Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For the Appellant: N. Rosi Naidu, Advocate.
  • For the Respondent: G.S. Selvatharasu, Veluswami, Advocates.
Judges
  • Nainar Sundaram
  • Bellie, JJ.
Acts
  • Motor Vehicles Act, 1939, hereinafter referred to as the Act,
  • Motor Vehicles Act, 1939.3.
  • place.7. Section 95(1)(b)(i)
  • sub-section (2)(b) of S. 95.
  • sub-section (1) of S. 95
  • sub-section (1)(b)(1)
  • Section 95(1)(b)
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For the Appellant: N. Rosi Naidu, Advocate.
  • For the Respondent: G.S. Selvatharasu, Veluswami, Advocates.
Judges
  • Nainar Sundaram
  • Bellie, JJ.
Acts
  • Motor Vehicles Act, 1939, hereinafter referred to as the Act,
  • Motor Vehicles Act, 1939.3.
  • place.7. Section 95(1)(b)(i)
  • sub-section (2)(b) of S. 95.
  • sub-section (1) of S. 95
  • sub-section (1)(b)(1)
  • Section 95(1)(b)
See more information ...
Smart Summary

Structured Summary of the Judgment delivered by Nainar Sundaram, J.

Factual and Procedural Background

The appeal arises from M.A.C.T.O.P No. 18 of 1980 before the Motor Accidents Claims Tribunal, Vellore. The Insurance Company, which was the second respondent before the Tribunal, is the appellant in this Civil Miscellaneous Appeal. The first respondent was the claimant before the Tribunal. The second respondent had been the owner of the stage carriage bus involved in the accident; he died pending the appeal and his legal representatives were brought on record.

Facts found by the Tribunal and recorded in the opinion: the claimant was inside the bus at the time of the accident, but was not a passenger being carried for hire or reward. The accident occurred due to rash and negligent driving by the bus driver. At the time of the accident the bus had undergone repair works and was on the road for a test drive to see whether defects had been rectified. The claimant sustained injuries, including loss of vision in his left eye, and had claimed Rs. 1,00,000/- by way of compensation. The Tribunal awarded Rs. 29,600/-. The claimant filed a memorandum of cross-objections seeking enhanced compensation.

Legal Issues Presented

  1. Whether the Insurance Company is liable under the policy where the policy condition states: "Use only under a stage carriage permit within the meaning of the Motor Vehicles Act, 1939" — and whether that condition confines coverage to accidents occurring only while the vehicle was in the course of plying as a stage carriage.
  2. Whether the claimant, being inside the vehicle at the time of the accident, qualifies as a "third party" under the statutory scheme and thus falls within the policy coverage.
  3. Whether proviso (ii) to Section 95(1)(b) of the Motor Vehicles Act (1939) excludes coverage for persons who are not passengers carried for hire or reward, thereby absolving the insurer of liability.
  4. Whether the insurer can escape liability on the ground that the bus was on a "reliability trial" (test drive) at the time of the accident.
  5. Whether the Tribunal erred in disallowing compensation for loss of earning power arising from the claimant's loss of vision in the left eye.

Arguments of the Parties

Insurance Company (Appellant) — Arguments

  • The policy's user clause limited coverage to "use only under a stage carriage permit" and, the insurer argued, coverage should apply only when the vehicle was being used as a stage carriage (i.e., while plying on a route), so liability does not arise for an accident during a test drive.
  • The claimant did not qualify as a "third party" under the policy because, the insurer contended, "third party" should be construed to mean a person outside the vehicle and on the road; a person inside the vehicle would thus not be covered.
  • The insurer relied on a Supreme Court decision (Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co.) to support the contention that a policy need not cover risks to persons being carried in certain vehicles (the insurer sought to invoke proviso (ii) to S.95(1)(b)).
  • The insurer also relied on a Madras single judge pronouncement (New India Assurance Co. Ltd. v. Kuppuswamy Naidu) to support its position.
  • The insurer argued it should be exempt from liability because the vehicle was on a reliability (test) trial at the time of the accident.

