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New India Assurance Company Ltd. v. Shaik Jaffar And Others
Concise Analytical Summary of the Opinion
Factual and Procedural Background
These four civil miscellaneous appeals were preferred by the insurance company challenging an award of the Motor Accidents Claims Tribunal. The tribunal had awarded compensation to the driver of a lorry and to three music artists injured in an accident; the award was made against both the owner of the vehicle and the insurance company.
The factual events reported in the opinion are: on 14-12-1978 the petitioner in O.P. No. 236/1978 (the first respondent in C.M.A. 313/80) was driving lorry APQ 3547 loaded with gammaxine bags from Doopadu railway station to Nellore. Near Badvel town the driver picked up a party of music artists who were stranded; they boarded the lorry. At K.M. 61 near Kona Samudran cross-road the lorry dashed against a palmyra tree. The driver and the three music artists were injured and claims were presented by the driver and the three artists against the owner and the insurer.
The tribunal found that the three music artists had paid hire or charges for travelling in the lorry, were persons carried for hire or reward, and were carried in the cabin; following a full bench decision of the Gujarat High Court (Ambaben v. Usmanbhai Amirmiyya Sheikh, 1979 ACC CJ 292 / AIR 1979 GUJ 9) the tribunal held the insurance company liable. The insurance company appealed.
Procedural outcome as narrated: the appeal relating to the driver (C.M.A. No. 313 of 1980) was dismissed with costs; the three other appeals (C.M.As. Nos. 314–316 of 1980) were allowed without costs.
Legal Issues Presented
- Whether, on the tribunal's findings, the insurance company could be held liable to pay compensation to the three music artists despite an alleged breach of a specific condition of the insurance policy and the vehicle's permit.
- Whether the insurance company is exempt from liability under section 96(2)(b)(i)(c) of the Motor Vehicles Act where (i) there is a breach of a specific condition of the policy excluding use of the vehicle for conveyance of passengers for hire or reward, and (ii) the transport vehicle was used for a purpose not allowed by its permit.
- Whether the insurance company remains liable to the driver of the lorry under proviso (i) to clause (b) of sub‑section (1) of section 95, and whether the determination of quantum complied with that proviso.
Arguments of the Parties
Appellant (Insurance Company) — primary arguments
- The three music artists were neither employees of the owner of the vehicle, nor owners of the goods, nor servants or agents of the owner of the goods being transported.
- The driver took those persons as passengers contrary to the permit conditions applicable to goods vehicles (i.e., they were unauthorized passengers).
- The express terms of the insurance policy prohibited carrying passengers for hire or reward; that prohibition is a specified condition of the policy within the meaning of section 96(2)(b)(i)(c), and its breach exonerates the insurer.
Respondents (Claimants) — as reflected in the opinion
- The tribunal treated the three music artists as persons carried for hire or reward (finding that they had paid hire/charges and had been carried in the cabin) and, following a cited full bench decision (Ambaben v. Usmanbhai...), held the insurer liable.
- Counsel for the claimants relied upon several judicial decisions (discussed below) in support of liability of the insurer or the owner in various fact patterns; the opinion records which decisions were relied upon and how they were read by the court.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ambaben v. Usmanbhai Amirmiyya Sheikh, 1979 ACC CJ 292 (AIR 1979 GUJ 9) | Used by the tribunal to sustain liability of the insurer where passengers were found to be carried for hire or reward. | The tribunal relied on this full bench decision to hold the insurance company liable; the present opinion records that the tribunal purports to follow it, but proceeds to analyse statutory conditions and the policy to reach its own conclusion. |
| M. Suryanarayana v. G. Satyavati, (1979) 1 APLJ (HC) 401 | Dealt with an owner of goods carried in a goods vehicle; concerned whether such a person is within the permitted category and whether insurer had produced the policy to show prohibition. | The opinion discusses this bench decision and explains that condition (v) of Rule 213-V was held to include the owner of goods; the present court states it cannot extend condition (v) to unrelated passengers who are neither employees nor owners/agents/servants of the goods. |
| Hindustant Ideal Insurance Corporation Ltd. v. Manner Chimperamma, 1974 ACC CJ 13 (AIR 1974 ANDH PRA 120) | Principle that under proviso to section 95(1)(b) the insurer is liable for death or injury of a passenger only if he was carried for hire or reward or pursuant to contract of employment; absent those, insurer escapes liability. | The opinion cites this decision approvingly for the stated principle and observes that it must be read with later decisions; the court applies the principle to the facts, finding the permit and policy prohibit carriage of passengers for hire or reward, thus relieving insurer as to the three music artists. |
| Sunder Lal v. Om Singh, 1978 ACC CJ 267 (Punjab & Har.) | Cited by respondents' counsel. | The court records that this decision does not deal with insurer liability nor with sections 95 and 96, and thus it is not directly relevant to the insurer‑liability question. |
| Narayanlal v. Rukmanibai, 1979 ACC CJ 261 (AIR 1979 MADH PRA 74) (Full Bench) | Dealt with owner’s liability when passengers were given a lift by the driver contrary to rules; not a case about insurer's liability under ss. 95 and 96. | The court notes this decision relates to owner liability (not insurer) and therefore does not control the question of insurer's exemption under section 96(2). |
| Jiwan Das Roshan Lal v. Karnail Singh, AIR 1980 P&H 167 | Concerns owner liability. | The court observes this decision is not about insurer liability; it notes the principle may run counter to the Madhya Pradesh full bench decision, but declines to resolve that conflict for purposes of these appeals. |
Court's Reasoning and Analysis
The court's legal analysis proceeds in a stepwise fashion and is tethered to the statutory wording and the policy terms cited in the opinion:
- The court begins with the proposition that an insurer's exceptions in claims for compensation are limited to those set out in section 96(2) of the Motor Vehicles Act. It identifies subsection (2)(b)(i)(c) as the specific provision invoked by the insurer in this case.
