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Judgment
United India Insurance Company Limited, aggrieved by the Award of the Motor Accident Claims Tribunal (Sub-Court), Dharmapuri, has filed
the above appeals. Since the question is one and the same in all these appeals, they are being disposed of by the following common order. The
only contention raised by the learned counsel appearing for the appellant/Insurance Company is that whether the awards passed by the Tribunal in
all these cases are sustainable is not? Inasmuch as the lorry-goods vehicle involved in the accident was used as a transport vehicle which is in
violation of the statutory provision as well as the insurance policy.
In order to find out an answer to the said question, I shall refer the brief facts which are required. It is the case of the appellant- Insurance
Company that on 8.12.89 while the respondents claimants were going to attend a marriage at Nariyanapalli in a goods vehicle, namely, lorry DTT
2126, they sustained injuries due to capsizing of the lorry. It is their definite case that since the goods vehicle is intended to carry goods only and
the claimants who used the said lorry to carry them to attend a marriage in a neighbouring village is in violation of the provisions of the Motor
Vehicles Act and also the terms of policy. According to them, in such a circumstances, the Insurance Company need not indemnify the owner of
the lorry; hence the award directing the Insurance Company to pay the compensation to the victims cannot be sustained. It is the definite case of
the claimants that with the specific permission of the owner of the lorry, they travelled in the lorry along with their goods which were intended for
the marriage and while proceeding there, due to the negligence of the driver of the lorry, it capsized, thereby they sustained various injuries. In such
a circumstance, according to them, the Insurance Company is liable to pay compensation as awarded by the Tribunal. Though the learned counsel
appearing for the respondents has stated that the appeals are to be dismissed as per Section 173(2) of the Motor Vehicles Act, 1988 since the
amount in dispute in the appeal is less than ten thousand rupess, in all these appeals the value is more than Rs.10,000 hence there is no need to
consider the said objection.
Now I shall consider the contention raised by the Insurance Company regarding their liability. Since the accident had occurred on 8.12.1989,
the provisions of Motor Vehicles Act, 1988 alone are applicable. Chapter XI of the Act deals with insurance of motor vehicles against third parry
risks. There is no dispute that the vehicle in question was covered with a valid insurance policy at the time of the accident. As per Ex.B-1, the lorry
was having a valid insurance for the period from 22.10.1989 to 21.10.1990. No doubt, as per the policy, the lorry was authorised to carry 10
Tones of goods. By pointing out the statutory provision, it is stated that apart from the permitted goods, 6 workmen can travel along with the
goods. Inasmuch as about 60 persons travelled as passengers in the lorry referred to above. Mr. N. Rajan, learned counsel appearing for the
Insurance Company vehemently contended that irrespective of the injuries sustained by them, the Insurance Company need not pay any amount on
the basis of the Insurance Policy. Section 147 of the Motor Vehicles Act, 1988 (hereinafter referred to as ""the Act"") speak about requirements of
policies and limits of liability which is as follows:-
Section 147. Requirements of policies and limits of liability, - (1) In order to comply with the requirements of this Chapter, a policy of insurance
must be a policy which -
(a) is issued by a person who is an authorised insurer; and
(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;
(ii) 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:
Provided that a policy shall not be required -
(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or
in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the
Workmen''s Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee -
(a) engaged in driving the vehicles, or
(b) if it is a public service vehicles engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation, - For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third
party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is
dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act of omission which led to the
accident occurred in a public place.
(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any
accident, upto the following limits, namely:-
(a) save as provided in clause (b), the amount of liability incurred;
(b) in respect of damage to any property of a third party, a limit of rupees six thousand;
Provided that any policy of insurance issued with any limited liability and in force immediately before the commencement of this Act, shall continue
to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.
(3) x x x x
(4) x x x x
The said section is similar to Section 95 of the Motor Vehicles Act, 1939. After gaining experience and taking note of the difficulties experienced,
certain provisions have been added in the new Act. Now I shall consider various decisions on these provisions and thereafter, the factual position
in these cases. Though the learned counsel has relied on a decision reported in Sohan Lal Passi Vs. P. Sesh Reddy and others, , the said judgment
is not helpful to the stand of the Insurance Company, on the other hand, it supports the claim made by the respondents herein. In that case, the
question considered by Their Lordships was whether the Insurance Company can be absolved of its liability to pay the compensation in a case
where the owner of the vehicle had got the vehicle insured, but the accident took place when it was being driven by a person not holding the
driving licence. The said case arise when the Motor Vehicles Act, 139 was in force. After referring to Section 96 of the Act which prescribes the
duty of insurers to satisfy judgments against person insured in respect of third party risks, and after referring to Skandia Insurance Co. Ltd. Vs.
