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Smart Summary

Structured Summary of the Legal Opinion

Factual and Procedural Background

This appeal challenges the judgment and award dated 9 December 2002 of the Motor Accident Claims Tribunal in Claim Petition No. 433 of 1996. The Tribunal had directed the respondent owner and the Insurance Company to pay Rs. 1,05,000 as compensation with interest at 9% per annum from the date of petition (7 October 1993) until realisation. The accident occurred on 9 October 1992 and resulted in the death of Narayan. The vehicle involved was a tipper bearing registration No. MH 31-6526. Respondent Nos. 3 and 4 (the father and mother of the deceased) filed the claim petition under Section 166 of the Motor Vehicles Act, 1988. The appeal was heard finally by the Court, with counsel for the appellant and respondents appearing and presenting arguments.

Legal Issues Presented

  1. Whether the Insurance Company would be liable to pay compensation under the provisions of the Motor Vehicles Act if there is death or bodily injury to a person travelling in a goods vehicle as a passenger in view of the Larger Bench decision of the Apex Court in National Insurance Co. Ltd. v. Baljit Kaur and National Insurance Co. Ltd. v. Bommithi Subbhayamma.
  2. Whether the Insurance Company is liable to satisfy the award in view of Section 168 of the Motor Vehicles Act.

Arguments of the Parties

Appellant's Arguments

  • The learned Counsel for the appellant contended that the deceased was travelling in the goods vehicle (tipper) and therefore the Insurance Company would not be liable to pay compensation.
  • Reliance was placed on the Supreme Court decision in National Insurance Co. Ltd. v. Bommithi Subbhayamma, which was said to hold that there is no statutory liability on the owner of a goods vehicle to insure for any passenger and that the Insurance Company is not statutorily liable for payment of compensation to gratuitous passengers travelling in goods vehicles.

Insurance Company's Arguments

  • The learned Counsel for the Insurance Company argued that it is only the owner of the motor vehicle who is liable to pay compensation since the deceased was admittedly travelling as a gratuitous passenger in the goods vehicle.
  • It was contended that whether the deceased paid fare was not of much relevance, and given admission that he was a gratuitous passenger, the Insurance Company would not be liable to pay compensation.

Respondent-Claimant's Arguments

  • The learned Counsel for the respondent-claimant relied on Apex Court decisions in National Insurance Co. Ltd. v. Baljit Kaur and National Insurance Co. Ltd. v. Challa Upendra Rao to contend that the Insurance Company is liable to satisfy the award and then can recover it from the owner of the motor vehicle involved in the accident.

