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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition

NA

Attorney(S)
  • Mr. Amit Khemka and Mr. Manoj Bhandari, Advocates
  • Mr. Shoumik Mazumdar, Advocate for insurance company.
Judges
  • Justice Najmi Waziri
Acts
  • Section 147(1)(b)(ii) of the Act
  • section 147(1)(b)(ii), Motor Vehicles Act, 1988
  • Section 149(2) of the Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition

NA

Attorney(S)
  • Mr. Amit Khemka and Mr. Manoj Bhandari, Advocates
  • Mr. Shoumik Mazumdar, Advocate for insurance company.
Judges
  • Justice Najmi Waziri
Acts
  • Section 147(1)(b)(ii) of the Act
  • section 147(1)(b)(ii), Motor Vehicles Act, 1988
  • Section 149(2) of the Act
See more information ...
Smart Summary

Structured Summary of the Opinion by Najmi Waziri, J.

Factual and Procedural Background

This opinion deals with two groups of applications/appeals heard orally by the court.

First, a set of applications (CM APPL. 53896/2019, CM APPL. 53899/2019, CM APPL. 53902/2019, CM APPL. 53905/2019, CM APPL. 53908/2019 & CM APPL. 53911/2019) sought condonation of delay in filing appeals. The applicant stated that she had not been informed by her counsel about the outcome of claim petitions before the learned Tribunal and only became aware of the liability when execution proceedings were initiated; she then engaged fresh counsel to file these appeals. The applicant is described as a businesswoman who pleaded a lapse on her counsel's part.

Second, several motor accident claims and statutory appeals (MAC. APP. 946/2019 through MAC. APP. 951/2019 and associated CM applications as listed in the opinion) impugned an award of compensation dated 16.02.2019 in six claim petitions (MACT Nos. 1128-33/2017). The appellants contended that the learned MACT erred in fixing liability on the insurer because the vehicle's seating capacity was 12 while 17 passengers were travelling at the time of the accident.

Legal Issues Presented

  1. Whether the delay in filing the appeals (in the set of condonation applications) should be condoned.
  2. Whether the insurer can be absolved of liability on the ground of overloading when there is no evidence that the carrying of excess passengers contributed to the motor accident.
  3. If the insurer is liable, what is the extent of the insurer's liability where the number of claims is less than the permitted number of insured passengers?

Arguments of the Parties

Applicant (Condonation Applications)

  • The applicant asserted she was not informed by her previous counsel about the Tribunal's decision in the claim petitions and only learned of the liability when execution proceedings were initiated.
  • As a result of this lack of communication, she retained new counsel and filed the appeals, seeking condonation of delay.

Appellants (in the MAC appeals challenging the award)

  • The appellants (insured/owner) contended that the learned MACT erred in fastening liability on the insurer merely because the vehicle (permitted for 12 passengers) was carrying 17 passengers at the time of the accident; implicitly, they challenged the insurer's attempt to avoid indemnity on account of overloading.

The opinion does not contain a detailed, point-by-point account of the respondent-insurer's written submissions in these proceedings beyond the factual and legal positions summarized above.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lakhmi Chand v. Reliance General Insurance, (2016) 3 SCC 100 Insurer must establish a fundamental breach of the insurance policy that results in the contract ending to avoid liability; mere overloading (in goods-carrying vehicle) does not necessarily amount to a fundamental breach. The court relied on this authority to hold that, absent evidence that overloading caused the accident, the insurer had not established a fundamental breach permitting it to resile from the contract.
B.V. Nagaraju v. Oriental Insurance Co. Ltd., (1996) 4 SCC 647 For an insurer to avoid liability, the breach of policy must be so fundamental as to bring the contract to an end (burden of proof on insurer). Cited as underpinning the principle that the insurer must prove a fundamental breach; applied to conclude insurer had not discharged that burden in the present case.
National Insurance Co. Ltd. v. Anjana Shyam, (2007) 7 SCC 445 Where overloading occurs, the insurer's liability is limited to the number of passengers permitted/insured; a 'passenger' under s.147(1)(b)(ii) is one authorised in the vehicle's permitted user; practical approach is to hold insurer liable for the permitted number of passengers covered by the policy. The court applied this principle to determine that, because the number of claims (six) was less than the permitted twelve passengers, each compensation amount must be paid by the insurer.

