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Radhey Shyam Agarwal v. Gayatri Devi
Summary of the Opinion — Motor Accident Claim Appeal
Factual and Procedural Background
The owner of stage carriage bus No. CIL 9025 (the appellant) filed an appeal under Section 173 of the Motor Vehicles Act, 1988 against an award dated 17.7.1995 passed by the First Additional Motor Accidents Claims Tribunal, Ambikapur in Motor Accident Claim Case No. 7 of 1993.
On 13.12.1992 the bus CIL 9025, owned by the appellant, was carrying passengers in excess of the seating capacity permitted by its permit (permit seating 47+1 + 1 + 1 including driver, conductor and khalasi). The deceased, Mahendra Prasad Das (approximately 30 years of age), was standing on the footboard of the closed gate of the bus. Near village Raipur, allegedly due to rash and negligent driving by the driver (respondent No. 8), the bus door suddenly opened; the deceased was thrown out, dragged, sustained multiple injuries and died instantly.
The deceased's widow and five minor children (respondent Nos. 1 to 6) filed a claim under Section 166 of the Act for Rs. 3,82,000/- as compensation. The owner (appellant), the insurer (respondent No. 7, United India Insurance Co. Ltd.) and the driver (respondent No. 8) contested the claim. The insurer's principal defence was that the vehicle was overloaded in breach of the permit and the policy conditions; therefore the insurer was not liable to indemnify the owner or to pay compensation.
The Tribunal found death resulted from rash and negligent driving, accepted a monthly dependency figure of Rs. 1,000 (yearly Rs. 12,000), applied a multiplier of 25, and after deductions arrived at an award of Rs. 1,72,000 (including specific heads such as consortium, loss of company to minors and funeral expenses) with 12% interest from date of application. The Tribunal, however, exonerated the insurer on the ground of breach of policy/permit and directed the owner and driver to pay jointly or severally.
Legal Issues Presented
- Whether the insurer can disown its liability under Section 149 (corresponding to Section 96 of the earlier Act) on the basis that the vehicle was overloaded and thereby used for a purpose not allowed by the permit, in view of policy clauses excluding liability for damage caused by overloading and the limitations expressed in the insurance policy.
- Whether the Tribunal correctly assessed the quantum of compensation — specifically, whether the Tribunal's application of the multiplier method (multiplier of 25) together with a 25% deduction for lump sum payment and uncertainties of life was appropriate.
Arguments of the Parties
Claimants' Case (Respondent Nos. 1–6)
- The claimants (widow and five minor children) filed under Section 166 seeking Rs. 3,82,000/- plus interest for the death caused by rash and negligent driving. The Tribunal accepted that death resulted from the bus's rash and negligent driving and assessed dependency at Rs. 1,000 per month (Rs. 12,000 per year).
Insurer's Defence (Respondent No. 7)
- The insurer contended that the vehicle was overloaded in breach of the permit and the policy conditions; this breach, it argued, disentitled the insurer to indemnify the insured or be liable to pay compensation for third party claims.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| British India General Insurance Co. Ltd. v. Captain Itbar Singh, 1958-65 ACJ 1 (SC) | Supports the proposition that an insurer cannot raise defences not enumerated in the statutory provision corresponding to Section 149(2); statutory language must be given effect and cannot be expanded by policy terms. | The court relied on it to interpret Sub-section (2) of Section 149 as admitting only the specific defences therein; a defence outside those grounds (even if provided in the policy) cannot be permitted. |
| Mangilal v. Parasram, 1970 ACJ 86 (MP) | Similar support for the interpretation that statutory defences are exhaustive and policy terms cannot add to them. | Cited alongside British India case to reinforce that the statute's Sub-section (2) lists exclusive grounds for insurer's defence against third party claims. |
| New India Assurance Co. Ltd. v. Pravina Singh, M.A. No. 444 of 1995 (decided 25.9.1996) | Held recently (per court) that overloading of a passenger bus which met with an accident will not disentitle third parties or a passenger to claim compensation arising out of rash and negligent driving. | The bench relied on this earlier view to support rejection of insurer's plea that overloading disentitles third-party claimants to compensation. |
| Kesavan Nair v. State Insurance Officer, 1971 ACJ 219 (Kerala) | Repudiation of liability on the ground that overloading changed the purpose of use contrary to permit is fallacious; overloading is breach of permit conditions but not a change of authorised purpose. | Quoted to support the proposition that overloading does not amount to use for a purpose not allowed by the permit and thus cannot be a valid ground to deny third-party liability under the statute. |
