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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • Mr. S.N. Parashar, Advocate (owner)
  • Ms. Neerja Sachdeva, Advocate
  • Ms. Neerja Sachdeva, Advocate
  • Mr. S.N. Parashar, Advocate
  • None
  • Mr. S.N. Parashar, Advocate
  • None
  • Ms. Neerja Sachdeva, Advocate
Judges
  • G.P. Mittal, J.
Acts
  • provision of Section 147(1) of the Motor Vehicles Act, 1988,
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • Mr. S.N. Parashar, Advocate (owner)
  • Ms. Neerja Sachdeva, Advocate
  • Ms. Neerja Sachdeva, Advocate
  • Mr. S.N. Parashar, Advocate
  • None
  • Mr. S.N. Parashar, Advocate
  • None
  • Ms. Neerja Sachdeva, Advocate
Judges
  • G.P. Mittal, J.
Acts
  • provision of Section 147(1) of the Motor Vehicles Act, 1988,
See more information ...
Smart Summary

Summary of Judgment

Factual and Procedural Background

These four appeals arise from a common judgment dated 16.05.2013 of the Motor Accident Claims Tribunal which disposed of two claim petitions: one by the three legal representatives of deceased Virender Yadav and one by injured Lal Singh.

The Tribunal had awarded Rs. 59,400 to Lal Singh (injured) and Rs. 7,53,500 to the legal representatives of Virender Yadav. Two appeals (MAC. APP.651/2013 and MAC. APP.662/2013) were filed by the Insurance Company; two cross-appeals (MAC. APP.73/2015 and MAC. APP.74/2015) were filed by Smt. Neeraj (the owner) challenging the granting of recovery rights to the Insurance Company.

The accident occurred on 25.03.2011 at about 2:50 p.m. at Press Enclave Road (FIR No. 117/2011). A Detailed Accident Report (DAR) recorded that on that date Dinesh, Virender Yadav (deceased) and Lal Singh were transporting marble slabs in a tempo (no. DL-1L-K-9789) from Satbari to New Friends Colony. Neetu Singh was driving; Dinesh sat beside the driver. The driver allegedly applied the brakes suddenly to avoid a cyclist (Ranjit), causing the persons sitting on the tempo along with the marble slabs to be sandwiched between the slabs. Virender Yadav was fatally injured; Ranjeet and Lal Singh were injured and awarded compensation (Rs. 18,100 and Rs. 59,400 respectively), and the deceased's legal representatives were awarded Rs. 7,53,500.

By an interim order dated 23.07.2013 this Court had directed the Insurance Company to deposit the entire amount with the Registrar General.

Legal Issues Presented

  1. Whether the Insurance Company is liable to pay compensation in respect of persons (the owner/custodian of the goods or other persons) travelling in the rear portion of a goods vehicle, or whether coverage under Section 147(1) of the Motor Vehicles Act, 1988 extends only to persons travelling in the cabin along with the driver.
  2. Whether, assuming non-coverage under the policy, the Tribunal erred in making the Insurance Company pay compensation in the first instance with a subsequent right of recovery against the owner.
  3. Whether an additional premium charged by the Insurance Company for covering legal liability for operation and maintenance of two persons (apart from the driver) affects the insurer's liability and the right to recovery.

Arguments of the Parties

Insurance Company's Arguments

  • The vehicle involved was a goods vehicle covered by the insurance policy. Under Section 147(1) of the Motor Vehicles Act, 1988, the risk for the owner of the goods or the authorised representative of the owner is covered only when that person travels in the cabin along with the driver.
  • In this case Lal Singh and Virender Yadav were travelling in the rear portion (goods portion) of the tempo along with the goods and therefore were not covered under the policy; consequently the Insurance Company had no liability to pay compensation.
  • The Claims Tribunal erred in making the Insurance Company liable to pay compensation in the first instance with a right to recover from the insured; reliance was placed on National Insurance Co. Ltd. v. Cholleti Bharatamma, 2008 ACJ 268 (SC).

