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Judgment
Sawant J.
These are tow appeals filed by the owner of a truck, which is a goods vehicle, against the decision of the Accidents Claim Tribunal, Ahmednagar, making him liable to pay compensation to the claimants under the Motor Vehicle Act, 1939.
The relevant facts leading to both the appeals are as follows :
The accident in question took place at about 9.30 a.m. on July 28, 1982, near Chandnapuri Shivar on Sangamner - Pune Road. The truck in question bearing No.MWA 548 was owned and driven by the appellant, Raghunath. At the relevant time, it was loaded with 700 baskets full of tomatoes. Along with tomato baskets, the truck was also carrying 15 or 16 owners thereof. Some of them were sitting in the receptacle of the truck and two of them were sitting by the side of the driver. As the truck proceeded after crossing a corner, according to the appellant, a jeep car came in the front and one the wrong side of the road. he, therefore, tried to avert a collision, with the result that he took the truck to the extreme side of the road on his die. However, about 2 or 3 persons were walking at that time on the left side of the road from which side the truck was proceeding ahead. As a result of the appellant attempt to avert the collision with the jeep, the truck went into the nearby agricultural field and turned turtle. Two of the persons who were walking came under the truck and died on the spot. The heirs and legal representatives of the two deceased thereafter filed the present claims for compensation before the tribunal. The claims were resisted by the appellant as well as by the New India Assurance co. Ltd., with which the truck was insured during the relevant period. The appellant resisted the claims on various counts including the ground that since the truck was insured, the insurance company alone was liable to pay the compensation. The insurance company, on the other hand, took the stand that since at the relevant time, the truck was also carrying passengers for which purpose admittedly the truck had no permit, the company had no liability to pay the compensation and it was the owner and the driver of the truck who were liable to pay the same. It is not necessary to refer to other defences raised by the appellant-owner of the truck and the insurance company before the Tribunal, since the only point which is involved in and canvassed by the appellant in the present appeal is whether it is the owner or the insurance company who is liable to pay the compensation.
The Tribunal, on the basis of the pleadings and the evidence on record, came to the conclusion that the negligence was proved and it was only the owner of the vehicle who was also the driver at the relevant time, who was liable to pay the compensation amount of Rs.25,000 in each case. The Tribunal exonerated the insurance company from the liability to pay the compensation on the ground that the truck was carrying more than seven persons as passengers which is prohibited under rule 118 of the Motor Vehicle Rules, 1959 (hereinafter referred to as "the Rules"). However, the Tribunal, in the operative part part of the order, also stated as follows : "The question of liability of the insurance company to make initial payment u/s 96 of the Motor Vehicle Act, 1939, however, is kept open". We will deal with this observation at the proper time. Suffice it to say at this stage that since the Tribunal allowed the claims in the both the claim applications against the appellant-owner-driver of the truck and dismissed it against the insurance company, the appellant-owner- driver has preferred these two appeals.
As stated earlier, the only point which is argued before us by the appellant as well as the respondent-insurance company is whether, on admitted facts of the case, the insurance company can be absolved of its liability to pay compensation under the Act.
There is no dispute that the truck had a permit to ply for hire for carrying goods. At the relevant time, the truck was carrying 700 baskets full of tomatoes and along with these goods, it was also carrying about 15 or 16 owners of the said baskets. It was while the vehicle was in the process of carrying in the goods and its owners, that the accident in question occurred. The claimants before us are the heirs and legal representatives of the two victims who were admittedly pedestrians on the road. hence, we are concerned in this case with the liability towards the third party.
Chapter VII of the act deals with "Insurance of motor vehicles against third party risks." We are concerned here with sections 94 to 96 of the said Chapter. Section 94 states that no person shall use a vehicle in a public place unless he takes out a policy of insurance complying with the requirements of the said Chapter. The persons excepted from this provision are passengers and a driver-employee, and the vehicles excluded therefrom are those owned by the Central or State Governments, a local authority or a State transport undertaking. Section 95 lays down the requirements of the insurance policy. In particular, it requires that the policy must insure persons or classes of persons specified in the policy to the extent stated in sub- section (2) thereof. The liability against which the insured is to be secured is laid down in clause (b) of sub-clause (i) of the said section. That liability is one which maybe incurred in respect of the death party caused by or arising out of the use of the vehicle in a public place, and also 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.
