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Case Number

S.B Civil Misc. Appeal No. 972 of 1997

Advocates

Ram Singh Rathore, for Appellant;
S.K Jain, for Owner-Respondent;
Shailesh Prakash Sharma, for Claimants-Respondents

Judges

Mr. Mahesh Chandra Sharma

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Smart Summary

Judgment Summary — Mahesh Bhagwati, J.

Factual and Procedural Background

This consolidated judgment arises from two appeals challenging the Motor Accident Claims Tribunal's award dated 22 July 1997 in Civil Misc. Motor Accident Claim Petition No. 247/1993 and Motor Accident Claim Petition No. 242/1993.

The factual matrix as recorded by the Tribunal is that on 3 April 1993 the deceased Hanuman Prasad returned from Itawa to village Dhipri after purchasing articles for his beetle shop and boarded a vehicle (described as a Swaraj/Metador goods vehicle) bearing registration No. RJ 20-D 0424. Other persons including Arun Kumar and Ram Karan also boarded the vehicle which was proceeding to Sultanpur. The driver was alleged to have driven rashly and negligently. At about 10:15 a.m. near Goraji (Morpa) the vehicle collided with a tree; the vehicle became imbalanced; passengers suffered injuries; Hanuman Prasad sustained spinal injuries and subsequently died while under treatment; Arun Kumar sustained grievous injuries to his left leg and was treated at M.B. Hospital, Kota.

Separate claim petitions were filed by the dependents of Hanuman Prasad and by the injured insured passenger Arun Kumar. The Tribunal gave a common judgment on 22 July 1997, holding the insurer (New India Assurance Company Ltd.) jointly and severally liable with the vehicle owner and driver to pay compensation (Tribunal awarded Rs. 1,33,000/- in favour of certain claimants and Rs. 10,000/- in respect of Arun Kumar). The insurer appealed, challenging its liability.

Legal Issues Presented

Whether the insurer (New India Assurance Co. Ltd.) is liable to pay compensation in respect of persons being carried in a goods vehicle (gratuitous or otherwise) when the vehicle meets with an accident.
Whether prior authorities that excuse insurer liability where passengers are carried in goods vehicles (e.g., New India Assurance v. Asha Rani and National Insurance Co. Ltd. v. Swaroopa) apply to the facts of these appeals.
If the insurer is required to pay compensation notwithstanding the breach, whether the insurer may recover any amount paid from the owner of the vehicle.

Arguments of the Parties

Appellant (New India Assurance Company Ltd.)

The insurer contended that the driver was carrying passengers in a goods vehicle and, under settled law (as cited in New India Assurance Co. Ltd. v. Asha Rani), the insurer was not liable to make payment of compensation to the dependents of the deceased or to the insured passengers.
The insurer relied on the Apex Court's pronouncements that the statutory scheme does not impose liability to insure passengers carried in goods vehicles and thus insurer liability does not arise in such cases.

Respondent — Owner of the Vehicle

The owner argued that even if there was a breach of policy conditions, the insurer could not be exonerated from liability; the insurer remains liable to pay to victims and may later recover from the owner.
The owner relied on a judgment of the Rajasthan High Court (Lali Devi & Ors. v. Oriental Insurance Co. & Ors.) and other authorities to support that position.

Respondents — Claimants (Dependents and Injured Passenger)

