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United India Insurance Co. Ltd. v. Smt. Susila Panigrahy And Others
Concise Analytical Summary of the Provided Opinion
Factual and Procedural Background
A claim under Section 110-A of the Motor Vehicles Act, 1939 was filed by Smt. Susila Panigrahy and her minor children (the claimants) seeking Rs. 1,50,000 from the owner, Labela Dharma Sahu, and its insurer, United India Insurance Co. Ltd., following the death of Niranjan Panigrahy on 20-2-1988. The deceased was waiting to board a passenger bus (Regn. No. OCG 7882) and was struck by the vehicle before he could board. He ran a shop selling fruits and vegetables and was said to earn about Rs. 1,000 per month; his age was about 45 years.
The Second Motor Accidents Claims Tribunal (S.D.) Berhampur awarded compensation: the Tribunal treated the deceased's monthly income as Rs. 1,000, deducted one-third for personal expenses, adopted an annual contribution of about Rs. 9,000 and applied a multiplier of 11 to reach Rs. 99,000. The Tribunal held that the insurer's liability was unlimited and directed payment with interest at 6% from date of claim within three months, with a default rate of 12% thereafter. The insurer appealed against the Tribunal's award.
Legal Issues Presented
- Whether the deceased, who had not actually boarded the bus but was attempting to enter it when struck, should be classified as a "passenger" within the ambit of proviso (ii) to sub-section (1) of Section 95 of the Motor Vehicles Act, thereby affecting the insurer’s limit of liability.
- Whether the insurer had undertaken any liability beyond the statutory limit (i.e., whether the insurer's liability was unlimited or limited to the statutory sum for third-party death), and whether the Tribunal was justified in holding the insurer's liability to be unlimited in the absence of specific material.
- Whether the Tribunal's quantification of compensation (annual contribution, multiplier) and the stipulated default rate of interest were legally and arithmetically correct.
Arguments of the Parties
Appellant / Insurer (United India Insurance Co. Ltd.) — Mr. Misra
- Contended the deceased should be treated as a passenger; if that is so, the Tribunal's fixation of liability is unsustainable.
- Argued that even if the deceased were a third party, the insurer's liability could not exceed Rs. 50,000 at the relevant time unless there was material showing that the insurer accepted liability beyond the statutory limit.
- Submitted that the Tribunal's quantification of compensation (adoption of annual contribution of Rs. 9,000 and multiplier of 11) was arbitrary and incorrect.
- Challenged the Tribunal's stipulation of a default interest rate as contrary to law.
Respondents / Claimants
- Argued that a person cannot be treated as a passenger until he actually boards a bus; since the deceased had not boarded, he was not a passenger.
- Maintained that because the insurer did not take a specific plea limiting its liability, the Tribunal was justified in concluding the insurer's liability was unlimited.
Owner's Plea (as recorded in the opinion)
- The owner took a specific plea that the claimants' entitlements would not exceed Rs. 16,000 (this was noted by the Court as part of the record of pleadings).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Panilal Sinha v. Divisional Manager, Oriental Insurance Co. Ltd. ANO No. 97 of 1991 | Requirement that, where a party asserts that insurer's liability is unlimited (or conversely that it is limited), there must be a specific assertion of that extent of liability by the claimant and/or insured in pleadings. | The Court relied on this authority to hold that the Tribunal was not justified in treating the insurer's liability as unlimited because the claim petition did not specifically assert the insurer's liability to be unlimited and relevant pleadings lacked an explicit assertion of insurer liability beyond statutory limits. |
| The Oriental Insurance Co. Ltd. v. Harapriya Nayak ((1994) 1 Orissa LR 88) | Authority bearing on the appropriate rate of interest/default rate to be applied in motor accident compensation matters (used by the Court to reject the Tribunal's higher default rate). | The Court held that the default rate stipulated by the Tribunal could not be maintained in view of this Division Bench decision and accordingly fixed the rate of interest at 9% from the date of claim on the quantified compensation. |
Court's Reasoning and Analysis
The Court proceeded in a stepwise analysis strictly tied to the text of the opinion:
- Statutory interpretation regarding "passenger": The Court examined proviso (ii) to sub-section (1) of Section 95 of the Motor Vehicles Act and related provisions. It emphasized the textual import of the words "being carried in or upon entering or mounting or alighting" and concluded that these expressions require a physical nexus or contact with the vehicle — i.e., "entering", "mounting" or "alighting" presuppose that the person has, at least in some physical sense, begun to get into or out of the vehicle.