Sub-section (2) of the said section then lays down the limits of the pecuniary liability. We are not concerned here with sections 95A and 95AA which deal with the validity of policies of insurance issued in reciprocating countries and the security to be deposited by the insurers, respectively. Then comes section 96 with which were ar directly concerned in the present case. Sub-section (1) thereof lays down the duty of the insurer to satisfy judgments against person insured against the third party risks. Sub-section(2) states the conditions under which the absolute liability created by sub-section (1) can be avoided. What is necessary to note is that these are the only conditions under which an insurer can avoid his liability. The conditions stated in the clause (a) need not detain us here since they are not relevant for our purpose. It is the conditions contained in clause (b) which were pressed into service and extensively debated before us by both sides. We may, therefore, reproduce the whole of clause (b) of sub-section (2) of section 96 here :
"96(2). ......an insurer shall be entitled to defend the action on any of the following grounds, namely :- ......
(b) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely :-
(i) a condition excluding the use of the vehicle-
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is (a transport vehicle), or
(d) without side-car being attached, where the vehicle is a motor cycle,"
What was argued on behalf of the appellant n the basis of the above clause was that the truck in question was insured as a vehicle used for carrying goods on hire. it had a permit to ply for hire for the purpose of carrying goods. There was, therefore, no breach of any condition specified in the policy and hence the insurance company cannot be exempted from its absolute liability created by sub-section (1) of section 96. As against this, the argument of the insurance company was that although the permit issued to the truck was only for carrying goods, it was, at the relevant time, admittedly carrying passengers also. The number of persons that a goods vehicle is permitted to carry is governed by rule 118 and the present vehicle being not a light transport vehicle, it could not have carried more than seven persons under the said rule. At the relevant time, admittedly the vehicle was carrying about 15 or persons. hence, the truck was being run in breach of the permit issued to it to ply as a goods vehicle. The further argument on behalf the insurance company was that by carrying person in excess of seven, the owner had also committed a breach of the contract of insurance since the conditions on which the insurance policy was issued had prohibited the use of the truck for a purpose other than for carrying goods. It was, therefore, contended that clause (b)(i)(a) as well as clause (b)(i)(c) of section 96(2) were directly contravened and the insurance company was not liable to pay the compensation.
We are inclined to negative the contentions of the insurance company on the following grounds. it is true that at the relevant time, the truck was carrying about 15 to 16 persons in addition to the goods for the carriage of which alone the permit was issued to ply it. However, it must not be lost sight of that under the said rule 118, even a goods vehicle is permitted to carry persons though up to seven in number. Those persons include the owner or the hirer of the vehicle. The only condition for carrying such persons is that they have to be carried free of charge. Hence, even if a vehicle has a permit only for carrying goods, the carrying of persons is not prohibited absolutely. The evidence on record admittedly shows that the passengers in question were the owners of the goods, i.e., the hirers of the vehicle. It is nobody`s case that they were charged any fare. The only condition of the permit which was breached was that the persons in question were in excess of the number permitted by the rule. This was a breach of the condition of the permit issued for plying the vehicle. The vehicle was, however, being used essentially for carrying goods. It cannot, therefore, be said that the vehicle was not being used for the purpose for which the permit was issued. A breach of the condition of the permit is not the same thing as a breach of the purpose for which it is issued. The contravention of one or the other condition of the permit is not a contravention of the purpose for which the permit issued. There was, therefore, no contravention either of clause (b)(i)(a) or of clause (b)(i)(c) of section 96(2) which clauses alone are and can be pressed into service on behalf of the insurance company.
