The New India Assurance Co. Ltd. and Others vs Mahaveer Prasad and Others

Dr. Vineet Kothari, J.—This batch of misc. appeals is filed by the appellant, the New India Assurance Co. Ltd. (''Insurance Company'') and the Rajasthan State Road Transport Corporation Ltd. (''Corporation'').

The appellants, Insurance Company and RSRTC Corporation, have preferred the present appeals aggrieved by the judgment and award dated 24.04.2008 passed by the learned Judge, Motor Accident Claims Tribunal, Bhilwara (Addl. District Judge, Bhilwara), (Tribunal) only against the direction to the Insurance Company to first pay the entire compensation to the claimants/respondents of Rs. 49,500/-, and then recover the same from the owner of the offending vehicle Truck, owned by M/s. Rooplal Transport Company, whose Insurer is the respondent, United India Insurance Company Ltd., who is also party-respondent before this Court in the present set of appeals, however, only in one of the appeals viz. CMA No. 3697/2011, the United India Insurance Co. Ltd. is not a party-respondent.

The relevant facts in the impugned order of the Tribunal giving rise to the present appeals are quoted herein below for ready reference:-

The relevant findings of the learned Tribunal for awarding compensation in favour of claimant (In CMA No. 3697/2011) Mahaveer Prasad, are also quoted herein below for ready reference:-

Learned counsel for the appellants, Mr. D.K. Bhootra, and Mr. L.K. Purohit, submitted that after the judgment of the learned Tribunal dated 24.04.2008, the Hon''ble Supreme Court in the case of Uttar Pradesh State Road Transport Corporation Vs. Kulsum and Others, has settled the controversy about the buses plied by the respondent-RSRTC Corporation on contractual basis. In the present case also the Bus in question was owned by one Sh. Niranjan Singh (respondent No. 4 in CMA No. 2467/2011), which was plied by one Sh. Rajendra Kumar (respondent No. 5 in CMA No. 2467/2011) on contract for RSRTC.

The Hon''ble Supreme Court in the case of Uttar Pradesh State Road Transport Corporation Vs. Kulsum & Ors. (supra) has held as under:-

"36. Thus, for all practical purposes, for the relevant period, the Corporation had become the owner of the vehicle for the specific period. If the Corporation had become the owner even for the specific period and the vehicle having been insured at the instance of original owner, it will be deemed that the vehicle was transferred along with the Insurance Policy in existence to the Corporation and thus Insurance Company would not be able to escape its liability to pay the amount of compensation.

The liability to pay compensation is based on a statutory provision. Compulsory Insurance of the vehicle is meant for the benefit of the Third Parties. The liability of the owner to have compulsory insurance is only in regard to Third Party and not to the property. Once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the Act does not provide that any person who uses the vehicle independently, a separate Insurance Policy should be taken. The purpose of compulsory insurance in the Act has been enacted with an object to advance social justice.

Third Party rights have been considered by this Court in several judgments and the law on the said point is now fairly well settled.

The Apex Court in the case of Guru Govekar Vs. Miss Filomena F. Lobo and Others, has held that:

"8....Thus, if a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of the third party caused by or arising out of the use of the vehicle at a public place. The liability to pay compensation in respect of death of or injury caused to the person or property of a third party undoubtedly arises when such injury is caused when the insured is using the vehicle in a public place. It also arises when the insured has caused or allowed any other person (including an independent contractor) to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period, unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident.

13....This meant that once the insurer had issued a certificate of insurance in accordance with Sub-section (4) of Section 95 of the Act the insurer had to satisfy any decree which a person receiving injuries from the use of the vehicle insured had obtained against any person insured by the policy. He was liable to satisfy the decree when he had been served with a notice under Sub-section (2) of Section 96 of the Act about the proceedings in which the judgment was delivered.

14....Any other view will expose innocent third parties to go without compensation when they suffer injury on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act."

In a recent judgment of this Court, in the case of United India Insurance Co. Ltd. Vs. Santro Devi and Others, it has been held as under:-

"16. The provisions of compulsory insurance have been framed to advance a social object. It is in a way part of the social justice doctrine. When a certificate of insurance is issued, in law, the insurance company is bound to reimburse the owner. There cannot be any doubt whatsoever that a contract of insurance must fulfil the statutory requirements of formation of a valid contract but in case of a third party risk, the question has to be considered from a different angle.

Section 146 provides for statutory insurance. An insurance is mandatorily required to be obtained by the person in charge of or in possession of the vehicle. There is no provision in the Motor Vehicles Act that unless the name(s) of the heirs of the owner of a vehicle is/are substituted on the certificate of insurance or in the certificate of registration in place of the original owner (since deceased), the motor vehicle cannot be allowed to be used in a public place. Thus, in a case where the owner of a motor vehicle has expired, although there does not exist any statutory interdict for the person in possession of the vehicle to ply the same on road; but there being a statutory injunction that the same cannot be plied unless a policy of insurance is obtained, we are of the opinion that the contract of insurance would be enforceable. It would be so in a case of this nature as for the purpose of renewal of insurance policy only the premium is to be paid. It is not in dispute that quantum of premium paid for renewal of the policy is in terms of the provisions of the Insurance Act, 1938."

