New India Assurance Company vs Shakuntla Devi and others

Bhawani Singh, J.—This letter patent appeal assails the judgment of learned single Judge in C.I.M.A. No. 16/94, dated April 28, 1995

whereby the appeal preferred by New India Assurance Company (hereafter the 'appellant') has been dismissed.

On March 2, 1993 at 5.00 a.m., truck bearing registration No. JKO 287093 turned turtle with the result that labourer Raj Pal, travelling in the

truck, died on the spot leaving behind his widow and three minor children. Claim petition was filed before the Motor Accident Claims Tribunal

(hereafter shortly 'Tribunal'), Jammu claiming compensation of rupees ten lacs from the respondents alleging that the accident was the result of rash

and negligent driving by driver Joginder Singh. The respondents have admitted the accident but the allegation that the accident was attributable to

the rash and negligent driving, has been denied. It has been stated that the accident took place due to sudden application of brakes for saving a

buffalo which came in front of it. The appellant has admitted that the vehicle was insured with it on the date of accident but liability to pay the

compensation for the death of the deceased has been denied.

On the pleadings of the parties, the Tribunal framed the following issues:

Whether the death of the deceased Raj Pal had occurred by use of the offending vehicle No. JK02B7093 driven rashly and negligently by

respondent 1 on 221993? OPP

In case issue No. 1 is proved what is the extent of compensation payable to the petitioners and by whom? OPP

3 Whether he Insurance Company is not liable to indemnify the insured as the offending vehicle was driven without a valid driving licence?

Whether the deceased as labourer is not covered under the insurance policy, if so, what is its effect on the liability of the insurer to indemnify the

insured? OPR3.

Relief.

3A. The parties went to trial. The Tribunal found that the accident was the result of negligent driving of the offending vehicle by its driver.

Consequently, compensation of Rs. 2,88 lac was awarded to the widow, and three minor children with interest at the rate of 12% per annum, by

application of multiplier of sixteen and fixing the age of the deceased at 30 years. The appellant could not prove the issues, onus of which was on it,

with the result that these issues have been decided against it.

The appellant confined the challenge to issue No. 4 before the learned single Judge as well as this Court. Precisely, the challenge was that there

is marked difference between labourer engaged by the hirer of the truck for the carriage of his goods and the labourer of the insured for

accompanying the goods at his instance. This being so, deceased Raj Pal, being the labourer of the insured, was not covered under the insurance

policy, therefore, the appellant could not have been burdened with the liability to pay the compensation awarded by the Tribunal in this case. It was

also contended that the learned single Judge gave wrong interpretation to Section 147 of the Motor Vehicles Act, 1939 by holding that once

accident has taken place, all kinds of persons travelling through it, are covered under the policy of insurance and the Insurance Company has to

bear the liability of payment of compensation. In the absence of comprehensive policy or any stipulation covering such a risk, labourer of the

insured is not covered, although, it was candidly admitted by the learned counsel for the appellant that in case it is found that deceased Raj Pal was

the labourer engaged by the hirer of the truck, the appellant has no case. In support of his main submission, reliance was placed on National

Insurance Co. Ltd. v. Punabhai Zerabhai Koli, 1986 Acc CJ 215 (Guj); Kishori v. Gulabkhan, 1988 Acc CJ 860 (Madh Pra); and New India

Assurance Co. Ltd. v. Ashok Singh, 1990 Acc CJ 1055 (Madh Pra).

From the other side, Shri J.P. Singh defended the judgment and referred to New India Assurance Company Ltd. v. Kamla Ben Sultan Singh

Jadav, AIR 1993 Guj 171 (FB).

First of all, it is important to establish the employer of deceased Raj Pal. In the claim petition it has been stated that the deceased was working

for different transport companies as such there was no permanent employer of the deceased. He was not an ordinary labourer but was trained in

delivering the consignments to destination by accompanying the carriers/vehicles and as such was working for different transport companies in

Delhi. Smt. Shakuntala Devi, claimant (widow of the deceased) has also stated that the deceased had been working with trucks for loading and

unloading of consignments and also looking after the safe custody and delivery of goods at the destination on behalf of the owner. Her statement is

supported by Panna Lal and Rajeshwar Dayal.

