The Divisional Manager, New India Assurance Co. Limited, Ongole v. T. Gurava Reddy & Ors., Andhra Pradesh High Court, Judgment, Law, casemine.com

Precedent	Rule or Principle Cited For	Application by the Court
United India Insurance Company Limited v. Malla Janaki, 1990 ACJ 1022	Non-liability of insurer where driver lacked valid licence under fault liability.	Distinguished as it related to fault liability, not no fault liability under Section 140.
New India Assurance Company Ltd v. G.V. Akkamma (DB)	Insurance liability under no fault liability with burden on insurer to prove exclusion, especially for gratuitous passengers.	Found not binding for the instant case due to factual differences and non-consideration of statutory definitions.
Sohan Lal Passi v. P. Sesh Reddy & others	Owner liable for negligent acts of employee drivers even if vehicle driven by unauthorized driver within course of employment.	Supports vicarious liability of owner and insurer under no fault liability.
Skandia Insurance Co. Ltd v. Kokilaben Chandravadan	Insurance company cannot avoid liability if owner appointed licensed driver and breach was not deliberate by owner.	Applied to hold insurer liable despite driver’s licence being fake, if owner acted bona fide.
Kashiram Yadav v. Oriental Fire and General Insurance Co.	Reiterated that insurer liable unless owner wilfully breached policy by allowing unlicensed driver.	Confirmed insurer’s liability where owner engaged licensed driver and was not at fault.
New India Assurance Company Ltd. v. Anasurya, 1990 (2) ALT 667	Transportation of coolies for agricultural operations covered under insurance for agricultural use.	Held insurer liable for accidents involving labourers transported for agricultural purposes.
Gattu Prabhakar v. Thummanapalli Brahmaiah	Insurance covers no fault liability; insurer liable irrespective of breach of policy terms under Section 140.	Supported absolute liability of insurer under no fault liability.
M/s. United India Insurance Company Ltd. v. C.D. Munirathnam Reddy (DB)	Insurance company liable under comprehensive policy for no fault liability despite non-inclusion in Section 95.	Distinguished for not considering statutory definition of liability including no fault liability.
Pandurang Narayandas Sarada v. Subhash Gopal Changale, 1989 ACJ 879 (DB)	Insurance liable under no fault liability even if driver was negligent or unlicensed.	Confirmed insurer’s liability under Section 140 despite negligence.
Kavemanchi Ramulu v. Shaik Khaja, 1991 (1) ACJ 359	Insurance liable under no fault liability; defences under fault liability provisions not available.	Applied to reject insurer’s defence based on breach of policy conditions.
Guru Govekar v. Filomena F. Lobo Miss, 1988 ACJ 585 (SC)	Insurance company liable to indemnify owner for compensation under Section 140.	Supports co-extensive liability of insurer with owner under no fault liability.
Gujarat State Road Transport Corporation v. Ramanbhai Prabhatbhai, 1987 ACJ 561	Introduction and rationale of no fault liability to provide immediate relief to victims.	Supports absolute liability of owner and insurer under no fault liability.

JUDGMENT

1. An important question of law as to the interpretation of 'No fault liability' under Section 140 of the Motor Vehicles Act, 1988 as far as Insurance Company is concerned, arises in this batch of appeals.

2. All these appeals have been preferred by the Insurance Company against the awards of the Motor Accidents Claims Tribunal arising out of a common accident. Hence, they are disposed of by a common judgment.

3. An unfortunate accident took place on 18-2-1995 when the Tractor-Trailor bearing NO.AP-27/T 4173 and AP-27/T 4174 owned by the 1st respondent was proceeding towards the agricultural fields. While so, the connecting hook from the Tractor was delinked, with the result, the trailer fell down in N.S.P. Canal. The coolies in the Trailer were drowned, out of them some died and some of them received injuries. The Tractor-trailor was insured with the 2nd respondent-Insurance company. The Legal Representatives of the deceased occupants in the trailor laid a claim before the Motor Accidents Claims Tribunal under Section 140 of the Motor Vehicles Act, 1988 (hereinafter called the Act') claiming compensation against the owner and the Insurance Company under 'no fault liability'.

4. The 1 st respondent-owner denied that the accident took place due to rash and negligent driving by the driver of the tractor. Even otherwise, he submitted that the 2nd respondent-Insurance Company was liable as the vehicle was insured with the 2nd respondent. It was also stated that on humanitarian grounds he also paid certain sums and executed an agreement with the legal representatives of the deceased.

5. The 2nd respondent-Insurance Company opposed the claim on the ground that the occupants in the trailer were fare paying passengers and therefore it was in contravention of terms and conditions of the Insurance policy. Secondly, it was stated the driver was not having valid licence. The policy specifically contained that the vehicle has to be driven by the person holding valid driving licence.

6. The learned Tribunal held that the licence possessed by the driver was not genuine, but, however, held that under 'no fault liability' under Section'140 of the Act, the Insurance Company was liable for payment of the compensation. The Tribunal found vehicle was used for agricultural and forestry purposes. In the said processes, the coolies were being transported to the place of work for agricultural purposes and, therefore, the Tribunal directed the 2nd respondent-Insurance Company to pay the amount under no fault liability duly deducting the amounts paid by the 1st respondent-Owner. All the petitions under Section 140 of the Act were allowed by the Awards dated 8th September, 1997. The present Appeals arose out of the said Awards.

7. Learned Counsel for the Insurance Company Mr. M. Srinivas Rao submits that when once the Tribunal held that the vehicle was being driven by a person not possessing valid driving licence. It amounts to statutory violation under the Motor Vehicles Act and also the terms of the Insurance Policy, and therefore, any liability arising out of the said accident the Insurance Company cannot be made liable. He also submits that the vehicle cannot carry the passengers even as coolies for purpose of agricultural operations which was not permissible under the terms of the policy. When the terms of policy are violated the liability arising under Section 140 of the Act cannot be invoked against the Insurance Company.

8. On the other hand, learned Counsel appearing for the claimants submit that the 1st respondent-owner had entrusted the Tractor-Trailer to the driver who was possessing valid driving licence. It is also his case that the said driver was previously working in APSRTC and subsequently he was removed from service, but the factum of fake certificate possessed by the said driver was revealed only during the proceedings before the Tribunal and it is not incumbent on the part of the owner to verify from the licence issuing authority the genuineness or otherwise of the driving licence possessed by the driver. The fact that the driver had previously worked in APSRTC itself was sufficient for the owner to entrust the vehicle to the driver for driving. Therefore, even though the driver was held to be not possessing the valid driving licence and that the licence possessed by him was found to be fake, yet, the liability under Section 140 cannot be disowned by the Insurance Company. More over, it is also stated that the coolies were being transported to the fields owned by the owner, therefore, the owner is not only the owner of the vehicle, but also the fields to which the cooties were being transported, and that the vehicle has to be construed as having been engaged for agricultural purposes.

9. The question that falls for consideration is interpretation of Section 140 of the Act, vis-a-vis. The liability of the Insurance Company to cover the third party risk and whether the Insurer can plead statutory defences or breach of terms of policy in a claim under Section 140 of the Act?

10. Learned Counsel for the Insurance Company as well as the Claimant submit that this issue did not arise directly before the Courts. He also submits the case of this type occur very frequently and therefore an authoritative pronouncement is necessary on the subject

11. For proper appreciation of the matter, it is necessary to refer to certain, relevant provisions of the Motor Vehicles Act.

