paid, the owner of a goods vehicle can claim indemnification from the insurer just because once in a year the goods vehicle had carried a passenger for hire or reward along with the goods. This would perhaps robe the third proviso dealing with coverage of contractual liability lame...

Thus, to find out whether an insurer would be liable to indemnify an owner of a goods vehicle in a case of the present nature, the mere fact that the passenger was carried for hire or reward would not be enough; it shall have to be found out as to whether he was the owner of the goods, or an employee of such an owner, and then whether there were more than six persons in all in the goods vehicle and whether the goods vehicle was being habitually used to carry passengers. The petition would thus become very uncertain and would vary from case to case. Production of such result would not be conducive to the advancement of the object sought to be achieved by requiring a compulsory insurance policy.

There is another aspect of the matter which had led us to differ from the Full Bench decision of Rajasthan High Court. The same is what finds place in Sub-section (2) of Section 95. That Sub-section specifies the limits of liability and Clause (a) deals with goods vehicle and insofar as the person travelling in goods vehicle is concerned, it has confined the liability to the employees only. This is an indicator, and almost a sure indicator, of the fact that Legislature did not have in mind carrying of either the hirer of the vehicle or his employee in the goods vehicle, otherwise, Clause (a) would have provided a limit of liability regarding such persons also."

Though, the conclusion was arrived at after taking into consideration the Orissa Motor Vehicles Rules, in our opinion the said view is correct, even otherwise also. In view of what we have said, the contrary view expressed by other High Courts has to be regarded as incorrect."

In view of the judgment of the Supreme Court supra and in view of the principles laid down therein, we have no other go except to hold that the respondents-claimants herein are gratuitous or unauthorized passengers in the goods vehicle and are not entitled for any compensation. Consequently, the order and decrees passed by the Tribunal below as against the Insurance Company are liable to be set aside.

It may be mentioned here that before the Tribunal the claimants gave up their claim as against the driver. But, curiously, the Tribunal has passed decrees as against the driver also without recording any finding in that regard. We are of the view that since the claimants themselves gave up their claim as against the driver, the Tribunal ought not to have passed the decrees as against the driver also. Therefore, the order and decrees of the Tribunal below as against the driver are also liable to be set aside.

In the result, all these appeals filed by the Insurance Company are allowed. The order and decrees under appeal passed by the Accidents Claims Tribunal below as against the Insurance Company and the driver are set aside and the order and decrees passed as against the owner shall stand. Now, the net result will be that the owner is solely liable for payment of the entire amount of compensation awarded by the Court below. No order as to costs.

ORDER

N.Y. Hanumanthappa, J. (on being mentioned on 23-6-2000)

All the above appeals are listed to-day under the caption "FOR BEING MENTIONED".

Mr. Rajamalla Reddy, the learned Counsel appearing on behalf of the claimants requested to recall our order dated 15th October, 1999 on the ground that the principles laid down in the decision reported in Sohan Lal Passi v. P. Sesh Reddy and Ors. (1996) SCC 21 are applicable to the facts of the case on hand. It is further submitted that the same is not brought to the notice of this Court at the time of disposal of the above appeals. On the other hand, Mr. Subba Rao, the learned Counsel appearing on behalf of the Insurance Company submitted that the above said case has no application and that it is only the case reported in Mallawwa and Ors. v. Oriental Insurance Company Limited and Ors. (3 supra) which is applicable to the facts of the case on hand. In fact, this Court has referred the same in the judgment. As such, there is no need to recall our order dated 15th October, 1999 and that we can say that if any amount is paid by the Insurance Company to the claimants and in view of the present order, if the claimants are liable to repay the said amount to the company, the company can in turn recover the same from the owner of the vehicle and not from the claimants.

Mr. Rajamalla Reddy is right in contending that the Insurance Company is liable provided that the incident occurred under the new Act and not under the old Act as clarified by the Supreme Court in New India Assurance Company Vs. Shri Satpal Singh and Others, .