Court's Reasoning and Analysis

The court divided its consideration between (A) the condonation applications and (B) the appeals against the MACT award.

(A) Condonation Applications

  1. The applicant said she had not been informed by her earlier counsel of the Tribunal's disposal and only learned of the liability when execution proceedings began; she then engaged new counsel and filed appeals.
  2. The court observed that the applicant, being a businesswoman, was not as disadvantaged as an illiterate person and might have been expected to pursue the litigation more carefully; nevertheless she attributed delay to counsel's lapse.
  3. Balancing the factors, the court concluded that dismissal of the appeals solely on the ground of delay would result in a miscarriage of justice; therefore, condonation was appropriate but subject to conditions intended partly as compensation and partly as a restorative/environmental measure.
  4. Consequently, the court condoned the delay subject to specified monetary payment and tree-planting obligations, with administrative directions for implementation and reporting.

(B) Appeals Against MACT Award

  1. The central legal question was whether carrying excess passengers had contributed to the motor accident; analysis began with the observation that the impugned judgment contained no finding that overloading caused the accident.
  2. The court explained the settled legal position that an insurer seeking to avoid liability must establish a fundamental breach of policy; it cited Lakhmi Chand and B.V. Nagaraju for this principle and noted the insurer had produced no evidence that overloading caused the accident.
  3. The court further relied on National Insurance Co. v. Anjana Shyam for the rule that insurer liability is limited to the number of passengers permitted/insured and practical means to determine compensation where overloading exists.
  4. Applying these principles to the facts, the court noted there were two fatalities and four claims of injuries (six claims total), which is less than the permitted seating of twelve; hence, each compensation amount is payable by the insurer because those claims fall within the permitted insured number.
  5. The court modified the impugned order to the extent of directing the insurer to pay the awarded amounts and provided ancillary directions regarding deposit timelines and interest, and the return of statutory amounts to the appellant.

Holding and Implications

The court's final dispositions and their direct effects are as follows:

  • Condonation of Delay (CM Applications): The delay in filing the appeals was condoned. The condonation was granted subject to conditions: (a) the applicant shall pay the respondent-insurance company Rs. 25,000/-; and (b) the applicant shall plant 3,000 trees at the ‘Insaaf Bagh’ area of the Central Ridge (estimated expense ~Rs. 75,000/-). The applicant is to appear before the DCF (South) on 31.01.2020 to be directed to forest lands for planting. The trees must be deciduous indigenous species, of nursery age three and a half years, and at least six feet in height. The applicant may water the trees for six months (water to be supplied by the Forest Department, GNCTD). A compliance report with photographs shall be filed by both the applicant and the DCF; the matter was listed for compliance on 16.03.2020. The condonation applications are disposed of in these terms.
  • Appeals on the Merits (MAC Appeals): The court held that, because there is no evidence that overloading contributed to the accident, the insurer had not shown a fundamental breach of the insurance contract entitling it to avoid liability. Applying precedent, the court held that the insurer is liable for the permitted number of passengers insured. As the six claims in question are fewer than the permitted twelve passengers, the insurance company must pay each of the compensation amounts. The impugned order was modified to direct the insurer to pay the awarded amounts.
  • Ancillary Financial Directions: If the awarded amount has not already been deposited, the insurer shall deposit it before the learned Tribunal within three weeks from receipt of a copy of this order, along with interest accrued from the date of filing of the claim petition until realization, to be released to the beneficiaries in terms of the disbursement scheme specified in the award. The statutory amount, along with interest, shall be returned to the appellant.
  • Disposition: The appeals are disposed of in the above terms.

