1. Feeling aggrieved by the impugned award of the Motor Accidents Claims Tribunal, Guna, holding the insurance company to be liable to pay an amount of Rs. 1,00,000 to the claimants, the heirs of the deceased victim of the motor accident, it has now come up in appeal seeking redress praying for its being exonerated from the liability to pay any amount towards the compensation and modification of the award accordingly.

2. We have heard learned Counsel for the appellant as well as the learned Counsel representing the claimants-respondents and have carefully perused the record.

3. The facts in brief shorn of details and necessary for the disposal of this appeal lie in a narrow compass: A claim petition had been filed by the claimants-respondents, the legal heirs of the deceased Ramsingh, praying for the award of compensation of an amount of Rs. 12,60,000 along with interest calculated at the rate of 24 per cent per annum on 24.8.1992 specifying clearly therein that the said petition was being filed under Section 140 and Section' 166 of the Motor Vehicles Act, 1988.

4. In para 23 of the claim petition it has been clearly asserted that an amount of Rs. 25,000 be immediately paid to the claimants on account of the death of Ramsingh in the accident in question, on the principle of 'no fault liability' as provided under Section 140 of the Motor Vehicles Act, 1988.

5. Ramsingh, the deceased at the time of the accident in question on 29.4.1992 was driving a tractor with a trolley attached thereto. The owners of the tractor and trolley were Pratap Singh and Hanumant Singh, the present respondent Nos. 4 and 5. At about 8 p.m. on 29.4.1992 while passing through an unmanned railway crossing the motor vehicle was hit by a train coming from Guna, as a result of which collision Ramsingh, the driver and Madanlal, krishi mazdoor, sitting in the trolley, died on the spot. The tractor was insured with the present appellant.

6. The Motor Accidents Claims Tribunal vide the impugned award found, on an appraisal of the evidence on record that the deceased Ramsingh, the driver, was himself responsible for the accident. It was also found that at the time of the accident in question, the driver Ramsingh was driving the tractor at a fast speed in a negligent manner with undue haste and the accident occurred on account of absence of any phatak at the crossing. In spite of the finding that the driver was himself guilty and it was his own action which had resulted in the accident, the Tribunal rejected the plea of the insurer company claiming exoneration of its liability to make any payment indemnifying the insured. The Tribunal in this connection noticing that for casting the liability in question the statutory provision contained in Section 165 of the Motor Vehicles Act, 1988, which has also been referred to in Section 166 of the said Act, had used the expression "accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles, or damages to any property of a third party so arising, or both", laying emphasis on the use of the expression "arising out of the use of motor vehicles" came to the conclusion that since the accident resulting in the death of Ramsingh had arisen out of the use of motor vehicle, therefore, the insurer could not escape the liability.

7. The Tribunal further found that under the terms and conditions subject to which the insurer had taken upon itself the liability to indemnify the owner especially the condition No. 19 indicated that on the death of the driver in the accident the insurer will be liable to pay the amount of compensation to the legal heirs of the deceased and for this liability an additional amount of Rs. 15 had been charged by the insurer. The Tribunal was of the opinion that in view of the aforesaid condition the element of negligence lost all its significance as under the said condition it was provided that the insurer will be liable to pay the amount even if the accident was found to have been caused on account of the fault of the driver himself.

8. On a consideration of the evidence and the materials on record, the Tribunal came to the conclusion that, in all, the claimants were entitled to an amount of Rs. 1,00,000 as just compensation. The claimants were also found entitled to interest on the aforesaid amount calculated at the rate of 12 per cent per annum. The joint and several liability for the payment of the amount determined as just compensation was fastened on the owners as well as the insurer company only.

9. The learned Counsel for the appellant has assailed both the findings of the Tribunal. It has been urged that the award of compensation in the proceedings under Section 166 of the Motor Vehicles Act, has to be in accordance with the common law principle governing the cases where liability to pay damages/compensation can be fastened on the owner of the vehicle on 'fault basis' on the establishment of culpable negligence covering the cases where owner of the vehicle can be saddled with the liability even vicariously. In the present case, it is urged, that on the finding on the question of negligence which has been returned against the owner the award of compensation is manifestly illegal.

10. It is also contended that the Tribunal has completely misread the terms and conditions subject to which the liability had been undertaken by the insurer to indemnify the owner and has drawn wholly unwarranted inferences from the I.M.T. No. 19 which has vitiated in law the impugned award.