On the basis of evidence and material available on record, the Tribunal found that the deceased was accompanying the goods for their safe

custody on behalf of the owner who had hired the vehicle. The appellant has not been able to prove satisfactorily that the deceased was labourer

of the insured, by production of record pointing out his employment and payments to the deceased from time to time. The insured has not stated

anywhere that deceased Raj Pal was his employee. Legitimately, it can be concluded that the deceased used to be engaged by the hirers of the

vehicle for the safe consignment of their goods. This finding of the Tribunal is supported by evidence and material on record and we do not see any

justification for taking a contrary view and reverse this finding.

Section 95 of the Motor Vehicles Act, 1939 deals with the requirements of policies and limits of liability. This Act has been amended by the

Motor Vehicles Act, 1988 in which Section 147 deals with the subject matter covered by old Section 95. In order to appreciate the question

involved in this case, it is necessary to quote the provisions of Section 95 (old) and Section 147 (new) below.

NEW OLD

Requirements of policies and limits of liability. (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a

policy which ""95. Requirements of policies and limits of liability. (1) In order to comply with the ""95. Requirements of policies and limits of liability.

(1) 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 autho rised insurer; and (a) is issued by a person who is an authorised insurer or by a cooperative society

allowed under Sec. 108 to transact the business of an insurer, and

(b) insures the person or classes of persons specified in the policy to the extent specified in subsection (2) (b) insures the person or classes of

persons specified in the policy to the extent specified in subsection (1)

(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 use of the vehicle in a public place. (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 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;

(ii) 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: (ii) 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:

Provided that a policy shall not be required.Provided 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 (8 of 1923), in respect at the death of, or bodily injury to, any such employee (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 (8 of1923), in respect of the death of, or bodily injury to, any such employee

(a) engaged in driving the vehicle, or(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(b) if it is a public service vehicle,

engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

(c) if it is a goods vehicle, being carried in the vehicle, or(c) if it is a goods vehicle, being carried in the vehicle, or

(ii) 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 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 the accident, if the

act or omission which led to the accident occurred in a public place (ii) except where the vehicle is a vehicle in which passengers are carried for

hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons

being carried in or upon entering or mounting of alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, or

(iii) to cover any contractual liability.Explanation. For the removal of doubts it is hereby declared that the death of, 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 the accident, if

the act, or omission which led to the accident, occurred in a public place

(2) Subject to the proviso to subsection 1), a policy of insurance referred to in subsection (1), shall cover any liability incurred in respect of any

accident, up to the following limits, namely :(2) Subject to the proviso to subsection 1), a policy of insurance referred to in subsection (1), shall

cover any liability incurred in respect of any accident, up to the following limits, namely :

(a) save as provided in cl. (b), the amount of liability incurred;(a) where the vehicle is a goods vehicle, a limit of fifty thousand rupees in all,

including the liabilities, if any, arising under the Workmen's Compensation Act, 1923 ( 8 of 1923), in respect of the death of, or bodily injury to,

employees (other than the driver), not exceeding six in number, being carried in the vehicle;

(b) in respect of damage to any property of a third party, a limit of rupees six thousand ;(b) where the vehicle is a vehicle in which passengers are

carried for hire or reward or by reason of, or in pursuance of, a contract of employment :

Provided that any policy of insurance issued with any limited liability and in respect of any one accident up to the following force, immediately

before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry

of such policy whichever is earlier

(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the

policy it effected a certificate of insurance in the prescribed form and containing the, prescribed particulars of any condition subject to which the

policy is issued and of any other prescribed matters, and different forms, particulars and matters may be prescribed in different cases.

