United India Insurance Co. Ltd. vs Toliya and Others

Dr. Vineet Kothari, J.—This batch of 14 appeals filed by the appellant-United India Insurance Co. Ltd. arise out of same accident and are disposed of by this common order. As far as CMA Nos. 2730/2012, 2731/2012, 2732/2012, 2733/2013, 2734/2012, 2735/2012, 1/2013, 3/2013, 4/2013, 6/2013 and 108/2013 are concerned, they are reported to 52 days'' time barred. Having regard to the averments contained in the application u/s 5 of the Limitation Act, the delay occasioned in filing these appeals is condoned.

Briefly stated, the facts of the case are that about 60 claimants/injured filed these 60 claim petitions claiming compensation on account of injuries suffered by them in an accident, which took place on 09.09.2010 while they were travelling in the insured Bus (RJ-03-PA-0786) and going towards Ambapura, which was plied by its driver- Mania @ Manilal. When the said Bus reached near "Jharnia Bridge", on account of rash and negligent driving, the said bus overturned and all the passengers in the said bus, 60 in number, received different grievous and simple injuries. Total 60 claim petitions were filed by various claimants and the same came to be decided by the learned Judge, M.A.C.T., Banswara vide the judgment and award dated 17.07.2012 awarding different award of compensation.

The only point pressed before this Court in the present 14 appeals filed by the appellant- United India Insurance Co. Ltd. is that as per judgment of the Hon''ble Supreme Court in the case of National Insurance Co. Ltd. Vs. Anjana Shyam and Others, (2007) ACJ 2129 : AIR 2007 SC 2870 : (2007) 4 CTC 593 : (2007) 10 JT 209 : (2008) 149 PLR 179 : (2007) 10 SCALE 116 : (2007) 7 SCC 445 : (2007) 9 SCR 78 : (2007) AIRSCW 5237 : (2007) 5 Supreme 856 , since the Bus was insured only for 45 passengers, therefore, the remaining excess number of 15 passengers who sustained injuries in the said accident, were not covered under the Insurance Policy and, therefore, while deciding their claim petitions, the learned Tribunal has erred in directing the appellant-Insurance Co. to first pay and satisfy the award and the recover the said amount from the owner/driver of the offending Bus, insured with it.

The operative portion of the judgment and award of the learned Tribunal reads as under:-

The Hon''ble Supreme Court in the case of National Insurance Co. Ltd. Vs. Anjana Shyam and Ors. (supra) has held as under:-

"13. In this situation, the insurance taken out for the number of permitted passengers can alone determine the liability of the insurance company in respect of those passengers. In terms of Section 149 of the Act, the duty of the insurer is only to satisfy judgments and awards against persons insured in respect of the third party risk. Obviously, this is to the extent the third party risk is coverable and is covered. Section 149 of the Act speaks of judgment or award being obtained against any person insured by the policy and the liability of the insurer to pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder subject to any claim the insurer may have against the owner of the vehicle. Section 149 could not be understood as compelling an insurance company to make payment of amounts covered by decrees not only in respect of the number of persons covered by the policy itself but even in respect of those who are not covered by the policy and who have been loaded into the vehicle against the terms of the permit and against the terms of the condition of registration of the vehicle and in terms of violation of a statute.

It is true that the provisions in Chapter XI of the Act are intended for the benefit of third parties with a view to ensure that they receive the fruits of the awards obtained by them straightaway with an element of certainty and not to make them wait for a prolonged recovery proceeding as against the owner of the vehicle. But from that, it would not be possible to take the next step and find that the insurance company is bound to cover liabilities not covered by the contract of insurance itself. The Act only imposes an obligation to take out insurance to cover third party risks and in the case of stage carriages, the passengers to be carried in the vehicle and the passengers to be carried in the vehicle can be understood only as passengers authorized or permitted to be carried in the vehicle.

