New India Assurance Co. Ltd. v. Suram Ramulamtna

1. Lorry bearing No. APT 5045 belongs to Mohd Jabangir, 1st Respondent in the O.P The 2nd respondent Mogili Narsimlu drove the vehicle on the date of the accident i.e on 9-6-1981. The lorry was insured with the New India Assurance Co. Ex. B-1 is the policy. The lorry was placed by the owner at the disposal of the District Collector for the use in the Panchayat Samithi elections. The Government delegated to the respec tive District Collectors the powers vested in it under Secs. 63-B, 68-D and 68-E of the A.P Panchayat Samithis and Zilla Parishads Act, 1950, by a notification. The notification was issued with G.O Ms. No. 328 Panchayat Raj (. Election IV) Department dated 17-5-1981, true copy of which is filed as Ex. B-2. The Government in its G.O Ms. No. 337, Panchayat Raj (Election IV) Department dated 20-5-1981, true copy of which is filed as Ex. B-3, issued instructions for payment of hire charges for the motor vehicles requisitioned and batra charges to the drivers, conductors and cleaners of the vehicles. The Secretary to Government, Panchayat Raj, by letter dated 26-5-1981, true copy of which is filed as Ex. B-4, asked the Transport authorities in the district to help the Collectors in requisitioning the required number of vehicles. The lorry in question was requisitioned by the Collector for election purposes under the delegated authority and the vehicle was allotted for transport of election personnel. One constable died and some others received injuries while they were on election duty, travel ling in the vehicle. The learned Judge found that the claimants are entitled for compensation. In the O. Ps the Government was not made a party. The Insurance Co. was made liable to pay the amount. It is against that, the Insurance Co, filed the appeals.

2. The contention of the Insurance Co, is that there is a requisition by the Government and it is in contravention of Clause (9) of Ex. B-1 which is as under:

“The due observence and fulfilment of the terms, conditions and endorsements of this policy in so far, as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the said proposal shall be conditions precedent to any liability of the company to make any payment under this Policy”.

3. The Insurance Co. contended that it is not liable to pay any compensation and in support of its contention, it relied on National Insurance Co. Ltd. v. Durdadahya K. Samal 1988 ACJ 540.. In that case also, the vehicle was requisitioned by the Collector for election purposes and the vehicle was met with an accident due to the negligence of its driver and a person sustained injuries. The point that arose for consideration in that case was whether the Collector who had requisitioned the vehicle is vicariously liable. The answer is— yes as the driver remains under the control of the Collector and the Collec-tor for the purpose of liability, becomes the owner of the vehicle. While construing the provisions of Sec. 95 of the Motor Vehicles Act in the case of requisition of vehicle, it has been found in the same judgment, that the Insurance is a contracted guarantee to the owner of the vehicle to discharge his liability under the terms of the policy and it is not a universal guarantee for the vehicle whosoever becomes the owntr and the liability during the period of requisition has been specifically excluded under the terms of the policy.

4. The learned counsel for the respondents herein relied upon M.S Ramachandra Pillai v. V.K.R Kumarappa Chetttar AIR 1964 Mad. 362.. In that case, the 3rd defendant who is the owner of the lorry lent the lorry and the driver to the 2nd defendant to one Subrabmanya Chertiar for marriage purpose and at the time of the accident, the 2nd defendant continued to be the servant of the 3rd defendant and the person who hired the lorry had no control over the 2nd defendant. The 3rd defendant, the owner of the lorry, was also held liable for the damages caused. In United India Fire and General Insurance Co. v. Maddali Susheela 1979 ACJ 110., also it was held that the insurer continues to be liable notwithstanding the clause providing for excepting the insurer from liability in respect of n accident during the period of requisition.

5. The learned counsel for the claimants relied upon General Assurance Society Ltd. Madras v. N.A Mohammed Hussain AIR 1966 Mad 388.. In that case, a workman died and there is a liability cast upon the owner also under the Workmen's Compensation Act. In that context it was pointed out that the insertion of a clause is bad. But they never said that the ownership has been transferred under the requisition and so the liability of the Insurance Co. can be fixed. He also relied upon New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani AIR 1964 S.C 1736.. In that case, the question of use of the vehicle by the mechanic when it was entrusted for repairs was considered. The Supreme Court has pointed out that there is an implied contract at the time of entrusting the vehicle to the repairer. When the limited use has been effected there, if any accident occurred, the Insurance Co. is liable. It is in that context of fixing the third party's liability where there is no specific condition, the Supreme Court has allowed the ple that the user of the vehicle was the mechanic at the time of repairs has to be considered and the liability of the Insurance Co. can be fixed.

6. The liability during the period of requisition, in this case, has been specifically excluded under the terms of the policy Ex. B-1. When a valid requisition is there for a vehicle and the user of the vehicle has been changed from the real owner to the State Government, in the event of an accident that takes place by the requisitioned vehicle, the claim should be against the Government alone. When a specific condition i.e Clause 9 is envisaged in Ex. B-1 policy as contemplated under Sec. 94(2) of the Motor Vehicles Act, it must be deemed that the liability also has been transferred during the period of requisition by the Government. Mere payment of batta to the driver to whom the vehicle is entrusted does not mean that the affect of requisition has been lost Once the vehicle is given out by way of requisition, the effect of requisition divests the liability of the Insurance Co, during the period of requisition. The G. Os, Exs. B-2 and B-3 issued by the Government clearly points out that during the period of requisition, the owner has no right over the vehicle. The Government is the proper party that has to be impleaded. When the claimant has not chosen to implead the Government, he must take the consequences of it. Merely because the owner is there and the vehicle is insured and the third party has been affected by it, no claim against the Insurance Co, can be made, ignoring the conditions that have been laid down in the requisition order issued by the Government.

7. Section 94(1) and (2) of the Motor Vehicles Act reads as under;

“(1) No person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.

(2) Sub-section (I) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise”.

8. The liability of the vehicle that has been requisitioned by the Government stands on a different footing than the vehicle that has been hired to a third party for a limited purpose, i.e for marriage function or carrying of goods etc. The reasoning given by the lower court fixing the liability on the Insurance Co. inspite of the conditions stipulated in Ex. B-1 policy and the provisions contained in Section 94(2) of the Motor Vehicles Act is bad.

9. The State Government alone is liable to pay the compensation amount, if any, during the period of requisition. The claimants are at liberty to file an application against the Government and the period that has been spent under the wrong impression can be excluded.

10. In the result, the CM. As. are allowed. No costs.

11. Rash and negligent act on the part of the driver of the vehicle has been proved. 1 feel that the quantum of compensation awarded by the lower court is correct. No case is made out for enhancement of compensa tion. The Cross-Objections are dismissed.