Respondent Owner's Arguments

  • Mr. Kukdey, counsel for the respondent owner, relied on National Insurance Co. Ltd. v. Swaran Singh to argue that the Insurance Company is liable to pay compensation because Sub-section (1) of Section 149 casts a liability upon the insurer to pay to the person entitled to the benefit of the decree as if the insurer were the judgment-debtor, subject to the provisions of that section.
  • It was further submitted that the statute raises a legal fiction deeming the insurer to be the judgment-debtor and that to avoid liability the insurer must show that the conditions under Section 149(2)(a) or (b) are satisfied and must establish a breach on the part of the insured.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
National Insurance Co. Ltd. v. Bommithi Subbhayamma The decision is cited for the proposition that there is no statutory liability on the owner of a goods vehicle to insure for any passenger and that the insurer is not statutorily liable for compensation to gratuitous passengers travelling in goods vehicles. The Court recited Bommithi's holding as part of the jurisprudence that limits insurer liability in goods vehicles, but distinguished that the specific question of whether insurer must satisfy an award under Section 168 was not considered by Bommithi.
National Insurance Co. Ltd. v. Baljit Kaur Large Bench decision addressing effect of the 1994 amendment to Section 147 and the scope of Section 168; it clarifies that where insurer is not statutorily liable, the Tribunal can direct insurer to satisfy the decree and permit insurer to recover the amount from the owner, with such clarification to have prospective effect. The Court applied Baljit Kaur to hold that, although the insurer is not statutorily liable for passengers in goods vehicles, in the interest of justice the insurer should be directed to satisfy the award and may recover the amount from the owner through executing court proceedings under Section 168.
National Insurance Co. Ltd. v. Challa Upendra Rao Cited by the respondent-claimant alongside Baljit Kaur as authority for the proposition that the Insurance Company is liable to satisfy awards and recover from the owner. The Court referred to Challa Upendra Rao as part of the body of decisions relied on by the claimants in support of directing the insurer to satisfy the award and recover from the owner.
National Insurance Co. Ltd. v. Swaran Singh Cited for the principle that Sub-section (1) of Section 149 casts a liability upon the insurer to pay to the person entitled to the benefit of the decree as if the insurer were the judgment-debtor, subject to the section's provisions. The Court noted the respondent owner's reliance on Swaran Singh to support a submission that the insurer is liable to pay compensation, but the Court's ultimate view was guided by subsequent larger-bench authorities which limited insurer liability in the context of goods vehicles.
New India Assurance Co. Ltd. v. Asha Rani Large Bench decision interpreting the words "any person" in Section 147 post-1994 amendment; holds that the 1994 amendment added "including owner of the goods or his authorised representative" and that insurers would not be liable to passengers of goods vehicles (particularly gratuitous passengers) unless specifically within the amended scope. The Court relied on Asha Rani as establishing that insurers are not liable for passengers in goods vehicles and treated this as settling the legal position on that point.
National Insurance Co. Ltd. v. Ajlt Kumar Cited for the proposition that the insurer cannot be made liable to pay compensation if the passenger is travelling in a goods vehicle. The Court treated Ajlt/ Ajit Kumar as part of the line of authorities confirming that insurers are not liable for passengers in goods vehicles and used it to answer the first question of law against insurer liability.
New India Assurance Co. Ltd. v. Santoshldevi Cited as a decision of this Court that followed the decisions in Asha Rani and Ajit Kumar, reinforcing the legal position on insurer non-liability for passengers in goods vehicles. The Court observed that Santoshldevi follows the Supreme Court's decisions and thus confirms the settled position that insurers cannot be made liable in the circumstances of passengers in goods vehicles.
Satpal Singh (2000 A.C.J. 1) Earlier Supreme Court authority relied upon by Tribunal and High Court in the past; later affected by Asha Rani. The Court noted that prior reliance on Satpal Singh by lower forums had been overtaken by later decisions (Asha Rani) and that Baljit Kaur clarified the law going forward.

Court's Reasoning and Analysis

The Court structured its analysis around the two questions framed in the appeal. It first examined the body of Supreme Court jurisprudence dealing with insurer liability where the injured or deceased person was travelling in a goods vehicle:

  • The Court recounted that the Larger Bench in New India Assurance Co. Ltd. v. Asha Rani interpreted the 1994 amendment to Section 147 and concluded that the amendment added a limited category ("owner of the goods or his authorised representative carried in the vehicle") and did not intend to extend compulsory insurance coverage to all passengers of goods vehicles. The Court quoted from Asha Rani to show the legislative intent and the plain meaning analysis adopted by the Larger Bench.
  • The Court noted the decision in National Insurance Co. Ltd. v. Bommithi Subbhayamma as having held that there is no statutory liability on the owner of a goods vehicle to insure for any passenger and that the insurer is not statutorily liable for gratuitous passengers in goods vehicles.
  • Relying also on Ajit Kumar and subsequent decisions followed by this Court (e.g., New India Assurance Co. Ltd. v. Santoshldevi), the Court concluded that the legal position is settled: an insurer cannot be made liable to pay compensation if the passenger was travelling in a goods vehicle.

On the second question concerning Section 168 and whether the insurer is liable to satisfy the award, the Court considered the Larger Bench decision in National Insurance Co. Ltd. v. Baljit Kaur. The Court highlighted the following points from Baljit Kaur:

  • Baljit Kaur clarified that, although the insurer may not be statutorily liable for passengers in goods vehicles, the interest of justice may require that the insurer be directed to satisfy the decree and then be permitted to recover the sum from the owner.
  • The Baljit Kaur decision instructed that such clarification should have prospective effect and that the insurer need not file a separate suit; instead, it could initiate proceedings before the executing Court as if the dispute between insurer and owner had been the subject-matter before the Tribunal, allowing recovery under the scope and purport of Section 168.

