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Hukam Chand Insurance Co. Ltd. v. Badruddin And Others
Structured Summary of the Judgment (B.R. Dubey, J.)
Factual and Procedural Background
On 19 July 1968 at about 8 p.m. motor truck No. 1673, owned by Bhagwandas, dashed against the wall of the Gambhir river bridge at Gogargaon and fell into the river while coming towards Indore. The truck was carrying goats and two keepers, Fakruddin and Inamual. As a result of the accident the goats and both men died on the spot. The legal representatives of Fakruddin and Inamual instituted claim petitions before the Motor Accidents Claims Tribunal, Indore under Section 110-A(1) of the Motor Vehicles Act, seeking compensation on the ground of rash and negligent driving by the truck's driver, Rameshwar.
The Claims Tribunal found that the accident was caused by negligent driving and that Fakruddin and Inamual were travelling as servants of the owners of the goats; the Tribunal awarded compensation in claim case No. 156 of 1968 (Fakruddin) in the sum of Rs. 13,000, apportioning insurer liability at Rs. 9,286.45, and in claim case No. 157 of 1968 (Inamual) in the sum of Rs. 15,000, apportioning insurer liability at Rs. 10,713.50. The insurer and the truck owner each filed separate Miscellaneous Civil Appeals against the respective awards, resulting in four appeals consolidated for disposal: Misc. Appeal Nos. 119/73 and 156/73 (connected) arising from claim case No. 156 of 1968, and Misc. Appeal Nos. 120/73 and 163/73 (connected) arising from claim case No. 157 of 1968.
Legal Issues Presented
- Whether the insurance company is liable to pay compensation under Section 95(1)(b) proviso (ii) of the Motor Vehicles Act when the deceased persons travelling in the goods vehicle were servants of the owners of the goods (and not servants of the insured/truck owner).
- Whether the deceased persons should be treated as employees of the truck owner so as to invoke the Workmen's Compensation Act and thereby limit compensation (as argued by the insurer).
- Whether the accident occurred due to rash and negligent driving by the truck driver (challenge by the truck owner).
- Whether any deduction should be made from the awarded compensation on account of lump sum payment or uncertainty of life (contended by the truck owner).
Arguments of the Parties
Insurer's Arguments (Appellant in Misc. Appeal No. 119/73)
- The insurer contended that Fakruddin (and Inamual) were travelling in the truck as owners of the goats and therefore, by virtue of Section 95(1)(b) proviso (ii) of the Motor Vehicles Act, the policy did not cover liability for their death.
- The insurer argued that the applicants amended their pleadings to assert that the deceased were servants of the owners of the goats only to fasten liability on the insurer; therefore the amended petition should be scrutinized to determine whether there is evidence to prove servant status.
- In the alternative, relying on evidence that Fakruddin earned Rs. 300 per month, the insurer argued that liability should be governed by the Workmen's Compensation Act and, as per Schedule IV read with Section 4 of that Act, the compensation would be limited (the insurer suggested it could not exceed Rs. 8,000 under that framework).
- The insurer relied on the decision in Venkataraman & Anr v. Abdul Munaf Sahib to contend that where the deceased is an employee of the insured (truck owner), the insurance company’s liability is governed by the limits in Section 95(2)(a) as it stood then.
Truck Owner's Arguments (Appellant in Misc. Appeal No. 156/73 and 163/73)
- The truck owner (Bhagwandas) challenged the Claims Tribunal's finding that the accident occurred due to rash and negligent driving by the driver, asserting that it was not the result of negligent driving.