The claimants contended that the insurer cannot be absolved from liability and, if the insurer must pay, the insurer's remedy is to recover the amount from the owner of the vehicle; they relied on the Apex Court decision Shri Pramod Kumar Agarwal v. Smt. Mushtari Begum.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
New India Assurance Company Limited v. Asha Rani (ACJ 2003 (1) 1; RLW 2003 (2) SC 213)	Held that insurer is not liable to pay compensation for persons (including owner of goods or his representative) being carried in a goods vehicle when it meets with an accident; interpreted "any person" in 1988 Act as meaning a third party and not passengers in goods vehicles.	The court relied on Asha Rani as the principal authority to conclude that the insurer is not liable in the present facts where passengers were carried in a goods vehicle.
National Insurance Company Ltd. v. Swaroopa (MACD 2006 (2) (SC) 804; RLW 2006 (4) SC 2747)	Reiterated that insurer will not be liable to pay compensation for a gratuitous passenger being carried in a goods vehicle if the vehicle meets with an accident; also clarified recoverability of amounts paid by insurer from the owner.	The court relied on Swaroopa to support its conclusion that the insurer is not liable for gratuitous passengers and to state that any compensation paid by the insurer can be recovered from the owner of the vehicle.
Lali Devi & Ors. v. Oriental Insurance Co. & Ors. (2005 (4) WLC (Rajasthan) 387; RLW 2005 (4) Raj. 2624)	Addressed insurer liability in context where the driver's licence was found to be fake; supported proposition that insurer may not be exonerated where breach of policy condition was not in owner's knowledge.	The court distinguished Lali Devi on facts: Lali Devi concerned breach of driving licence, whereas the present case concerns carrying passengers in a goods vehicle; thus Lali Devi was not held applicable.
National Insurance Company v. Swarn Singh (2004 (1) WLC (Supreme Court) Civil 270; RLW 2004 (2) SC 161)	Related to breach of driving licence condition and insurer liability in such circumstances.	The court observed that Swarn Singh deals with driving licence breaches and is factually distinct from the present case; therefore it does not support the claim that insurer must pay here.
Shri Pramod Kumar Agarwal v. Smt. Mushtari Begum (2004 (2) WLC (SC) 495; RLW 2004 (4) SC 483)	Recognised that where an insurer pays compensation, it may have a right of recovery from the owner of the vehicle (and not from the legal representatives of the deceased in certain circumstances).	The court accepted this principle and applied it to clarify that if the insurer has paid compensation, it can recover that amount from the owner of the goods vehicle.
Satpal (2000 ACJ 1 (SC); RLW 2000 (1) SC 98) — as discussed in Asha Rani	Previously decided proposition (not specified in detail in the opinion) which Asha Rani considered to be incorrectly decided in its context.	The court noted that Asha Rani observed Satpal was not correctly decided; the present opinion follows Asha Rani's corrective view on the matter.
New India Assurance Company Ltd. v. Arun Kumar (CMA No. 971/1997 in Claim Petition No. 242/1993)	(Internal/related matter) Noted in the record in relation to the companion appeal.	Used by the court to observe that the Tribunal's finding holding the insurer liable in that companion matter was not in accordance with law; served as an illustration of the same legal error found in the impugned awards.

Court's Reasoning and Analysis

The court consolidated and disposed of the two appeals because similar questions of law and fact arose from the impugned Tribunal judgment. The court undertook the following analytical steps, based entirely on the material and authorities referred to in the opinion:

Examined the evidence produced before the Tribunal: PW-2 (Arun Kumar) testified that he was travelling in the Metador and admitted paying Rs. 2 as fare and Rs. 5 for luggage; PW-1 (Shakuntala Bai, wife of the deceased) admitted her husband had gone to buy shop articles and was travelling in the Metador which met with the accident. On this basis the court concluded that both the deceased Hanuman Prasad and Arun Kumar were passengers in the offending goods vehicle at the time of the accident.
Identified the central legal principle from Apex Court authorities (notably New India Assurance Co. Ltd. v. Asha Rani and National Insurance Co. Ltd. v. Swaroopa) that, in the context of the Motor Vehicles Act as amended (the 1988 Act), the phrase "any person" must be construed in its statutory context and does not impose a statutory obligation on owners to insure gratuitous passengers carried in goods vehicles; accordingly insurers are not liable to pay compensation to such passengers or the owner/representative of goods carried in a goods vehicle.
Distinguished authorities relied upon by respondents (Lali Devi and Swarn Singh) on the ground that those cases involved breach of the driving licence condition (for example, a fake licence) and thus are factually and legally distinct from the present situation which concerns the carriage of passengers in a goods vehicle.
Concluded that the Tribunal's finding holding the insurer jointly and severally liable to pay compensation was inconsistent with the cited Apex Court decisions (Asha Rani and Swaroopa) and therefore suffered from a legal infirmity.
Addressed the ancillary submission that even if insurer was required to pay, it could recover the amount from the owner: the court accepted the principle (as laid down in Pramod Kumar Agarwal and clarified in Swaroopa) that any compensation paid by the insurer can be recovered from the owner of the vehicle rather than from legal representatives of the deceased in certain circumstances.