12. The Motor Vehicles Act, 1939 (hereinafter called the 'Old Act') was repealed by Motor Vehicles Act, 1988 and it came into force with effect from 1-7-1989. In the old Act, originally there was no provision under no fault liability, but subsequently, in view of large scale of increase in the accidents and to provide succour to the victims immediately, Chapter VII-A was introduced providing "no fault liability with effect from 1-10-1982" under section 92-a of the old act and the same was carried out in paramateria in section 140 of the 1988 act in Chapter X, the said Section reads thus:

"140. Liability to pay compensation in certain cases on the principle of no fault:--

(1) Where death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to any compensation in respect of such death or disablement in accordance with the provisions of this section.

(2) The amount of compensation which shall be payable under sub-section (1) in respect of the death of any person shall be a fixed sum (fifty thousand rupees) and the amount of compensation payable under that sub-section in respect of the permanent disablement of any person shall be a fixed sum of (twenty-five thousand rupees.) (3) In any claim for compensation under sub-section (1), the Claimant shall not be-required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any other person.

(4) A claim for compensation under subsection (1) shall not to defeated by reason of any wrongful act, neglect or default of the person in respect of whose death of permanent disablement the claim has been made nor shall the quantum of compensation recoverable in respect of such death or permanent disablement be reduced on the basic of the share of such person in the responsibility for such death or permanent disablement.

(5) Notwithstanding anything contained in sub-section (2) regarding death or bodily injury to any person, for which the owner of the vehicle is liable to give compensation for relief, he is also liable to pay compensation under any other law for the time being in force;

Provided that the amount of such compensation to be given under any other law shall be reduced from the amount of compensation payable under this section or under Section 163-A."

Further Section 141 of the Act protects the right to compensation on the principle of fault and also adjustment in cases where liability both for fault and no fault was established. Section 141 is extracted below:

"141. Provisions as to other right to claim compensation for death or permanent disablement :--(1) The right to claim compensation under Section 140 in respect of death or permanent disablement of any person shall be in addition to any other right (hereafter in this section referred to as the right on the principle of fault) to claim compensation in respect thereof under any other provision of this act or of any other law for the time being in force.

(2) A claim for compensation under Section 140 in respect of death or permanent disablement of any person shall be disposed of as expeditiously as possible and where compensation is claimed in respect of such death or permanent disablement under Section 140 and also in pursuance of any right on the principle of fault, the claim for compensation under Section 140 shall be disposed of as aforesaid in the first place.

(3) Notwithstanding anything contained in sub-section (1), where in respect of the death or permanent disablement of any person, the person liable to pay compensation under Section 140 is also liable to pay compensation in accordance with the right on the principle of fault, the person so liable shall pay the first-mentioned compensation and,

(a) if the amount of the first-mentioned compensation is less than the amount of the second-mentioned compensation, he shall be liable to pay (in addition to the first-mentioned compensation) only so much of the second-mentioned compensation as is equal to the amount by which it exceeds the first-mentioned compensation;

(b) if the amount of the first-mentioned compensation is equal to or more than the amount of the second-mentioned compensation, he shall not be liable to pay the second-mentioned compensation."

By this section, the minimum payable under no fault liability is protected thereby ensuring that even if the compensation under fault liability is less than the amount under no fault liability, yet the owner is made liable to pay the latter amount. Section 142 of the Act clarifies the phrase

i.e., permanent loss of eye sight in either eye, loss of hearing of either ear, loss of any limb or joint, permanent disfiguretion of the head or face. Except these injuries, other injuries would not fall under the category of "permanent disablement" for the purpose of claiming compensation under Section 140 of the Act.

13. Most important Section 144 of the Act, which is accorded over-riding effect. This section is having over-riding effect notwithstanding anything contained in any other provisions of the Act or of any other law for the time being in force. Under this chapter, the liability is fastened only on the owner or owners of the vehicle, as the case may be. But, however, Chapter-XI relates to insurance of motor vehicles against third-party risks. This chapter is admittedly intended to provide social justice by giving compensation without proof of fault or negligence of the owner or any other person. It is a beneficial peace of legislation aimed at giving quick relief to the victims of the traffic accidents or the legal representatives without reference to the fault or negligence either on the part of the owner or any other person including the victim. In case of death, the compensation is fixed at Rs.50,000/- and in case of permanent disability it is Rs.25,000/- with effect from 14-11-1994. The applications for no fault liability have to be dealt with expeditiously. Section 92-A imposes automatic and absolute liability on the owner without reference to negligence.

14. Under Chapter XI (Chapter VIII of the Old Act), a provision is made for compulsory insurance of motor vehicles against third party risks. Various words were defined to meet the requirements of this Chapter. The word liability was defined under Section 145-C which reads thus:

"145(c) 'Liability', wherever in relation to the death of or bodily injury to any person includes liability in respect thereof under Section 140."

15. Section 146 of the Act prohibits use of any motor vehicle not covered by insurance.

The requirements of policies and limits of liability of insurance are contained in Section 147 of the Act, which reads thus:

"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 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 vehicle, or

(b) if it is a public service vehicle 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 or 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 subsection (1), shall cover any liability incurred in respect of any accident, up to 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 month after such commencement or till the date of expiry of such policy whichever is earlier.

(3) A policy shall be of no effect for the purpose of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters, may be prescribed in different cases.

(4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the facts to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.

(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this Section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."

16. It is also to be noted that while Section 146 requires that all the motor vehicles should be covered by an insurance cover before it can be used in a public place, Section 147 prescribes the liabilities that are covered by the policy, the limit of liability, and the liabilities which are not required to be covered by the policy. The policy has not only to cover the liability to pay compensation on the principle of fault under Section 168 of the Act, but also for no fault liability under Section 140 of the Act. Thus, Section 147 of the Act enjoins upon the insurer certain requirements in relation to the use of particular vehicle.

They are : (1) the policy must specify the persons or class of persons who are insured with respect to their liability to third parties: (2) the policy must specify the extent of liability which must extend to the extents specified in sub-sections (2); and (3) the liability which may be incurred by. the specified persons or class of persons in respect of death or bodily injury to any person caused by or arising out of the use of the vehicle insured in a public place.

17. Section 149 of the Act imposes duty on the insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub-sections (1) and (2) of Section 149 reads as follows:

"149 (1) If, after a certificate of insurance has been issued under sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of such liability as is required to be covered by a policy under clause (b) of sub-section (1) of Section 147 (being a liability covered by the terms of the policy) is obtained against any person: insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely :

(a) that there has been a breach of specified condition of the policy, being one of the following conditions namely:

(i) a condition excluding the use of the vehicle:

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to play for hire or reward, or

(b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or

(d) without side-car being attached where the vehicle is a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duty licensed, or by an person who has been disqualified for holding or obtaining adriving licence during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or

(b) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular."

18. By this provision, the insurer is now entitled to defend the action and avoid the liability only if there has been a breach of one of the specified conditions of the policy, which condition is one of those mentioned in sub-clauses (i), (ii) or (iii) of Clause (a) and (b) of Section 149 of the Act. Except these defences, the other defences are not open to the insurer to plead in the proceedings.

