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The General Assuranc... v. N.A Mohammed Hussain...
Structured Summary of the Opinion
Factual and Procedural Background
On 24 December 1961 the first respondent sustained injury in a road accident while returning from Nagore to Madras in the delivery van of the second respondent (Snuff Factory (P.) Ltd.), vehicle registration MSX 6134, driven by Jayavelu. The delivery van was insured with the appellant, The General Assurance Society, Ltd., Madras, under a comprehensive policy including third-party risk. The Motor Accidents Claims Tribunal (District Judge), Chingleput, awarded compensation of Rs. 4,500 to the first respondent. The General Assurance Society appealed that award. The injured employee (first respondent) filed a cross-appeal seeking enhanced compensation.
Legal Issues Presented
- Whether the Insurance Company (appellant) is liable to pay compensation to the injured employee (first respondent) under the Motor Vehicles Act despite policy clauses excluding liability for employees injured in the course of employment.
- Whether the injured person (an employee/passenger) qualifies as a "third party" for purposes of the Motor Vehicles Act and the policy.
- Whether the policy exclusion of liability as between insurer and insured (excluding employees) can operate to relieve the insurer from statutory obligations under the Motor Vehicles Act (including Section 95 as amended).
- Whether the Insurance Company, when made a party to a claim under Section 96, may raise defences other than those enumerated in Section 96(2) (in light of the Supreme Court decision cited).
- Whether the injured person, having obtained relief under the Motor Vehicles Act, can additionally pursue claims under the Workmen's Compensation Act against the insurer.
Arguments of the Parties
Appellant's Arguments (The General Assurance Society, Ltd.)
- The insurer is not liable to pay compensation to the injured person; their obligations are only to indemnify the insured company for loss or damage to the insured vehicle.
- The accident did not occur while the injured person was in the course of his employment (or, alternatively, even if it did, the policy excludes liability to employees).
- The injured person is not a "third party" under the Motor Vehicles Act; a passenger who is an employee is excluded from third-party cover by the policy.
- The policy terms (Section 11, Clause 1 and provisos) expressly exclude liability in respect of death or bodily injury to employees arising out of and in the course of their employment, except to the extent required by Section 95 of the Motor Vehicles Act; thus the insurer's liability is excluded.
- Where there is a definite contractual exclusion between insured and insurer, injured employees cannot claim against the insurer and must look to the employer and the Workmen's Compensation Act.
First Respondent's Arguments (as represented before the Court)
- Counsel for the first respondent relied on the proviso in Section 95 which reserves liability "other than a liability arising under the Workmen's Compensation Act" — stressing that policies must comply with the Motor Vehicles Act requirements and that employees injured in such accidents have a right to claim under the Motor Vehicles Act.
- The first respondent also relied on the Supreme Court precedent (B.I.C. Insurance Co. v. Itber Singh) to argue that an insurer, when a party, is limited to the statutory defences listed in Section 96(2) and cannot otherwise avoid liability.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| B.I.C. Insurance Co. v. Itber Singh (1960) S.C.J. 44; (1960) 1 An. W.R. (S.C.) 6; (1960) 1 M.L.J. (S.C.) 6; (1960) 1 S.C.R. 168 | Construction of Section 96(2) — an Insurance Company, when made a party to a claim petition, is limited to the defences enumerated in Section 96(2) and cannot avoid liability by raising other defences. | The court applied this principle to conclude that the appellant-insurer could not avoid liability in the present claim by relying on policy exclusions other than the statutory defences listed in Section 96(2); therefore the insurer remained liable to pay compensation within statutory limits. |
Court's Reasoning and Analysis
The court examined the precise terms of the insurance policy and the statutory provisions of the Motor Vehicles Act, particularly Section 95 (as introduced by the Amending Act C of 1956) and Section 96. The policy contained customary exclusions limiting third-party liability in respect of employees injured "arising out of and in the course of such employment," and a clause excluding liability for death or bodily injury to employees except so far as necessary to meet Section 95 requirements and the Workmen's Compensation Act.
The court reasoned that Section 95 prescribes what a policy must insure to comply with the chapter on insurance of motor vehicles against third parties. The proviso to Section 95(1) and the coverage described in Section 95(2)(a) were interpreted to mean that statutory requirements cannot be defeated by inserting contrary exclusions in the policy between the insurer and the insured. The court emphasized that the injured employee has remedies both in tort (common law) and under the Workmen's Compensation Act, but where the employer has insured the vehicle, the Motor Vehicles Act affords the injured employee a right to claim compensation against the insurer as provided by the Act.
Applying that statutory framework, the court held that even though the policy attempted to exclude liability to employees, the insurer must nevertheless indemnify the employer and is liable to pay compensation to the injured employee under the Motor Vehicles Act, subject to the monetary limits set out in Section 95(2)(a).