11. Learned counsel for the claimants-respondents, on the other hand, has tried to support the award on the reasonings contained therein. It has also been urged that the finding of the Tribunal that there was no negligence is liable to be reversed as applying the principle of res ipsa loquitur it was obvious that driver was not at fault.

12. We have given our anxious consideration to the rival submissions made by the learned Counsel for the parties.

13. So far as the finding in regard to the aspect of negligence is concerned, suffice it to say that the oral evidence and the spot map prepared in the presence of the 'panchas' and the placement of the parts of the tractor and the trolley and the bodies, etc., there can be no manner of doubt that the driver of the motor vehicle was himself responsible for the accident which occurred on account of his sheer negligence, and driving the motor vehicle with undue haste and in a careless manner. The finding on this question returned against the claimants does not appear to be suffering from any such legal infirmity which may justify an interference therein. The contention of learned Counsel for the claimants-respondents in this regard is not at all acceptable.

14. A perusal of the insurance policy, a copy of which has been filed on record, indicates that the insurer company had insured the Escort tractor with trolley subject to limitations to use, which was indicated to be 'agriculture use only'. While specifying the amount of premium it was indicated in the policy that the policy was for an amount of Rs. 1,30,000. An additional premium was charged for covering the risk of the driver. The policy was subject to I.M.T. Endorsement Nos. 22, 24, 26, 19, 36 and 55. I.M.T. No. 19 referred to legal liability in respect of the paid driver employed in connection with the operation of the motor vehicle. The aforesaid I.M.T. No. 19 is to the following effect:

In consideration of the payment of an additional premium it is hereby understood and agreed that notwithstanding anything contained herein to the contrary the company shall indemnify the insured against his legal liability under:

The Workmen's Compensation Act, 1923 and subsequent amendments of that Act prior to the date of this endorsement, the Fatal Accidents Act, 1855 or a common law in respect of personal injury to any paid driver whilst engaged in the service of insured in such occupation in connection with the motor vehicle and will in addition be responsible for all costs and expenses incurred with its written consent.

The premium having been calculated and paid while taking insurance of the vehicle concerned at the rate of Rs. 157 per driver and/or conductor. Provided always that:

(1) The endorsement does not indemnify the insured in respect of any liability in cases where the insured holds or subsequently effects with any insurance company or group of underwriters a policy of insurance in respect of liability as herein defined for his general employees.

(2) The insured shall take reasonable precautions to prevent accidents and shall comply with all statutory obligations.

(3) In the event of the policy being cancelled at the request of the insured no refund of the premium paid in respect of this endorsement will be allowed.

Subject otherwise to the terms, exceptions, conditions and limitations of this policy except so far as necessary to meet the requirements of Section 147 of the Motor Vehicles Act, 1988.

15. From a perusal of the above conditions, it is apparent that the insurer had only undertaken apart from other things the liability occurring under the common law 'in respect of personal injury to any paid driver whilst engaged in the service of the insured in such occupation in connection with the motor vehicle provided always that the insured was to take reasonable precautions to prevent accidents and was to comply with all statutory obligations, subject otherwise to the terms, exceptions, conditions and limitations of the policy except so far as necessary to meet the requirements of Section 147 of the Motor Vehicles Act, 1988.

16. From what has been indicated here-in-above, it is apparent that the liability of the insurer company so far as the death of the driver was concerned was a liability under the common law in respect of personal injury which necessarily involves establishing of the negligence on the part of the owner or driver of the offending vehicle resulting in the accident causing death of the victim.

17. In the aforesaid circumstances in the absence of a finding in regard to the element of the negligence the provision contained in I.M.T. No. 19 on the basis whereof the Tribunal had proceeded to fasten the liability on the insurer company, is not sustainable in law. However, the aforesaid ground was utilised by the Tribunal as an additional ground for fastening the liability on the insurer company, the other ground being that since the accident in question had arisen out of the use of the motor vehicle the insurer company could not escape the liability to indemnify the owner.

18. The learned Counsel for the insurer/ appellant has strenuously urged that in the present case since on the own finding of the Tribunal, there was no act of negligence forming the cause of accident and in the absence of the element of wrongful act, which is the basis for a tortious action, the insurer could not be saddled with any liability to pay any amount of compensation.

19. It may be noticed that as stated by the learned Counsel for the parties neither the claimants nor the owner of the offending motor vehicle have challenged the impugned award and as against them, it has attained finality.

