Surgonda Babgonda Patil vs Sajabai Bapu Soundade and Others

Sharad Manohar, J.—This appeal arises out of the motor accident claim made by Respondent No. 1 herein, claiming compensation as per the principle of "no fault liability" pursuant to Section 92-A of the Motor Vehicles Act.

The appeal has been filed by the owner of the vehicle and the real dispute in this appeal is between the owner of the vehicle and the insurer of the vehicle.

The facts are very simple:

On 31.3.1985, the vehicle which belongs to the present Appellant (original opponent No. 1, hereafter ''the Appellant'') was plying on Miraj-Pandharpur road. It is a truck with a steel water tank and it carried water to village Soni. After supplying the water, the truck was coming towards Miraj for making another trip.

About 6 or 7 persons were travelling by the truck on its said journey back. One of them was Sharad, son of present Respondent No. 1 (the original claimant). There is no serious dispute that Sharad was not travelling by the vehicle by payment of any hire charges. In fact the claim of the present Appellant is that the driver of the truck did not even know that Sharad had hopped on to the truck and was travelling merrily by the truck, the driver of the truck being blissfully unaware of his presence. When the truck passed Siddhewadi stop, at the corner, it overturned and in that accident Sharad died, almost instantaneously. His mother, present Respondent No. 1, filed the claim in the Accidents Claims Tribunal (M.A.C. No. 182 of 1985) claiming compensation of Rs. 50,000/- . But that application is being processed separately. Simultaneously, she also filed another application, out of which the present appeal arises, M.A.C. No. 200 of 1985, claiming compensation of Rs. 15,000/- as per the provisions of Section 92-A of the Motor Vehicles Act on the principle which is now, in common parlance, known as no fault liability.

To the said application, not only the owner of the vehicle (the present Appellant) was made a party, but also the driver and the insurance company were impleaded as opponent Nos. 2 and 3. The driver is at present out of the picture. The real dispute now is between the owner of the vehicle (original opponent No. 1) and New India Assurance Company Ltd., the relevant insurance company (original opponent No. 3).

I may state here that although in this appeal the real dispute is between the original opponent and present Respondent No. 3 (original opponent No. 3, the insurance company), there is no dispute that at least one of the two, either the present Appellant or present Respondent No. 3 (the insurance company) is liable to pay Rs. 15,000/- to present Respondent No. 1, the original Applicant, u/s 92-A of the Motor Vehicles Act as per the said principle of no fault liability.

Since all the facts were, more or less, admitted facts, the trial court was required to identify the person upon whom the liability could be fixed.

The insurance policy taken by the present Appellant from present Respondent No. 3 (the insurance company) in connection with the truck in question has been produced. As will be presently pointed out, the policy is what is known as the comprehensive policy. The policy is not restricted to the owner''s liability towards the third party only. The liability under the policy extends even to the damage that might be caused to the truck itself or to the owner of the truck or to the driver of the truck. But the main point to be borne in mind is that as per the policy the entire liability of the owner that might arise out of any accident caused by the truck is to be borne by the insurance company to the extent mentioned in the policy, subject to certain exceptions and all that is required to be decided in the appeal is as to whether the liability falls, in the instant case, under any of the exceptions provided for by the policy.

The trial court has held that as per the policy, Exh. 20, read with Rule 118(1) of the Motor Vehicles Rules, the insurance company is exonerated from payment of the amount that may be payable by the owner of the truck, viz. the present Appellant, by virtue of the accident in question. It is the correctness of this decision which is called in question in this appeal.

Mr. Apte, the learned Advocate appearing for the Appellant, rightly relied upon the judgment of a Division Bench of this Court (P.B. Sawant and B.G. Kolse Patil, JJ.) in Raghunath Eknath Hivale Vs. Shardabai Karbhari Kale and others,

It was held in that case that if there is a breach of the contract on the part of the insured, in connection with the policy of insurance in respect of a vehicle, the insurer may proceed against the insured, but that as far as the third party risks under the Motor Vehicles Act are concerned, the liability being statutory, it cannot be over-ridden by the terms of the contract of insurance between the parties.

In that case, a goods vehicle carried 15 persons, who were the owners of the goods, but that number of inmates in the vehicle was in excess of the permissible number as provided by self-same Rule 118 of the Motor Vehicles Rules and in the context of those facts argument was advanced before the Division Bench that since there had been a breach of the statutory rule, the insurance policy would not cover the liability incurred by the owner of the vehicle after committing such breach of the rule. It was this argument which was squarely negatived by the Division Bench and it was held that if there was breach of any statutory rule on the part of the owner of the truck, the insurance company might be, in given circumstances, entitled to recover the amount required to be paid by the insurance company to the heirs of the victim. But so far as the third party, viz. the heirs of the victim, were concerned, the liability of the insurance company was complete.