The court further relied on the Supreme Court decision in B.I.C. Insurance Co. v. Itber Singh to conclude that the insurer, when made a party, is limited to the defences enumerated in Section 96(2) and cannot challenge or avoid liability on other grounds. The court found that the appellant could not establish any of the defences listed in Section 96(2) and therefore could not successfully resist the award made by the Tribunal.
In relation to the cross-appeal by the injured employee seeking an enhanced award, the court observed that although the employee might have claims under the Workmen's Compensation Act as against his employer for various heads of damages, having obtained relief under the Motor Vehicles Act he could not further claim under the Workmen's Compensation Act against the insurer. The insurer's liability is limited by the statutory ceiling set out in Section 95(2)(a), and the court found no reason to interfere with the Tribunal's assessment of quantum.
Holding and Implications
Holding: The primary appeal by the insurer is DISMISSED. The cross-appeal by the injured employee for enhanced compensation is also DISMISSED.
Implications and direct effects as stated by the court:
- The Insurance Company is liable to pay compensation to both the insured (owner/employer) and the injured employee when the injury arises out of and in the course of employment, subject to the monetary limits prescribed by Section 95(2) of the Motor Vehicles Act.
- Policy terms attempting to exclude liability to employees cannot defeat the statutory requirements of the Motor Vehicles Act; a policy must comply with the Act's provisions regarding third-party insurance.
- The insurer, when made a party under Section 96, is limited to the defences enumerated in Section 96(2) (as confirmed by the cited Supreme Court authority) and cannot avoid liability by raising other grounds not listed in that subsection.
- An injured employee who obtains relief under the Motor Vehicles Act cannot thereafter claim under the Workmen's Compensation Act against the insurer; the insurer's liability is confined to the statutory limits under Section 95(2)(a).
- There will be no order as to costs in both the appeal and the cross-appeal.
All statements and summaries above are drawn exclusively from the text of the provided opinion.
1. This appeal arises out of an order passed by the Motor Accidents Claims Tribunal (District Judge), Chingleput, awarding compensation in a sum of Rs. 4,500 to the first respondent who sustained an injury, in an accident which occurred on 24th December, 1961, while he was returning from Nagore to Madras in the delivery van of the second respondent Snuff Factory (P.), Ltd., MSX 6134, driven by one Jayavelu, and which van has been insured with the appellant, M/s. The General Assurance Society, Ltd., Madras, under a comprehensive policy including third party risk.
2. The General Assurance Society, Ltd., have preferred the appeal, on the grounds that they are not liable to pay compensation to the first respondent, that their obligations rest only with recompensing the insured company for the loss or damage caused to the insured car, that the accident did not occur while the first respondent was in the course of his employment and that the injured person was not a third party as per the provisions of the Motor Vehicles Act. They further contend that the injured person being a passenger is not a third party and there is no statutory liability on the part of the Insurance Company to give compensation to the injured person and that the policy itself does not cover risk to the passenger of the car.
3. In the appeal before me, learned Counsel for the appellant took me through the relevant provisions of the terms of the policy. Section 11 of the terms of the Policy deals with liability to third parties. Clause 1 is as follows;
Subject to the limits of liability the Society will indemnify the Insured against all ,surri9 including claimant's costs and expenses which the Insured shall become legally liable to pay in respect of,
(i) death of or bodily injury to any person caused by or arising out of the use...of the motor vehicle;
(ii) ....
Provided always that:
(a) ....
(b) Except so far as is necessary to meet the requirements of Section 95 of the Motor Vehicles Act, 1939, the Society shall not be liable in respect of death of or bodily injury to any person in the employment of Insured arising out of and in the course of such employment.
(c) Except as far as is necessary to meet the requirements of Section 95 of the Motor Vehicles Act, 1939, in relation to liability under the Workmen's Compensation Act, 1923, the Society shall not be liable in respect of death of or bodily injury to any person (other than a passenger carried by reason of or in pursuance of a contract of employment) being carried in or upon or entering or mounting or alighting from the motor vehicle at the time of the occurrence of the event out of which any claim arises.
4. Learned Counsel for the appellant contends that the Insurance Company is not liable to pay compensation, according to the provisions of the Policy, to the injured person, even assuming that the accident arose out of and in the course of his employment. Further, the injured person is not either a driver or conductor or any person in pursuance of contract of employment travelling in the vehicle at the time of the accident.
5. It is usual for the insurance companies to insert the abovesaid provisions, that is the customary exclusions under the third party liability, as stated by Batten and Lindsale in their book ' Motor Insurance' (Third Edition) at page 182. Learned Counsel for the appellant has contended that under the provisions of the Policy, the liability of the third party is completely excluded not only under the terms of the contract but also under Section 85(2) of the Motor Vehicles Act. The injured person has no claim against the Insurance Company. He has to look for his compensation to the employer that is the insured and he has to take appropriate proceedings under the Workmen's Compensation Act. It is further contended that when there is a definite contract between the insured and the Insurance Company to exclude certain persons who are employed under him, then such injured persons cannot claim compensation from the Insurance Company in respect of injuries caused to them. There may be some force in the contention urged by learned Counsel for the appellant; still, we have to consider and examine the provisions in the Motor Vehicles Act which provide for the insurance of third parties. In this connection, it is useful to refer to the provisions of Section 95 of the Act:
(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-
(a) ....
