Oriental Insurance Co. Ltd. vs BADRI PRASAD KHANDELWAL

THIS appeal is directed against the order dated 8th February 1994 passed by the Consumer Disputes Redressal Commission, Rajasthan at Jaipur.

THE facts giving rise to this appeal are that a tanker belonging to Badri Prasad Khandelwal, complainant No. 1 was insured with the Oriental Insurance Company against third party risk. In the tanker, 12,000 litres diesel belonging to M/s. Hindustan Petroleum Corporation Ltd., complainant No. 1, was being transported from Jaipur to Lalsot. When the tanker was at a distance of 2-3 kms. from Lalsot, the steering of the motor vehicle broke down, the vehicle went out of control and overturned. On account of that accident, the diesel contained in the tanker spread over the road and there was a complete loss of the diesel to the extent of Rs. 66,779/-. An amount of Rs. 57,482/- was recovered from complainant No. 1 by M/s. Hindustan Petroleum Corporation Ltd., complainant No. 2 as damages for the loss of the diesel. Badri Prasad Khandelwal, complainant No. 1 preferred a complaint before the State Commission that the tanker was covered under third party risk and they had paid damages to M/s. Hindustan Petroleum Corporation Ltd. and they were entitled to be indemnified by the Insurance Company. In these premises, an amount of Rs. 1,17,827/- was claimed from Insurance Company. The claim was resisted on behalf of the Insurance Company. The main contention raised on behalf of the Insurance Company was that the complainant No. 1 had only discharged its contractual liability towards M/s. Hindustan Petroleum Corporation Ltd. and the Insurance Company was not liable under the terms of insurance policy for the contractual liability of complainant No. I.

The State Commission after holding due enquiry found that the complainant No. 1 was entitled to recover Rs. 57,482/- from the Insurance Company alongwith interest at the rate of 12% w.e.f. 8.1.1991 till realisation. It was observed by the State Commission that the policy of insurance covering third party risk could be a policy insuring a person against liability which may be incurred by him in respect of damage to any property of a third party.

WE have heard me learned Counsel for the parties. Mr. P.K. Seth learned Counsel appearing on behalf of the appellant contended that the order of the State Commission suffered from legal infirmity. The State Commission failed to notice that the insurance policy in question was issued in respect of a third party risk only and as such any liability arising out a contract between the respondent No. 1 and respondent No. 2 was not covered under the terms of insurance policy. The State Commission failed to appreciate that respondent No. 1 was transporting the diesel belonging to the respondent No. 2 under a contract of carriage and as such, if any loss or damage is caused to the consignment during the transit, the entire liability to compensate the respondent No. 2 against the said damage was that of the respondent No. 1. It was also contended that the State Commission omitted to note terms of Clause (i)(d) of Section II of the terms of policy reading as under: "The Company shall not be liable in respect of damage to property belonging to or held in trust by or in the custody or control of the insured or a member of the insured''s household or being conveyed by the motor vehicle".

IN view of this clause, the INsurance Company was not liable to pay damages to the insured. On the other hand, Mr. P.K. Khetan, Counsel for the respondent argued that the view taken by the State Commission was correct and called for no interference. The State Commission rightly held that the Insurance Company was legally liable to pay the amount covered under the policy. We have given our thoughtful consideration to the matter.

AT the outset, it may be noticed that an identical question came up for hearing before a Division Bench of Madras High Court in the case of United India Insurance Co. Ltd. & Anr. v. K.A.R.N. Janarthanam & Anr., reported as 1988 ACJ 503. The facts of the case were that the petitioner filed a petition under Section 110-A of the Motor Vehicles Act claiming compensation for damage caused to his goods at a time when his goods were being carried in a lorry belonging to respondent No. 2. The petitioner had booked a consignment of 42 bales of cotton worth Rs. 70,000/- for being carried from Jayam Ginning Factory at Theni to Rajapalayam by the lorry belonging to the respondent No. 2. The lorry was being driven by a driver of the respondent No. 2 who had been impleaded as respondent No. 1. Due to the rash and negligent driving of the driver, the load of cotton came into contact with the electric wire, as a result of which the entire 42 bales of cotton were burnt. In these premises, he claimed a compensation of Rs. 70,000/- from the owner of the lorry and the Insurance Company with which the lorry had been insured against third party risk.

ON behalf of the Insurance Company, it was contended that no liability could be fastened on the Company by the petitioner as the contractual liability had been specifically excluded by virtue of a specific terms in Clause (i)(d) of Section II of the policy Exhibit R-I reading as under: "The Company shall not be liable in respect of damage to property belonging to or held in trust by or in the custody or control of the insured or a member of the insured''s household or being conveyed by the motor vehicle".

In the light of the terms and conditions of the policy issued by it the goods belonging to the petitioner carried inside the vehicle under contract could not be treated as a property of a third party.

The Court accepted the contentions raised on behalf of the Insurance Company and held has under: "the concept of third party in Chapter VIII in Motor Vehicles Act is in respect of parties who are not inside the vehicle, unless they are carried for reward of hire. Therefore, any property of a third party, when carried in a vehicle under a contractual liability, then the proviso to Section 95(1)(b) can be applied. The goods belonging to the petitioner having been carried in the vehicle of second respondent, under a contract, the relationship between them being one of bailor and bailee, the goods were carried by the second respondent for the benefit of the claimant, and hence, under Exhibit R-I, the loss occasioning in respect of such goods having been specifically excluded, the respondent-Insurance Company cannot be made liable to compensate for the loss alleged to have been suffered by the petitioner".

WE are in agreement with the view expressed by the Madras High Court. The judgment of the Madras High Court is applicable to the facts of the case in hand on all fours. Accordingly, we hold that the goods belonging to Hindustan Petroleum Corporation Ltd. had been carried in the vehicle of Badri Prasad Khandelwal under a contract. The relationship between them was of a bailor and bailee. Badri Prasad Khandelwal compensated the loss of M/s. Hindustan Petroleum Corporation Ltd. arising out of a contractual liability. The loss occurring in respect of the goods had been specifically excluded under Clause (i)(d) of Section II of the policy which reads as under : "The Company shall not be liable in respect of damage to property belonging to or held in trust by or in the custody or control of the insured or a member of the insured''s household or being conveyed by the motor vehicle".

In view of the above, the Insurance Company cannot be made liable to compensate the loss alleged to have been suffered by the complainant No. 1 Badri Prasad Khandelwal. We allow this appeal, set aside the order of the State Commission. As a consequence thereof, the complaint filed by the respondent No. 1 is dismissed. However, we leave the parties to bear their own costs. Appeal allowed. ___________________