Claimant (First Respondent / Cross-Objector) — Arguments

  • The claimant challenged the Tribunal's disallowance of compensation for loss of earning power arising from the loss of vision in his left eye. He contended that the Tribunal's reasoning — that compensations for pain and suffering and disability made further award for loss of earning power unnecessary — was legally inadequate.
  • It was submitted that the claimant, then aged 19 and employed as a mechanic, would no longer be able to pursue his avocation as effectively and that future prospects and earning capacity would be adversely affected.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co., 1977 ACJ 343 : (1977) 2 SCC 745 : AIR 1977 SC (1735) Used by appellant to argue that where vehicle (a car in that case) was not one in which passengers were carried for hire or reward, proviso (ii) to S.95(1)(b) meant policy need not cover persons being carried in the vehicle. The Court held that the precedent did not assist the appellant because in the present case the vehicle was a bus in which passengers are carried for hire or reward; consequently the proviso's exception did not apply. The Court rejected the insurer's attempt to rely on that decision to exclude liability.
New India Assurance Company Limited v. Kuppuswamy Naidu, 1988 ACJ 774 (Mad) Relied on by the appellant to support a narrow construction of "third party" or to show insurer not liable where there was unauthorized handling (facts of that case involved unauthorized handling and death of pillion rider). The Court observed that Swamikkannu, J.'s pronouncement in that case did not express a specific opinion supporting the appellant's broad contention that "third party" means only a person outside the vehicle; the decision did not support the insurer's argument in the present appeal.

Court's Reasoning and Analysis

The court undertook a statutory and textual analysis of the Motor Vehicles Act provisions (notably Ss. 93, 94 and 95) and of the policy condition relied on by the insurer. The reasoning proceeded in distinct steps:

  1. Interpretation of the Policy Clause: The clause in the policy stating "Use only under a stage carriage permit within the meaning of the Motor Vehicles Act, 1939" was construed to mean that the vehicle must be one covered under a stage carriage permit as defined by the Act. The court rejected the insurer's narrower reading that coverage applies only when the bus was actively plying as a stage carriage, i.e., on a route carrying passengers as part of its service. The clause does not confine coverage to accidental occurrences only while the bus was plying as a stage carriage.
  2. Meaning of "Third Party": The court considered the limited statutory definition in S.93(d) ("'third party' includes the Government") and observed that the definition is not exhaustive. The court rejected the insurer's restricted notion that "third party" must mean a person outside the vehicle and on the road, stating that such a construction was too narrow. The court adopted the accepted commercial and statutory understanding that third parties include persons other than the insurer and insured who make claims arising out of negligent use of the motor vehicle.
  3. Analysis of Section 95 and its Proviso: The court closely examined S.95(1)(b) and its proviso. It noted that S.95(1)(b)(i) generally covers "death of or bodily injury to any person" caused by or arising out of use of the vehicle in a public place, and S.95(1)(b)(ii) separately covers "death of or bodily injury to any passenger of a public service vehicle." The court explained that proviso (ii) to S.95(1) creates an exception but that exception does not apply where the vehicle is one "in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment."
  4. Application to the Present Vehicle: Because the bus in the present case was a vehicle in which passengers are carried for hire or reward, the proviso's exclusion did not apply. Therefore S.95(1)(b) and S.95(2)(b) operate to impose statutory limits and categories of liability: (i) persons other than passengers carried for hire or reward (limit of Rs. 50,000 in all), and (ii) passengers (limit of Rs. 15,000 per passenger). The court emphasized that these are statutory requirements and cannot be negated by policy conditions that purport to abrogate statutory obligations.
  5. Rejection of "Reliability Trial" Defence: The court addressed the insurer's contention that the vehicle was on a reliability (test) trial and that this should absolve liability. It held that Section 96(2) of the Act enumerates the grounds on which an insurer may defend an action and that being on a reliability trial is not among those enumerated statutory defenses. Thus this condition cannot be used to override statutory provisions and the insurer cannot rely on it to escape liability.
  6. Conclusion on Liability: For the above reasons, the court rejected all contentions raised by the Insurance Company and dismissed the Civil Miscellaneous Appeal, thereby upholding the insurer's statutory liability in respect of the claimant's injuries.
  7. On Quantum (Cross-Objections): The court considered the claimant's cross-objection confined to the Tribunal's disallowance of compensation for loss of earning power. The Tribunal had reasoned that awards for pain and suffering and disability made an award for loss of earning power unnecessary. The court found this reasoning legally inadequate. Given the claimant's age (19), employment as a mechanic, and loss of vision in the left eye, the court concluded that the claimant's future earning capacity would be impaired and that an award for loss of earning power was appropriate. The court quantified that award at Rs. 15,000/-.
  8. Payment Directions and Costs: The court ordered that the enhanced compensation of Rs. 15,000/- be deposited by the Insurance Company within two months, failing which it shall carry interest at 6% per annum from the date of default. The court made no order as to costs in either the memorandum of cross-objections or the Civil Miscellaneous Appeal.