(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2) against any liability which may be incurred by him or them in respect of the death of, 6r bodily injury, to, any person 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 A.I.ing out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment, other than a liability arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to any such employee....
6. Learned Counsel for the first respondent stresses on the words,
" other than a liability arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to any such employee ". Sub-section (2)(a) of Section 95 is as follows:
Subject to the proviso to Sub-section (1), a policy of insurance shall cover any liability insured in respect of any one accident up to the following limits, namely:
(a) where the vehicle is a goods vehicle, a limit of twenty thousand rupees in all, including the liabilities, if any A.I.ing under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury, to employees (other than the driver) not exceeding six in number, being carried in the vehicle;
7. This section has been introduced by the Amending Act C of 1956. The injured person can always get a remedy in the common law to claim compensation for tortious liability. He has also got a further right to claim compensation under the Workmen's Compensation Act. In the instant case when the injured man is employed under one who has insured his vehicle and when he sustains an injury in the course of an accident to the vehicle, though he has right to get compensation under the Workmen's Compensation Act, it is not necessary for him to go to the Workmen's Compensation Tribunal, when he had the right to claim compensation along with his employer under the Motor Vehicles Act. Though the employer has got a liability under the general law to pay compensation to the injured person, since the employer happens to be the insured as in this case, as per the provisions of the Motor Vehicles Act, the Insurance Company has to indemnify the employer, in spite of the fact that there are provisions in the Policy to exclude a liability of this kind. It has been specifically stated that under Section 95 of the Act in order to comply with the requirements of the Chapter relating to insurance of Motor Vehicles against third parties, the policy of insurance must be a policy which should comply with the requirements of the Act. Therefore no useful purpose will be served by inserting in the Policy the condition that they are not liable to pay compensation to the persons employed who would be entitled to get compensation under the Workmen's Compensation Act. In effect, if the employee is injured in an accident arising out of his employment under the employer the Insurance company is liable to pay compensation not only to the owner of the vehicle for the loss or damage but also to pay compensation to the injured person who will be entitled to get compensation under the Motor Vehicles Act. I am therefore of opinion that under the provisions of the Motor Vehicles Act, the Insurance Company is liable to pay compensation both to the insured and the injured, of course within the limited liability prescribed under the Act.
8. It is contended, and rightly in my view, by learned Counsel for the first respondent that the appellant is not entitled to question the award of compensation given by the Motor Accidents Claims Tribunal, in view of the recent decision of the Supreme Court in B.I.C. Insurance Co. v. Itber Singh (1960) S.C.J. 44 : (1960) 1 An. W.R. (S.C.) 6 : (1960) 1 M.L.J. (S.C) 6 : (1960) 1 S.C.R. 168. It is true that Section 96 of the Act gives the Insurance Company the right to be made a party to defend the action. But the Insurance Company cannot avoid its liability, except by establishing such defences as are catalogued in Sub-section (2). In the instant case, I do not think that the appellant could defend on any of the grounds mentioned in Section 96(2). The principle that has been laid down in the Supreme Court decision is that, on the construction of Section 96(2), the Insurance Company, whenever they are made a party in a claim petition, have only the defences enumerated in Section 96(2) and beyond that they cannot question the award of compensation. I am, therefore, of opinion that the appellant is liable to pay compensation not only to the owner of the vehicle but also to the employee who is injured in an accident arising out of his employment, the employee being a person who is entitled to get compensation under the Workmen's Compensation Act.
9. In the result, the appeal is dismissed.
10. The injured employee, the first respondent in the main appeal, has preferred a cross-appeal. There appears to be no reason to interfere with the quantum of compensation awarded by the Tribunal. The cross-objector has claimed enhanced compensation to the extent of Rs. 55,500 on various heads, viz., expenses incurred and liable to be incurred in regard to the injury, pain and suffering inflicted on the victim, loss of time during the cure and permanent injury and consequent pecuniary loss. It is true that the injured person could claim under the Workmen's Compensation Act, under the various heads mentioned in his appeal, as against his employer but not as against the Insurance Company. Having got a relief under the Motor Vehicles Act, it is not open to him to claim under the Workmen's Compensation Act. Further, he has sailed with his employer in preferring a claim against the Insurance Company, the liability of which company is limited to the extent prescribed under Section 95(2)(a) of the Motor Vehicles Act. The cross-appeal is also dismissed. There will be no order as to costs in both the appeal and the cross-appeal.
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