19. A perusal of the above provisions would reveal that insurance is a must for all the motor vehicles for plying at the public places. The liability of the insurer has been fixed. The insurance policy will be issued by virtue of the provisions contained in Section 147 of the Act. Therefore, it goes to establish that whenever the insured is found liable for compensation, the insurer is made liable but subject to certain defences as stipulated in Section 149 of the Act. But however, we are not concerned with the liability arising under Chapter XI of the Act but concerned with the liability arising under Chapter X of the Act. Admittedly, the definition "liability" as contained in Chapter XI under Section 145 specifies that the liability of the insurance company also comprehends the liability under Section 140 of the Act. Section 140 does not in so many words fixed the liability of insurer, but when the word liability is included in the "liability of the insurer by virtue of definition, the effect of such inclusive definition has to be considered.

20. Let us first consider whether the insurer is liable when the driver was found to be possessing fake driving licence and whether the coolies engaged by the 1st respondent were fare paying passengers so as to successfully plead breach of conditions of insurance policy.

21. The learned Counsel for the Appellant-Insurer submits that the Driver had no Licence and therefore the Insurer cannot be made liable. He also submits that the owner had committed breach of act policy, inasmuch as the occupants in the trailer were fare paying passengers and therefore on this ground also the Insurance is not liable. He relies on the decision of the learned single Judge of this Court in United India Insurance Company Limited v. Malla Janaki, 1990 ACJ 1022. In the said case, it was found that the driver was not having valid driving licence in force as on the date of the accident and therefore the Award of the Tribunal making" the Insurance liable was set aside. The learned Judge found that there was violation of terms of the policy. It was a case arising under principle of fault and not a case under no fault liability. The learned Counsel also relied on the decision of the Division Bench of this Court reported in New India Assurance Company Ltd v. G.V. Akkamma, (DB), wherein the Division Bench held as follows:

"In the case of non-gratuitous passengers, decisions are to the effect that the insurance company is liable to pay compensation under 'no fault liability'. In the decisions cited before us, nowhere liability of the insurance company under 'no fault liability' in regard to the gratuitous passenger has been considered. On the other hand in those judgments the Courts treated gratuitous passengers as a separate class. So, in all we are not having a direct decision dealing with 'no fault liability' in respect of gratuitous passengers.

It is a well settled proposition of law that if the policy covers a particular risk, the insurance company is also liable. But, whether that policy covers a particular risk or not, is a matter to be decided with reference to the evidence and the material adduced by the insurance company to that effect. Unless and until a particular risk is covered by the policy, the question of Insurance Company's liability does not arise. The Karnataka High Court Full Bench decision in Immam Aminasab Nadab 's case 1990 (2) ACJ 757, also laid stress on the risk factors that have been mentioned in the policy.

In the event of death of a person, the Statute has made a provision for payment of amount, which is called instantaneous payment, which is 'no fault liability' claim. That 'no fault liability' claim has to be paid by the owners. If there is a policy the insurance company is also liable to pay. The word used in the relevant provisions of the Act is 'owners'. But, the Legislature never made a mention of insurance company. But, if there is a policy, the insurance company is liable to pay. So, in a matter where it is a gratuitous passenger, the burden is on the insurance company to establish that the particular risk is not covered in the case of a gratuitous passenger. If that is established, the insurance company is notliable under 'no fault liability'.

xxxx xxxx In the case of payment of'no fault liability', they are not liable basing on the policy that has been issued. Invariably, the owners are absent. However, the burden falls on the insurance company. So, as the insurance company is having a copy of the policy with them, they may produce the same and adduce evidence to that effect. If the insurance company produces the same, the Tribunal is liable to fix joint liability, even 'no fault liability', even with regard to the gratuitous passenger, basing on the evidence adduced on behalf of the claimants. The view that has been taken by us with regard to the burden and the defence of the insurance company, has also been taken by the Supreme Court in Jugal Kishore's case 1998 (1) ACJ 270 (SC), so the conclusion is that the burden is on the insurance company in the case of gratuitous passenger under 'no fault liability'.

22. It is observed that the Division Bench did not refer to certain provisions in the Act. As already stated, the definition of liability under Section 145 itself included the liability arising out of Section 140 of the Act. So, when there is such a statutory obligation on the part of the Insurance, the policy separately need not cover the liability under Section 140 of the Act. The Act itself presumes that the liability under Section 140 is also covered when an Insurance policy is taken. Moreover, the case dealt with by the Division Bench was with regard to gratuitous passengers. The Division Bench ruled that the burden was on the insurance in case of gratuitous passenger under 'no fault liability'. It mainly concentrated on the aspect of burden of proof. In the instant case, we are concerned with tractor-trailor used for agricultural purposes in which coolies were being transported. The coolies cannot be treated as passengers either fare paid passengers or gratuitous passengers. The coolies were being transported for engaging them in the field of the 2nd respondent through the tractor-trailor owned by the 1st respondent. Therefore, apart from laying down the law that the Insurance is not liable in respect of gratuitous passengers, on facts also the case dealt with by the Division Bench stands on a different footing. Therefore, the said case is distinguishable on facts. Even otherwise, with respect of the learned Judges, the inclusive definition of the word 'liability' was not noticed, by the Division Bench. Therefore, when the decision was rendered without reference to the material provisions in the Statute, in my considered opinion, it is not a binding precede^ on the case on hand.

23. The learned Counsel for the Claimant relied on the judgment of the Supreme Court reported in Sohan Lal Passi v. P. Sesh Reddy & others, . In that case, the Tribunal held that the accident had occurred on account of rash and negligent driving of the driver who did not have the driving licence and accordingly absolved the Insurance company of the liability. Appeals were filed by the claimants for enhancement and the owner also filed appeal. The High Court while enhancing the claim amount, the appeal filed by the owner was dismissed. The matter was carried in civil appeal to the Supreme Court by the owner. It was observed that the Tribunal and the High Court that one Gurubachan Singh was the regular driver having valid licence, but it appears that the said driver had allowed the Cleaner Rajinder Pal Singh, to drive the vehicle and while so the accident took place due to the rash and negligent driving of the bus. The contention raised before the Supreme Court was that Gurubachan Singh was duly authorised to drive the vehicle and he in turn allowed the vehicle to be driven by the cleaner and therefore the owner cannot be made liable for payment of compensation. The Supreme Court after referring to Indian and English decisions, held as follows:

"The Appellant had authorised Gurubachan Singh to drive the vehicle, but Gurubachan Singh allowed Rajinder Pal Singh, the Cleaner/Conductor who was also the employee of the appellant to drive the vehicle because of which the accident took place. It is not the stand of the appellant that Rajinder Pal Singh was driving the vehicle without the knowledge or consent of Gurubachan Singh, for his personal persuit. He was driving the bus for the business of the appellant, that is to carry on the passengers. In this back ground the appellant cannot escape the liability so far the third parties are concerned on the ground that he had not actually authorised the particular manner in which the act was done. As it has been established that the negligent act of Gurubachan Singh and respondent Rajinder Pal Singh was "in the course of employment" the appellant shall be liable for the same. In the present case, the accident took place when the act authorised was being performed in a mode which may not be proper but nonetheless it was directly connected within the course of employment. It was not an independent act for a purpose which had no nexus or connection with the business of the appellant so as to absolve the appellant from the liability."

However, the question of liability of Insurance arose, the Insurer took the defence that there was a breach of specified condition in the policy i.e., the vehicle should not be driven by a person who was not duly licensed and that Section 96(2)(b)(ii) permitted the Insurer to defend as the ground of breach of conditions. This issue was earl ier decided by the two Judge Bench of the Supreme Court in Skandia Insurance Co. Lid v. Kokilaben Chandravadan, , wherein the defence of the insurer was rejected on the following grounds:

"(1) on a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promiser is absolved once it is shown that he has done everything in his power to keep honour and fulfil the promise and, he himself is not guilty of a deliberate breach.