20. The status of the insurer in law so far as the statutory liability sought to be fastened upon him under the Act cannot be more than that of a guarantor and he acts as a security for the third party with respect to its realising damages for the injuries suffered but a right to get any amount paid in excess is refunded to it by the insured stands secured. The ultimate burden always remains cast or fastened on the insured-owner of the motor vehicle.

21. As has already been noticed herein-above, the terms and conditions of the insurance policy clearly stipulate that the insurer will not be liable to pay any compensation in case the motor vehicle in question was used for any purpose other than the agricultural use only. It was also clearly stipulated that the policy did not cover the liability of compensation in case of the use of the vehicle for hire or reward.

22. However, there is another aspect of the matter which is of considerable importance so far as the controversy raised in this appeal is concerned and it cannot be lost sight of.

23. In a recent decision, the Supreme Court in the case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu, 2001 ACJ 1 (SC), had elaborately dealt with the extent of liability of an insurance company towards the third party as per Section 95 (1) (b) of the Motor Vehicles Act, 1939, and on the question as to what are its rights in case of payment of an amount in excess of the limits of the liability under the insurance policy vis-a-vis the insured.

24. In the aforesaid case, the claimants had raised a claim for Rs. 2,00,000 as the compensation on account of the death of their predecessor-in-interest in a road accident on 6.7.1988 involving the offending motor vehicle, an autorickshaw, bearing registration No. KRN 1859. The insurer had contested the claim specifically stating therein that its liability was limited to Rs. 50,000 under the policy of insurance. The Tribunal, however, had granted an award for an amount of Rs. 1,94,150 and had fastened the entire liability on the appellant insurance company. The insurance policy in that case was of a date prior to the coming into force of the new Motor Vehicles Act, 1988, on 1.7.1989.

25. Under the aforesaid insurance policy the limit of the insurance company's liability in respect of any one claim or series of claims arising out of one event w-as fixed at Rs. 50,000 only. However, the avoidance clause of the policy provided that

"nothing in the said policy or the endorsement hereon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act, 1939, Section 96. But the insured shall pay to the company all sums paid by the company which the company would not have been liable to pay but for the said provisions"

. Section II of the policy dealt with 'liability of third party' and provided that the company will indemnify the insured against all sums including claimants' costs and expenses which the insured becomes legally liable to pay in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle or damage to the property caused by such use.

26. Taking into consideration the earlier decisions of the Apex Court in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani, 1958-65 ACJ 559 (SC) and Amrit Lal Sood v. Kaushalya Devi Thapar, 1998 ACJ 531 (SC), the Hon'ble Supreme Court came to the conclusion that despite holding the liability under the policy limited to the extent of Rs. 50,000, the Claims Tribunal and the High Court were not unjustified in directing the appellant insurance company to pay the whole of the awarded amount to the claimants on the basis of the contractual obligations contained in clauses relating to the liability of the third parties and avoidance clause. However, it was further indicated that the Claims Tribunal and the High Court were not justified in rejecting the right of the appellant insurance company to recover from the insured the excess amount paid in execution and discharge of the award of the Tribunal.

27. In the aforesaid view of the matter, the Apex Court allowed the appeal holding that the appellant insurance company was liable to pay the entire award amount to the claimants. Upon making such payment, the appellant can recover the excess amount from the insured by executing the award against the insured to the extent of such excess as per Section 174 of the Motor Vehicles Act, 1988.

28. In its another decision in the case of New India Assurance Co. Ltd. v. Kamla, 2001 ACJ 843 (SC), the Apex Court had indicated taking into consideration the implications arising under Sub-section (4) and its proviso together with Sub-section (5) of Section 149 of the Motor Vehicles Act, 1988, that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This, it was clarified means that the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but insurer is entitled to recover any such sum from the insured if the insurer was not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy.

29. In para 22 of the aforesaid decision, the Apex Court summarised the position in law indicating that when a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to third parties,, whether or not there has been any breach or violation of policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured.

30. In para 25 of the aforesaid decision, it was indicated that the insurer and the insured are bound by the conditions enumerated in the policy and the insurer was not liable to the insured if there was violation of any policy condition. But the insurer who was made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid licence.

31. In view of the aforesaid position in law and what has been indicated herein before, the appeal is allowed holding that the appellant insurance company is liable to pay the entire award amount to the claimants and upon making such payment the appellant company can recover the excess amount from the insured by executing the award against the insured to the extent of such excess as per Section 174 of the Motor Vehicles Act, 1988. The impugned award shall stand modified to that extent. In other respects, since the owner has submitted to the impugned award, it shall remain intact.

32. There shall however be no order as to costs.