(i) in respect of persons other than passengers, carried for hire or reward, a limit of fifty thousand rupees in all,

(ii) in respect of passangers

(1) a limit of fifty thousand rupees in all , where vehicle is registered to carry more than thirty but not more than sixty passengers;

(2) a limit of seventy five thousand rupees in all, where the the vehicle is registered to carry not more than thirty passengers;

(3) a limit of one lakh rupees in all, where the vehicle is registered to carry more than sixty passengers; and

(4) subject to the limits as said, ten thousand rupees for each individual passenger, where the vehicle is a motorcab and five thousand rupees for

each individual passenger, in any other case

(c) save as provided in cl. (d) where the vehicle is a vehicle of any other class, the amount of liability incurred;

(d) irrespective of the class of the vehicle, a limit of rupees two thousand in all in respect of damage to any property of a third party.

* * * * * * *

(4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of

insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact

to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State

Government may prescribe.(4)A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour

of the person by whom the policy is effected a certificate of insurance **** in the prescribed form and containing the prescribed particulars of any

conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed

indifferent cases.

(4A) Where a covernote issued by the insurer under the provisions of this Chapteror the rules made thereunder is not followed by a policy of

insurance within the prescribed time, the insurer shall, within seven days ofthe expiry of the period of the validity of cover note, notify the fact to the

registering authority in whose records the vehicle towhich the covernote relates have been registered or to such other authority as theState

Government may prescribe.

(5) Notwithstanding anything contained in any law for the time being in force, aninsurer issuing a policy of insurance underhis section shall be liable

to indemnify the person or classes of pesons specified in the policy in respect of any liability which the policy purports to cover in the case of that

person of those classes of persons.""(5)Notwithstanding anything elsewhere contained in any law, a person 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.

Irrespective of the conclusion that deceased Raj Pal was not employee of the insured but was engaged by the hirer of the vehicle, we intent to

examine the question in two facets, namely, the liability of the appellant in the case the deceased happened to be labourer of the insured or labourer

of the hirer of the vehicle. There has been divergence in the view expressed by various High Courts with respect to the liability of Insurance

Company in case of the owner of the goods travelling in the goods vehicle along with the goods whether his case would be covered under the

provisions of clause (ii) of proviso to subsection (1) of Section 95, or whether his case would fall under any other provision. High Courts of

Allahabad, Andhra Pradesh, Bombay, Gujarat, Karnataka, Kerala and Orissa took the view that the hirer of goods vehicle, for the carriage of

goods, when, travelling in the said vehicle in connection with the carriage of goods with the consent of the driver or the owner of the goods vehicle

in question, would be covered by word 'passenger' in the vehicle within the meaning of clause (ii) of proviso to subsection (1) of Section 95 of the

Act and, as such, the tortuous liability of the owner towards him must be covered by the insurance policy contemplated by the said Section. Clause

(ii) of the proviso to subsection (1) would also cover the persons who are travelling in the goods vehicle as employees of the owner of goods, since

they are travelling in the vehicle in pursuance of contract of employment. As such, contract of employment need not be with the insured but may be

with the hirer of the vehicle.

Kerala High Court in State Insurance Department, State Insurance Officer, Trivandrum v. Sosamma Mani, 1978 Acc CJ 504 : (AIR 1979

Kerala 15) held that employees of the owner of goods, who are being carried, go out on the lorry with the goods and return home in the lorry after

the goods are delivered, such employees may properly be regarded as 'passengers' carried in pursuance of a contract with someone other than the

insured and their case will be covered by part (ii) of the proviso. In para 6 of the judgment, the Court held :

.......... In the case of a public service vehicle the liability is in respect of the death of or bodily injury to any passenger of that vehicle. But the

insistence for insurance by subsection (1) is subject to the proviso to that subsection. The proviso consists of three parts and as per the proviso, in

the case of three kinds of liabilities mentioned therein there need not be any insurance coverage. The proviso itself in an exception to the general

rule regarding insurance coverage and the second part of the proviso provides for exceptions to the exception made by the proviso itself by

insisting that the policy should cover the liability of person carried where the vehicle is a vehicle in which passengers are carried for hire or reward

or by reason of or in pursuance of a contract of employment. The first part of the proviso deals with the employees of the insured. So the mention

in the second part need not be about those employees. The only other kind of employees who can be expected to be carried by a goods vehicle is

the employees of the owner of the goods carried by it. They accompany the goods in pursuance of a contract of employment because they are

asked to do that by their employer to safeguard the goods. So, as per the exception contained in part (ii) of the proviso to the exceptions provided

for by the proviso an

employee of the owner of the goods who accompanies the goods in the vehicle gets insurance coverage under Section 95 of the Act...........