- The court extracts the two elemental requirements that must be established to invoke section 96(2)(b)(i)(c): (i) there must be a breach of a specific condition of the policy (a specified condition of the policy), and (ii) the transport vehicle must have been used for a purpose not allowed by the permit under which the vehicle is used.
- The opinion then addresses statutory definitions: "transport vehicle" under clause (33) of section 2 includes a goods vehicle; "goods vehicle" under clause (3) of section 2 is defined as any motor vehicle constructed or adapted for carriage of goods or so used when carrying goods, "locel or in addition to passengers" (as quoted in the opinion).
- The court refers to Rule 213, Part V of the A.P. Motor Vehicle Rules (additions applicable to goods vehicles), and quotes Conditions (iv) and (v): (iv) limits persons in the cab to the number for which seating accommodation exists; (v) provides that not more than six persons in addition to the driver shall be carried except with permission of the transport authority.
- Applying the rules and definitions to the facts, the court states that although a goods vehicle may carry up to six persons in addition to the driver, those persons must be either employees of the owner of the vehicle, or the owner of the goods, or his agents or servants. The court notes it was not shown that the permit for the subject goods vehicle authorized carriage of passengers for hire or reward.
- The court examines the policy and records that it "expressly states" that the policy does not cover "use for the conveyance of passengers for hire or reward." Given this express term in the policy and the absence of permit authority to carry passengers for hire or reward, the court concludes that both conditions required by section 96(2)(b)(i)(c) are satisfied in this case.
- Consequently, the court holds that the insurance company cannot be held liable for compensation awarded to the three music artists who were unauthorized passengers under the permit and excluded by the policy.
- Separately, as to C.M.A. No. 313 of 1980 (the claim by the driver), the court accepts that there is no dispute about insurer liability to the driver and that quantum was determined having regard to proviso (i) to clause (b) of sub-section (1) of section 95; the court notes no complaint on the quantum determination and thus dismisses that appeal with costs.
- The court also reviews the authorities cited by both sides, distinguishing decisions that concern owner liability rather than insurer liability under sections 95/96, and clarifying where earlier cases have or have not considered the interplay of permit, policy conditions and section 96(2).
- Final application of law to fact: because (a) the permit did not permit carriage of passengers for hire or reward, and (b) the insurance policy expressly excluded such use, the insurer was exonerated under section 96(2)(b)(i)(c) as to the three music artists; however, the owner's liability remains intact and claimants may pursue recovery from the owner.
Holding and Implications
Holding: The court allowed the three appeals relating to the three music artists (C.M.As. Nos. 314 to 316 of 1980) and dismissed the appeal relating to the driver (C.M.A. No. 313 of 1980). The three appeals were allowed without costs; the appeal concerning the driver was dismissed with costs.
Implications and direct consequences:
- The insurance company is not liable to pay the compensation awarded to the three music artists because (i) the vehicle's permit did not authorize carriage of passengers for hire or reward and (ii) the insurance policy expressly excluded use for conveyance of passengers for hire or reward—together satisfying the requirements of section 96(2)(b)(i)(c) as applied by the court.
- The liability of the owner of the vehicle remains undisturbed by this decision; it remains open to the claimants to proceed against the owner for realization of any award.
- The opinion does not purport to lay down a broader new principle beyond its statutory application to the facts of this case; its effect, as recorded in the text, is the direct exoneration of the insurer in respect of the three music artists and confirmation of insurer liability to the driver in accordance with section 95's proviso.
This summary was prepared exclusively from the content of the provided opinion. No information has been invented or inferred beyond the text of the opinion.