Holding and Implications

Holding: The Civil Miscellaneous Appeal by the Insurance Company is DISMISSED. The claimant's memorandum of cross-objections is allowed in part: an additional sum of Rs. 15,000/- is awarded for loss of earning power.

Implications (direct effect on the parties):

  • The Insurance Company remains liable under the policy as construed in light of Chapter VIII of the Motor Vehicles Act; statutory coverage requirements cannot be negated by the policy conditions relied upon by the insurer.
  • The Insurance Company must deposit the enhanced compensation of Rs. 15,000/- within two months from the date of the judgment, failing which interest at 6% per annum will apply from the date of default.
  • No order as to costs was made in respect of either the cross-objections or the Civil Miscellaneous Appeal.

The opinion does not purport to lay down a novel judicial precedent beyond its statutory interpretation and the application of existing authorities; its practical effect is the resolution of liability and quantum between the parties in this litigation.

Order recorded: Release accordingly (the precise short order rendered is: appeal dismissed; cross-objections partly allowed with award of Rs. 15,000/-; deposit and interest directions; no orders as to costs).

Show full summary ...

    National Insurance Co. Ltd., Madras v. V.S.R Kumaresan

    The Judgment of the Court was delivered by

    Nainar Sundaram, J.:— The Insurance Company which was the second respondent before the Motor Accidents Claims Tribunal, Vellore, in M.A.C.T.O.P No. 18 of 1980, is the appellant in this Civil Miscellaneous Appeal. The first respondent herein was the claimant before the Tribunal. The second respondent was the owner of the vehicle, namely, a stage carriage bus which was involved in the accident. The second respondent dies pending this Civil Miscellaneous Appeal and his legal representative have been brought on record. The claimant was inside the bus at the time of the accident. He was not a passenger, being carried in the bus for hire or reward at the time of the accident. It has been found that the accident occurred on account of the rash and negligent driving of the bus by its driver. The bus had undergone repair works at the time of the accident was on the road for test driving in order to find out whether the defects had been properly rectified. In the accident, the claimant sustained injuries, and, in particular, he lost vision in his left eye and he laid a claim for compensation of Rs. 1,00,000/-. The Tribunal awarded only a total compensation of Rs. 29,600/-. The claimant-first respondent in this Civil Miscellaneous Appeal has preferred a Memorandum of Cross-objections covering enhanced compensation.

    2. Mr. N. Rosi Naidu, learned Counsel appearing for the Insurance Company-appellant herein, made submissions to have his client exonerated from liability. First, learned Counsel for the Insurance Company, appellant herein, would contend that the terms of the policy related only to the user of the vehicle as a stage carriage and the accident having occurred when the vehicle was not being used as a stage carriage, the liability cannot be pinned down on his client. The condition in the policy marked in this case as Ex. B-1 and relied on by the learned Counsel for the Insurance Company-appellant reads as follows:

    “Use only under a stage carriage permit within the meaning of the Motor Vehicles Act, 1939.”

    3. This condition certainly does not convey the meaning that the accident should have occurred only at the time of the user of the vehicle as a stage carriage, namely, while the vehicle was plying on a route as a stage carriage. It could not only connote and denote that the vehicle must be one covered under a stage carriage permit within the meaning of the Motor Vehicles Act, 1939, hereinafter referred to as the Act, and nothing more. Hence, we eschew this contention of the learned Counsel for the Insurance Company-appellant herein.