Applying Baljit Kaur, the Court held that although the deceased was travelling in a goods vehicle (and insurer was not statutorily liable), fairness and the interest of justice require the insurer to satisfy the award and thereafter recover from the owner through execution proceedings. The Court observed that Bommithi did not decide the Section 168 issue, leaving Baljit Kaur as the controlling authority on the point of satisfying awards and recovery.

Holding and Implications

Core Ruling: The appeal is partly allowed and disposed of in the terms that the Insurance Company is not statutorily liable to pay compensation for a person travelling in a goods vehicle as a passenger, but the Insurance Company is directed to satisfy the award and may recover the amount from the owner of the vehicle in accordance with the directions in National Insurance Co. Ltd. v. Baljit Kaur.

Implications and direct effects:

  • The insurer is not held statutorily liable for compensation to a passenger of a goods vehicle (including gratuitous passengers) — the Court answered Question (i) against insurer liability in line with Asha Rani, Ajit Kumar and related authorities.
  • Under the Baljit Kaur framework (and Section 168), the insurer is directed to satisfy the Tribunal's award in favour of the claimant and is permitted to recover the paid amount from the owner of the vehicle through executing-court proceedings without filing a separate suit.
  • The decision follows and applies existing Supreme Court Larger Bench authority (Baljit Kaur and Asha Rani); the Court did not purport to set a new precedent but applied the cited authorities to the facts before it.
  • The appeal was accordingly partly allowed and disposed of in the specific terms described above.
Show full summary ...

    National Insurance Co. Ltd. v. Prakash And Ors.

    1. Heard Mr. Pathak, learned Counsel for appellant, Mr. Kukdey, learned Counsel for respondent No. 2 and Mr. S.S. Sharma, learned Counsel for the respondent Nos. 3 and 4 finally.

    2. This appeal is against the judgment and award dated 9th December, 2002 passed by the Motor Accident Claims Tribunal in Claim Petition No. 433 of 1996 whereby the Tribunal directed the respondent owner and Insurance Company to pay an amount of Rs. 1,05,000 as compensation with interest at 9 per cent per annum from the date of petition i.e., 7th October, 1993 till its realisation. Accident occurred on 9th October, 1992. Narayan died in the accident arising out of the use of the motor vehicle, i.e., tipper bearing registration No. MH 31-6526. Respondent Nos. 3 and 4 are father and mother of the deceased who filed claim petition under Section 166 of Motor Vehicles Act, 1988.

    3. The learned Counsel for the appellant contended that the deceased was travelling in the aforesaid goods vehicle, i.e. tipper truck on the date of the accident and, therefore, the Insurance Company would not be liable to pay compensation. In support of these submissions he relied on the decision of Supreme Court in National Insurance Co. Ltd. v. Bommithi Subbhayamma , wherein it has been held that there is no statutory liability on owner of goods vehicle to get his vehicle insured for any passenger and the Insurance Company is not statutorily liable for payment of compensation to gratuitous passengers travelling in goods vehicle. The learned Counsel for the Insurance Company therefore contended that it is only the owner of the motor vehicle involved in the accident, who is liable to pay compensation since the deceased was admittedly travelling as a gratuitous passenger in the goods vehicle. He contended that whether the deceased was travelling as a passenger by paying fare is not of much relevance and when it is an admitted position that the deceased was travelling in the goods vehicle as a gratuitous passenger, Insurance Company would not be liable to pay compensation.

    4. Learned Counsel for the respondent-claimant contended that in view of the decisions of the Apex Court in National Insurance Co. Ltd. v. Baljit Kaur and in the case of National Insurance Co. Ltd. v. Challa Upendra Rao 111 (2004) ACC 292 (SC) : 2005 (5) All MR (SC) 509, the Insurance Company is liable to satisfy the award and then can recover it from the owner of the motor vehicle involved in the accident.

    5. Mr. Kukdey, learned Counsel for the respondent owner of the vehicle contended that in view of the decision of Apex Court in National Insurance Co. Ltd v. Swaran Singh , the Insurance Company is liable to pay compensation because Sub-section (1) of Section 149 casts a liability upon the insurer to pay to the person entitled to the benefit of the decree as if he were the judgment-debtor and the said liability is subject to the provision of this section and that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy. Furthermore, the statute raises a legal fiction to the effect that for the said purpose the insurer would be deemed to be judgment-debtor in respect of the liability of the insurer. Furthermore, the Insurance Company with a view to avoid its liabilities is not only required to show that the conditions laid down under section 149(2)(a) or (b) are satisfied but is further required to establish that there has been a breach on the part of the insured.