| National Insurance Co. Ltd. v. T. Elumalai, 1990 ACJ 426 (Madras) | Terms of policy are subject to statutory provisions; liability to third parties is created by statute and cannot be over-ridden by contractual terms; certain violations (e.g., plying in particular areas) may fall outside the statutory grounds for insurer's defence. | Used to show that even where a vehicle contravenes permit conditions (such as geographical plying restrictions), that contravention does not automatically come within the statutory defences available to the insurer for third-party liability. |
| Bomanji Rustomji Ginwala v. Ibrahim Vali Master, 1982 ACJ 380 (Gujarat) | Breaches of statutory rules by the driver do not necessarily fall within the conditions enumerated in the statutory provision (Section 96(2)(b)(i)–(iii)) and do not enable the insurer to escape third-party liability. | Cited to support the proposition that breach of operational/statutory rules (e.g., driving position rules) is not within the enumerated statutory defences that can absolve insurer's liability towards third parties. |
| Ananda Ram Saikia v. Nurul Haque, 1987 ACJ 900 (Gauhati) | Case referred to by counsel for insurer. | The court observed this authority was of no assistance because the specific question (whether overloading amounts to use for a purpose not allowed by the permit) was not specifically considered or decided in that case. |
| General Manager, Kerala State Road Transport Corpn. v. Susamma Thomas, 1994 ACJ 1 (SC) | Laid down principles for determining multiplicand and applying the appropriate multiplier in assessing compensation. | The court relied on these Supreme Court guidelines in reviewing the Tribunal's application of the multiplier method and directed that disbursement be made keeping those guidelines in mind. |
| Lilaben Udesing Gohel v. Oriental Insurance Co. Ltd., 1996 ACJ 673 (SC) | Also sets out principles for application of the multiplier method and determination of multiplicand. | Referred to for the correct application of multiplier principles; the court noted the Tribunal's departure (deduction of 25%) was incorrect under these authorities. |
Court's Reasoning and Analysis
The court proceeded in two linked strands: (A) whether the insurer could be exonerated from third-party liability on the basis of overloading (i.e., the relevance of policy terms and permit breach), and (B) whether the Tribunal had correctly assessed quantum of compensation.
A. Insurer's Liability: The court examined the policy wording (Section I and Section II of Exh. NA 1) and Section 149 of the Motor Vehicles Act (corresponding to Section 96 of the repealed Act). It noted that Section 149(2) specifies, in plain and unambiguous language, the exclusive grounds on which an insurer may avoid payment of a judgment or award (for example, particular specified policy conditions or non-disclosure). The court held that:
- The policy does contain a clause excluding liability for damage caused by overloading in Section I and contains limitations on use in Section II, but Sub-section (2) of Section 149 enumerates the statutory defences available to the insurer for third-party liability.
- If a proposed defence is outside the statutory grounds listed in Section 149(2), the insurer cannot rely on it to deny third-party liability; allowing otherwise would effectively add words to the statute, which is impermissible. The court relied on earlier authorities to support this strict interpretation.
- The court analysed definitions in the Act: "permit," "stage carriage," and "transport vehicle," and recognized that carrying more passengers than seating capacity is an offence and a breach of permit conditions (potentially attracting prosecution). However, such breach constitutes violation of conditions of permit, not a change of the vehicle's permitted purpose.
- Accordingly the court concluded that overloading does not mean the vehicle was used for a purpose not allowed by the permit. The vehicle was being used for its sanctioned purpose — carrying passengers — albeit in breach of certain conditions (overloading/overspeeding). Therefore the insurer could not be exonerated from third-party liability under Section 149(2) on that basis.
- The court expressly held the Tribunal erred in exonerating the insurer on the ground of overloading as falling within Section 149(2)'s defences.
B. Quantum of Compensation: The court reviewed the Tribunal's approach to quantum. The Tribunal had accepted a yearly dependency multiplicand of Rs. 12,000 and applied a multiplier of 25, but then reduced the calculated amount by 25% for lump sum payment and uncertainties of life, resulting in a final award of Rs. 1,72,000.
- The court noted that when the multiplier method is applied, no additional deductions (such as a lump-sum/uncertainties deduction) are permissible because the multiplier method is intended to take account of all heads and contingencies.
- Relying on Supreme Court authorities (Susamma Thomas and Lilaben Gohel), the court stated that the Tribunal's deduction was incorrect in principle.