- Application to facts: The Court found that the deceased had not physically entered or mounted the bus and had only been attempting to get in without any physical contact at the time of the accident. On that factual basis, the deceased could not be characterized as a passenger under the proviso and therefore had to be treated as a third party in relation to the offending vehicle.
- Insurer's liability beyond statutory limit: The Court queried whether the insurer had accepted liability beyond the statutory limit. It noted the insurer's pleadings (paragraph 9) averring that liability, if any, was to a maximum of Rs. 30,000 (as pleaded by the insurer). It rejected the claimants' submission that absence of the complete policy before the insurer warranted an adverse inference, relying upon the Panilal Sinha authority which requires a specific assertion where unlimited liability is claimed. The Court observed the claim petition did not specify the extent of insurer liability; the owner had taken a specific plea that entitlements would not exceed Rs. 16,000. Consequently, the Tribunal's conclusion of unlimited insurer liability was unjustified.
- Quantum of compensation — arithmetic correction and multiplier: The Court identified an arithmetic error in the Tribunal's computation. The Tribunal treated monthly income as Rs. 1,000, deducted one-third for personal expenses, but then purported to hold the monthly contribution at Rs. 750 and annual contribution at Rs. 9,000. The Court corrected this: monthly contribution after deducting one-third would yield an annual contribution of Rs. 8,000 (i.e., Rs. 1,000 x 12 = 12,000; minus one-third = 8,000). Given the deceased's age (45 years), the Court selected multiplier 10 (rather than 11) and thus calculated compensation entitlement as Rs. 80,000 (8,000 x 10).
- Interest and default rate: Reliance on the Division Bench decision in Oriental Insurance Co. Ltd. v. Harapriya Nayak led the Court to disallow the Tribunal's stipulated default rate. Instead, the Court fixed interest at 9% from the date of claim on the quantified compensation of Rs. 80,000.
- Interim directions and scope for further adjudication: Because the deceased was a third party, the insurer's statutory liability stood at Rs. 50,000 unless evidence established that the insurer accepted liability beyond that sum. The Tribunal had not dealt with that aspect adequately. The Court therefore directed the Tribunal to reconsider only the question of whether the insurer's liability exceeded Rs. 50,000, permitting the parties to place relevant materials limited to that issue and set a timetable to avoid delay (appearance directed on 18-2-1994). The insurer was ordered to re-deposit funds before the Tribunal for claimants' withdrawal after identification, and the Tribunal was to give effect to directions regarding percentage/time of fixed deposit as in the cited Oriental Insurance case.
Holding and Implications
Core Holding: The Miscellaneous Appeal was disposed of and the Tribunal's award was modified in part as follows.
Direct rulings and consequences (as per the opinion):
- The deceased was not a "passenger" within the meaning of proviso (ii) to sub-section (1) of Section 95 and must be treated as a third party vis-à-vis the offending vehicle.
- The Tribunal was not justified in holding the insurer's liability to be unlimited in the absence of specific pleading or material showing acceptance of liability beyond statutory limits.
- The proper quantification of compensation for the claimants (on the accepted facts) was fixed at Rs. 80,000 (annual contribution Rs. 8,000 x multiplier 10), with interest at 9% from the date of claim until payment.
- The insurer is primarily to indemnify Rs. 50,000 (statutory liability for a third party at the relevant time). The Court directed that Rs. 50,000, along with interest at 9% from the date of claim, be paid within three months.
- Regarding any amount in excess of Rs. 50,000, the Tribunal was directed to admit and adjudicate evidence only on whether the insurer had accepted liability beyond Rs. 50,000; the parties were given an opportunity and a timetable to place materials on that narrow issue.
- Administrative directions: the insurer was to withdraw amounts deposited in the Court and re-deposit them before the Tribunal for claimants to withdraw upon identification; the Tribunal was to apply directions as to fixed deposit percentage/time contained in the cited Oriental Insurance decision.
The opinion does not purport to lay down a new precedent beyond its application of existing authorities cited; the decision primarily modifies the Tribunal's award and remits the limited question of excess insurer liability for fresh consideration.
Disposition: The Misc. Appeal is disposed of accordingly.
1. The United India Insurance Co. Ltd. (hereinafter referred to as the ‘insurer’) calls in question the legality of award made by the Second Motor Accidents Claims Tribunal (S.D) Berhampur (hereinafter referred to as the ‘Tribunal’).