    4. Secondly, learned Counsel would submit that the claimant would not come within the category of ‘third party’ so as to be covered by the policy. According to learned Counsel for the Insurance-Company-appellant herein, the expression ‘third party’ could only mean a person outside the vehicle and on the road and as such the policy would not cover the claimant. The terms of the policy, as such do not support such a theory. Nothing is stated in the policy to the above effect. But, learned Counsel would rely on a pronouncement of the Supreme Court in Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co., 1977 ACJ 343 : ((1977) 2 SCC 745 : AIR 1977 SC (1735), in support of the theory advanced by him. The Supreme Court has dealt with the case of a car which was driven rashly and negligently and as a result of which the accident occurred, causing the death of a person who was travelling in the car. There was advertence to Sec. 95(1)(b), Proviso (ii) of the Act, to hold that it is not required that the policy of insurance should cover such a risk. That is the position evident from a reading of the said proviso. The operative or the latter portion of the proviso, as such, stated that a policy shall not be required to cover liability in respect of death or for bodily injury to a person being carried in or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises. But, there is an exception adumbrated in the first part of that proviso by virtue of which if the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, then it will fall outside that proviso and the general provisions requiring coverage by the policy shall govern. The vehicle with which the Supreme Court was concerned was a car and not a vehicle, in which the passengers were carried for hire or reward, as in the present case, and hence the view was expressed that it is not required that the policy of insurance should cover such risks this would be the position, where the policy is in terms of the provisions of the Act. But, in addition to statutory terms, wider risks could be covered by what we call as a comprehensive policy. But, in our case, as we shall presently see the policy in terms of the Act itself will cover the claimant. We do not think that this decision can be availed of by the learned Counsel for the Insurance-Company-appellant herein, to wriggle out of the liability on this ground. In any event, the pronouncement of the Supreme Court relied on by the learned Counsel for the Insurance Company-appellant herein, does not at all support the theory projected by him that a third party could only mean a person outside the vehicle and on the road. However, learned Counsel for the Insurance Company, appellant herein, would place reliance on the pronouncement of Swamikkannu, J., in New India Assurance Company Limited v. Kuppuswamy Naidu, 1988 ACJ 774 (Mad). That pronouncement does not express any specific opinion on this contention put forth by the learned Counsel for the Insurance Company, appellant herein, namely, that a third party would take only a person outside the vehicle and on the road. The facts of the case dealt with by the learned single Judge show that there was an unauthorised handling of the vehicle and in those circumstances it was opined that the Insurance Company cannot be made liable for the death of the pillion rider.

    5. Learned Counsel for the Insurance Company-appellant herein, thirdly wants to base a submission on the proviso (ii) to S. 95(1)(b) of the Act, to say that a policy shall not be required to cover risks for persons, who do not travel for hire or reward or in other words who are not passengers carried in the vehicle for hire or reward. This is a misconception and misconstruction of the language of the said proviso. Let us examine the relevant provisions of the Act. Chapter VIII of the Act deals with insurance of motor vehicles against third party risks. For our purpose, advertence to Ss. 93, 94 and 95 may be sufficient. Section 93(d) defines ‘third party’ thus:

    “‘third party’ includes the Government.”

    6. This is not very helpful and the definition is not exhaustive. But, it is now well accepted that the insurer or the Insurance-company, being one party to the contract; the insured or the policy-holder being another, the claims made by others in respect of the negligent use of the motor vehicle would be claims made by third parties. The concept entertained by the learned Counsel for the Insurance Company-appellant herein, that the expression ‘third party’ would cover only a person, who was outside the vehicle and on the road, is too restricted a one to be accepted. Section 94 prohibits the user of a motor vehicle by any person other than a passenger, in a public place, unless there is in force in relation to the use of the said motor vehicle by the concerned person, a policy of insurance, complying with the requirements of Chap. VIII. Section 95 sets down the requirements of policies and limits of liability. Section 95(1)(b) says that in order to comply with the requirements of Chap. VIII, a policy of insurance may be a policy, which 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 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.”