- However, although the court considered that the multiplier of 25 was high and that, applying the II Schedule multiplier of 17 (appropriate given the deceased's age and number of dependants) the compensation would have amounted to Rs. 2,04,000 on the multiplicand of Rs. 12,000, the claimants had not filed any cross-appeal or objection. For that reason the court declined to enhance the Tribunal's awarded amount.
C. Directions and Practical Consequences: The court directed the insurer (respondent No. 7) to deposit the amount awarded by the Tribunal together with interest at 12% per annum from the date of application within two months; failure to do so would attract interest at 15% per annum thereafter. After deposit, the amount was to be disbursed to respondent Nos. 1 to 6 in accordance with the Supreme Court guidelines in Susamma Thomas and Lilaben Gohel.
Holding and Implications
Holding:
The appeal is allowed. The Tribunal's exoneration of the insurer on the ground that overloading amounted to use of the vehicle for a purpose not allowed by the permit (thus relieving the insurer of third-party liability) was erroneous.
Immediate consequences for the parties:
- The insurer (respondent No. 7) is directed to deposit the compensation amount awarded by the Tribunal together with interest at 12% per annum from the date of the application within two months of receipt of the certified copy of the order; on default, the awarded amount will carry interest at 15% per annum thereafter.
- After deposit, the awarded amount shall be disbursed to the claimants (respondent Nos. 1 to 6) in accordance with the guidelines laid down in Susamma Thomas and Lilaben Gohel.
- The Tribunal's conclusion that the insurer was not liable because of overloading (a breach of permit conditions) was held to be illegal; the insurer cannot rely on a policy condition or permit-breach not enumerated in Section 149(2) to deny third-party liability.
- The court declined to enhance the compensation despite finding the multiplier applied by the Tribunal to be high and that, by the II Schedule multiplier of 17, the compensation would have been higher—because the claimants did not file a cross-appeal or cross-objection.
The opinion articulates statutory interpretation and applies existing precedents to the facts of the case; it does not present or claim to establish a new, separate legal principle beyond those applications set out above.
Order as to costs: The appeal was allowed with no order as to costs.
1. Owner of stage carriage bus CIL 9025 has filed this appeal under Section 173 of the Motor Vehicles Act, 1988 (Act) against the award dated 17.7.1995 passed in Motor Accident Claim Case No. 7 of 1993 by the First Additional Motor Accidents Claims Tribunal, Ambikapur.
2. Facts giving rise to this appeal are thus: On fateful day of 13.12.1992 the bus No. CIL 9025 owned by appellant, driven by respondent No. 8 and insured by respondent No. 7 was carrying excess passengers than its seating capacity permitted by the conditions of permit 47+1 + 1 + 1 including driver, conductor and khalasi. Deceased Mahendra Prasad Das, aged about 30 years, was one of the passengers travelling in the said bus by standing on the footboard of the gate of the bus which was closed. When it reached near village Raipur, because of rash and negligent driving of the bus, the door of the bus got suddenly opened as a result of which deceased was thrown out of the bus and was dragged to some distance as a result of which he received multiple injuries and died instantaneously.
3. The respondent No. 1, aged 26 years, the widow of the deceased and five minor children of the deceased aged six months to 12 years respectively, the respondent Nos. 2 to 6 filed an application under Section 166 of the Act to claim compensation of Rs. 3,82,000/- with interest thereon for the death of Mahendra Prasad Das caused due to rash and negligent driving of the bus. The appellant and the respondent Nos. 7 and 8 contested the claim. The main defence of the insurer was that the vehicle was overloaded and was carrying passengers more than its seating capacity permitted by the conditions of permit in breach of the conditions of the policy and the permit, therefore, the insurer is not liable to indemnify the insured, the owner of the bus or to pay compensation to the legal representatives of the deceased.
4. Learned Tribunal on the evidence adduced by the parties held that death of Mahendra Prasad Das was a result of rash and negligent driving of the bus, the deceased was earning about Rs. 3,250/- per month from his leather business. The Tribunal on the evidence estimated dependency at Rs. 1,000/- per month, yearly Rs. 12,000/-. Applying the multiplier of 25 calculated compensation of Rs. 2,70,000/- out of which deduction was made towards the lump sum payment and uncertainties of life. The amount was determined at Rs. 1,50,000/- wherein Rs. 5,000/- were awarded towards consortium, Rs. 15,000 for loss of company to minor children and Rs. 2,000/- for funeral expenses. Thus, the total compensation of Rs. 1,72,000/- was awarded with interest thereon at the rate of 12 per cent per annum from the date of application till payment. However, the Tribunal exonerated the insurer, the United India Insurance Co. Ltd., as the vehicle was being driven in breach of the conditions of the permit and that of the policy, directed the owner and driver of the vehicle to pay the compensation jointly or severally.