2. Factual background as portrayed by the parties is as follows:—
A claim was lodged under Section 110-A of the Motor Vehicles Act, 1939 (in short, the ‘Act’) by Smt. Susila Panigrahy and her minor children (hereinafter referred to as the ‘claimants’), claiming a compensation of Rupees 1,50,000/- from Labela Dharma Sahu (hereinafter referred to as the ‘owner’) and the insurer, on the ground that one Niranjan Panigrahy (hereinafter referred to as the ‘deceased’) lost his life on 20-2-1988 in an accident caused by a passenger bus bearing registration No. OCG 7882 belonging to the owner, which was the subject-matter of insurance by the insurer. According to them, the deceased was waiting for a bus, but before he could actually board it, the vehicle hit him as a result of which he fell down, sustained injuries and subsequently breathed his last. He was running a shop at Golantara selling fruits and vegetables and was earning about Rs. 1000/- per month and was contributing for maintenance of his family out of the said income. The deceased was aged about 45 years at the time of his death. The Tribunal held, that monthly income was about Rs. 1000/- per month after deducting 1/3rd for personal expenses, held that annual contribution would be in the neighbourhood of Rs. 9000/-, and adopting a multiplier of 11 fixed entitlement of claimants at Rs. 99,000/-. It was held that liability of the insurer was unlimited, and accordingly liability was fixed on the owner, to be indemnified by the insurer. It was stipulated that the amount was to be paid with interest @ 6% from the date of claim within three months. A default rate of interest @ 12% was stipulated in case of failure to pay within the aforesaid period.
3. Mr. Misra, learned counsel appearing for the insurer has urged the following points in support of appeal:
(i) The deceased was to be treated as a passenger and therefore, liability as fixed by the Tribunal is not sustainable. According to him, even if for the sake of argument, it is conceded that the deceased was not a passenger and was a third party so far as the vehicle is concerned, yet liability could not have been fixed beyond Rs. 50,000/- in the absence of material being brought on record by either claimants or owner that the insurer understood any liability beyond the statutory liability.
(ii) Quantification of compensation is arbitrary. Fixation of annual contribution at Rs. 9,000/- and adoption of multiplier of 11 is arbitrary.
(iii) Stipulation regarding default rate of interest is contrary to law.
Learned counsel for claimants however, submitted that until a person actually boards a bus, he cannot be treated to be a passenger. It is submitted that the insurer having not taken any specific plea about its liability, the Tribunal was justified in its conclusion about liability being unlimited.
4. I shall first deal with question as to whetehr the deceased could be taken to be a “passenger”. Difficulty arises when the person has not actually boarded the vahicle legislative intent is clear from proviso (ii) to sub-section (1) of Section 95 of the Act which reads as follows:—
“95. Requirements of policies and limits of liability—(i)
xxxxxx
Provided that a policy shall not be required.
(ii) except where 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, to cover liability in respect of the death of or bodily injury to persons being carried in or upon entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, of
xxxxxx”
Clause (b) of sub-section (2) of section 95 inter alia, provides that subject to the proviso to sub-section (1), where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of, or in pursuance of a contract or employment in respect of persons other than passengers, carried for hire or reward, a limit of fifty thousand rupees in all, and in respect of passengers a limit of fifty thousand rupees in all where the vehicle is registered to carry not more than thirty passengers a limit of seventy-five thousand rupees in all where the vehicle is registered to carry more than thirty but not more than sixty passengers a limit of one lakh rupees in all where the vehicle is registered to carry more than sixty passengers and subject to the limits aforesaid, ten thousand rupees for each individual passenger, in any other cases. By notional extension of coverage protection of liability in respect of death or bodily injury to persons being carried in or upon entering or mounting or alighting the vehicle at the time of occurrence of the event is given in terms of proviso (ii) to sub-section (1) of Section 95.