Kokilaben Chandravadan and Others, . Their Lordships while reiterating the law laid down in the said decision have held that without the
knowledge of the insured, if by driver''s acts or omission others meddle with the vehicle and cause an accident, the insurer would be liable to
indemnify the insured. The insurer in such a case cannot take the defence of a breach of the condition in the certificate of insurance. After holding
so, Their Lordships have directed the appellant/Insurance Company to pay the compensation to the claimants. As stated earlier, the said judgment
supports the stand of the claimants.
In B.V. Nagaraju Vs. M/s. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, . Their Lordships of the Supreme Court have held that.
It is plaint from the terms of the insurance policy that the insured vehicle was entitled to carry 6 workmen, excluding the driver. If those 6
workmen when travelling in the vehicle are assumed not to have increased any risk from the point of view of the insurance company on occurring
of an accident, how could those added persons be said to have contributed to the causing of it is the poser, keeping apart the load it was carrying.
Here, it is nobody''s case that the driver of the insured vehicle was responsible for the accident. In fact, it was not disputed that the oncoming
vehicle had collided head-on against the insured vehicle, which resulted in the damage. Merely by lifting a person or two, or even three, by the
driver or the cleaner of the vehicle, without the knowledge of owner, cannot be said to be such a fundamental breach that the owner should, in all
events, be denied indemnification, The misuse of the vehicle was somewhat irregular though, but not ..... fundamental in nature so as to put an end
to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident. In the instant case,
however, we find no such contributory factor...
Here again, Their Lordships after referring to Skandia Insurance Company''s case as well as in Suissee Atlantique Societe d'' Armenent Maritime
S.A. v. N.V. Rotterdamshe Kolem Central, 1967 (1) AC 361 have accepted the theory ""wide exclusion clauses will be read down to the extent to
which they are inconsistent with the main purpose, or object of the contract."" They further observed thus:-
The National Commission went for the strict construction of the exclusion clause. The reasoning that the extra passengers being carried in the
goods vehicle could not have contributed, in any manner, to the occurring of the accident, was barely noticed and rejected sans any plausible
account; even when the claim confining the damage to the vehicle only was limited in nature. We thus, are of the view that in accord with the
Skandia case, the aforesaid exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy, that is, to
indemnify the damage caused to the vehicle, which we hereby do.
Here again, the conclusion of Their Lordships supports only the case pleaded by the victims.
The next decision referred to by the learned counsel for the Insurance Company is a Division Bench decision of this Court reported in
Kanniappa Nadar Vs. Jayapandi and others, . The Division Bench while disposing of several L.P. Appeals and connected Civil Revision Petition
filed by the owner of the vehicle after considering various decisions of the Supreme Court including Skandia Insurance Company''s case 1967 (1)
AC 361 as well as Sohanlal Passi''s case, allowed all the appeals filed by the owner of the vehicle and directed the insurance company to
indemnify the losses caused to them. In that case, the lorry in question which was carrying several persons (labourers) along with their paddy bags
cought in a depression on the road and the driver asked all the passengers to get down. While the driver attempted to pull out the lorry, it capsized
and those who were standing hear the lorry got involved in the accident and the accident was not the outcome of the rash and negligent driving of
the lorry by its driver. After holding that in the absence of any evidence that the owner of the vehicle authorised or permitted the owners of the
goods which was being transported in the vehicle at the time of the accident, to travel in the transport vehicle-in- question, nor is there any
evidence to show that the driver was authorised to carry the owners of the goods along with the goods in the transport vehicle in question, and that
there is no evidence that they are the gratuitous passengers, the Division Bench had held that.
The burden of proving the breach of condition of permit or the contract of insurance by the insured is on the insurer, viz., the insurance company.
In the instant case, that burden has not been discharged. Therefore, the Insurance Company cannot absolve form its liability to pay the
compensation to the claimants .... For the fore-going reasons, all the appeals filed by the owner of the vehicle are allowed in part.... and the
insurance company viz., appellant and 2nd respondent, respectively shall be jointly and severally liable to pay the compensation amount to the
claimants....