(1) These four civil miscellaneous appeals are preferred by the insurance company questioning the award of the motor accidents claims tribunal. The contention of mr. I. A naidu is that on the findings recorded by the tribunal, the insurance company could not have been made liable for paying the compensation awarded. It is necessary to state a few facts:
(2) On 14 - 12 - 1978, the petitioner in o. P. No. 236/1978 (first respondent in c. M. A 313/80) was driving the lorry, apq 3547 loaded with gammaxine bags. He was transporting them from doopadu railway station, to nellore. While going on the bombay - nellore high road, near bedvel town, he met a party of music artists. They were stranded for want for transport. At their entreaty, the lorry and, accordingly, they got into the lorry. When the lorry reached k. M. 61 near kona samudran cross - road, within dashed against a palmyra tree, and got damaged. The inmates, including the driver and the three music artists who got into the lorry near badvel town, were also injured. Claims were laid by the driver, as well as the said three artists for compensation, both against the owner of the vehicle and the insurance company. The tribunal found that the three music artists having paid the hire or the charges, as the case may be for travelling in the lorry, must be held to be persons carried for hire or reward, as the case may be (it found that they were carried in the cabin of the lorry) and purporting go follow the full bench decision of the gujarat high courts in ambaben v. Usmanbhai amirmiyya sheikh, 1979 acc cj 292: (air 1979 guj 9) , the tribunal held the insurance company liable for paying the amounts awarded by it. Hence these appeal.
(3) Far as c. M. A no. 313 of 1980 is concerned, the claimant is the driver of the lorry, and there can hardly be any dispute about the liability of the insurance company to pay the compensation to him. No doubt, such compensation has to be determined having regard to proviso (i) to cl. (b) of sub - sec. (1) of s. 95. It is not complained before me that the determination of the quantum of compensation has not been done in accordance with the aid proviso. Therefore, so far as c. M. A. No 313 of 1980 i concerned, there can be no legitimate grievance. It is, accordingly, dismissed with costs.
(4) The main contention of mr. I. A. Naidu, the learned counsel for the appellant - insurance company, is that, so far as the three music artists are concerned, they were not the employees of the owner of the vehicle, nor were they the owners of the goods, or servants or agents of the owner of the goods being transported in the lorry. They were taken as passengers by the driver contrary to the conditions of the permit relating to the lorry (goods vehicles). He submitted that, according to the express terms of the insurance policy, taking of such passengers is prohibited. If so, it is argued, the insurance company cannot be made liable for the compensation awarded.
(5) It is now well settled that the only exceptions which an insurance company can plead in a claim for compensation, are those est out in sub - sec. (2) of s. 96 of the motor vehicles act. Mr. I. A. Naidu relies upon sub - cl. (i) (c) , occurring in cl. (b) of sub - sec. (2). In other words, his contention is that there has been a breach of a specified condition of the policy, excluding the use of the lorry in question for conveyance of passengers for hire or reward. I am inclined to uphold this contention. The clause and the sub - clauses which are relevant, and are attracted in the present case, are the following: -
". An insurer to whom notice of the bringing of any such proceedings is so given shall be entitle to be made a party there to and to defend the action of any of the following grounds, namely: (a) xx xx xx (b) 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) and (b) xx xx xx (c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle."
(6) According to cl (b) of sub - sec. (2) , violation of any and every condition of policy does not exonerate the insurer from the liability under the act. The violation must be of a specific condition of a specified nature. Since in this case, section 96 (2) (b) (i) (c) is being invoked it is necessary to establish two things viz. , (i) that there has been a violation of a specific condition of the policy and (ii) that the transport vehicle has been used for a purpose not allowed by its permit.
(7) Before proceeding to deal with these questions, it is necessary to refer is some more provisions of the act and rules. The expression
"transport vehicles is defined by cl. (33) of s. 2, to mean public service vehicle, or a goods vehicle". Goods vehicle is defined by cl. (3) of s. 2, to mean
"any motor vehicle constructed or adapted for use for the carriage of goods or any motor vehicle not so constructed or adapted when used for the carriage of good, loel or in addition to passengers"
.
(8) Rule 213, part - v, of the a. _p. Motor vehicle rules, sets out the additions $s applicable to goods vehicles. Conditions (iv) and (v) are relevant for the present purpose, and they read as follows: - -
" (iv) no other person shall be carried in the cab of the vehicle beyond the number for which there is earring accommodation at the rate of 284 millimeters measurement along the seat, excluding the space reserved for the driver, for each person. (v) not more than six persons in all in addition to the driver shall be carried in the vehicle except with the permission of the transport authority."