10A. The High Court of Karnataka in Channappa Chanavirappa Katti v. Laxman Bhimappa Bajantri, AIR 1979 Karnataka 93 held that the

goods vehicle, which carries the owner of goods as a passanger, can be construed as a vehicle in which passengers are carried for hire or reward

as would answer the exception contained in the first part of the second proviso so as to make the coverage of risk of such a person compulsory

under Chapter VIII of the Act. It was held that :

...... The policy of the law in making provision for compulsory insurance of vehicles is to cover the risk of innocent third parties. The owner of the

goods (hirer of goods vehicle) who wants to convey his goods through a public goods vehicle will be an innocent third party when he dies or

suffers injury while accompanying his goods carried by a public goods vehicle, in the course of the user of the vehicle. The simple reason is that, in

the normal course of things, it would not be possible for him to ascertain beforehand the financial stability of the user of the vehicle, the expertise of

the driver of the vehicle in driving it, or the roadworthy condition of the vehicle, as would ensure his safety. When such person travels as a

passenger in a goods vehicle which is used to advance the business interests of its owner and is permitted by law, it, cannot be said that it is not a

vehicle meant for carrying passengers for hire or reward, provided for in the exception to the first part of the second proviso to Section 95(1)(b).

This decision was later followed in United India Insurance Co. Ltd. v. Gangamma, 1982 Acc CJ 357 : (AIR 1982 Karnataka 261).

The Gujarat High Court in Ambaben v. Usmanbhai Amirmiya Sheikh, 1979 Acc CJ 292 : AIR 1979 Guj 9 (FB) held that :

....... so far as the policy contemplated by Section 95(1)(b) is concerned, it does not cover the risk to (A) persons other than those who were

carried for hire or reward at the time of occurrence of event which gives rise to the claim against the insurer and (B) passengers other than those

who were bona fide employees of the owner or hirer of the vehicle not exceeding six in number, carried in pursuance of or by reason of a contract

of employment.

Another Full Bench of the same Court held in National Insurance Co. Ltd., Ahmedabad v. Nathibai Chaturabhuj, 1982 Acc CJ 153 that :

the liability in respect of the death of or bodily injury to a passenger carried for hire or reward on the insured vehicle when the accident giving rise

to the claim occurred, including the liability in respect of the owner or hirer of the insured vehicle or his bona fide employees within the permissible

limit will be covered by the statutory insurance either by virtue of Section 91 (1)(b)(i) read with the second clause of the proviso or by reason of

Section 95(1)(b)(ii) of the Act. In such a case the insurer will have to pay to the person entitled to the benefit of the award the sum assured, which

shall not be less than the sum specified in Section 92(2), subject, however, to the right of the insurer to disclaim the liability, inter alia, under Section

96(2)(b) (i)(a) .........

It was further held that in order to successfully disclaim its liability the insurer will have to establish the following facts and if the facts are

established, the benefit of statutory insurance will not be available in respect of such passenger:

(l) That on the date of the contract of insurance, the insured vehicle was expressly or implicitly not covered by a permit to carry any passenger for

hire or reward;

(2) That there was a specified condition in the policy which excluded the use of the insured vehicle for the carriage of any passenger for hire or

reward; and.

(3) That the vehicle was, in fact, used in breach of such specified condition on the occasion giving rise to the claim by reason of the carriage of the

passenger therein for hire or reward.