    6. This Court has given thoughtful consideration to the contentions canvassed by the learned Counsel for the parties. Two questions of law which arise in this appeal are--(i) whether the Insurance Company would be liable to pay compensation under the provisions of the Motor Vehicles Act if there is a death or bodily injury to the person travelling in the goods vehicle as a passenger in view of the Larger Bench decision of Apex Court in National Insurance Co. Ltd. v. Baljit Kaur (supra) and in the case of National Insurance Co. Ltd. v. Bommithi Subbhayamma (supra); and (ii) whether the Insurance Company is liable to satisfy the award in view of Section 168 of the Motor Vehicles Act?

    7. In this context, the Apex Court in National Insurance Co. Ltd. v. Bommithi (supra), has laid down that there is no statutory liability on the owner of the goods vehicle to get his vehicle insured for any passenger and the Insurance Company is also not statutorily liable for the payment of compensation to gratuitous passenger travelling in goods vehicle. It has been specifically observed in para 8 of the judgment as under:

    The question again came up for consideration before a three-Judge Bench of this Court, of which we are members, in National Insurance Co. Ltd. v. Baljit Kaur (supra), wherein upon considering the effect of amendment carried out in Section 147 of the Motor Vehicles Act, 1988 by Motor Vehicles (Amendment) Act, 1994, it was opined-

    By reason of the 1994 amendment what was added is 'including owner of the goods or his authorised representative carried in the vehicle'. The liability of the owner of the vehicle to insure it compulsorily, thus, by reason of the aforementioned amendment included only the owner of the goods or his authorised representative carried in the vehicle besides the third parties. The intention of Parliament, therefore, could not have been that the expression 'any person' occurring in Section 147 would cover all persons who were travelling in a goods carriage in any capacity whatsoever. If such was the intention there was no necessity of Parliament to carry out an amendment inasmuch as the expression 'any person' contained in Sub-clause (i) of Clause (b) of Sub-section (1) of Section 147 would have included the owner of the goods or his authorised representative besides the passengers who are gratuitous or otherwise.

    The observations made in this connection by the Court in Asha Rani , to which one of us, Siriha, J" was a party, however, bear repetition:

    (26) In view of the changes in the relevant provisions in the 1988 act vis-a-vis the 1939 Act, we are of the opinion that the meaning of the words' any person' must also be attributed having regard to the context in which they have been used, i.e.., 'a third party'. Keeping in view the provisions of the 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of the vehicle to get his vehicle insured for any passenger travelling in a goods vehicles, the insurers would not be liable therefore.

    In Asha Rani , it has been noticed that Sub-clause (i) of the Clause (b) of Sub-section (1) of Section 147 of 1988 Act speaks of liability which may be incurred by the owner of a vehicle in respect of 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 vehicle in a public place. Furthermore, an owner of a passenger-carrying vehicle must pay the premium for covering the risks of the passengers travelling in the vehicle. The premium in view of the 1994 Amendment would only cover a third party as also the owner of the goods or his authorised representative and not any passenger carried in a goods vehicle whether for hire or reward or otherwise.

    It is, therefore, manifest that in spite of the amendment of 1994, the effect of the provisions contained in section 147 with respect to persons other than the owner of the goods or his authorised representative remains the same. Although the owner of the goods or his authorised representative would now be covered by the policy of insurance in respect of a goods vehicle, it was not the intention of the Legislature to provide for the liability of the insurer with respect to passengers, especially gratuitous passengers, who are neither contemplated at the time the contract of insurance was entered into, nor any premium was paid to the extent of the benefit of insurance to such category of people.