(2) Even if it treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver.

(3) The exclusion clause has to be 'read down' in order that it is not at war with the 'main purpose' of the provisions enacted for the protection of victims of accidents so that the promisor is exculpated when he does everything in his power to keep the promise."

The correctness of the decision was doubted and when similar issue arose in this Court, the same was referred to three Judges Bench. The Supreme Court referring to in Sohanlal Passi's case (1st cited above), observed thus:

"According to us, Section 96(2)(b)(ii) should not be interpreted in a technical manner. Sub-section (2) of Section 96 only enables the insurance company to defend itself in respect of the liability to pay compensation on any of the grounds mentioned in sub-section (2) including that there has been a contravention of the condition excluding the Vehicle being driven by any person who is not only licensed. This baron face of it operates on the person insured. If the person who has got the vehicle insured has allowed the vehicle to be driven by a person who is not duly licensed then only that clause shall be attracted. In a case where the person who has got insured the vehicle with the insurance company, has appointed a duly licensed driver and if the accident takes place when the vehicle is being driven by a person not duly licensed on the basis of the authority of the driver duly authorised to drive the vehicle whether the insurance company in that event shall be absolved from its liability? The expression "breach" occurring in Section 96(2)(b) means infringement or violation of promise or obligation. As such the insurance company will have to establish that the insured was guilty of an infringement or violation of a promise. The insurer has also to satisfy the Tribunal or the Court that such violation or infringement on the part of the insured was wilful. If the insured has taken all precautions by appointing a duly licensed driver to drive the vehicle in question and it has not been established that it was then insured who al lowed the vehicle to be driven by a person not duly licensed, then the insurance company cannot repudiate its statutory liability under sub-section (1) of Section 96. In the present case far from establishing that it was the appellant who had allowed Rajinder Pal Singh to drive the vehicle when the accident took place, there is not even any allegation that it was the appellant who was guilty of violating the condition that the vehicle shall not be* driven by a person not duly licensed. From the facts of the case, it appears that the appellant had done everything within his power inasmuch as he has engaged a licensed driver Gurubachan Singh and had placed the vehicle in his charge. While interpreting the contract of insurance, the Tribunals and Courts have to be conscious of the face that right to claim compensation by heirs and legal representatives of the victims of the accident is not defeated on the technical grounds. Unless it is established on the materials on record that it was the insured who had wilfully violated the condition of the policy by allowing a person not duly licensed to drive the vehicle when the accident took place, the insurer shall be deemed to be a judgment-debtor in respect of the liability in view of subsection (1) of Section 96 of the Act. It need not be pointed out that the whole concept of getting the vehicle insured by an insurance company is to provide an easy mode of getting compensation by the claimants, otherwise in normal course they had to pursue their claim against the owner from one forum to the other and ultimately to execute the order of the Accident Claims Tribunal for realisation of such amount by sale of properties of the owner of the vehicle. The procedure and result of the execution of the decree is well known."

The Supreme Court in the case of Kashiram Yadav v. Oriental Fire and General Insurance Co., , reiterated the view expressed in Skandia Insurance Co. Ltd v. Kokilaben Chandravadan, (supra). While referring to that case it was said :

".....There the facts found were quite different. The vehicle concerned in that case was undisputedly entrusted to the driver who had a valid licence. In transit the driver stopped the vehicle and went to fetch some snacks from the opposite shop leaving the engine on. The ignition key was at the ignition lock and not in the cabin of the truck. The driver had asked the cleaner to take care of the truck. In fact the driver had left the truck in care of the cleaner. The cleaner meddled with the vehicle and caused the accident. The question arose whether the insured (owner) had committed a breach of the condition incorporated in the certificate of insurance since the cleaner operated the vehicle on the fatal occasion without driving licence. This Court expressed the view that k is only when the insured himself entrusted the vehicle to a person who does not hold a driving licence, he could be said to have committed breach of the condition of the policy. It must be established by the Insurance company that the breach is on the part of the insured. Unless the insured is at fault and is guilty of a breach of the condition, the insurer cannot escape from the obligation to indemnify the insured. It was also observed that when the insured has done everything within his power inasmuch as he has engaged the licensed driver and has placed the vehicle in his charge with the express or implied mandate to drive himself, it cannot be said that the insured is guilty of any breach.

We affirm and reiterate the statement of law laid down in the above case. We may also state 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.

We are in respectful agreement with the view expressed in the case of Skandia Insurance Co. Limited v. Kokilaben Chandravan (supra).

As in the facts of the present case, the appellant shall be deemed to be liable to pay compensation applying the principle of vicarious liability because the accident took place when the act authorised was being performed in a mode which may not be proper but was directly connected with in the course of employment, sub-section (1) of Section 96 of the Act shall come into play and the Insurance Company judgment-debtor, so far the claim made by the heirs and legal representatives of the deceased is concerned."

Applying the said principles in the instant cases, it has to be held that there was no breach of condition of policy. Admittedly, the driver was having licence and that was held to be a fake one during the enquiry before the Tribunal. As a owner of the vehicle he is expected to entrust the vehicle to a person having driving licence. He should take all reasonable care and cautions as are expected of a person of ordinary prudence. It is not the case that the owner of the vehicle had deliberately allowed the vehicle to be driven by the person not having any licence at all. It is beyond anybody's comprehension that the owner should first verily the genuineness of the licence with the licence issuing authority and thereafter only the vehicle should be entrusted for driving. If the owner had taken the reasonable steps available within his powers, it must be held that he had acted bona fide and discharged his statutory obligation under the Act. To the same effect is the judgment of Division Bench of Himachal Pradesh High Court in Sukh Dev v. Bhagwati Devi, 1996 ACJ 1292, which held thus:

"Above all, applying the ratio of judgment in Skandia Insurance Co. Ltd v. Kotilaben Chandravadan, (1987 ACJ 411) (SC), we are of the opinion that in the facts and circumstances of this case the appellant owner had done whatever was within his power, inasmuch as he has engaged a licensed driver and given him mandate to drive it himself, as such, it cannot be said that he is guilty of any breach disentitling him to get the compensation amount from the Insurance Company. The appellant owner cannot be penalised, as has been done by the Tribunal, as it was not expected of him to make detailed verification from the licensing authorities from where the licence was issued and renewed before engaging his driver. Therefore, we have no hesitation to hold that the Insurance Company is liable to indemnify the appellant owner for the compensation awarded to the claimants. Mr. Ashwani Kumar Sharma has tried to urge another point that the accident had not occurred due to the negligence of the driver of the bus. We are not permitting this argument as by now it is well settled that this defence is not available to the insurance company."

24. Following the above said judgments, I have to necessarily hold that in the facts and circumstances of this case, the contention of the Insurance company that there was no valid entrustment of the vehicle has to be rejected. Consequently the insurer is held liable for payment of the compensation even though the driver was found to be possessing fake driving licence.

25. The other contention by the Insurance is that the vehicle was being used for the purpose for which it was hot authorised. The deceased occupants in the trailer were fare paid passengers. On the other hand, it was the case of 1st respondent that they were coolies being transported to the field of the 1st respondent. The Insurance only covered the use of the tractor for agricultural operations.