- The truck owner contended that the Claims Tribunal failed to make any deduction on account of lump sum payment and uncertainty of life; he relied on decisions of various High Courts where deductions in the range of 15%–20% were made.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Vanguard Insurance Company Ltd. v. Chinnammal and Ors., 1969 A.C.J. 226 (Madras High Court) | Held that where a passenger carried in a goods vehicle pursuant to a contract of employment with someone other than the insured sustained injuries in an accident caused by that vehicle, the insurance company will be liable — contract of employment need not be with the insured. | The Court agreed with this view and relied on it to support the conclusion that servants of the owners of the goods were covered under Section 95(1)(b) proviso (ii), making the insurer liable. |
| Oriental Fire and General Insurance Co. Ltd. v. Gurdev Kaur and Ors., 1967 A.C.J. 158 (Punjab & Haryana High Court) | Held (relying on English authority) that 'contract of employment' in Section 95(1)(b), proviso (ii) need not necessarily be with the insured; employees of the owner of the goods carried in a truck are entitled to protection under compulsory insurance. | The Court accepted this principle and applied it to hold that servants of the owners of the goats were covered by the insurance policy. |
| Izzard v. Universal Insurance Co. Ltd. (1937) A.C. 773 (English decision) | English authority relied upon to support the view that the contract of employment need not be with the insured alone for insurance coverage under comparable statutory provisions. | The Court noted that Oriental Fire relied on Izzard; the reasoning in that line of authorities supported the conclusion that servants of goods-owners were covered. |
| Venkataraman & Anr. v. Abdul Munaf Sahib, 1971 A.C.J. 77 | In circumstances where the deceased was an employee of the vehicle owner (a cleaner of the vehicle), Section 95 cast a duty on the insurer to indemnify the insured for liability under the Workmen's Compensation Act, and insurance limits (e.g., Rs. 20,000) applied under Section 95(2)(a) as it then stood. | The Court explained that Venkataraman is distinguishable because that case involved the vehicle owner's employee; in the present cases the deceased were employees of the owners of the goods and not of the truck owner, so Venkataraman was not applicable. |
Court's Reasoning and Analysis
The Court proceeded stepwise through factual findings and legal principles strictly as recorded in the record:
- On pleadings and evidence regarding the status of the deceased, the Court observed that the Claims Tribunal had allowed an amendment whereby the applicants pleaded that Fakruddin and Inamual were travelling as servants of the owners of the goats. The Court identified the critical question as whether there was evidence to support that status.
- The Court examined the testimony of Banshilal (P.W.1), who deposed that Fakruddin was his servant, that Fakruddin used to buy goats on his behalf, and that Banshilal had sent Fakruddin to buy goats on the date of the accident. Relying on this evidence, the Claims Tribunal found Fakruddin to be the servant of Banshilal; the appellate Court saw no reason to disagree with that finding.
- The Court noted an inconsistency in the Claims Tribunal's findings where the Tribunal also treated the deceased as employees of the insured (truck owner). The Court observed that, having found that Fakruddin and Inamual were travelling to carry goods belonging to their masters, the Tribunal should not have given a contradictory finding that they were employees of the insured as well.
- Turning to legal liability under the insurance policy, the Court surveyed binding and persuasive authorities (Vanguard; Oriental Fire; Izzard) establishing the proposition that a 'contract of employment' under the proviso to Section 95(1)(b) need not be with the insured alone. The Court expressly agreed with these authorities and held that servants of the owners of the goats were covered by Section 95(1)(b) proviso (ii), so the insurer was liable to pay compensation.
- The insurer's alternative contention invoking the Workmen's Compensation Act was considered and rejected. The Court reasoned that the deceased were not employees of the truck owner (insured) but were third parties travelling under a contract of employment with the owners of the goats. Consequently, their claims arose under the Motor Vehicles Act and not under the Workmen's Compensation Act; the Venkataraman decision was distinguished on the same ground (that case involved an employee of the vehicle owner).
- On the appeal by the truck owner challenging negligence, the Court reviewed eyewitness testimony of Siraj (P.W.5) and Latif Khan (P.W.6), who were travelling in the truck and stated the driver was driving at high speed, changed gear to neutral to save diesel, lost control, and the truck broke the bridge wall and fell into the river. The Court accepted this evidence and affirmed the Tribunal's finding of rash and negligent driving by the driver.
- Regarding the contention that the Claims Tribunal failed to deduct for lump sum payment/uncertainty of life, the Court examined the wage evidence and the Tribunal's approach. For Fakruddin the Tribunal accepted monthly wages of Rs. 300 and an age of 45 with a normal life expectancy taken as 70 years (and noted a shorter expectancy was taken into account by the Tribunal). For Inamual the Tribunal accepted monthly dependency of Rs. 250 and age 35 with expectancy taken as 70 years. The Court held that multiplying monthly wages by the entire theoretical remaining life would produce a sum much larger than that awarded; the Tribunal had considered shortened expectancy and uncertainty and awarded lump-sum amounts (Rs. 13,000 and Rs. 15,000 respectively) which the Court found reasonable. Therefore, no further deduction on account of lump sum payment was necessary.
Holding and Implications
DISPOSITION: All four appeals — Misc. Appeal Nos. 119 of 73, 156 of 73, 120 of 73 and 163 of 73 — were dismissed.
Direct consequences for the parties (as recorded in the judgment):
- The appellate Court affirmed the Claims Tribunal's findings that the accident was caused by rash and negligent driving by the truck's driver.