12A. Similar view was taken by Allahabad High Court in Abdul Razaq v. Sharifunnisa,

1984 Acc CJ 44 : (AIR 1983 All 400) holding that the first part of proviso (ii) to Section 95 (1)(b) of the Act relates to carrying of passengers for

hire or reward in the vehicle, while the second part contemplates carriage of passengers by reason of or in pursuance of a contract of employment.

Placing reliance upon the judgment of Supreme Court in Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co. Pvt. Ltd., 1977 Acc CJ

343 : (AIR 1977 SC 1735), the Bench held that a gratuitous passenger being carried in a vehicle is not covered by the compulsory policy of

insurance but in a goods vehicle which permits carriage of owner of goods for hire or reward falls within the exception contained in the first part of

second proviso so as to require the coverage of the risk of the persons travelling as passengers by compulsory insurance. On the second part of

proviso (ii) to Section 95 (1)(b) of the Act, the Court held :

...... if a person hires a vehicle for the transport of his goods and his employee accompanies the goods in the vehicle, he would be covered by the

expression 'by reason of or in pursuance of a contract of employment' and his risk will be covered by compulsory policy.

In para 15 of the judgment, it has been recorded that:

'""........ There is, however, a significant difference in the two provisions. Under the proviso (ii) to Section 91(1)(b) the expression used is 'by reason

of or in pursuance of a contract of employment' which, according to some of the High Courts, means that the person travelling in the vehicle must

be doing so in pursuance of an employment with the insured or with some other reason. Clause (1)(c) of section II of the policy, however, uses a

different phraseology; it states that the company shall not be liable in respect of death of or bodily injury to any person other than a passenger being

carried 'by reason of or in pursuance of a contract or employment' in the vehicle at the time of the occurrence. The use of the word 'or' between

the words 'contract' and 'employment' is significant. The policy does not insist on a contract of employment. Under the terms of the policy the

insurance company has undertaken to cover risk of a passenger carried by reason of or in pursuance of a contract or employment, thus if a person

is being carried in the vehicle in pursuance of a contract or he is being carried in pursuance of employment, in both the cases the company has

undertaken to indemnify the owner for the liabilities arising against the owner. The terms contained in the policy do not necessarily require that the

passenger being carried in the vehicle should be travelling in pursuance of a contract of employment, instead the company has undertaken to

indemnify the owner for the death of a passenger who may be travelling in the vehicle in pursuance of contract also. Owner of goods is entitled

under the rules to be carried in the goods vehicle by reason of his contract of hiring the vehicle for the transport of his goods. His risk is thus

covered by the terms of the policy. Under the aforesaid terms the insurance company has clearly undertaken to indemnify, the owner for his liability

for the death of owner if travelling in the vehicle as a passenger in pursuance of a contract of hiring. We are, therefore, of the opinion that even if

there be any doubt relating to the liability of the insurance company on the interpretation of proviso (ii) to Section 95(1)(b), it is fully liable in view

of the express terms and conditions of the policy.

In Oriental Fire and General Ins. Co. Ltd., v. B. Parvathamma, 1984 Acc CJ 686 : (AIR 1986 Karnataka 63), the Division Bench of the

Karnataka High Court, reiterating the view expressed in the case of Channappa Chanavirappa, AIR 1979 Karnataka 93, which was followed in

later judgments of the same Court in T. M. Renukappa v. Fahmida, 1980 Acc CJ 86 : (AIR 1980 Karnataka 25), Nagappaiah v. New India

Assurance Co. Ltd., 1982 Acc CJ 176 : (AIR 1982 Karnataka 183) and Gangamma's case, 1982 Acc CJ 357 : (AIR 1982 Karnataka 261) and

by the High Court of Bombay in Nasibdar Suba Fakir's case, 1983 Acc CJ 264 : (AIR 1984 Bombay 1) and by the 'High Court of Orissa in