Though the said decision had been cited by the Insurance Company, I am of the view that the ratio laid down in that decision supports the stand of
the insured.
Another decision referred to by the learned counsel for the appellant is in the case of M/s National Insurance Company Ltd., v. S.V.
Adimoorthy and 7 others, 1999 (1) LW 331. K. Govindarajan, J., after referring to the Division Bench decision in Kanniappa Nadar Vs.
Jayapandi and others, and after holding that the insurance company has not discharged its burden of establishing that the insured himself is guilty of
committing breach of contract of insurance, held that the insurance company cannot absolve its liability from paying the compensation. The facts
and the ultimate conclusion of the learned Judge is not helpful to the appellant''s case and this also supports the stand of the respondents-claimants.
The other decision referred to by the learned counsel for the appellant is a Division Bench decision of the Punjab and Haryana High Court
reported in Harish Chand and Others Vs. Smt. Boti and Others, wherein Their Lordships after referring to Section 147(1) of the Act, has held that
passengers cannot be carried in a goods vehicle. There is no dispute with regard to the said proposition.
Now I shall consider the decisions referred to by the learned counsel for the respondents-claimants. In New India Assurance Company Ltd., v.
Khannan, 1998 (II) ACC 447, a learned single Judge of Karnataka High Court has held that the employee of the hirer may also stand on the same
footing as employee of the insured, the coverage of risk by the policy issued by the Insurance Company of the motor vehicle, also covers within
itself all those persons carried by reason of or in pursuance of contract of employment either with the owner of the vehicle or with the owner of
goods or the hirer travelling in the vehicle.
In New India Assurance Company Ltd., v. Shakuntla Devi, 1998 (II) ACC 418, a Division Bench of the Jammu and Kashmir High Court has
held that labour travelling in the truck engaged by either of the parties, is covered u/s 147 of the Motor Vehicles Act, 1988. Their Lordships have
further held that in case of death of a labourer engaged by the hirer of the truck and travelling in it for the safe custody and delivery of the goods on
behalf of the owner of the goods who had hired the vehicle, when it met with accident, the Insurance Company is liable to indemnify the owner and
pay compensation.
In National Insurance Company Ltd., v. Moharsingh and others, 1998 (II) ACC 466, a learned Single Judge of the Madhya Pradesh High
court, after referring to al Full Bench decision of the same Court, namely, Harishankar Tiwari v. Jugru Laxman Sahu and others, 1988 ACC 208
and a decision of the Supreme Court reported in B.V. Nagaraju Vs. M/s. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, had held that
the insurance company is bound to cover risk of hirer/agent or his employee travelling with goods in goods vehicle as passenger carried for reward
or by reason of or in pursuance of contract of employment.
In C.K. Seetaram v. Jayalakshmamma, 1998 (II) ACC 7, a learned Single Judge of Karnataka High Court has upheld the order of the
Tribunal indirecting the insurance company to pay compensation to the legal heirs of the deceased who accompanied with the goods in a lorry and
died due to the negligence of the driver of the lorry.
In a latest decision, the Supreme Court in the case of New India Assurance Company v. Shri Satpal Singh and others, 1999 (10) Supr 87,
after referring to Section 147(1) of the Act, has held in the following manner:-
The result is that under the new Act an insurance policy covering third party risk is not required to exclude gratuitous passengers in a vehicle, no
matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act vis-a-vis gratuitous passengers are of and avail while
considering the liability of the insurance company in respect of any accident which occurred or would occur after the new Act came into force.
In the light of the various decision, now I shall consider the factual position in these cases. There is no dispute that on the ill-fated day 60
persons hired the lorry in question to carry their goods/articles for the marriage which was taking place in the neighbouring village. It is the
categorical evidence of the claimants that they were travelling in a lorry along with their goods/articles intended for the marriage. It is the definite
case of the claimants that they obtained permission from the lorry owner to travel and took their articles along with them, that while proceeding to
the neighbouring village to attend a marriage of their relative, while taking a turn, due to the negligence of the driver of the lorry, it capsized, thereby
sustained various injuries.