- The Court held that Fakruddin and Inamual were servants of the owners of the goats and, under Section 95(1)(b) proviso (ii) of the Motor Vehicles Act (as interpreted by cited authorities), were covered by the insurance policy; accordingly the insurer remains liable to the extent apportioned by the Claims Tribunal (Rs. 9,286.45 in claim case No. 156 of 1968 and Rs. 10,713.50 in claim case No. 157 of 1968, as previously assessed by the Claims Tribunal).
- The Court rejected the insurer's contention that liability should be governed by the Workmen's Compensation Act and its suggested limits, distinguishing the cited authority (Venkataraman) because that case involved an employee of the vehicle owner.
- The truck owner's appeal against quantum and the failure to make a lump-sum deduction was dismissed; the Court found the Tribunal's lump-sum awards reasonable.
- The judgment records that, "Looking to the facts of the case no order as to costs," i.e., no costs were ordered between the parties.
Broader implications: The Court applied existing High Court and English authority to construe Section 95(1)(b) proviso (ii) as extending cover to persons travelling under a contract of employment with persons other than the insured; the opinion does not purport to announce a novel legal principle beyond the application of those precedents.
B.R. Dubey, J.
1. This judgment shall dispose of four Misc. Civil appeals arising out of two claim cases; which were instituted before the Motor Accidents Claims Tribunal, Indore, under Section 110-A(1) of the Motor Vehicles Act, by the legal representatives of two persons who died in a motor accident. Civil Misc. Appeal No. 119 of 73 and the connected appeal No. 156 of 73 arise out of the claim case No. 156 of 1968 while Civil Misc. Appeal No. 120 of 73 and the connected appeal No. 163 of 73 arise out of the claim case No. 157 of 1968 lodged by the legal representatives of deceased Fakruddin and lnamual, respectively against the owner of the vehicle, its driver and the insurer.
2. On 19-7-68 at about 8 p.m. motor truck No. 1673 owned by Bhagwandas dashed against the wall of Gambhir river bridge at Gogargaon and fell into the river when it was coming towards Indore, carrying goats and their keepers Fakruddin and lnamual. On account of the said accident the goats as well as Fakruddin and lnamual died on the spot. The case of the legal representatives of deceased persons in the respective claims petitions was that the accident occurred on account of the rash and negligent driving of the truck by the driver Rameshwar.
3. In both the claims cases the owner of the truck Bhagwandas and the driver Rameshwar took the plea that the accident did not occur on account of the rash and negligent driving of the truck by the driver and that it was simply a mishap on which the driver had no control. The insurer took the additional defence that the two persons who were killed in the accident were in fact the owners of the goats and that neither it was required by law, nor under the policy issued by the insurer, the liability in respect of the death or injury to such persons was covered. In both the claim cases, the Claims Tribunal held that the accident took place on account of negligent driving of the truck by the driver. It was also held that the two persons Fakruddin and lnamual who were killed in the accident were travelling in the truck as servants of the owner of the animals and, therefore, the insurance policy did cover the risk of those persons. Consequently, in claim case No. 156 of 68 instituted by the legal representatives of Fakruddin the Claims Tribunal awarded compensation amounting to Rs. 13,000/-with costs and the liability of the insurer was apportioned to the extent of Rs. 9,286.45 with proportionate cost. In claim case No. 157 of 68 lodged by the legal representatives of deceased lnamual, the Claims Tribunal awarded the compensation amounting to Rs. 15,000/-with costs and the liability of the insurer was apportioned to the extent of Rs. 10,713-50 with proportionate cost. Against the award and decree in claim cases No. 156 of 68 the insurer has filed Misc. Appeal No. 119/73 and the owner of the truck Bhagwandas has filed Misc. Appeal No. 156 of 73. Similarly against the award and decree passed in claim case No. 157 of 68 the insurer has filed Misc. appeal No. 120 of 73 and the owner of the truck Bhagwandas filed civil Misc. appeal No. 163 of 73. The Appellants in these four appeals have reiterated the pleas taken by them in defending the two claim cases.