(9) Admittedly, the vehicle in question is a goods - vehicle constructed for the carriage of goods. It i, no doubt, true that it is entitle to carry not more than six persons in all, in addition to the driver, in the vehicle; but, the six persons mentioned therein must be either the employees of the owner of the vehicle, or the owner of the goods, or his agents or servants, as the case may be. It is not brought to my notice that the permit for a goods vehicle issued under the act, entitles such a goods vehicle to carry passengers for hire or reward. It si thus clear that under the permit issued for the vehicle in question under the motor vehicles act, it is not permitted to carry passengers for hire or reward.
(10) Now coming to the policy issued by the appellant, it expressly states that " the policy does not cover. (3) use for the conveyance of passengers for hire or reward. " thus, in this case, both the conditions contemplated by the relevant sub - clauses is sub - sec. (2) of s are satisfied and therefore the insurance company cannot be held lable.
(11) It is, however, necessary to briefly refer to certain decisions relied upon by both the counsel before me. The first decision relied upon by the learned counsel for the respondents - claimants is of a bench of this court in m. Suryanarayana v. G. Satyavati (1979) 1 aplj (hc) 401. That was a case where the owner of the goods met with an accident, and claimed compensation on that account. On behalf of the insurance company an objection was raised that the insurance company was not liable, inasmuch as the injured person (owner of the goods transported in the vehicle) was not a person carried for hire or reward, or by reason, of , or in pursuance to a contract of employment. It was argued that the owner of the goods who travels in a goods being transported in the lorry, was accompanying the goods as in the normal situation and that, his travelling in the vehicle cannot be said to be unauthorised or prohibited by the permit, or by the policy. S far as the permit is concerned it was observed, with reference to condition (v) in r. 213 - v, that six persons in all can be carried in addition to the driver, in a goods vehicle and that, the owner of the goods was within the permitted category. So far as the policy is concerned, the bench observed that the insurance company failed to produced the policy and, therefore, it cannot be said whether the policy prohibited the owner of the goods being carried of in the vehicle. But, in my opinion, condition (v) of r. 213 - v cannot be extended to passengers who have nothing to do either with owner of the vehicle, or with the owner of the vehicle, of the goods, in the sense that they are not the employees of the owner of the vehicle, nor are they the owners, or servants or agents of the owner/owners of the goods carried in the vehicle.
(12) The next decision relied upon is of venkatrama sastry, j. In hindustant ideal insurance corporation ltd. V. Manner chimperamma, 1974 acc cj 13: (air 1974 andh pra 120). Following the decisions rendered by various high courts, the learned judge observed in para 15 (of acc cj) : (para 14 of air) :
" all the above four decisions are directly in point and conclude the question in this case. The principle behind all these decisions is that under proviso to s. 95 (1) (b) of the act, the insurance company is liable to meet the liability i respect of death or bodily injury of a passenger only if he has been carried for hire or reward or by reason of or in pursuance of a contract of employment. If both these things absent, then the insurance company escapes the liability."
That was also a case where the claimant was the owner of the goods carried in the vehicle. The learned judge, however, held that, since the owner of the goods cannot be said to be a person carried for hire or reward the insurance company cannot be held liable. This decision must, however, be read and understood subject to the subsequent bench decision, referred to above. In any event, as i have stated above, since the permit of the vehicle prohibits the carrying of passengers for hire or reward, which is also prohibited by the policy, the insurance company cannot be made liable in thee matters.
(13) Learned counsel for the respondents claimants then relied upon the decision of a single judge in sunder lal v. Om singh, 1978 acc cj 267 (punj and har) but, i find that this decision does not deal with the liability of the insurance company, nor with ss. 95 and 96 of the act.
(14) The next decision relied up i that of a full bench of the madhya pradesh high court, in narayanlal v. Rukmanibai, 1979 acc cj 261: (air 1979 madh pra 74). That again is not a case dealing with the liability of an insurance company, with reference to ss. 95 and 96. The decision deals only with the liability of an owner. It was held that since there was not express prohibition by the master from giving lift to any one in the truck, the owner is liable to apply compensation to the passengers who were given a lift by the driver, no doubt, contrary to a lift by the driver, no doubt, contrary to a lift by the driver, no doubt, contrary to the express rules framed under the act.
(15) The other decision relied upon by the learned counsel for the respondents claimants, is jiwan das roshan lal v. Karnail singh, air 1980 punj and har 167. This again is not a case dealing with the liability of an insurance company. But that of the owner alone. The principle of this decision, however, seems to run counter to the decision of the full bench of the madhya pradesh high court; but, it is not necessary to deal with the said aspect definitely for the purpose of these appeals.
(16) For the above reasons, the three appeals, viz. , c. M. As. Nos 314 to 316 of 1980 are allowed; but in the circumstances, without costs. The liability of the owner of the vehicle, however, remains undisturbed and it shall be open to the claimants to proceed against the owner of the vehicle for realisation of
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