Oriental Fire and General Insurance Co. Ltd. v. Narayanibai, 1984 Acc CJ 106 : (AIR 1984 Orissa 43),

that the risk of the owner of the goods, travelling in the goods vehicle along with the goods, would be covered by the compulsory insurance in

respect of the vehicle, held that where the vehicle is permitted to run as a goods vehicle and not a public service vehicle, it does not cover the risk

of fare paying passengers in general, apart from the passengers contemplated under Rule 161 of the Karnataka Motor Vehicles Rules. The rule

prohibited use of the goods vehicle for the conveyance of passengers for hire or reward. It was held that endorsement in the policy covers only an

employee and any other person who is a nonfare paying passenger. Thus bona fide employees were held to be covered within the ambit of

passengers carried in the goods vehicle in pursuance to the contract of employment, whose risk is required to be statutorily covered by the second

proviso to S. 95(1)(b) of the Act.

The contrary view held by the High Courts of Punjab and Haryana, Madras, Madhya Pradesh and Calcutta is to the effect that the hirer of a

truck, being the owner of the goods carried on in the goods vehicle, cannot be said to be on the vehicle in pursuance of a contract of employment

since he will not be a person employed by anybody but he being only the owner of the goods carried by it. In other words the view has been that

there cannot be any contract of employment between hirer of the truck or the owner of the goods with the owner of the vehicle. The question

whether such persons could be considered as passengers carried for reward or not, has not been decided.

The judgment of the Punjab and Haryana High Court holding such a view is of its Full Bench in Oriental Fire and General Insurance Co. Ltd.

v. Gurdev Kaur, 1967 Acc CJ 158. : (AIR 1967 Punjab 486). It was a case of hirer of the goods vehicle in which the owners of the goods being

carried in the goods vehicle along with their goods died as a result of the accident. The question about the liability of the insurer had arisen. It was

held that Rule 4.60 (l) of the Punjab Motor Vehicles Rules recognises that the hirer of the vehicle may travel as a passenger in a goods carrier but

proviso to subrule (2) of the rule limits the number of such persons to a maximum of six. The liability of the insurer was not considered visavis the

owners of the goods as a passenger carried for reward. It was held that the terms 'are carried for hire or reward' or 'are carried by reason of or in

pursuance of a contract of employment' go with the word 'passengers' and not with the vehicle. After observing that :

The normal and the ordinary meaning and the scope of the expression 'a contract of employment' points to a person being employed to do

something or to carry out something for another person. It has the element of rendition of some service in one shape or another for the employer.

So it cannot refer to the hiring of a goods carrier as a contract of employment or to the owner of such a carrier as the person with whom a contract

of employment has been made. . . . .

Insurer was held not liable on the ground that there cannot be any contract of employment between the hirer of the vehicle / the owner of goods

with the owner of vehicle.

Similar view was held by a Division Bench of Madhya Pradesh High Court in South India Insurance Co. Ltd. v. Heerabai, 1967 Acc CJ 65

(MP). The decision in Gurdev Kaur's case, 1967 Acc CJ 158 : (AIR 1967 Punjab 486), was relied in a later judgment of the same High Court in

Oriental Fire and General Insurance Co. v. Kasturi Lal, 1968 Acc CJ 227 (PandH). Following the view held by Full Bench, of Punjab and

Haryana High Court relied on in Kasturi Lal's case (supra) and that of Madhya Pradesh High Court in Heerabai's case (supra), learned single

Judge of Madras High Court in the Commonwealth Assurance Co. Ltd., Bombay v. V. P. Rahim Khan Sahib, 1971 Acc CJ 295 : (AIR 1971

Madras 415), recorded a similar reasoning to the effect that hirer of a vehicle for carriage of goods while accompanying the goods cannot be said

to be a passenger carried by reason of or in pursuance of a contract of employment within the ambit of clause (ii) of proviso to subsec. (1) of S. 95

of the Act. Similar view was held in a later judgment of the High Court of Madras in South India Insurance Co. Ltd.

v. P. Subramanium, 1972 Acc CJ 439 ; (AIR 1972 Madras 49).