4. First of all I shall deal with Misc. Appeal No. 119 of 73 and the connected appeal No. 156 of 73. In Misc. Appeal No. 119 of 73, which is filed by the insurer Hukumchand Insurance Co. Ltd., the learned Counsel for the Appellant firstly contended that the deceased Fakruddin was travelling in the truck as an owner of the animals and, therefore, by virtue of the provisions contained in Section 95(1) (b) proviso (ii) of the Motor Vehicles Act the insurance company is not liable to pay compensation on account of death of Fakruddin. In support of this contention the learned Counsel for the Appellant referred to the original claim petition in which it was averred that deceased Fakruddin and lnamual were travelling in the truck as owners of the goats. The contention of the learned Counsel for the Appellant is that the applicants by way of amendment pleaded that deceased Fakruddin and lnamual were travelling in the truck as owners of the goats. The contention of the learned Counsel for the Appellant is that the applicants by way of amendment pleaded that deceased Fakruddin and lnamual were travelling in the truck as servants of the owners of the goats which were being transported simply with a view to fasten the liability on the insurance company. It may be pointed out that the amendment having been allowed by the Claims Tribunal the amended petition only will be looked into to know the case of the applicants. Therefore, the only question which arises for consideration is whether there is any evidence to prove that deceased Fakruddin and Inamual were travelling in the truck as servants of the owner of the goats.
5. Banshilal (P.W. 1) has appeared in the witness box before the Claims Tribunal and has deposeo that Fakruddin was his servant. He has further deposed that Fakruddin used to buy goats on his behalf and that on the date of the accident this witness had sent Fakruddin to Dhamnod to buy goats for him. The Claims Tribunal relying on the evidence of this witness has come to the finding that deceased Fakruddin was the servant of Banshilal who was carrying the goats in the truck on behalf of his master. To my mind there is no ground to disagree with the Claims Tribunal on this point.
6. It is true; that by a strange logic the Claims Tribunal came to a finding that deceased Fakruddin could be treated as the employee of the insured as well. When the Claims Tribunal had come to a clear finding that deceased Fakruddin and Inamual were travelling in the truck in order to carry the goods belonging to their masters it could not have given a contradictory finding that the two deceased were the employees of the insured as well.
7. However, the question for consideration is whether the Appellant insurance company is liable under the insurance policy to pay compensation on account of the death of the servants of the owner of the goats. In the Vanguard Insurance Company Ltd. v. Chinnammal and Ors. 1969 A.C.J. 226 the Madras High Court had taken the view that where a passenger carried in a goods vehicle in pursuance of a contract of employment with someone other than the insured, sustained injuries on account of the accident caused by that vehicle, the insurance company will be liable to pay compensation as it was not essential that the contract of employment should be with the insured only. In Oriental Fire and General Insurance Co. Ltd. v. Gurdev Kaur and Ors. 1967 A.C.J. 158 the High Court of Punjab and Haryana relying on an English decision in Izzard v. Universal Insurance Co. Ltd. (1937) A.C. 773, held that 'contract of employment' as envisaged in Section 95(1)(b), proviso (ii) of the Motor Vehicles Act need not necessarily be with the insured alone and employees of the owner of the goods carried in a truck are as well entitled to the protection of compulsory insurance under Section 95(1)(b), as the employee of the insured. I am in agreement with the above view taken by the Madras and Punjab and Haryana High Courts. I therefore, hold that the risk of the servants of the owner of the goats which were being transported in the vehicle was covered under Section 95(1)(b) proviso (ii) and hence the Appellant insurance company is liable to pay the compensation.
8. The learned Counsel for the Appellant, in the alternative, contended that Banshilal (P.W. 1) has deposed that he used to pay Rs. 300/- per month to deceased Fakruddin by way of wages and hence the liability to pay compensation to the legal representatives of the deceased on account of the fatal accident would be governed by the Workmen's Compensation Act and as per Schedule IV read with Section 4 of that Act, the amount of compensation payable could not exceed Rs. 8,000/-. To my mind, this contention is not tenable. In the instant case the deceased persons were not the employees of the truck owner and hence their legal representatives could not claim compensation from the truck owner under the Workmen's Compensation Act.
The claim for compensation is made on account of the fatal accident of the truck which resulted due to the negligence of the truck owner's driver. Therefore, the deceased persons were third parties who were travelling in the truck under the contract of employment with the owner of the goats for the transportation of which the truck was hired. Under these circumstances, the extent of liability of the owner of the truck as well as that of the insurance company would be governed by the Motor Vehicles Act and not by the Workmen's Compensation Act. The decision in Venkataraman and Anr. v. Abdul Munaf Sahib 1971 A.C.J. 77, relied on by the learned Counsel for the Appellant would not be applicable because in that case the cleaner of the vehicle had died on account of the negligence of the driver. It was, therefore, held that under Section 95 of the Motor Vehicles Act a statutory duty was cast upon the insurance company to indemnify the insured against any liability to pay compensation to his employee under the Workmen's Compensation Act. Therefore, under section 95(2) (a) as it stood at the time of the said accident, the total limit of the insurance company to indemnify on account of the fatal accident was Rs. 20,000/-. The Claims Tribunal has apportioned the liability of the Appellant within the said limit for paying compensation to the legal representatives of the two persons who died in the accident. Therefore, Misc. Appeal No. 119 of 73 filed by the insurance company having got no force must be dismissed.