    8. The question whether the insurer is liable to pay the compensation under the provisions of law or under the Motor Vehicles Act if there is death or bodily injury to the person travelling in goods vehicle as a passenger is no longer res integra and there is a clear dictum of Apex Court in the case of National Insurance Co. Ltd. v. Ajlt Kumar , that the insurer cannot be made liable to pay compensation if the assenger is travelling in a goods vehicle. In fact, the legal position has been set at rest by the Larger Bench decision in case of New India Assurance Co. Ltd. v. Asha Rani , wherein it has been observed as under:

    It is no doubt true that sometimes the Legislature amends the law by way of amplification and clarification of an inherent position which is there in the statute, but a plain meaning bei ng given to the words used in the statute, as it stood prior to its amendment of 1994, and as it stands subsequent to its amendment in 1994 and bearing in mind the objects and reasons engrafted in the amended provisions referred to earlier, it is difficult for us to construe that the expression 'including owner of the goods or his authorised representative carried in the Vehicle' which was added to preexisting expression 'injury to any person' is either clarificatory or amplification of the pre-existing statute. On the other hand, it clearly demonstrates that the Legislature wanted to bring within the sweep of Section 147 and making it compulsory for the insurer to insure even in case of a goods vehicle, the owner of the goods or his authorised representative being carried in a goods vehicle when that vehicle met with an accident and the owner of the goods or his representative either dies or suffers bodily injury.

    9. The aforesaid decisions in the cases of Asha Rani (supra) and Ajit Kumar (supra), have been followed by this Court in the case of New India Assurance Co. Ltd. v. Santoshldevi and, therefore, the legal position which is no longer res integra as per the clear dictum of the Supreme Court is that the insurer cannot be made liable to pay compensation if the passenger is travelling in a goods vehicle. Therefore, question No. (i) is answered accordingly.

    10. So far as question No. (ii) is concerned, there is a Larger Bench decision of Supreme Court in National Insurance Co. Ltd. v. Baljit Kaur (supra), wherein in unequivocal terms it has been held in para 21 as under:

    The upshot of the aforementioned discussion is that instead and in place of the insurer the owner of the vehicle shall be liable to satisfy the decree. The question, however, would be as to whether keeping in view the fact that the law was not clear so long such a direction would be fair and equitable. We do not think so. We, therefore, clarify the legal position which shall have prospective effect. The Tribunal as also the High Court had proceeded in terms of the decisions of this Court in Satpal Singh 2000 A.C.J. 1 : 2000 (1) T.A.C. 403 (S.C.). The said decision has been overruled only in Asha Rani, 2003 A.C.J. 1 (S.C.). We, therefore, are of the opinion that the interest of justice will be subserved if the appellant herein is directed to satisfy the awarded amount in favour of the claimant if not already satisfied and recover the same from the owner of the vehicle. For the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing Court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. We have issued the aforementioned directions having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988 in terms whereof it is not only entitled to determine the amount of claim as put forth by the claimant for recovery thereof from the insurer, owner or driver of the vehicle jointly or severally but also the dispute between the insurer on the one hand and the owner or driver of the vehicle involved in the accident inasmuch as can be resolved by the Tribunal in such a proceeding.

    11. The aforementioned Larger Bench decision of Apex Court squarely applies to the facts and circumstances of the present case. It is not disputed that the deceased Narayan was travelling in the tipper as a passenger. It is not relevant as to whether he was travelling as a fare paying passenger or a gratuitous passenger. Since he was travelling in the goods vehicle, the Insurance Company is not statutorily liable to pay compensation and the question has to be answered in the light of Larger Bench decision of Supreme Court in the case of Baljit Kaur (supra), wherein the Apex Court considered the scope of Section 168 of the Motor Vehicles Act and held that the interest of justice will be served if the Insurance Company is directed to satisfy the award and then recover the same from the owner of the vehicle and for the purpose of such recovery it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing Court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal.

    12. The question whether the Insurance Company is liable to satisfy the award in view of Section 168 of the Motor Vehicles Act was not the subject for consideration of the Apex Court in the case of National Insurance Co. Ltd. v. Bommithi (supra) and thus the decision of the Larger Bench in the case of National Insurance Co. Ltd. v. Baljit Kaur (supra), is occupying the field as on today and, therefore, it is obvious that the interest of justice will be served if the Insurance Company is directed to satisfy the award and then recover the same from the owner of the vehicle and for the purpose of such recovery it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing Court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal. In such circumstances, this appeal is partly allowed and stands disposed of in the aforesaid terms.

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    Comments

    National Insurance Co. Ltd. v. Prakash And Ors.
    (Aug 8, 2005)