Owner's (Appellant in Cross-Appeals) Arguments

  • The Insurance Company had charged an additional premium for covering legal liability for operation and maintenance of two persons; therefore liability of two persons apart from the driver would be covered under the policy.
  • For that reason the Insurance Company ought not to have been granted recovery rights (i.e., it should bear liability rather than recover from the owner).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
National Insurance Co. Ltd. v. Cholleti Bharatamma, 2008 ACJ 268 (SC That the owner of the goods would be covered under insurance only if he travels in the cabin of the vehicle. The Court applied this principle to conclude that since the deceased and injured were travelling in the rear portion of the tempo (not in the cabin), their risk was not covered and the insurer had no liability to pay compensation.
Oriental Insurance Co. Ltd. v. Kaushalya Devi, MAC. APP. 19/2005 decided on 14.12.2011 Held that the Insurance Company has no liability in respect of injury to gratuitous passengers travelling in a goods vehicle and therefore is not obliged to first pay and then recover from the insured. The Court relied on the reasoning in this decision to distinguish cases where insurers must pay first and recover later, emphasizing that gratuitous passengers in goods vehicles are not covered at all.
National Insurance Company v. Baljit Kaur (2004) 2 SCC 1 Discussed in context with prospective effect of Asha Rani and the scope of insurer's liability where coverage is absent. Referenced by the Court through the Oriental Insurance Co. Ltd. v. Kaushalya Devi judgment to demonstrate that Baljit Kaur did not lay down a proposition making insurers liable to pay first in all cases of gratuitous passengers.
New India Assurance Company Limited v. Asha Rani (2003) 2 SCC 223 Considered for its prospective effect and its interplay with other Supreme Court decisions on insurer liability. Used by the Court (via Oriental Insurance Co. Ltd. v. Kaushalya Devi) to explain the limited and prospective nature of Asha Rani's effect on insurer liability.
New India Assurance Company v. Satpal Singh (2000) 1 SCC 237 Earlier authority on insurer liability; relevant to the jurisprudential context leading to subsequent decisions. Cited by the Court through the Oriental Insurance judgment to show the evolution of the law on insurer liability for passengers in goods vehicles.
Swaran Singh (supra) Related to cases where the driver did not possess a valid driving licence or the licence was fake; insurer made liable because liability arose from the insurance and could be avoided only by breach of policy conditions. The Court distinguished Swaran Singh from cases of gratuitous passengers in goods vehicles, explaining that Swaran Singh concerned different facts (licence breach) and did not support making insurers pay first where there is no coverage for gratuitous passengers.

Court's Reasoning and Analysis

The Court began by identifying the Insurance Company's primary contention: the vehicle was a goods vehicle and, under Section 147(1) of the Motor Vehicles Act, 1988, the owner of the goods or the authorised representative is covered by the policy only when travelling in the cabin along with the driver. The injured (Lal Singh) and the deceased (Virender Yadav) were travelling in the rear portion of the tempo along with the marble slabs and not in the cabin.

The Court reviewed relevant authority. It noted the position set out in Oriental Insurance Co. Ltd. v. Kaushalya Devi, which relied on earlier Supreme Court decisions (including Baljit Kaur, Asha Rani and Satpal Singh) to hold that insurers have no liability for gratuitous passengers in a goods vehicle and therefore should not be compelled to first satisfy awards and then recover from the insured. The Court observed the distinction between Swaran Singh (where insurer's liability arose despite invalid driver license because of breach of policy conditions) and cases involving gratuitous passengers (where coverage is absent because premium for such passengers was not paid).

The Court then considered that the persons in this case were not gratuitous passengers but custodians of the goods. Nonetheless, it relied on the Supreme Court's decision in Cholleti Bharatamma which held that the owner of the goods would be covered only if he travels in the cabin. Applying that precedent, the Court concluded that because the deceased and injured were travelling in the rear portion and not in the cabin, their risk was not covered under the insurance policy and the insurer had no liability to pay compensation.

Given that the Insurance Company had already deposited the compensation pursuant to the Court's earlier order, and that the claimants did not contest the proceedings despite sufficient service, the Court ordered that the deposited compensation be refunded to the Insurance Company. The Court further held that the amount could be recovered from the owner of the offending vehicle (identified in the record as Respondent no. 3 in MAC. APP.651/2013 and Respondent no. 5 in MAC. APP.662/2013).

Holding and Implications

Holding: MAC. APP.651/2013 and MAC. APP.662/2013 are allowed. MAC. APP.73/2015 and MAC. APP.74/2015 are dismissed.

Implications:

  • The Court concluded that the Insurance Company had no liability to pay compensation for injuries/death of persons travelling in the rear (goods) portion of the tempo because, under the authorities considered (notably Cholleti Bharatamma), coverage for the owner/representative of goods exists only if travelling in the cabin.
  • The compensation amount that had been deposited by the Insurance Company shall be refunded to the Insurance Company.
  • The compensation is recoverable from the owner of the offending vehicle (the specified respondents in the respective appeals).
  • No broader novel precedent was announced by the Court beyond application of the cited authorities; the decision applies the established principles to the facts of this case and determines the direct effect on parties (refund to insurer and recovery from owner).