This issue need not detain us further. Justice K. Ramaswamy, as he then was in The New India Assurance Company Ltd, v. Anasurya, 1990 (2) ALT 667, held thus:

"The immediate question that emerges is whether the contract of insurance of the third parties includes the labour engaged by the owner of the vehicle for loading and unloading the sand for agricultural operations, for which the policy was admittedly taken. Though Sri Somayajulu, learned Counsel, is right in contending that for travelling it is only the driver and the attendant for each tractor is permitted under Rule 302 read with Rule 500 of the Motor Vehicles Rules and V there is an implied prohibition against carrying any persons as passengers in the trailer-cum-tractor, but there is no implied prohibition for carrying the coolies or the labour for agricultural operations. The very object of the insurance of the agricultural operations is to engage the tractor in the operation of agriculture. As an incident thereto, carrying the coolies or the labour for agricultural operations is an integral part of the main purpose of agricultural operations. Therefore, when an accident has occurred in which one or some of the labourers or coolies engaged have sustained injuries or have died due to rash and negligent driving of the driver of the contract, then it covers the third party risks. Obviously for that reason the policy is taken and it is not necessarily of any person or persons other than those who were travelling in the vehicle as incidental to the agricultural operations. If this construction is adopted, it would not only subserve the purpose of the contract of insurance but also the very object of carrying on the agricultural operations with the aid of the tractor towed with trailer. Any other construction would defeat the purpose of the insurance taken by the owner of the tractor-cum-trailer and also deprives the labour or the coolies engaged in the agricultural operations which were carried by the trailer-cum-tractor for the purpose. No doubt, the Madhya Pradesh High Court in 1981 ACJ 107 has taken the view which supports the contention of Shri Somayajulu, but, with due respect and after giving my anxious consideration to the construction to be "adopted, I find it difficult to agree with the ratio laid down thereunder. Accordingly, I hold that the liability fastened on the Insurance Company is clearly valid and enforceable against the appellant."

26. In the case on hand the coolies were being transported to the field of the 1st respondent for agricultural operation: Keeping the principles laid down in the above decision, it has to be held that there was no violation of condition of policy.

27. However, the learned Counsel for the claimant submits that as far as no fault liability is concerned the Claimants need not establish the fault nor breach of conditions and the liability is absolute. He submits that when once the insurance cover is obtained, the liability under Section 140 gets attracted at once and he cited number of decisions. The learned Counsel for insurance submits that the liability of the insurer is only to the extent indicated in the policy and the insurer is entitled to put forth all the defences available under the Statute and also establish breach of terms and conditions of policy. The learned Counsel also submitted that there is no authoritative pronouncement directly on this issue.

28. The learned Counsel for the claimant relies on the judgment of the learned single Judge of the Court reported in Gattu Prabhakar v. Thummanapalli Brahmaiah, . It was observed in para 5 as follows:

"Section 95 which deals with the requirements of Insurance Policies and limits of liability shows that the Insurer under the policy has to insure the person or classes of persons specified in subsection (2) against any liability which may be incurred by the owner in respect of the death or bodily injury to any person or damage to any third party. The liability of the owner under Section 92 is nothing else but a liability in respect of death or bodily injury to the victim. The only difference is of a speedy summary enquiry in which the fault of any person is not relevant but it is confined to identification of the victim and vehicle in the accident. It is not possible to hold that Section 92-A or any other provision excluded the liability which is cast on the Insurance Companies by the clear language of Section 95(1) (b) read with Section 95(2), Section 9^(2) specifically provides for the cases where the Insurance Company is not liable and the limits of its liability."

The learned Counsel also relied on the decision of the Division Bench of this Court reported in M/s. United India Insurance Company Ltd. v. C.D. Munirathnam Reddy (Owner), (DB). The Division Bench after referring to Section 92-A observed thus:

"Thus, on a reading of the above section, it is seen that the liability has been fixed on the owner/owners and nowhere the liability has been fixed on the Insurance Company. Section 93(ba) shows that the word, 'Liability' wherever used in relation to the death of or bodily injury to any person, includes liability in respect thereof under Section 92-A also. The Legislature, having incorporated Section 92-A and Section 93(ba), ought to have included 'no fault liability' under Section 95 of the Act. Because of the non-inclusion of 'no fault liability' under Section 95 of the M.V. Act, the Insurance Company claims that it is not liable to pay any amount in the case of a claim which arose under Section 92-A, i.e. for no fault liability."

But, however, the Division Bench observed that the non-inclusion of 'no fault liability' in Section 95 of the Act, did not mean that the Insurance can raise the plea that it is not liable for compensation payable under Section 92-A established, when there is a composite policy or comprehensive policy. Since the intention of the Legislature was immediate payment of compensation to the victim, without any enquiry, and in case where there is a comprehensive or complete policy available, both the owner as well as the Insurance Company are liable to pay the compensation awarded under Section 92-A of the Act. However, the Division Bench observed that 'no fault liability' was not included in Section 95 and made it clear that it is open for the Insurance Company to claim the same from the owner and suggested amendment to Section 95, The Division Bench failed to observe that when the word 'liability' itself was defined so as to include 'no fault liability' under Section 92-A of the Act, it would not necessitate any amendment and that the liability of the insurance, wherever occurring in Chapter XI of the Act, should be deemed to include the liability under 'no fault liability' clause. With great respect to the learned Judges, this aspect was not considered.

29. The learned Counsel for the claimant also relied on the decision reported in Pandurang Narayandas Sarada v. Subhash Gopal Changale, 1989 ACJ 879 (DB). In the said case a minor boy was driving the vehicle and during the course of driving he caused an accident, with the result, some persons died. On a claim having been made, it was held by the Tribunal that the dependents were entitled to claim the compensation from the owner and that the Insurance Company was not liable to indemnify the owner. The Division Bench affirmed the finding of the Tribunal that the Insurance Company was not liable to indemnify the owner for the compensation. But, however, as far as liability under Section 92-A (present Section 140) was concerned, the Division Bench following the judgments of the Supreme Court in Gujarat State Road Transport Corporation v. Ramanbhai Prabhatbhai, 1987 ACJ 561 (SC) and Guru Govekar v. Filomena F. Lobo Miss, 1998 ACJ 585 (SC) held that the Insurance Company will be liable to indemnify the owner under 'no fault liability'. Therefore, from the decision of the Division Bench which is based on the decision of the Supreme Court referred to above, it is clear that even if the accident is caused with negligence the Insurance is liable under 'no fault liability.

30. The learned Counsel for the claimant also relied on the decision of this Court in Kavemanchi Ramulu v. Shaik Khaja, 1991 (1) ACJ 359 (C.M.A.No.1017/1982& Batch, dated 25-4-90).

31. The point that arose for consideration in all those appeals was whether the Insurer was liable in regard to the compensation to be awarded under Section 92-A and if so whether any defence was available to the Insurer. The learned single Judge held that in a claim under Section 92-A (Section 140 of the present Act), the following factors have to be established.

"(1) Motor vehicle is used.

(2) It was involved in an accident (3) The accident resulted in the death or permanent disablement as contemplated under Section 92-C."