    7. Section 95(1)(b)(i) is generally couched, in respect of death or bodily injury to any person, without restricting it to any particular person or classes of persons. The person or classes of persons with reference to extent of liability in respect of such person or classes of person get exemplified by sub-section (2), which we shall presently advert to. As per proviso (ii) to sub-section (1), a policy shall not be required, except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason or in pursuance of a contract of employment to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence or event out of which a claim arises. This proviso, as per the inbuilt exception, would not apply to the case of a vehicle, in which passengers are carried for hire or reward or by reason or in pursuance of a contract of employment. The exception is with reference to the nature of the vehicle and not with reference to the persons carried in the vehicle. That the bus involved in the accident was such a vehicle is not in dispute. The contention that the accident must have occurred only in the course of and at the time of the user of the bus or the plying of the bus carrying passengers for hire or reward has been already repelled. Hence, the bus in question falls outside the said proviso, and it will come within the general provision found in sub-section (1)(b)(1) and (ii). The position is made more clear when we advert to sub-section (2)(b) of S. 95. It says that subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident, up to the following limits, namely:— (b) where the vehicle is a vehicle in which passengers are carried for hire or reward by reason or in pursuance of a contract of employment (i) in respect of persons other than the passengers carried for hire or reward, a limit of fifty thousand rupees in all; (ii) in respect of passengers a limit of fifteen thousand rupees for each individual passenger. Here, again the reference is to the nature of the vehicle and the limitations are prescribed with reference to categories of persons carried in. It has been already found that proviso (ii) to sub-section (1) of S. 95 would not apply to a vehicle in which passengers are carried for hire or reward. Thus, the rigour of sub-section (2)(b) of S. 95 would fully come into play and by clauses (i) and (ii) provision has been made to cover two categories; one in respect of persons other than the passengers carried for hire or reward; and the other in respect of passengers. This is a statutory requirement and this cannot be got over by any condition getting incorporated in the policy, militating against or abrogating from the statutory requirement.

    8. Lastly, learned Counsel for the Insurance Company, appellant herein, would Submit that there excepts liability in case the vehicle was used for reliability trial. Section 96(2) of the Act enables the Insurance Company to defend an action for claim only on the enumerated grounds. This ground, namely, user of the vehicle on reliability trial, does not at all fall within the enumerated statutory grounds and it is not possible for the Insurance Company, appellant herein, to take over under such a condition which militates against the statutory provision. Certainly, statutory provision cannot be overriden by any condition in the insurance policy. Thus, we are obliged to eschew all the contentions put forth by the learned Counsel for the Insurance Company, appellant herein. Hence, we dismiss the Civil Miscellaneous Appeal.

    9. As already noted, there is a memorandum of cross-objections by the claimant, the first respondent in this Civil Miscellaneous Appeal. Mr. G.S Selvatharasu, learned Counsel for the claimant, cross-objector, would canvass only one aspect with regard to the quantum of compensation and that is the disallowance of compensation for loss of earning power. As per the medical evidence, the claimant lost his vision in the left eye. The claimant was aged nineteen years at the time of the accident. He was employed as a mechanic in an automobile workshop. The reasoning given by the Tribunal for disallowing this claim is that there is an award for pain and suffering and for the disability suffered by the claimant. This is no reasoning at all in the eye of law for disallowing the claim for loss of earning power. Certainly, the claimant could not be held to be as a fit person as he was before the accident, to carry on his avocation even as a mechanic in the future efficiently. We can also envisage the difficulties which he has to experience, as time passes on in respect of bettering his prospects, on account of this drawback, namely, loss of vision in his left eye.

    10. We think we can award approximately a sum of Rs. 15,000/- under the head loss of earning power and we award it. To the above extent, the memorandum of cross-objections is allowed and this enhanced compensation of Rs. 15,000/- shall be deposited by the Insurance Company, appellant herein, within a period of two months from today, failing which it shall carry interest at 6 per cent per annum from the date of default. We make no order as to costs in the Memorandum of Cross-objections. Equally so, there will be no order as to costs in the Civil Miscellaneous Appeal.

    11. Order accordingly.

    Use AI to get other relevant cases.
    Try AI Pro free for 7 days Upgrade to AI Pro

    Comments

    National Insurance Co. Ltd., Madras v. V.S.R Kumaresan
    (Jul 20, 1989)