Pending applications were disposed of and any statutory amount deposited is to be refunded to the Appellant Insurance Company.

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    Bajaj Allianz General Insurance Company Ltd. v. Lal Singh & Ors. S

    JUDGMENT

    1. These four appeals arise out of common judgment dated 16.05.2013 passed by the Motor Accident Claims Tribunal (the Claims Tribunal) whereby the claim petition preferred by the three legal representatives of deceased Virender Yadav and the claim petition filed by injured Lal Singh were disposed of. Compensation of Rs. 59,400/- was awarded in favour of Lal Singh, injured (Respondent no. 1 in MAC. APP.651/2013) and compensation of Rs. 7,53,500/- was awarded in favour of Respondents no. 1 to 3 in MAC. APP.662/2013. Two appeals (MAC App.651/2013 and MAC APP.662/2013) have been filed by the Insurance Company while the other two appeals (MAC. APP.73/2015 and MAC. APP.74/2015) have been filed by Smt. Neeraj against granting of recovery rights to the Insurance Company.

    2. Before adverting to each of the appeal, it will be appropriate to mention a few facts. A Detailed Accident Report(DAR) was filed by SHO, P.S Saket in respect of the motor vehicular accident which took place on 25.03.2011 at 2:50 p.m at Press Enclave Road resulting in registration of FIR no. 117/2011. As per the information given in the DAR, on 25.03.2011, Dinesh, deceased Virender Yadav and Lal Singh were carrying marble slabs from Satbari to New Friends Colony on a tempo bearing no. DL-1L-K-9789. Respondent Neetu Singh was driving the tempo and Dinesh was sitting beside him. Neetu Singh was driving the tempo at a very fast speed. A cyclist Ranjit was going ahead on the road. On seeing the cyclist and in order to avoid collision with the cyclist, Neetu Singh suddenly applied break. As a result, the persons sitting on the tempo(along with the marble slabs) got sandwiched in between the marble slabs. The injured were removed to the hospital, where Virender Yadav was reported brought dead. In respect of injured Ranjeet and Lal Singh, compensation of Rs. 18,100/- and Rs. 59,400/- respectively for having suffered injuries was granted whereas compensation of Rs. 7,53,500/- was awarded in favour of legal representatives of deceased Virender Yadav.

    3. For the sake of convenience, appellant Bajaj Allianz General Insurance Company Ltd. in MAC. APP.651/2013 and MAC. APP.662/2013 shall be referred to as the Insurance Company and the Appellant in Cross-Appeals being MAC. APP.73/2015 and MAC. APP.74/2015 shall be referred to as the owner of the offending vehicle involved in the accident.

    4. The contention raised on behalf of the Insurance Company is that the vehicle involved in the accident is a goods vehicle covered by insurance policy (Ex.R3W1.A). As per the provision of Section 147(1) of the Motor Vehicles Act, 1988, risk towards the owner of the goods or the authorised representative of the owner of the goods travelling in a goods vehicle is covered only when the said owner/representative of the owner of the goods is travelling in the cabin along with the driver. It is urged that in the instant case, injured Lal Singh and deceased Virender Yadav were admittedly travelling in the rear portion of the tempo meant for carrying the goods alongwith the goods and therefore, their risk was not covered under the policy of insurance. In support of her contention, the learned counsel placed reliance on the report of the Supreme Court in National Insurance Co. Ltd. v. Cholleti Bharatamma, 2008 ACJ 268 (SC). The learned counsel therefore, urges that the Claims Tribunal erred in making the Insurance Company liable to pay compensation in the first instance with the right to recover the same from the owner of the offending vehicle later on. It is stated that since injured Lal Singh and deceased Virender Yadav were travelling in the rear of the tempo along with the goods, they were not covered under the policy of insurance and the Insurance Company had no liability at all.

    5. On the other hand, the learned counsel for the owner submits that since the Insurance Company charged an additional premium for covering legal liability for operation and maintenance of two persons, the liability of two persons apart from the driver of the vehicle would stand covered under the policy. The Insurance Company ought not to have been granted recovery rights.