A Division Bench of Calcutta High Court in Indian Mutual General Insurance Society Ltd, v. Manzoor Ashan, 1977 Acc CJ 85 : (AIR 1977

Calcutta 34), also held the view that a hirer of a vehicle is not a person who enters into a 'contract of employment' with the owner of the vehicle

and as such the insurance company is not liable, which was by following the decision in Gurdev Kaur's case, 1967 Acc CJ 158 : (AIR 1967

Punjab 486).

The employees of the hirer of the goods vehicle being carried in the vehicle have been held to be covered by the wider term used in clause (ii)

of the proviso to subsec. (1) of S. 95 'being the passengers carried by reason of or in pursuance of a contract of employment', in which case the

insurer was required to indemnify the insured for covering the liability in respect of death of or bodily injury to such persons carried in the vehicle.

This view taken by various High Courts is founded on the ratio of the judgment of House of Lords in Izzard v. Universal Insurance Co. Ltd., 1937

AC 773, which in turn has also been followed in Gurdev Kaur's case, 1967 Acc CJ 158 : (AIR 1967 Punjab 486) and some other decisions in

Vanguard Insurance Co. Ltd. v. Chinnamal, 1969 Acc CJ 226 : (AIR 1970 Madras 236); Hukam Chand Insurance Co. Ltd, v. Badruddin, 1980

Acc CJ 164 (MP); United India Fire and General Insurance Co. Ltd. v. Shantaben Jerambhai Parmar, 1983 Acc CJ 74 : (AIR 1982 Gujarat

212); Nasidbar Suba Fakir's case, 1983 Acc CJ 264 : (AIR 1984 Bombay 1); National Insurance Co. Ltd. v. Laxmi Devi, 1985 Acc CJ 48

(Orissa) and Patharibai Karansingh v. Firm Lalji Shankarlal, 1985 Acc CJ 526 : (AIR 1985 Madh Pra 103). The preponderance of the view is

that the employees of the owner of the goods or hirer of the vehicle would be the persons carried for hire or reward or by reason of a contract of

employment and the act requires that the policy of insurance should cover the risk of such persons, who are carried for hire or reward or by reason

of the contract of employment.

In Pushpabai Purshottam Udeshi's case, 1977 Acc CJ 343 : (AIR 1977 SC 1735), the Apex Court dealing with the case of a passenger, who

was allowed free lift in the vehicle, while referring to the first part of clause (i) of proviso to subsec. (1) of S. 95 of the Act observed that it is not

required that a policy of insurance should cover the risk to passengers, who are not carried for hire or reward. In case of gratuitous passengers

unless there is a special contract of insurance, their cases would not be covered as well by clause (ii) of the proviso to subsec.(1) of S. 95 of the

Act.

In the case of the employees of the hirer of the goods vehicle, reference may be made to the Izzard's case, 1937 AC 773, in which a

commercial policy of the lorry was taken by the owner of vehicle containing a proviso that the insurance company shall not be liable it respect of

death of or bodily injury to any person in the employment of the insured in the course of such employment and the death of or bodily injury to any

person (other than a passenger carried by reason of or in pursuance of a contract of employment) being carried in or by the said vehicle. It was

held that the language in clause (ii) of policy to the effect that the company shall not be liable in respect of death of or bodily injury to any person

(other than a passenger carried by reason of or in pursuance of a contract of employment), being carried in or upon such vehicle was not to be

construed as applying only to the death of or bodily injury to a person in the employment of the owner while being carried in the vehicle. It applied

to any person being carried in pursuance of a contract of employment with another employer and, therefore, when such a person, while being

carried on in the vehicle was killed, due to negligence of driver, the insurance company was bound to indemnify the owner in respect of his liability

to the representative of deceased person. In term. 'contract of employment' was construed thus :