The insurer can avoid his liability only if the conditions specified in section 96(2) are satisfied, and not otherwise. The contract between the insurer and the insured may permit the insurer to avoid his liability under various circumstances. However, if these circumstances do not satisfy the provisions of section 96(2), the insurer cannot escape his liability for third party risks. The statute recognises no other condition for an insurer to escape his liability except those given in section 96(2) whatever the term of the contract between the insurer and the insured. The terms of the contract between the insurer and the insured determining their rights and liability towards each other are not and should not be confused with the statutory liability of the insurer for the third party risks. If there is a breach of the contract on the part of the insured, the insurer may proceed against the insured. As far as third party risks are concerned, the liability being statutory, it cannot be overridden by the terms of the contract of insurance between between the parties.
This being the legal positions, we see no justification for the defence advanced on behalf of the insurance company in the present case. We are fortified in the view we are taking by a decision of the learned single judge of the Kerala High Court in Kesavan Nair Vs. State Insurance Officer and by a decision of the Division Bench of the Karnataka High Court in Madras Motor and General Insurance Co. Ltd. v. Nanjamma AIR 1977 Kar 46. More or less a similar view is taken by the Andhra pradesh High court in a decision in United India Fire and General Insurance Co. Ltd. Vs. Maddali Susheela and Others, . With respect, these decisions adopt the same line of reasoning as we have done here. It is, therefore, not necessary to discuss the said decisions in detail.
In view of what we held above, it is clear that it is the insurance company which is respondent No. 5 in Appeal No. 51 of 1985 and respondent No. 3 in Appeal No. 52 of 1985 which will be liable to pay the compensation awarded by the Tribunal and not the appellant who is the owner-driver of the truck in question. hence, to that extent, the decision of the tribunal will have to be set aside.
It has, however, been rightly pointed out on behalf of the insurance company that the Tribunal`s observations in both the cases, that the question of liability of the insurance company to make initial payment u/s 96 of the Act of the Act is kept open is uncalled for and unless it is set aside, it is likely to give rise to further litigation. There is no indication in the body of the judgment as to why the Tribunal has found it necessary to keep that question open. Learned counsel appearing for the claimants in both the cases were also unable to enlighten us on the point. It appears that probably the Tribunal had in mind the amendment to the Act whereby Chapter VII-A dealing with liability without fault in certain cases was introduced. Since the accident in the present case occurred on July 28, 1982, and the provisions of the section came into force on a subsequent date, they will not be applicable to the facts of the present case. hence the said observations have to be set aside.
In the result, we allow both the appeals and pass the following orders in them :
In Appeal No. 51 of 1985, the impugned award dated October 1, 1984, is hereby set aside. Respondent No.5 is directed to pay respondents Nos. 1 to 4 a sum of Rs.25,000 together with interest at 6% per annum from September 30, 1982, i.e., the date of the filing of the claim application till payment along with costs throughout. Out of the amount of rs.25,000 an amount of Rs.5,000 should be invested in a fixed deposit account in any nationalised bank in the name of each of respondents Nos. 2 to 4 with respondent No.1 acting as their guardian. Respondents Nos. 2 to 4 will be entitled to withdraw the said amounts on their attaining majority. Respondent No. 1 will, however, be entitled to utilise the interest accruing on the said amounts from time to time, for the expenses of bringing up respondents Nos. 2 to 4. The remaining amount of Rs.10,000 with interest should be paid to respondent Nos.1. The appellant to bear his own costs.
In Appeal Nos. 52 of 1985, the award dated October 1, 1984, is hereby set aside. Respondent No.3 is directed to pay respondents Nos. 1 and 2 a sum of Rs.25,000 together with interest at 6% per annum from September 30, 1982, i.e., the date of the filing of the claim-application till payment along with costs throughout. A sum of Rs.5,000 be invested in the name of respondent No. 2 in a fixed deposit account in any nationalised bank. Respondent Nos. 2 will be entitled to receive the said amount on attaining majority. Respondent No. 1 will act as a guardian of respondent No.2 and will be entitled to receive interest on the said amount of Rs.5,000 which may accrue from time to time. The appellant to bear his own costs.