    6. This Court in Oriental Insurance Co. Ltd. v. Kaushalya Devi, MAC. APP. 19/2005 decided on 14.12.2011 referred to the judgments of National Insurance Company v. Baljit Kaur (2004) 2 SCC 1, New India Assurance Company Limited v. Asha Rani (2003) 2 SCC 223 and New India Assurance Company v. Satpal Singh (2000) 1 SCC 237 and held that the Insurance Company has no liability at all in respect of injury to gratuitous passengers travelling in a goods vehicle and therefore, the Insurance Company will not be under an obligation to first pay the compensation and then recover from the insured. Paras 7 to 9 and 11 of the report in Oriental Insurance Co. Ltd. v. Kaushalya Devi (supra) are extracted hereunder:

    “7. A close reading of Baljit Kaur (supra) reveals that the judgment in Asha Rani (supra) which was passed on 03.12.2002 was to have a prospective effect. Since the position was uncertain because of the earlier decision of the Supreme Court in Satpal Singh (supra) it was observed that the Appellant National Insurance Company Limited would satisfy the award in favour of the claimant, if not already satisfied and recover the same from owner of the vehicle. It was not laid down as a proposition of law that even in the case of gratuitous passengers travelling in a goods vehicle, the Insurance Company will first pay the compensation awarded and would then recover from the insured.

    8. Reliance on Swaran Singh (supra) for making the Insurance Company liable to pay the compensation in the first instance was also misplaced because Swaran Singh (supra) related to the cases where the driver did not possess a valid driving licence or the driving licence held by him was a fake. In Swaran Singh (supra) the Insurance Company was made liable to pay the compensation because it had liability to pay on account of insurance of the vehicle and it could avoid liability only because of the breach of the condition of the policy.

    9. In the case of gratuitous passengers travelling in a goods vehicle, there is no liability of the insurance company at all to pay the compensation, it is not required to prove any breach of the terms of the policy as the passengers travelling in the goods vehicles are not covered as the premium therefor is not paid by the insured. It is important to note that the judgment by the three Judges Bench in Swaran Singh (supra) was delivered on January 05, 2004 while judgment in Baljit Kaur (supra) was delivered on January 06, 2004. The Hon'ble Chief Justice presided over both the Benches with Hon'ble Mr. Justice S.B Sinha being the common author in both the judgments. If the Supreme Court had any intention to make the Insurance Company liable to pay the compensation, it would have so mentioned in Baljit Kaur (supra) also.

    …….

    11. In the instant case also, the Tribunal committed grave error in interpreting Baljit Kaur (supra) so as to enable the Tribunals and the Courts to make the Insurance Company liable to pay the compensation awarded in the first instance and then to recover from the insured even in the cases where gratuitous passengers, not covered by the Insurance policy, were travelling in a goods vehicle. The Appeals, therefore, have to be allowed.”

    7. However, in the instant case, the deceased and the injured were not gratuitous passengers but were custodian of the goods. At the same time, they travelling in the rear portion of the tempo along with the goods. They were not travelling in the cabin of the vehicle along with the driver. This question was examined by the Supreme Court in Cholleti Bharatamma (supra) where it was held that the owner of the goods would be only covered if he travels in the cabin of the vehicle. Since deceased Virender Yadav and injured Lal Singh were travelling in the rear portion of the tempo, their risk was not covered and the Insurance Company would not be liable to pay the compensation at all as it was clearly not a case of breach of the terms and conditions of the insurance policy where the Insurance Company should be first made liable to pay the compensation with a right of recovery.

    8. By an order dated 23.07.2013 passed by this Court in MAC. APP.651/2013 and MAC. APP.662/2013, the entire amount was ordered to be deposited with the Registrar General of this Court by the Insurance Company. Claimant/claimants who is Respondent no. 1 in MAC. APP.651/2013 and Respondents no. 1 to 3 in MAC. APP 662/2013 preferred not to contest the proceedings despite sufficient service. In view of the observations made above, since the Insurance Company had no liability at all to pay the compensation, the compensation already deposited shall be refunded to the Appellant Insurance Company. The compensation, however, shall be recoverable from Respondent no. 3 in MAC. APP.651/2013 and Respondent no. 5 in MAC.662/2013, who was the owner of the offending vehicle.

    9. Consequently MAC. APP.651/2013 and MAC. APP.662/2013 are allowed.

    10. MAC. APP.73/2015 and MAC. APP.74/2015 are hereby dismissed.

    11. Pending applications stand disposed of.

    12. Statutory amount, if any, deposited shall be refunded to the Appellant Insurance Company.

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    Comments

    Bajaj Allianz General Insurance Company Ltd. v. Lal Singh & Ors. S
    (Feb 19, 2015)