I cannot accept the respondent's contention that 'contract of employment' should be construed in the Act as subject to the implied limitation 'with

the person insured by the policy'. Such a departure from the clear language used cannot, I think, be justified. I think the Act is dealing with persons

who are on the insured vehicle for sufficient practical or business reasons, and has taken a contract of employment in pursuance of which they are

on the vehicle as the adequate criterion of such reasons. But there is no sufficient ground for holding that this criterion should be limited to

employees of the insured person. Such employees, if injured or killed, would ordinarily fall under exception (1), though I am not prepared to say

that there might not be in certain events an employee of the assured who could claim as a passenger. But such cases must be rare. The most

probable case is where the man killed or injured was on the vehicle in pursuance of a contract not with the owner of the vehicle but with someone

else, for instance, with the person whose goods were being carried on the vehicle: thus a commercial vehicle carrying a contractor's or merchant's

goods would frequently and perhaps even normally have on it an employee of the goods owner to see to loading or unloading or delivering the

goods or caring for them in transit. For these purposes such a man may be carried as a passenger.

The Karnataka, Bombay and Gujarat High Courts, in view of the specific rules in the respective States, permitting carriage of the employees of

the owners of the vehicle upto a particular limit, in B. Parvathamma's case, 1984 Acc CJ 680 : (AIR 1986 Kamataka 63), Nasibdar Suba Fakir's

case, 1983 Acc CJ 264 : (AIR 1984 Bombay 1) and Nathibai Chaturbhuj's case, 1982 Acc CJ 153(Gujarat) (FB) held the employees of the

owners of the vehicle to be covered under clause (ii) of the proviso to Section 95(1)(b) of the Act on account of wide interpretation of the words

'passengers carried by reason of or in pursuance of a contract of employment'. A Full Bench of the Rajasthan High Court in Santra Bai's case,

1985 Acc CJ 762 : (AIR 1986 Rajasthan 101), held that the policy is not required in three categories of cases falling in subclauses (a), (b) and (c)

of clause (i) of the proviso to subsection (1) (b) of Section 95 of the Act but in other cases of the employees of owner of vehicle, it must be treated

as covered by clause (ii) of the proviso to Section 95(1)(b) of the Act thereby making the insurer liable.

Similar view has been taken by the High Court of Himachal Pradesh in New India Assurance Company Ltd. v. Usha Rani, 1990 Acc LJ 785

and M/s. Raghbar Datta Pyare Lal v. Malka Rani, 1990 Acc CJ 812.

In National Insurance Co. Ltd. v. Punabhai Zerabhai Koli, 1986 Acc CJ 215 (Guj), it has been held that Insurance Company can be made

liable to pay compensation for the death of the employees of the insured travelling in a goods vehicle involved in an accident resulting in death or

injuries, provided, by charging additional premium the insured has undertaken to discharge the liability in addition to compulsory liability under

Section 95 of the Act.

The contention of the appellant that the policy of insurance in respect of the vehicle in question did not cover the liability of the labourer for

want of payment of additional premium within the meaning of Section 147 of the Motor Vehicles Act, 1988, has hardly any substance in view of

the object and intendment of amended Section 147 of the MotorVehicles Act, 1988 statutorily covering all kinds of persons travelling by the

vehicle without payment of additional premium. A bare reading of Section 147 demonstrated plainly that it 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 interpretation to the provisions of Section 95 (old) causing immense harm to many categories of

persons by disentitling 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 decisions referred to by the learned counsel for the appellant, turn on their own

facts and have hardly any application under the amended Section 147 of the Motor Vehicles Act, 1988 which applies to the present case since the

accident took place after this Act had come into force.

The learned single Juage has rightly said that 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 or persons or paricular kind of vehicles.

Therefore, the deceased Raj Pal, 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 appellant.

It was faintly urged that Section 149(2) of the Act has not been examined either by the Tribunal or by the learned single Judge while dealing

with the liability of the appellant under Section 147 of the Act. Such a plea has neither been raised in the pleadings nor before the Tribunal and the

learned single Judge. Hence, it cannot be permitted to be raised for the first time.

No other point was urged by the learned counsel for the parties.

Consequently, there is no merit in this appeal and the same is accordingly dismissed. The appellant will pay Rs. 200/ by way of cost to each of

the claimants.