The court therefore applied these findings of fact and binding precedents to reach its conclusion that the insurer was not liable to pay compensation in these appeals, while recognizing the insurer's right of recovery from the vehicle owner if it had made any payment.

Holding and Implications

HOLDING: The appeal filed by New India Assurance Company Ltd. is allowed and the claim petitions against the appellant-insurer by Smt. Shakuntala Bai and others and by Arun Kumar stand dismissed insofar as they sought to fasten liability on the insurer.

Implications:

Direct effect: The Tribunal's decree holding New India Assurance Company Ltd. jointly and severally liable to pay compensation is set aside as to the insurer; the insurer is relieved of liability to pay the compensation awarded by the Tribunal in these matters.
Recovery right preserved: If the insurer has already paid any part or whole of the compensation awarded by the Tribunal, the insurer is entitled to recover such amounts from the owner of the goods vehicle (as clarified by reliance on Pramod Kumar Agarwal and the Swaroopa decision).
Precedential note: The court's decision follows and applies the ratio of the Apex Court decisions cited (notably Asha Rani and Swaroopa) that insurers are not liable for gratuitous passengers carried in goods vehicles. The opinion distinguishes other High Court/Apex Court authorities relied on by respondents where the legal issue involved breach of driving licence conditions rather than carriage of passengers in a goods vehicle.

This summary is confined to and faithful to the facts, arguments, authorities and conclusions expressly set out in the provided opinion.

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New India Assurance Co. Ltd. v. Shakuntla Bai & Ors.

Mahesh Bhagwati, J.:— Since the aforesaid two appeals have arisen out of the impugned judgment and award dated 22nd July, 1997 rendered by the Motor Accident Claims Tribunal (District Judge, Kota) in Civil Misc. Motor Accident Claim Petition No. 247/1993 and Motor Accident Claim Petition No. 242/1993 and the questions involved relating to law and facts therein are similar, they are being disposed of by this common judgment.

2. Background facts, in a nut shell, are as follows:

“That on 3rd April, 1993, the deceased Hanuman Prasad came from Itawa to village Dhipri after purchasing some articles relating to his beetle shop. From Dhipri, he boarded one vehicle (Swaraj Majda) bearing registration No. RJ 20-D 0424. It is stated that some more persons namely Ram Karan, Arun Kumar etc. also boarded along with Hanuman Prasad in that vehicle. The vehicle was coming to Sultanpur. It is alleged that the driver of the aforesaid vehicle was driving the vehicle very rashly and negligently and when it reached Goraji (Morpa) at about 10.15 a.m, it collided with a tree resulting into the injuries to the passengers sitting inside. Hanuman Prasad sustained injuries in his spinal code and Arun Kumar sustained grievous injury in his left leg. Other passengers also sustained injuries and they were referred to M.B Hospital, Kota for treatment immediately. It is stated hat Hanuman Prasad succumbed to injuries during treatment.

Both the dependents of deceased Hanuman Prasad and the insured Arun Kumar filed separate claim petitions, which were tried and adjudicated by the learned Tribunal together and a common judgment dated 22nd July, 1997 was pronounced, which has been impugned by the appellant-Insurance Company.

3. Heard the learned counsel for the appellant as also the learned counsel appearing for the claimants-respondents and the owner of the vehicle and carefully perused the relevant material on record including the impugned judgment.

4. Learned counsel for the appellant has assailed the impugned judgment only on one ground that the driver of the vehicle was carrying passengers in a goods vehicle and the Insurance Company was not liable to make the payment of compensation to the dependents of the deceased as also to the insured passengers. He has cited the judgment of New India Assurance Company Limited v. Asha Rani reported in ACJ 2003 (1) page 1 : RLW 2003 (2) SC 213 in support thereof. Learned counsel further canvassed that the impugned judgment of the learned Tribunal is totally contrary to the settled propositions of law and intelligible and distinct pronouncements of the Hon'ble Apex Court, wherein it has been categorically held that the Insurance Company was not liable to make the payment of compensation.