9. Now I come to the connected appeal No. 156 of 73 filed by Bhagwandas the owner of the truck. This Appellant has challenged the finding of the Claims Tribunal that the accident occurred on account of rash and negligent driving of the driver. The evidence of Siraj (P.W. 5) and Latif Khan (P.W. 6) clearly establishes the fact that the accident took place on account of the negligent driving of the truck. Both these witnesses were travelling in the truck. They have deposed that the drive was driving the truck at high speed. When the truck was passing through the Gambhir liver bridge, the driver in order to save the consumption of diesel changed the gear to make it in the neutral position and allowed the truck to roll with the result that the driver lost the control of the truck and it dashed against the wall of the bridge. It appears that on account of the high speed the truck broke the wall of the bridge and fell into the river. I, therefore, agree with the finding of the Claims Tribunal that the accident took place on account of the rash and negligent driving of the truck by the driver.
10. The next contention of the learned Counsel for the Appellant Bhagwandas is that the Claims Tribunal has not made any deduction on account of lump sum payment and uncertainty of life. He has placed reliance on certain decisions of different High Courts in which the deduction on account of lump sum payment was made in the range of 15 to 20 per cent In the instant case, it may be noted that from the evidence of Banshilal (P.W. 1) it is clear that he used to pay a sum of Rs. 300/- per month to deceased Fakruddin. The Claims Tribunal has found that at the time of the death of the deceased his age was 45 years. It also held that the normal expectation of life was 70 years. Even in case the normal expectancy of life were to be taken as 60 years, the deceased could have supported the family atleast for 15 years. Therefore, the loss of the income to the family at the rate of Rs. 300/- per month if multiplied by the number of months of the expectancy of life would lead to a larger sum than that which has been awarded by the Claims Tribunal to the legal representatives of the deceased. It may be noted that the Claims Tribunal by awarding the compensation has taken into consideration the shortened expectation of life. Therefore, the award of compensation amounting to Rs. 13,000/-being quite reasonable, it is not necessary to make further reduction on account of the lump sum payment. I am, therefore, of the view that Misc. Appeal No 156 of 73 filed by Bhagwandas the truck owner has got no force and it must be dismissed.
11. Now coming to Misc. Appeal No. 120 of 73 and the connected Misc. Appeal No. 163 of 73, it may be noted that they involve common questions of facts and law which have already been discussed above while dealing with Misc. Appeal Nos. 119 of 73 and 156 of 73. These appeals arise out of the claim case No. 157 of 68 filed by the legal representatives of deceased Inamual who also died in the same accident. The deceased Inamual was also travelling in the truck as the servant of the owner of the goats by name Fakir Mohammad, who is Petitioner's witness No. 3. This witness has also deposed that he used to pay Rs. 300/-per month to deceased Inamual. Zulfinnissa (P.W. 2), the widow of Inamual has deposed that her husband used to pay her Rs. 250/-per month for the maintenance of the family. The Claims Tribunal has come to the finding that age of Inamual was 35 years at the time of the accident and that on account of his death there was loss of Rs. 250/- per month to his dependents. In this case also the Claims Tribunal has taken the normal expectancy of life as 70 years. The deceased, therefore might have survived for 35 years. In case the loss of income of the dependents of the deceased at the rate of Rs. 250/- per month were to be multiplied with the total months of the normal expectancy of the life of the deceased the amount of compensation could have been assessed at a very high amount. However, the Claims Tribunal taking into consideration the uncertainty in life has awarded lumpsum compensation of Rs. 15.000/- only. Therefore, for the reasons already stated above while dealing with Misc. Appeal No. 119 of 73 and connected Misc. Appeal No. 156 of 73, Misc. Appeal No. 120 of 73 and the connected appeal No. 163 of 73 must also be dismissed.
12. In the result all the four appeals i.e. Misc. Appeal Nos. 119 of 73, 156 of 73, 120 of 73 and 163 of 73 having got no force are hereby dismissed accordingly. Looking to the facts of the case no order as to costs.
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