In the instant case, the position is, more or less, identical. The plea of Mr. Kotak, appearing for the insurance company in this case, is that under the insurance policy, Exh. 20, the owner of the truck was not allowed to take any passengers in the truck and if the passengers were taken and injury was caused to any passenger, the consequent risk was not covered by the policy.

I have gone through the policy very carefully and I find no justification whatsoever for the above-mentioned argument advanced by Mr. Kotak. As stated above, the policy is what is popularly known as a comprehensive policy. Under the policy, there is a third party premium paid of the amount of Rs. 240/- . It is not disputed that the deceased, who was in the truck, was one of the persons who is contemplated by the expression ''third party'', within the meaning of the schedule of premium mentioned in the policy. No doubt the policy also provides for limitations as regards the user of the vehicle and it would be a possible argument that if the owner of the vehicle allowed the vehicle to be used beyond the said limitation, then, in that event, the insurance policy could not be said to be covering the risk consequent thereupon. But if we turn to the limitations specified in the policy, no room is left for doubt that the limitation does not extend to the carrying of passengers. The first two limitations are not germane for our purpose. The third limitation, which is the relevant one, relates to the use of the conveyance of passengers for hire or reward. The word ''for'' is absent in that particular clause. But there is no dispute that the word ''for'' is to be read in it, because otherwise the clause does not make any sense at all. The entire clause runs as follows:

used for the conveyance of passengers hire or reward.

It means that the user of the vehicle is limited to the conveyance of passengers for hire or reward. The policy does not cover the liability arising out of conveyance of passengers taken aboard the truck for hire or reward. By necessary implication, it means that if the passenger is not taken on board the vehicle for hire or reward, the consequent risk to such passenger is covered by the policy.

Having regard to this position, it is futile going to Rule 118 which imposes certain restrictions upon carrying of particular number of passengers by the vehicle.

The argument advanced was that under Rule 118 no person can be carried in a goods vehicle. This provision is no doubt subject to certain exceptions. But these exceptions are not relevant for our purpose. Point is that when the owner of the vehicle allows, expressly or by necessary implication, some passengers to travel by the truck, may be that he has committed contravention of the mandatory provisions of said Rule 118; but that does not mean that the agreement between the insurance company and the owner of the vehicle to cover the liability of the owner to the third party is in any way done away with. Under the policy, the insurance company has undertaken to cover every kind of risk, excepting the risk by virtue of the transcending by the owner of the truck of the limitations mentioned in the policy. The limitation relevant for our purpose is that the owner must not take any passenger for hire or reward. It is nobody''s case that the deceased had been travelling by the truck for any hire or reward.

But if there existed any doubt of the insurance company''s liability, the same is, really speaking, set at rest by what may be called the main cover note. It is termed as "Clause M.V.C." and this clause M.V.C. consists of various sections. Section I relates to loss or damage. Section II relates to liability of third parties. We are concerned with said Section II. Clause 1 of said Section II provides as follows:

Subject to the limits of liability the company will indemnify the insured against all sums including the claimant''s costs and expenses which the insured shall become liable to pay in respect of--

(i) death of or bodily injury to any person caused by or arising out of the use (...) of the motor vehicle.

(Emphasis supplied)

The remaining clauses of said Section II are not relevant for our purpose.

From the said provisions of the policy, it becomes clear that the insurance company has taken onto its shoulders the entire liability of the insured minus the liability resulting from something done by him beyond the limitations prescribed by the policy. I have already pointed out above that so far as carrying of passengers is concerned, the only limitation of the policy is that the passenger should not be conveyed for hire or reward. There exists no total ban against conveyance of the passengers so far as the policy is concerned. That bar or restriction may result from above-mentioned Rule 118 of the Motor Vehicles Rules. But the policy by itself does not bring about the same.

Having regard to the above position and having regard, further, to the principle laid down by the Division Bench in Raghunath Eknath Hivale Vs. Shardabai Karbhari Kale and others, to my mind, the view taken by the trial court cannot be accepted.

Mr. Kotak, however, relied upon three authorities in support of his contention that the insurance company is not liable for the liability incurred by the owner.

(a) He firstly relied upon the judgment of the Supreme Court in Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Company Pvt. Ltd. 1977 ACJ 343 (SC).

It was held in that case that u/s 95 of the Motor Vehicles Act, it was not mandatory that the policy of insurance contemplated by said Section 95(1)(b)(i) should cover the risk to the passengers, who are not carried for hire or reward. In other words, what the learned Advocate argues is that covering the risk pursuant to the liability towards a passenger in the vehicle is not a mandatory requirement u/s 95.

There needs, really speaking, to be no dispute about this proposition of law. There are certain risks which are required mandatorily to be covered by the insurance policy and there are other risks covering of which is optional. The covering of the risk towards the passengers in the vehicle is optional. But the point in this case is that the risk has been covered by the policy and if it has been covered by the policy, there is no earthly reason why the court should not direct the insurance company to honour its promise and to pay the requisite amount to the heirs of the victim.