Perusal of the ratio of aforesaid judgments of this Court, shows that Section 146 of the Act gives complete protection to Third Party in respect of death or bodily injury or damage to the property while using the vehicle in public place. For that purpose, insurance of the vehicle has been made compulsory to the vehicles or to the owners. This would further reflect that compulsory insurance is obviously for the benefit of Third Parties.

Certificate of Insurance, between the owner and the Insurance Company contemplates, under what circumstances Insurance Company would be liable to pay the amount of compensation. The relevant conditions are reproduced herein below:

"Rules with respect to use of the Vehicle Use only for carriage of passengers in accordance with permit (contract carriage or stage carriage) issued within the meaning of the Motor Vehicles Act, 1988. This policy does not cover:

Use for organised racing pace making reliability trial speed testing.

Use whilst drawing a trailer except the towing (other than to reward) of any one disabled mechanically propellor vehicle.

Persons who are qualified to use the Vehicle:

Any person including the insured provided that person driving holds an effective driving licence at the time of the accident and is not disqualified from holding or obtaining such licence. Provided also that a person holding an effective learner''s licence may also drive the vehicle when non used for transport of passenger at the time of the accident and such a person satisfies the requirement of rule No. 3 of this Central Motor Vehicle Rule, 1989"

Perusal thereof would show that there has not been any violation of the aforesaid terms and conditions of the policy. Respondent-Insurance Company has also failed to point out violation of any Act, Rules or conditions of the Insurance. Insurance Company has no legal justification to deny the payment of compensation to the claimants.

In the light of the foregoing discussions, the Appeal filed by Insurance Company fails, wherein it has been directed that the amount would first be paid by the Company, with right to it to recover the same from owner of the vehicle. This we hold so, as the liability of the Insurance Company is exclusive and absolute.

Thus, looking to the matter from every angle, we are of the considered opinion that Insurance Company cannot escape its liability of payment of compensation to Third Parties or claimants. Admittedly, owner of the vehicle has not violated any of the terms and conditions of the policy or provisions of the Act. The owner had taken the insurance so as to meet such type of liability which may arise on account of use of the vehicle.

Apart from the above, learned Counsel for Insurance Company could not point out any legal embargo which may give right to it to deny the payment of compensation. Thus, legally or otherwise liability has to be fastened on the Insurance Company only.

In the light of the aforesaid discussion, the Appeals of the Corporation are allowed. The impugned judgment and order passed by High Court qua the Corporation are hereby set aside and quashed and we hold that the Insurance Company would be liable to pay the amount of compensation to the claimants.

Appeals filed by the Corporation thus stand allowed and the Appeal filed by the Insurance Company stands dismissed with costs. Counsel''s fee quantified at Rs. 10,000/- in each Appeal."

The only grievance raised in the present set of appeals by the appellant-Insurance Company is that solely the insurer of the Truck i.e. the New India Assurance Company Ltd. cannot be held liable to pay the entire compensation and since the drivers of both the vehicles were found negligent in driving the vehicles, therefore, the Insurer of the RSRTC contractual Bus No. RJ-14-P-3937 i.e. United India Insurance Co. Ltd. (respondent No. 6 in CMA No. 2467/2011), which was plied by its driver, namely, Rajendra Kumar (respondent No. 5 in CMA No. 2467/2011) shall also be liable to pay the compensation and recovery rights be given to the appellant, N.I.A., to recover the same from United India Insurance Co. Ltd. also.

Having heard the learned counsel for the parties, and in view of aforesaid binding precedent of the Hon''ble Supreme Court in the case of Uttar Pradesh State Road Transport Corporation Vs. Kulsum & Ors. (supra), the prayer of the learned counsel for the appellants, the New India Assurance Co. Ltd. appears to be justified and accordingly the appeals filed by appellant, The New India Assurance Co. Ltd. being CMA No. 3697/2011-N.I.A. Ltd. Vs. Mahaveer Prasad & Ors., CMA No. 2464/2011-The N.I.A. Ltd. Vs. Ram Gopal & Ors., CMA No. 2467/2011-The N.I.A. Ltd. Vs. Ram Swaroop & Ors., CMA No. 3631/2011-The N.I.A. Ltd. Vs. Rameshwarlal & Ors. and CMA No. 4682/2011-N.I.A. Co. Ltd. Vs. Smt. Kamla & Ors., are accordingly partly allowed.

The appeals filed by the appellant-Corporation being CMA No. 2923/2011-R.S.R.T.C. Vs. Mahaveer Prasad & Ors., CMA No. 2925/2011-R.S.R.T.C. Vs. Rameshwar Lal & Ors. and CMA No. 2893/2011-R.S.R.T.C. Vs. Smt. Kamla & Ors., are also disposed of in the light of aforesaid decision of the Hon''ble Apex Court and the award of the learned Tribunal stands modified to the extent that instead of appellant R.S.R.T.C, the insurer of the contracted bus as well as insurer of offending Truck, the compensation amount shall be paid by the appellant-The New India Assurance Co. Ltd. (Insurer of offending Truck) and the United India Insurance Co. Ltd. (Insurer of contractual Bus) in equal share, and the compensation amount shall be deposited by both the Insurance Companies, with the learned Tribunal within a period of three months from today, with the recovery right to recover the same from the owners of the vehicles in question in accordance with law and aforesaid Apex Court decision. No costs. A copy of this order be sent to the concerned parties forthwith.