If those factors are proved, no other fact need to be proved. The learned Judge observed thus:

"It may be noted that in the General Law of Torts, the driver of the vehicle, which is involved in an accident resulting in death or bodily injury, is liable to pay damages to the legal representatives of the deceased or the injured if the said accident was due to rash or negligent driving on his part. In such a case the owner of the vehicle is vicariously liable. But a reading of section 92a(1), (3) and (4) suggests that the owner of the vehicle is liable even if the accident is not due to the rash or negligent act of the driver, and even in a case where the injured or the deceased was solely responsible for such accident. Thus it is a case of absolute liability on the part of the owner of the vehicle to pay damages in case of death or permanent disablement caused due to the accident, if that accident had arisen due to the use of his vehicle. Thus this liability which is termed as no fault liability is distinct and different from liability under General Law of Torts which is termed as fault liability. The two liabilities are treated as separate liabilities as evident from Section 92-B (1). It reads that the right to claim compensation under Section 92-A is in addition to the right on the principle of fault to claim compensation in respect of death or permanent disablement. Thus a fault has to be established to claim compensation under Section 110-A. The fault on the part of the owner, a driver of the vehicle or any other person need not be established to claim compensation under Section 92-A. Further even the fault on the part of the victim i.e. injured or the deceased is not a ground to defeat the claim under Section 92-A."

The learned Judge further held that the liability that was fixed under Section 92-A was indivisible, premptory and total and that this is an absolute liability, even though this type of liability cannot be fastened on the owner under general law of torts. It was further held that liability under Section 110-A was only on the principle of fault liability which is in conformity with the general law of torts and the said liability cannot be said to be absolute. The owner can avoid the liability by leading satisfactory evidence. But, in view of the section 92-a(iv), the owner was liable even though the deceased or injured was negligent. Thus the nature of liability under Section 92-A was different from that of under Section 110-A. He further held that when an application was made only under Section 92-A, and when there is no application under Section 110-A, the enquiry has to be held only under Section 92-A to establish (I) the motor vehicle was used, (2) it was involved in an accident, (3) it resulted in the death or permanent disability. No further enquiry with regard to the insurance coverage under the Act or contract policy etc., are necessary. The learned Judge also held thus:

"Further when an absolute liability was fastened and when the owner of the vehicle has to insure the vehicle compulsorily, can it be stated that the owner of the vehicle alone is liable for no fault liability, in cases where he need not take policy under Section 95 (l)(b) or (c). As Section 92-E has got an over-riding effect. and when the intendment under Section 94 is to have insurance coverage in all cases where the owner is statutorily liable, it is just and proper to hold that the insurer is also liable in regard to the compensation payable under Section 92-A. Hence, I respectfully agree with the judgment of this Court in New India Assurance Company Ltd, v. Chotina Bee, 1986 ACJ 120, wherein it was held that the insurer is also liable to the compensation to be awarded under Section 92-A."

The learned Judge also observed thus:

"A reading of Section 92-A suggests that no defence is available to the owner of the vehicle if it is established that his vehicle was involved in the accident resulting in death or permanent disability as contemplated under Section 92-C. Thus even if a person enters into the lorry without heeding to the protests of the driver, the owner of the vehicle is liable if such person dies because of the injuries sustained in that accident or if they result in permanent disablement. Section 93(ba) reads that the liability in regard to Chapter VIII includes the liability under Section 92-A. This Court held in New India Assurance Company Limited v. Chotina Bee, (supra) that insurer is also liable for no-fault liability."

With regard to the availability of plea under Section 96 (1) (b) or (c) and the defences under Section 96, the learned Judge held thus :

Now it has to be seen whether the insurer is entitled to raise any pleas under Section 95(1) (b) or (c) or any defence under Section 96 to defeat the claim on the basis of no-fault liability. Section 92E is having over-riding effect not only against other provisions in this Act, but also against the Genera! Law. It follows that the other provisions in this Act applicable in regard to no-fault liability so long as they are not inconsistent with the provisions in Chapter VII-A. The pleas under Section 96(1) (b) or (c) and the defences under Section 96 are applicable to an insurer if the claim is on the principle of fault-liability. It means that if the claim is for damages as per General Law of Torts. But when no defence is open to the owner even in case of contributory or sole negligence on the part of the victim or any act of the victim, it has to be held that it is a case of absolute liability and it cannot be defeated by way of any defence or other pleas. So the pleas or the defences available to an insurer as per Section 95 (1) (b) or (c) or Section 96 are inconsistent with the concept of absolute liability created under Section 92-A. Hence, in view of non-obstante clause as per Section 92-E which has over-riding effect over the other provisions in the Act, it follows that the insurer is not entitled to raise the pleas available under Section 95 (1) (b) or (c) or Section 96. So if it is established that the vehicle which was involved in the accident was insured and that the policy was in force by the date of the accident, the Insurance Company is liable for no-fault as Section 93 (ba) defines that liability includes no fault liability under Section 92-A and as it means that Act policy covers no-fault liability created under Section 92-A. Hence, I find that even it is ultimately established that the insurer is not liable in regard to the amount awarded as per Section 110-B, still the Insurance Company is not entitled to recover the amount paid towards no-fault liability. It follows that to the extent of no-fault liability, the insurer is liable even in cases where it is not liable for the amount awarded under Section 110-B."

Thus the judgment of the learned Judge is elaborate and clear point. This judgment was not reversed by the Division Bench in the subsequent decisions. On the other hand, the Division Bench in G.V. Akkamma's case (supra), observed thus.

"In K. Ramulu v. Shaik Khaja, 1991 (1) ACJ 359 (AP), a learned single Judge of this Court found that the Insurance Company is liable to pay compensation under 'no fault liability' in case of hire-paid passengers. The learned Judge further found that even if it is ultimately established that the insurer is not liable in regard to the amount awarded as per Section 110-B, still the Insurance Company is not entitled to recover the amount paid towards, no fault liability'. It follows that to the extent of 'no fault liability', the insurer is liable even in cases where it is not liable for the amount awarded under Section 110-B."

32. The learned Counsel for the Insurance Company, however submits that the decision of the Full Bench of Karnataka High Court reported in United India Insurance Company Ltd. v. Immam Aminasab Nadaf, 1990 (2) ACJ 757, is in favour of the Insurance which held that even under 'no fault liability', the owner of the vehicle is limited to the" coverage under policy and not beyond that.

33. The Full Bench of Karnataka High Court, however, observed that where the compensation claimed under no fault liability of the owner of the vehicle under Section 92-A or on the ground fault under Section 110-A as far as the Insurer was concerned, his liability in view of Section 95(5) is to indemnify the Insured only to the extent of such liability undertaken or covered by the policy and not beyond that. In order to fix the liability on the Insurance Company to pay the compensation awarded under Section 92-A of the Act, the Tribunal, in addition to deciding as to whether the vehicle involved in the accident was covered by an insurance policy has to decide as to whether the prima facie risk was covered by the insurance policy. If the policy did not cover the risk, the Insurance Company may not be compelled to pay the same and collect the money from the owner at a later stage of point. But, however, I find the Full Bench failed to notice the definition of word "Liability" under Section 92-A also. By legal fiction, the policy need not separately cover the liability under Section 92-A and any policy issued under Chapter VIII would automatically cover no fault liability under Section 92-A. Therefore, the decision of the Full Bench of the Karnataka High Court, which did not consider the definition of 'liability', vis-a-vis the liability under Section 92-A in my considered option, does not go to the aid of the Insurance.