5. A plea has been taken by Mr. Misra for the insurer that where the person has not actually paid hire or reward, he cannot be construed to be a person being carried for hire or reward. This plea, though attractive is not acceptable in a case covered by proviso (ii) to sub-section (1) of section 96. When the person enters or mounts the vehicle, he is just taking an entry to the vehicle, and possibility of his having opportunity of paying hire or reward may not in all cases arises. In many cases he pays the fare after he enters a vehicle. To cover such a situation proviso (ii) to sub-section (1) of Section 95 appears to have been enacted. Where a person who did not actually get into the vehicle sustained injuries from the moving vehicle while making an attempt to get entry into it cannot be said to have suffered death or bodily injury while being carried in or upon entering or mounting or alighting from the vehicle. There must be material to show that a person had any physical contact with the vehicle while entering or mounting if he was trying to get in, alighting from the vehicle, if he was trying to get out, when the accident occurred. The use of the words “entering”, “mounting”, “alighting” clearly shows that the person has already got physical nexus or link with the vehicle. A person who runs after a vehicle or comes towards a vehicle to enter into it, cannot be treated as a passenger so long as he has not entered or mounted it. Facts of the present case show that the deceased had not actually got into the vehicle, and was merely making an attempt to get into the vehicle without any physical contact. Therefore, he cannot be construed to be a passenger to be on encomposed by provisions of proviso (ii) to sub-section (1) of Section 95. Additinally it was not the case of the insurer before the Tribunal that the deceased was a passenger. No material was placed on that regard. It is accepted that if the deceased is not taken to be a passenger, he has to be treated as a third party so far as the vehicle is concerned. Statutory liability in case of a third party at the relevant time was Rs. 50,000/-.
6. Further question is whether the insurer had undertaken any liability beyond the statutory liability. With reference to written statement filed by it before the tribunal, it is submitted by learned counsel for insurer that in paragraph-9 it has been specifically averred that liability, if any, was to the maximum extent of Rs. 30,000/-. Learned counsel for claimants however, submits that complete policy was not before Insurance Company, and an adverse view was to be taken. This plea has no substance in view of decision of this Court in Panilal Sinha v. Divisional Manager, Oriental Insurance Co. Ltd. ANO No. 97 of 1991 where it was held that where a plea is taken that liability is unlimited, there must be a specific assertion to that effect by the claimant and/or insured. Claim petition in the case at hand does not breathe a word about the extent of liability of the insurer. It has been merely stated that applicants were entitle to obtain compensation from the owner of the vehicle which caused accident, and the insurer which insured it. The owner of the vehicle took a specific plea that entitlements of claimants would not exceed Rs. 16,000/-. There is not even a mention about insurance of the vehicle by the insurer, leave aside the plea of unlimited liability. Therefore, the Tribunal was not justified to hold that liability of the insurer was unlimited.
7. In view of my conclusion that the deceased was a third party so far as the offending vehicle is concerned, liability of the insurer would be Rs. 50,000/- unless it is proved that any extra premium was accepted by the insurer to indemnify liability beyond the statutory liability. The Tribunal has not considered this aspect in the proper perspective. In the fitness of things therefore, the Tribunal should reconsider whether there was any liability of the insurer, beyond Rs. 60,000/-. So far as quantum of compensation is concerned, the Tribunal has held monthly income of Rs. 1,000/-. It has been observed that 1/3rd was to be deducted for personal expenses. But monthly contribution was held to be Rs. 750/- per month. This appears to be arithmatically inaccurate. Annual contribution is to be taken at Rs. 8,000/-. So far as proper multiplier to be adopted is concerned, I find the age of the deceased was 45 years as evident from the evidence on record. Considering that, proper multiplier to adopted would be 10 and on that basis entitlement of claimants comes to Rs. 80,000/-. So far as default rate is concerned, in view of the Division Bench decision of this Court in The Oriental Insurance Co. Ltd. v. Harapriya Nayak (1994) 1 Orissa LR 88 the same cannot be maintained. However, rate of interest would be @ 9% from the date of claim till payment of compensation quantified at Rs. 80,000/-. There is no quarrel over the position that the insurer is primarily to indemnify Rs. 50,000/-. Let this amount along with interest from the date of claim @ 9% be paid within three months from today. In respect of the balance amount, the Tribunal shall permit the parties to place materials in support of their respective claims regarding liability, if any, of the insurer beyond Rs. 50,000/-. Adjudication shall be restricted to that question alone. To avoid unnecessary delay, the parties are directed to appear before the Tribunal on 18-2-1994 without any further notice so that the Tribunal can fix up a date for hearing. The insurer shall withdraw the amount deposited in this Court and re-deposit the same before the Tribunal, so that claimants on being identified by counsel for them before the Tribunal can withdraw the same. Direction regarding percentage of fixed deposit to be made and time of deposit as contained in The Oriental Insurance Co. Ltd. case (supra), shall be given effect to by the Tribunal, which shall pass appropriate orders in that regard.
The Misc. Appeal is disposed of accordingly.
Order accordingly.
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