5. Mr. B.K. Rawat, counsel for the appellants, Mr. Sunil Sinha, counsel for the respondent Nos. 1 to 6 and Mr. N.S. Ruprah, counsel for the respondent No. 7 heard. Record perused.
6. The first question for our consideration is whether insurer can disown its liability under Section 149 of the Act because the policy Exh. NA 1 contained a clause that the vehicle would not be allowed to be used for the purpose not allowed by the permit and whether overloading would constitute violation of the purpose of permit. The policy lays down the limitations as to use of the vehicle, i.e., use only for carriage of passengers in accordance with the permits (contract carriage or stage carriage) issued within the meaning of 1988 Act. Section I of the policy, Exh. NA 1, deals with loss or damage. For the purpose of this appeal, sub-clause (a) of clause (2) of section I is relevant which we quote:
Section I - Loss or Damage xxx xxx xxx (2) The company shall not be liable to make any payment in respect of:
(a) Consequential loss, depreciation, wear and tear, mechanical or electrical breakdown, failures of brakes nor for damage caused by overloading or strain of the motor vehicles nor for loss or damage to accessories by burglary, housebreaking or theft unless such motor vehicle is stolen at the same time.
xxx xxx xxx Section II of the policy deals with liability to third parties, relevant part of which reads thus:
Section II - Liability to Third Parties (1) Subject to the limits of liability as laid down in the Schedule hereto the company will indemnify the insured against all sums 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 (including the loading and/or unloading) of the motor vehicle;
(ii) damage to property caused by the use (including the loading and/or unloading) of the motor vehicle.
xxx xxx xxx
7. Section 149 of the Act corresponding to Section 96 of the repealed Motor Vehicles Act, 1939 casts a duty on the insurer to satisfy judgment and awards against the person insured in respect of third parties risks. The language of Sub-section (2) is plain and unambiguous. If an insurer to whom the requisite notice of the action has been given is entitled to be made a party thereto and to defend the action on any of the grounds enumerated in Sub-section (2) which we quote:
(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 a 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 ply 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 duly licensed, or by any person who has been disqualified for holding or obtaining a driving 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.
The language of Sub-section (2) of Section 149 is plain and admits no doubt or confusion if the defence is outside the grounds in Sub-section (2) then an insurer cannot defend the action on the grounds which are not specified in Sub-section (2), but contained in the policy. If that is allowed that would be adding words to the statute which is not permissible. [See: British India General Insurance Co. Ltd. v. Captain Itbar Singh 1958-65 ACJ 1 (SC) and Mangilal v. Parasram 1970 ACJ 86 (MP)].
8. Therefore, in this case to exonerate the insurer from liability under the Act in case of third party risks it is necessary for insurer to establish that there has been violation of the conditions of the insurance policy and that the transport vehicle was used for a purpose not allowed by its permit. 'Permit' as defined in Section 2(31), means a permit issued by a State or Regional Transport Authority or an authority prescribed in this behalf under this Act authorising the use of a motor vehicle as a transport vehicle. 'Stage carriage' as defined under Section 2(40) means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey. Section 2(47) defines the 'transport vehicle' which means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle. A stage carriage can be plied on grant of permit under Section 72 of the Act. After grant of permit, the permit may be cancelled or suspended under Section 86 of the Act by the appropriate authority for any of the lapses or breaches of general conditions of each permit which are attached to all permits as provided in Section 84 of the Act. Carrying passengers more than the seating capacity is an offence also and the permit holder, driver and conductor are liable to be prosecuted and punished for the same.
9. The contention that this stage carriage vehicle was carrying passengers more than its seating capacity provided in the permit, therefore, it would be a case of use of the vehicle not with the purpose provided for in the permit, cannot be accepted. The purpose of the stage carriage was to carry passengers and obviously the bus was carrying passengers. It was not being used for other purposes than carrying the passengers or being used like goods carrier. The vehicle was being used for sanctioned purpose and if any condition or conditions are violated either by overspeeding or overloading or any condition of permit that will be a breach of conditions of permit, but it cannot be said that the vehicle was used for the purpose not authorised by the permit.