(b) The next authority relied upon is the judgment of the Madhya Pradesh High Court in Shivlal and Others etc. Vs. Smt. Rukmabai and Others,

A mere reading of head-note ''B'' of the said report is enough to show that the authority has not even a semblance of application to the question arising in the instant case. In that case, the position was that the relevant insurance policy prohibited the use of vehicle, viz. a tractor, for conveyance of passengers. The deceased in that case was a gratuitous passenger who met with death while travelling by the vehicle. It was held in that case that in view of the terms of the policy of insurance as well as Section 96(2)(b)(i) of the Motor Vehicles Act, no liability could be fastened upon the insurance company. So far as the policy is concerned, in the instant case, as pointed out above, the policy, far from prohibiting the carriage of passengers, in fact permits such carriage or conveyance provided the passengers were not travelling for hire or reward. The prohibition contained in that particular policy with which the Madhya Pradesh High Court was dealing is totally absent in the case of the policy with which we are dealing. So far as Section 96(2)(b)(i) is concerned, as pointed out above, there is no breach of specified condition of the policy in the instant case, as contemplated by the said provision. The authority has, therefore, no application to the facts of this case.

(c) The third authority relied upon by the learned Advocate is the judgment of the Supreme Court in Kedar Nath Motani and Others Vs. Prahlad Rai and Others,

The judgment of Lord Mansfield in Holman v. Johnson relating to the maxim ex dolo malo non oritur actio was examined. Lord Mansfield has observed in that case that:

No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.

The illegality, if any, in the instant case, consists of contravention of the abovementioned Rule 118. But that might, at the most, give rise to cause of action for the insurance company against the insured. It cannot be said that any such illegality is committed by the deceased which forecloses the right of his heirs to recover the sum consequent under no fault liability.

That apart, we must see the real ratio of the judgment of the Supreme Court in that case. This is what the Supreme Court has observed:

The correct position in law in our opinion is that what one has to see is whether the illegality goes so much to the root of the matter that the Plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the Plaintiff is not required to rest his case upon that illegality, then public policy demands that the Defendant should not be allowed to take advantage of the position.

This is the ratio of the Supreme Court judgment and we have to see whether in the instant case there was any such illegality committed by the deceased which cannot be, in the instant case, described as trivial or venial. Sharad was a young boy of 13 years. The truck was passing; 5 or 6 persons got into the truck; he also got into it. The driver had no reason to object, because no particular inconvenience was caused to him by the mere fact that some passengers boarded the empty truck. In any event, the driver did not object to it. The deceased could not have known that the driver was unaware of his presence.

Having regard to all these circumstances, it could not be said that the deceased was committing such an illegality which could not be described as trivial or venial within the contemplation of the above-mentioned authority.

This being the position, the last authority relied upon by the learned Advocate cannot also be said to be of any relevance.

The appeal is, therefore, allowed. The order passed by the Tribunal is set aside and it is held that the insurance company, present Respondent No. 3, is liable to pay a sum of Rs. 15,000/- with interest at the rate of 12 per cent per annum from the date of the original claim, to the 1st Respondent forthwith.

Mr. Kotak, appearing for the insurance company, stated that the insurance company is expected to deposit the amount in the trial court immediately, provided the Appellant gave security to the satisfaction of the trial court to reimburse the insurance company for the amount deposited by the company, in case the insurance company is exonerated from its liability in any further appeal.

The request of Mr. Kotak is quite reasonable. The insurance company is, therefore, directed to deposit the amount of Rs. 15,000/- with interest at the rate of 12 per cent per annum thereon from the date of the original claim till the date of the deposit. Upon deposit of the said amount, the present Appellant shall furnish security to the satisfaction of the trial court to reimburse the insurance company in respect of the amount deposited by the company.

The security shall be furnished within 4 weeks from today. After the security is furnished by the present Appellant to the satisfaction of the trial court, the amount deposited by the insurance company in the trial court shall be paid by the trial court to present Respondent No. 1, the original claimant. This is without prejudice to the right of the original claimant, present Respondent No. 1, to execute the award independently against present Respondent No. 3 forthwith.

The insurance company shall pay the costs of this appeal to present Respondent No. 1 which are quantified at Rs. 1,000/- . The Appellant and Respondent No. 3 shall bear their own costs.

The amount of costs of Rs. 1,000/- to be deposited by the insurance company within one week from today. The learned Advocate for Respondent No. 1 shall be entitled to withdraw the said amount from this Court without furnishing any security.

Liberty to the Appellant and Respondent No. 1 to move this Court for appropriate orders regarding discharge of security if no appeal is filed by the insurance company against this judgment within a reasonable time or if the appeal is not admitted by the Division Bench.