I have already referred to and stated that the vehicle in question is a goods vehicle and as per the Statute, it was permitted to carry only goods. No
doubt, certain person can travel along with the goods. It is not the case of the owner and the insurance company that since certain persons
exceeded the prescribed limit and because of their excess capacity, the lorry capsized. It is the evidence of the driver of the lorry that since a cow
had suddenly crossed the road and in order to avoid an accident with the cow, he suddenly took the bus on the left side, thereby it capsized. It is
clear that the persons travelling in the lorry along with their goods were not responsible for the accident. In such a circumstance, as observed by
Their Lordships in the decisions referred to above, because more persons were travelling along with their goods than the prescribed cannot be a
ground for the insurance company to repudiate its liability. After analysing the oral and documentary evidence let in by the claimants as well as the
insurance company, the learned Judge has concluded thus:-
It is clear that with the consent of the lorry owner, certain persons travelled in the said lorry along with their articles intended for the marriage and
while travelling so, they met with an accident and sustained injuries, accordingly in the light of the conduct of the owner and in view of the contract
between the insured and the insurer, the insurance company cannot dis-own its liability. Though it is stated that the owner had not permitted one
Jayaraman to take the lorry at the relevant time, it is established that the one Gunasekaran who was the authorised driver of the lorry had permitted
the said Jayaraman to drive the lorry. In such a circumstance, on the ground to mistake or fault of Gunasekaran, the owner cannot be permitted to
dis-own his responsibility. It is further clear that before the Court below, the claimants have established that the owner of the lorry had permitted
them to travel in the said lorry along with their goods/articles to attend the marriage in the neighbouring village and while they were traveling, due to
the negligence of the driver of the lorry, it capsized and thereby they sustained injuries. In such a circumstance, the Court below is justified in
directing the insurance company to pay compensation as determined to the victims. Even as per the provision of the Motor Vehicles Act, 1988, it
is permissible that in the goods vehicle the passengers have to be carried out on account of or by reason of or contract of employment between
either of the owner of the vehicle or the hirer who had hired the vehicle for transport of goods and his employer that is owner of the goods or as
the employee of the hirer for being carried any goods vehicle for due and proper transportation of goods and related matter therein.
In the light of the established factual position, I hold that the insurance company is bound to cover risk of hirer/agent or the employee travelling in
any goods vehicle as passenger carried for reason or by reason of or in pursuance of contract of employment. Further, as observed by Their
Lordships in B.V. Nagaraju Vs. M/s. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, , that breach of crying humans in goods vehicle
more than the number permitted in terms of insurance policy cannot be said to be such fundamental breach so as to offer ground to the insurer to
deny indemnification. I have already observed that it is not the case of the owner or the insurance company that the persons travelling in the lorry
along with their goods/articles were responsible for the accident. The purpose of the Motor Vehicles Act is to compensate a person who has
suffered injury. In case of death, the heirs of the deceased have to be provided some means of subsistence. Keeping in view of the nature of the
Statute, the provisions have to be liberally construed. Before winding up it is useful to refer the observation of Their Lordships in Skandia''s case
wherein Their Lordships have observed this:-
When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependents on the one
hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by it, by way
of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire
approach, the very same conclusion would emerge in obeisance to the doctrine of ''reading down'' the exclusion clause in the light of the ''main
purpose'' of the provision so that the ''exclusion clause'' does not cross swords with the ''main purpose'' highlighted earlier. The effort must be to
harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose...
It is also worth-while to refer that considering the provisions of the Motor Vehicles Act, 1988 in Sohan Lal Passi''s case, JT 1996 (6) SC 728 the
Three Judges Bench of the Hon''ble Supreme Court have taken a view that even in the absence of valid licence to drive the vehicles in question at
the relevant time, in view of the contract of insurance policy and the statutory provisions under the Act, the Insurance company is liable to-pay
compensation to the claimants. In the light of the elastic view taken by the Hon''ble Supreme Court and in view of the provisions of the Motor
Vehicles Act, 1988, I am unable to accept the argument advanced by the learned counsel for the appellant/insurance company, I am in agreement
with the conclusion and the ultimate award passed by the Tribunal. As a matter of fact, in most of the cases, the Tribunal has passed an award only
for Rs.10,000 and in few cases, some amount exceeding Rs.10,000 were awarded. Hence, looking at any angle, I do not find any valid ground to
interfere with the impugned awards; accordingly all the appeals filed by the insurance company are liable to be dismissed, they are accordingly
dismissed. No costs. Consequently, all the miscellaneous petitions are also dismissed.