5. E contra, the learned counsel for the respondent-owner of the vehicle contended that even if there was a breach of the conditions of policy, the insurer could not be exonerated from its liability. He has cited a judgment of this court titled as Lali Devi & Ors. v. Oriental Insurance Co. & Ors. reported in 2005 (4) WLC (Rajasthan) 387 : RLW 2005 (4) Raj. 2624 in his support.

6. The learned counsel for the claimants-respondents canvassed that the insurer cannot be absolved from its liability to pay the compensation to the claimants, as the liability accrued to the owner of the vehicle is the liability of the insurer and in that case the insurer shall pay the quantum of compensation to the claimants and this amount can be recovered from the owner of the vehicle. The learned counsel has relied upon the judgment of Shri Pramod Kumar Agarwal v. Smt. Mushtari Begum of the Hon'ble Apex Court reported in 2004 (2) WLC (SC) page 495 : RLW 2004 (4) SC 483.

7. From the perusal of the impugned award, it is noticed that the learned Tribunal has decreed an amount of Rs. 1,33,000/- in favour of the claimants respondents No. 1 to 3 and against the appellant-respondents No. 5 and 6, who are the owner and the driver of the offending vehicle No. RJ-20.G/0424. The liability to pay the amount of compensation has been held jointly and severally.

8. In the case of New India Assurance Company Limited v. Asha Rani (supra), the Hon'ble Apex Court observed that the case of Satpal reported in 2000 ACJ 1 (SC) : RLW 2000 (1) SC 98 was not correctly decided and held that the insurer will not be liable for paying compensation to the owner of the goods or his authorized representative on being carried in a goods vehicle when that vehicle meets with an accident and the owner of the goods or his representative dies or suffers any bodily injury.

9. Para 26 of the said judgment is reproduced as under:

“26. In view of the changes in the relevant provisions in 1988 Act vis-a-vis 1939 Act, we are of the opinion that the meaning of the words ‘any person’ must also be attributed having regard to the context in which they have been used, i.e ‘a third party’. Keeping in view the provisions of 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor.

10. Learned counsel for the respondent No. 4 owner of the vehicle contended that if the breach of the condition of the policy was not in the knowledge of the owner of the vehicle, insurer could not be exonerated from its liability. He has cited the judgment of Lali Devi (supra). This judgment of Rajasthan High Court is based on the judgment of Hon'ble Apex Court delivered in the case of National Insurance Company v. Swarn Singh reported in 2004 (1) WLC (Supreme Court) Civil 270 : RLW 2004 (2) SC 161.

11. Neither of these two judgments of Lali Devi & Ors. v. Oriental Insurance Co. & Ors. (supra) and the National Insurance Co. Ltd. v. Swarn Singh (supra) holds good to the facts of the instant case, as their facts are dissimilar and the question involved in both these cases is also distinct. Both these cases cited by the learned counsel for respondent No. 4 are related to the breach of condition of driving license. In the case of Lali Devi (supra), the learned Tribunal found that the driving license of the driver driving the offending vehicle was fake. Similarly, the case of Swarn Singh (supra) was also related to the breach of the condition of driving license, whereas the instant case relates to carrying passengers in a goods vehicle.

12. In the case of carrying gratuitous passengers, the Hon'ble Apex Court in the case Asha Rani (supra) has categorically held that if the driver of the offending vehicle was carrying passengers in a goods vehicle, the Insurance Company would not be liable to make the payment of compensation to the dependents of the deceased as also to the insured passengers.