34. Learned Counsel for the Insurance also relied on the decision of Patna High Court, Ranchi Bench in New India Assurance Company Limited v. Turkihi, 1995 ACJ 1118. It was a case of accident where the persons travelling in the goods vehicle died and the said passengers were held to be unauthorised occupants. In such an event, it was held that the Insurance Company was not liable for payment of compensation under no fault liability. This position is also not applicable here, as was established case that the coolies were being transported in the tractor-trailor for agricultural purposes. Moreover, the definition of 'liability' under Section 145 was not considered.

35. Reliance was also placed by the learned Counsel for Insurance on the decision in United India Insurance Company Limited v. Kamala Lochan Kamalo, 1996 ACJ 302. The learned single Judge held that it cannot be said that liability under Section 92-A of the Act is to be fastened on the Insurer without any reference to the Insurance policy. The mere fact that the vehicle was insured was not by itself sufficient to settle the liability on the Insurer. It is to be either proved/established that the risk in question was covered or required to be covered under Section 95-1 of the Act, 1939. The provisions contained in 92-E cannot be interpreted in a manner to mean that a mere fact of insurance would be sufficient to saddle the liability on the Insurer. While determining the liability of the Insurer, whether under Section 92-A or under Section 110-B, reference to section 95 and section 96 of the , act cannot be dispensed with. The learned Judge remitted the matter to the Tribunal for disposing of the application under section 92-a of the old act in accordance with law. The learned Judge, however, observed that the liability of the Insurer was required to be ascertained or fixed with reference to the insurance policy. With great respect the decision of the learned Judge did not consider the effect of definition of 'liability' which apart from the liability under sub-section (2) of Section 147, is inclusive of 'no fault liability' under Section 140 of the Act. Hence, this decision is of no assistance to the insurance.

36. The learned Counsel also relied on a decision in Branch Manager, National insurance Company v. B. Vapatamma, 1997 (5) ALD 188. It was held by a learned single Judge of this Court that the liability of the Insurance has to be decided in the light of the terms of the insurance policy and the statutory provisions in Section 95, 96 and 110-B (2) (a) of the Act that the burden is on the Insurance to file the policy and the same cannot be avoided on technical grounds. It was also held that when the policy did not cover the risk towards the fare paying passengers in a goods vehicle, the Insurance Company cannot be made liable. The learned Judge further observed that when the Insurance Company was found not liable for payment of the compensation, it cannot be asked to pay the compensation even in respect of no fault liability under Section 92-A. The learned Judge referring to K. Ramulu v. Shaik Khaja, (supra), said:

"In the first place such a statement of law is based on the facts in the case that the claimants in that case were accompanying the goods. Secondly, a careful reading of the decision cannot be meant to mean that such a legal effect flows borrowing Section 92-A of the Act to fix the 'no fault liability' on the insurer. Even assuming that such a rule is laid as law of precedent, it is covered by the Division Bench decision of this Court in Bhanumathi's case and also of the Supreme Court in Pushpa Bai 's case and Jugal Kishore 's case supra and cannot be held to can be either good law or binding precedent. This can be elaborated little more for proper understanding of the matter. As already pointed out, the liability of the insurer in a given case under the Motor Vehicle Act flows from the contract of insurance and the statutory provisions, Section 110(B), (2-A), Section 95 and Section 96 of the Act and not otherwise. Section 92-A cannot be taken to be isolated from such provisions. If such a postulation is accepted, it may lead to absurdities. Because if such interpretation is given in all claim cases where there is no insurance policy, but the owner becoming liable to pay the 'no fault liability', then the Insurance Company would automatically become liable under Section 92-A of the Act to indemnify the owner of the liability to pay the compensation viz., 'no fault liability'. Admittedly, there are atleast four Insurance Companies, as can be judicially noticed, dealing with such insurance business. The question arises as to which Insurance Company should be made liable to pay the compensation or whether all of them should be made liable. Secondly, a proper reading of Section 92-A and Section 92-B shows that it is intended to be an interim measure or interim compensation to merge in the final compensation to be determined under Section 110-A of the Act. Sections 92-A and 92-B of the Act reads as follows:

XXXX XX XX XXXX The sum and substance of the above provisions appears to be, notwithstanding the proof of the fault or the proof of insurance and the stipulations as required and notwithstanding the defences available to the Insurance Company to be agitated under the fault liability, the Tribunal or the Court would award a minimum compensation so required in death and injury cases which should be the sum even if the ultimate compensation is less than that, more if it is more than the minimum compensation and at any rate the minimum in case there is no fault liability. Sub-clauses (a) and (b) of Section 92-B in more than clear terms explain this. Basically, the provisions of Section 92-B having nothing to do with the liability of the insurer. It is because of the contract of insurance the insurer comes into picture to satisfy the 'no fault liability' compensation also. That is how section 92-a(1) categorically states that the owner of the vehicle shall as the case may be, owners of the vehicles, shall jointly and severally be liable to pay the compensation and there is not even a whisper of the insurer in the provision. To read anything beyond the statute is not permissible. The interpretation of the statute should also be within the plain, grammatical interpretation, unless the interpretation is warranted beyond that having due regard to the totality of the provision in an enactment. If we read Section 92-A and B, 110-A, 110-B, 110-B, (2-A) and Section 95 and 96 no such interpretation is possible to put the insurer to liability under Section 92-A notwithstanding the coverage of the insurance under the contract of insurance or the insurance policy."

The opinion of the learned Judge that the above case could not be held to be good law in view of the decision in Bhanumathi 's case, Pushpa Bai's case and Jugal Kishore's case, does not appear to be correct. In the aforesaid cases the liability of Insurance under Section 92-A was not directly under issue. The learned Judge also posed a question as to which of the four Insurance Companies has to be made liable under 'no fault liability'. That situation may not arise as we are dealing with the case having insurance coverage with specified company. The further observation of the learned Judge that Section 92-A was intended as an interim measures to merge in the final compensation also does not appeal to reason. There is no such requirement under the Act. It is always open to the Claimant to claim compensation under Section 92-A and he may not go for compensation under fault liability. The learned Judge also failed to see that the liability under 'fault' and no fault liability stand on different footing. The word 'liability' under sub-section (2) of Section 147 includes the 'no fault liability'. This aspect was not considered by the learned Judge. With great respect to the learned Judge, I differ with the decision on this aspect.

37. In this regard it is also pertinent to refer to certain decisions of the Supreme Court for a better perspective of the issue. In Guru Govekar v. Filomena F. Lobo Miss, 1988 ACJ 585 (SC), the Supreme Court observed thus:

"While it may be true, as we have observed earlier, that under the law of Torts, the owner may not be liable on the principle of vicarious liability, the insurer would be liable to pay the compensation by virtue ofthe provisions of Section 94 and Section 95 of the Act, referred to above. Therefore, we hold that the Insurance Company will be liable to indemnify the owner so far as the compensation payable under Section 92-A of the Motor Vehicles Act is concerned."

