United India Insurance Co. Ltd., Salam vs Lakshmi and others

Nainar Sundaram, J.—This Civil Miscellaneous Appeal by the Insurance Company, with which the vehicle involved in the accident and

against the driver of which vehicle the culpability of being rash and negligent has been found by the Motor Accidents Claims Tribunal, Erode, has

got to be allowed on a short and at the same time a very potent legal point taken by Mr. K. S. Narasimhan, learned counsel appearing for the

Insurance Company.

There was an accident on 11-5-1980. In that accident, two lorries were involved. One lorry bore the Registration No. MED 4639. It was

owned by one N. Ramasami, It was insured with the appellant-Insurance Company. It was driven at the time of the accident by one S. Ramasami,

who was made as the first respondent before the Tribunal and who is the third respondent herein. The other lorry involved in the accident bore the

registration number KPE 9368. The finding of the Tribunal was that it was only on account of the rash and negligent driving of the lorry MED 4639

the accident occurred. Unfortunately, the owner of that lorry MED 4639 N. Ramasami, who was travelling in his lorry, died in that accident, his

widow and his minor preferred claim for compensation to the Tribunal. The Tribunal mulcted the liability on the Insurance Company, and this has

made the Insurance Company prefer this Civil Miscellaneous Appeal.

Mr. K. S. Narasimhan, learned counsel for the Insurance Company, appellant herein, urges that the insured, namely, deceased N. Ramasami

was himself the victim in the fatal accident, caused by an act of his own driver and so the legal representatives of the deceased insured cannot

make a claim for compensation against the Insurance Company, since the policy of Insurance covered only liability to be incurred by the insured

against third parties, in terms of S. 95(1)(b)(i) of the Motor Vehicles Act 4 of 1939, hereinafter referred to as the Act. Learned counsel bases his

argument on the terms of the policy issued in the present case and marked as Ex. P. 1, which we find is in accordance with Section 95 (1)(b)(i) of

the Act. That section stands extracted as follows :

In order to comply with the requirements of this chapter a policy of insurance must be a policy which-

(a).....

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)-

(i) against any liability which may be incurred by him in respect of the death of or bodily injury to, any person or damage to any property of a third

party caused by or arising out of, the use of the vehicle in a public place;.....

As we could see from the expressions used in the section, it required a policy of insurance to cover any liability which may be incurred by the

insured in respect of death or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the

vehicle in a public place. There ought to have been a liability incurred by the insured to a third party. The terms of the Policy of insurance issued,

namely, Ex. P. 1 being in accord with Section 95(1)(b)(i) of the Act, the policy of insurance could cover only the liability of the insured to a third

party. The purpose of the provision is to protect the interests of third parties who are involved in motor accidents. In order to fix liability on the

Insurance Company, the liability must be first established against the insured. It is only in that case the liability of the Insurance Company would

arise. The Insurance Company or the insurer is one party to the contract, the insured of the policy holder is another and the claims made by others

in respect of negligent use of a vehicle would be claims by third parties. Thus, it is obvious that if any liability has not been incurred by the owner or

the insured towards a third party, then that is not intended to be covered by the policy of insurance issued as per this provision. The language of the

provision being what it is, plain in terms, the implications flowing therefrom are also plain and as such admit of no ambiguity. If there is no liability

on the part of the owner of the vehicle or in other words the insured, nothing could be passed on to the insurance company to meet any such

liability. The owner of the vehicle or in other words the insured must be first found to be liable to a third party, so that, that liability could be passed

on to the insurance company.

From the present case, fortunately for the Insurance Company, the terms of the policy of insurance issued, namely, Ex. P. 1 being in accord with

S. 95(1)(b)(i) of the Act, comes to its rescus, and that disables the claimants who are none else than the legal representatives of the deceased

owner of the lorry MED 4639 and which lorry was insured with the insurance company, from making the claim. The owner of the lorry or in other

words the insured having himself died in the accident, caused by his own driver, and there being no liability on his part or on the part of his legal

representatives towards any third party, the insurance company''s liability does not at all arise. This being the legal position, we have to accept the

contention put forward by the learned counsel for the appellant and allow this Civil Miscellaneous Appeal. We are making it clear that we have not

dealt with a case, where the policy of insurance by its terms has extended the benefit of indemnity to the legal representatives of the insured, who

may die in the accident.

Though no direct decision has been brought to our notice, our attention has been drawn to a pronouncement of the Supreme Court of India in

Minu B. Mehta and Another Vs. Balkrishna Ramchandra Nayan and Another, , where there is a discussion of the implications of S. 95(1)(b)(i) of

the Act. Equally so, in Mallika v. S. V. Alagarsami (died), 3982 ACJ 272 a Bench of this Court has adverted to the scope of Section 95 (1)(b)(i)

of the Act though the facts of that case were different, and while doing so, there is a reference to the pronouncement of the Supreme Court in Minu

B. Mehta and Another Vs. Balkrishna Ramchandra Nayan and Another, . The Award passed by the Tribunal is set aside. In the circumstances of

the case, we direct the parties to bear their costs throughout.

Appeal allowed.