13. In the case of National Insurance Company Ltd. v. Swaroopa reported in MACD 2006 (2) (SC) 804 : RLW 2006 (4) SC 2747, the Hon'ble Apex Court relying upon the judgment of Asha Rani's (supra) held that the Insurance Company will not be liable to pay compensation in respect of a gratuitous passenger being carried in a good vehicle, if the vehicle meets with an accident. Thus, what flows from the above discussions, is that an Insurance Company shall not be liable to pay compensation in respect of a gratuitous passenger being carried in the goods vehicle if the vehicle meets with an accident. In the instant case also, the driver of the Metador was carrying passengers in the vehicle. PW-2 Arun Kumar was himself travelling in this Metador and he stated before the Tribunal that on 3rd April, 1993, he was going from Dhanwa to Sultanpur by the said Metador. The driver was driving it very negligently and at a fast speed. In the Metador, three more passengers were sitting. On account of rash and negligent driving, the driver lost control over the vehicle (Metador) and the same got imbalanced, as a result of which, the vehicle dashed against the tree. This witness in his cross-examination admitted that he had paid Rs. 2/- fare to the driver of the vehicle and Rs. 5/- fare for his luggage. The wife of the deceased Hanuman Prasad PW-1 Shakuntala Bai has also admitted that her husband had gone to buy articles for his shop. She has also admitted that her husband was travelling in the Metador which met with an accident. From the evidence on record, it is very well proved that the deceased and injured Arun Kumar both were the passengers in the offending vehicle at the time when the same met with an accident. Since, the driver was carrying the gratuitous passengers in the goods vehicle, the Insurance Company cannot be held liable to pay the amount of compensation to the claimants of the deceased and to the injured persons. Learned Tribunal albeit, is found to have cited so many judgments of the Hon'ble Apex Court but his finding does not seem to be in accordance with the law. Learned Tribunal has held the Insurance Company liable to pay the compensation along with the other respondents, jointly and severally, but the finding of holding the Insurance Company liable to pay the amount of compensation does not seem to be just, proper and legal and the same is found to have suffered from serious infirmity.

(New India Assurance Company Ltd. v. Arun Kumar; CMA No. 971/1997 in Claim Petition No. 242/1993)

14. In this case also learned Tribunal has held the Insurance Company liable to pay an amount of Rs. 10,000/- as compensation to the claimants-respondents Arun Kumar. PW-2 Arun Kumar has appeared as a witness to prove his claim. He has admitted that he had paid Rs. 2/- fare to the driver of the offending vehicle. Thus, it is very well proved from his statements that he was travelling as a passenger in the goods vehicle.

15. In the ultimate analysis, it can safely be inferred that in view of the aforesaid judgments of the Hon'ble Apex Court pronounced from time to time that Insurance Company will not be liable to pay compensation in respect of a gratuitous passenger being carried in a goods vehicle if the vehicle meets with an accident.

16. For the reasons stated above, the appeal filed by the New India Assurance Company Ltd. is allowed and the claim petitions of claimants-respondents Smt. Shakuntala Bai and others and Arun Kumar against the appellant - New India Assurance Company Ltd. stands dismissed.

17. Learned counsel for the claimants-respondents Mr. Shailesh Prakash Sharma canvassed that insurer was required to pay the quantum of compensation fixed by the Tribunal about which there was no dispute raised and the appellant-Insurance Company could make a recovery of the said amount of compensation from the owner of the vehicle. He has relied upon the judgment of Sri Pramod Kumar Agarwal v. Smt. Mushtari Begum reported in 2004 (2) Western Law Cases (SC) Civil pg. 495 : RLW 2004 (4) SC 483.

18. In the case of National Insurance Company Ltd. v. Swaroopa Singh (supra) the Hon'ble Apex Court clarified such a situation in the following words:

“We, however, clarify that the amount of compensation, if any, that may have been paid to respondents 1 to 6 shall be recoverable by the Insurance Company from the owner of the vehicle, respondent 7 herein and not from the legal representatives of the deceased.”

19. Placing reliance upon the aforesaid judgment, it is made clear that in case any amount of compensation, full on in part, has been deposited by the appellant - Insurance Company and disbursed to the claimants-respondents, the appellant - Insurance Company shall be entitled to make the recovery of the said amount from the owner of the goods vehicle.

New India Assurance Co. Ltd. v. Shakuntla Bai & Ors.

Judgment Summary — Mahesh Bhagwati, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant (New India Assurance Company Ltd.)

Respondent — Owner of the Vehicle

Respondents — Claimants (Dependents and Injured Passenger)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

New India Assurance Co. Ltd. v. Shakuntla Bai & Ors.

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