10. Recently, we have taken a view in New India Assurance Co. Ltd. v. Pravina Singh, M.A. No. 444 of 1995, decided on 25.9.1996 that overloading of the passenger bus which met with an accident will not disentitle the third parties or a passenger to claim compensation for the death or injury arising out of rash and negligent driving in a motor accident.
11. Kerala High Court in the case of Kesavan Nair v. State Insurance Officer 1971 ACJ 219 (Kerala), observed that repudiation of the liability to pay compensation on the ground that by overloading the bus the insured had contravened the purpose by using the vehicle for the purpose not allowed by the permit is fallacious. There has been no violation of the purpose of the permit. Overloading and overspeeding might constitute violation of the conditions of the permit but it cannot be said that the vehicle has been used for an unauthorised purpose.
12. The Madras High Court in the case of National Insurance Co. Ltd. v. T. Elumalai 1990 ACJ 426 (Madras), a case in which auto-rickshaw was plying in the city contrary to its permit condition, took the view that the policy of insurance may permit the insurer to avoid its liability under various cicumstances. However, as against the liability of insurer to third parties, the terms of the policy of insurance are subject to the provisions of Section 96(2) of the Act. If there is a breach of the contract on the part of the insured the insurer could proceed against the insured, but as far as the third party risks are concerned, the liability having been created by the statute, cannot be over-ridden by the terms of the contract of insurance between the parties. Section 96(2) of the Act does not include violation of the terms of the permit relating to plying in certain geographical areas. Hence the plea that the auto-rickshaw was found plying in the city contrary to its permit, even if established factually, cannot be a ground since the same does not fall within the ambit of Section 96(2) of the Act.
13. Gujarat High Court in the case of Bomanji Rustomji Ginwala v. Ibrahim Vali Master 1982 ACJ 380 (Gujarat), a case of breach of statutory rules committed by driver of insured vehicle, held that driving of the tractor in violation of Rule 264(2) which enjoined upon the driver of the tractor to ply the tractor as far as possible on the sidestrip of the metalled road, the driver of the tractor committed breach and drove it in the middle of the tar road. He also committed violation of Rule 266 and Rule 266(3), the Court observed that breach of statutory rules on the part of the driver of the insured vehicle do not fall within any of the conditions enumerated in Section 96(2)(b)(i) to (iii). Such breaches cannot enable the insurance company to escape its liability qua third party.
14. The decision relied by Mr. N.S. Ruprah of Gauhati High Court in the case of Ananda Ram Saikia v. Nurul Haque 1987 ACJ 900 (Gauhati), is of no help as question was not specifically considered and decided therein.
15. Therefore, in our opinion, the Tribunal was in error in holding that because of the violation of the condition of permit of carrying passengers in excess of seating capacity insurance company would not be liable to pay compensation and it is illegal as such a defence is not available in Sub-section (2) of Section 149 of the Act against the third party risks as the vehicle was not used for a purpose not allowed by the permit of transport vehicle.
16. Next question raised relates to quantum of compensation. Though the Tribunal has calculated the compensation applying the multiplier method taking into account the multiplier of 25 which, in our opinion, is higher, in that a deduction of 25 per cent was given for lump sum payment and uncertainties of life. It is well settled that when the multiplier method is applied no deductions are permissible as it takes care of all heads and circumstances. The Supreme Court in General Manager, Kerala State Road Transport Corpn. v. Susamma Thomas 1994 ACJ 1 (SC) and Lilaben Udesing Gohel v. Oriental Insurance Co. Ltd. 1996 ACJ 673 (SC), has laid down the principles to determine the multiplicand and for applying the appropriate multiplier. However, the compensation awarded by the Tribunal is low. The deceased was a young man of 30 years who left behind six dependants. According to II Schedule under Section 163A, the multiplier of 17 ought to have been applied. If that multiplier is applied to the multiplicand of Rs. 12,000/- the amount of compensation would come to Rs. 2,04,000/-. But as the claimants have not filed any cross-appeal or cross-objection, hence, we are not inclined to enhance the amount of compensation.
17. As a result of above discussion, we direct the insurer, the respondent No. 7 to deposit the amount awarded with 12 per cent interest from the date of application within two months from the date of receipt of certified copy of the order failing which the amount so awarded would carry interest at the rate of 15 per cent per annum. After deposit the amount shall be disbursed to respondent Nos. 1 to 6 keeping in mind the guidelines laid down by the Supreme Court in the cases of Susamma Thomas 1994 ACJ 1 (SC) and Lilaben Udesing Gohel 1996 ACJ 673 (SC).
18. Accordingly, the appeal is allowed with no order as to costs.
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