In spite of the relevant provisions of the statute, insurance still remains a contract between the owner and the insurer and the parties are governed by the terms of their contract. The statute has made insurance obligatory in public interest and by way of social security and it has also provided that the insurer would be obliged to fulfil his obligations as imposed by the contract and as overseen by the statute notwithstanding any claim he may have against the other contracting party, the owner, and meet the claims of third parties subject to the exceptions provided in Section 149(2) of the Act. But that does not mean that an insurer is bound to pay amounts outside the contract of insurance itself or in respect of persons not covered by the contract at all. In other words, the insured is covered only to the extent of the passengers permitted to be insured or directed to be insured by the statute and actually covered by the contract. The High Court has considered only the aspect whether by overloading the vehicle, the owner had put the vehicle to a use not allowed by the permit under which the vehicle is used. This aspect is different from the aspect of determining the extent of the liability of the insurance company in respect of the passengers of a stage carriage insured in terms of Section 147(1)(b)(ii) of the Act. We are of the view that the insurance company can be made liable only in respect of the number of passengers for whom insurance can be taken under the Act and for whom insurance has been taken as a fact and not in respect of the other passengers involved in the accident in a case of overloading.

Then arises the question, how to determine the compensation payable or how to quantify the compensation since there is no means of ascertaining who out of the overloaded passengers constitute the passengers covered by the insurance policy as permitted to be carried by the permit itself. As this Court has indicated, the purpose of the Act is to bring benefit to the third parties who are either injured or dead in an accident. It serves a social purpose. Keeping that in mind, we think that the practical and proper course would be to hold that the insurance company, in such a case, would be bound to cover the higher of the various awards and will be compelled to deposit the higher of the amounts of compensation awarded to the extent of the number of passengers covered by the insurance policy. Illustratively, we may put it like this. In the case on hand, 42 passengers were the permitted passengers and they are the ones who have been insured by the insurance company. 90 persons have either died or got injured in the accident. Awards have been passed for varied sums. The Tribunal should take into account, the higher of the 42 awards made, add them up and direct the insurance company to deposit that lump sum. Thus, the liability of the insurance company would be to pay the compensation awarded to 42 out of the 90 passengers. It is to ensure that the maximum benefit is derived by the insurance taken for the passengers of the vehicle, that we hold that the 42 awards to be satisfied by the insurance company would be the 42 awards in the descending order starting from the highest of the awards. In other words, the higher of the 42 awards will be taken into account and it would be the sum total of those higher 42 awards that would be the amount that the insurance company would be liable to deposit. It will be for the Tribunal thereafter to direct distribution of the money so deposited by the insurance company proportionately to all the claimants, here all the 90, and leave all the claimants to recover the balance from the owner of the vehicle. In such cases, it will be necessary for the Tribunal, even at the initial stage, to make appropriate orders to ensure that the amount could be recovered from the owner by ordering attachment or by passing other restrictive orders against the owner so as to ensure the satisfaction in full of the awards that may be passed ultimately.

In these cases, we find that this Court has not issued notices to the claimants. We are therefore not in a position to vary the decision of the High Court as regards the claimants. But, we have clarified the law on the question and we grant the insurance company a decree to recover the excess amount that it has deposited, from the owner, who has been issued notice and who has contested these appeals. Obviously, the principle indicated by us here will have to be applied by the Tribunal in the case from which the appeal against the interim award has been filed by the insurance company.

Thus, the appeals are allowed to the extent indicated above. There will be no order as to costs."

In view of aforesaid Apex Court decision, though the learned Tribunal ought to have directed the Insurance Company to first deposit the highest award for the number of passengers covered, namely, 45 and then directed pro-rata distribution of that deposited amount to all 60 claimants and then, the shortfall in the satisfaction of award, could be directed to be made by owner of the inured vehicle but looking to the small gap of such shortfall, the learned Tribunal however, cannot be said to be committed any error or mistake in directing the appellant-Insurance Company to first satisfy the award qua the uncovered passengers, 15 in number, also and then recover the same from the non-claimants, owner and driver the offending Bus to the extent indicated in the award. The Supreme Court decision, referred to above, has been followed by the Tribunal is letter and spirit and only minimal amount would remain to be recovered from the owner of the insured vehicle while major portion already stands paid by the Insurance Company and distributed amongst the claimants. The poor claimants could not be asked to pursue the owner for recovery of the shortfall amount, which would have only resulted in unnecessarily litigation. The same would be contrary to the intent and object of Section 149, as held by the Hon''ble Supreme Court.

Accordingly, the present civil misc. appeals of the Insurance Company are thus found to be bereft of merit and the same are, accordingly, dismissed. No costs. A copy of this order be sent to the concerned parties and the learned Tribunal forthwith.