In Gujarat State Road Transport Corporation v. Ramanbhai Prabhatbhai, 1987 ACJ 561, the Supreme Court observed at para 9 as under:

"When the Fatal Accidents Act, 1855 was enacted there were no motor vehicles on the roads in India. Today, thanks to the modern civilization, thousands of motor vehicles are put on the road and the largest number of injuries and deaths are taking place on the roads on account of the motor vehicle accidents. In view of the fast and constantly increasing volume of traffic, the motor vehicles upon the roads may be regarded to some extent as coming within the principle of liability defined in Rylands v. Fletcher, 1868 LR3 HL 330. From the point of view of the pedestrian the roads of this country have been rendered by the use of the motor vehicles highly dangerous. 'Hit and run' cases where the drivers of the motor vehicles who have caused the accidents are not known, are increasing in number. Where a pedestrian without negligence on his part is injured or killed by a motorist whether negligently or not, he or his legal representatives, as the case may be, should be entitled to recover damages if the principle of social justice should have any meaning at all. In order to meet to some extent the responsibility of the Society to the deaths and injuries caused in road accidents there has been a continuous agitation throught the world to make the liability for damages arising out of motor vehicle accidents as a liability without fault. In order to meet the above social demand on the recommendation of the Indian Law Commission, Chapter VII-A was introduced in the Act. Sections 92-A to 92-E of the Act are to be found in Chapter VII-A. Section 92-E of the Act provides that the provisions of Chapter VII-A shall have effect notwithstanding anything contained in any other provision of the Act or of any other law for the time being in force. Section 92-A of the Act provides that where the death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner ofthe vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of the said section. The amount of compensation which is payable thereunder in respect of the death of any person is a fixed sum of fifteen thousand rupees and the amount of compensation payable under it in respect of the permanent disablement of any person is a fixed sum of seven thousand and five hundred rupees. Sub-section (3) of Section 92-A of the Act provides that in any claim for compensation under subsection (1) of section 92-a, the claimant shall not be required to plead and establish that the death or permanent disablement, in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any other person. It is thus seen that to a limited extent relief has been granted under Section 92-A of the Act to the legal representatives of the victims who have died on account of motor vehicle accidents. Now they can claim Rs. 15,000/-without proof of any negligence on the part of the owner of the vehicle or of any other person. This part of the Act is clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicle before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. To that extent the substantive law of the country stands modified."

In K. Nanda Kumar v. Managing Director, Thanthal Periyar Transport Corporation, , observed thus:

"By reason of sub-section (1) of Section 92-A, an absolute liability is cast upon the owner of a vehicle to pay compensation in respect of death or permanent disablement resulting from an accident arising out of its use. By reason of sub-section (3), the claimant is not required to plead or establish that the death or disablement was due to a wrongful act or neglect or default of the owner or any other person. Sub-section (4) is in two parts. The first part states that a claim for compensation under the section is not defeated by reason of any wrongful act, neglect or default of the person who had died or suffered permanent disablement. The second part states that the quantum or compensation is not to be diminished even if the person who had died or suffered permanent disablement bore some responsibility for his death or disablement.

There was, therefore, on a plain reading of Section 92-A, particularly, the first part of sub-section (4) thereof, no basis for holding that a claim thereunder could be made only if the person who had died or suffered permanent disablement had not been negligent. The provision being clear, no external aid to its construction, such as the Statement of Objects and Reasons, was called for."

But, however, in the said case, it was not covered by the Insurance. However, on principle when the liability under Section 92-A was held to be absolute on the owner and when vehicle was insured, the absolute liability which Is cast on the owner will automatically fall on the insurance under 'no fault liability'. The nature of the provision itself indicates that against the principles of general torts.

38. From the provisions Chapters X and XI of the Motor Vehicles Act, and a close scrutiny of the judgments referred to above,' it is manifest that when once the vehicle is insured, the liability of the insurer becomes co-extensive with that of liability of the owner. The definition of liability under Section 145 also includes the liability under Section 140 (no fault liability). As already noticed by me in the foregoing paras, Section 92-A of the Old Act (Section 140 of the present Act) was introduced in 1982 to provide immediate cash compensation to the victims of automobile accidents disregarding the negligence or wrongful action on the part of the owner or any other person, including the victim. In view of the enormous increase in automobile vehicles and consequently spurt in road accidents involving number of passengers, pedastrains and other victims, the Parliament thought it fit to introduce the beneficial piece of legislation under Chapter VII-A of the Old Act (under Chapter X of the present Act). Under general law of torts, the award of damages are based on principle of fault either directly or vicariously. Section 140 is an exception to the general principles of tortuous liability and Section 144 recognises the said exception and accords over-riding effect as the Parliament has chosen to bring such a legislation in the interest of the community. Therefore, Section 140 has to be interpreted in a meaningful manner so as to fall in conformity with the objects of the legislation. However, on a bare reading of Section 140 the owner is liable under no fault liability. But, under Chapter XI, the coverage of insurance became mandatory under Section 146 so as to cover the third party risks arising out of automobile accidents and to indemnity the owner in respect thereof. The statute has given certain safeguards to the insurance to plead defences including the terms of policy. But, at the same time, apart from covering the liability by the insurance under Chapter XI, the statute has also embraced the 'no fault liability' under Section 140. The definition of 'liability' in Chapter XI includes the liability not only arising under Chapter XI but also under Chapter X namely Section 140. When once the liability under Chapter XI is inclusive of liability under Section 140, in such a case, would it be appropriate for the insurance to contend that still the insurance can plead defences. When once the policy is issued, the statute creates legal fiction making the insurance liable under 'no fault liability'. The Insurer had undertaken to indemnify the owner under fault liability subject to certain limitations under Chapter XI of the Act. When such liability includes the liability under Section 140 of the Act the Insurer cannot plead that it cannot indemnify the owner under 'no fault liability'. If the owner is made liable under 'no fault liability' so also the insurer is liable if the vehicle is insured. The provision has to be interpreted not to frustrate the intention of the legislature, but to sub-serve the object. Therefore, in my considered opinion, when once the insurance is obtained under Chapter XI, the liability of the Insurance Company cannot be limited to Chapter XI, but it is also liable under 'no fault liability'. More over the Chapter X has been given an over-riding effect on the other provisions of the Act, or other laws for the time being in force. The judgments reported in The New India Assurance Company Limited v. Anasurya, (supra), Union of India v. Ram Devi, 1989 ACJ 896, Kavemanchi Ramulu v. Shaik Khaja, 1991 (1) ACJ 359, New India Assurance Company Ltd. v. G. V. Akkamma, (DB), Gujarat State Road Transport Corporation v. Ramanbhai Prabhatbai, 1987 ACJ 561, and Guru Govekar v. Filomena F. Lobo Miss, (supra), fully supports the view taken by me.

39. For the foregoing reasons, I record the following conclusions:

(i) For a claim under Section 140 of the Act, the claimants need not plead negligence of the deceased or injured as the case may be nor wrongful act on the part of the owner or any other person is necessary to be established.

(ii) In a claim under Section 140 the following facts have to be proved.

(a) that a vehicle was involved in the accident.

(b) that the victim received injuries in the accident resulting in his death or a permanent disability as specified under Section 142 of the Act.

(c) That the vehicle was insured with the Insurance Company under Chapter XI of the Act.

(d) that the claim was made on the owner or the driver of the vehicle including the Insurance Company with whom the policy was obtained and that the policy was in operation as on the date of the accident.

(iii) The plea of the defence available under Chapter XI, or the breach of terms of policy cannot be invoked by the insurance when a claim under Section 140 is made by the victims or the dependents.

40. Viewed from any angle, I do not find any infirmity in the awards of the Tribunal. All the CMAs are accordingly dismissed. No costs.

A.A.O Nos. 440 of 1998 and etc.

The Divisional Manager, New India Assurance Co. Limited, Ongole v. T. Gurava Reddy & Ors.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Insurance Company’s Arguments

Claimants’ Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

The Divisional Manager, New India Assurance Co. Limited, Ongole v. T. Gurava Reddy & Ors.

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