Implications: The decision enforces settled authority requiring an insurer to prove a fundamental breach to avoid liability and applies the established approach limiting insurer liability to the permitted/insured number of passengers. The opinion modifies the impugned order accordingly and imposes conditions for condonation. The judgment relies on existing precedents and does not purport to create a new precedent beyond applying those authorities to the facts of this case.

Show full summary ...

    Raj Rani Arora v. Vasu And Others

    Najmi Waziri, J. (Oral):—

    CM APPL. 53896/2019, CM APPL. 53899/2019, CM APPL. 53902/2019, CM APPL. 53905/2019, CM APPL. 53908/2019 & CM APPL. 53911/2019 (for delay)

    1. These applications seek condonation of delay in filing of the appeals.

    2. It is the applicant's case that she was not informed by her counsel about the outcome of the claim petitions in the proceedings before the learned Tribunal and got to know about the liability only when the execution proceedings were initiated against her, whereafter she engaged another counsel to file these appeals.

    3. The applicant is a business woman and surely is not as disadvantaged as an illiterate person. She would be expected to have pursued her litigation with more care and circumspection. She, however, pleads lapse on her counsel's part, in whom she had reposed faith.

    4. Be that as it may, the case otherwise is good on merits and the dismissal of the appeals only on the ground of delay would result in miscarriage of justice. In the circumstances, the delay is condoned subject to the applicant paying the respondent-insurance company an amount of Rs. 25,000/- and planting 3,000 trees at the ‘Insaaf Bagh’ area of the Central Ridge (an expense of roughly about Rs. 75,000/-). The applicant, shall appear before the DCF (South) on 31.01.2020, who shall indicate to her, the forest lands under his care where the trees shall be planted. The trees shall be of deciduous indigenous variety and they shall have a nursery age of three and a half years and shall have a minimum height of at least six feet.

    5. The applicant will be free to water the trees for the next six months. Water will be supplied by the Forest Department, GNCTD. Depending upon the soil type and topography, the DCF may consider the following types of trees for plantation:—

    (i) Gular (Cluster Fig)

    (ii) Kadamba (Burflower Tree)

    (iii) Pilkhan (White Fig)

    (iv) Jaamun (Black Plum)

    (v) Bargad (Banyan Tree)

    (vi) Mango

    (vii) Amaltas (Golden Shower) [Indian Laburnum]

    (viii) Mahua (Butter Tree)

    (ix) Putranjiva

    (x) Badh

    (xi) Sagwan (Teak Wood)

    (xii) Safed Siris (Albizia Procera)

    (xiii) Kala Siris

    (xiv) Anjeer

    (xv) Kathal-Jackfruit

    (xvi) Palash

    (xvii) Arni

    (xviii) Bistendu

    (xix) Rohida

    (xx) Medshingi

    (xxi) Palash/Tesu/Dhak

    (xxii) Hingot

    (xxiii) Ronjh

    (xxiv) Khejri

    6. Compliance Report alongwith photographs shall be filed both by the applicant and the DCF before the next date.

    7. List for compliance on 16.03.2020.

    8. The applications stand disposed-off in the above terms.

    MAC. APP. 946/2019, CM APPL. 53897/2019 & CM APPL. 53898/2019, MAC. APP. 947/2019, CM APPL. 53900/2019 & CM APPL. 53901/2019, MAC. APP. 948/2019, CM APPL. 53903/2019 & CM APPL. 53904/2019, MAC. APP. 949/2019, CM APPL. 53906/2019 & CM APPL. 53907/2019, MAC. APP. 950/2019, CM APPL. 53909/2019 & CM APPL. 53910/2019 & MAC. APP. 951/2019, CM APPL. 53912/2019 & CM APPL. 53913/2019

    9. These appeals impugn the award of compensation dated 16.02.2019 in six claim petitions numbered as MACT Nos. 1128-29-30-31-32-33/2017 passed by the learned MACT, on the ground that it has erred in fastening the liability of payment of compensation on the appellant/insured simply because the vehicle which met with the motor accident was insured to carry only 12 passengers, whereas 17 passengers were travelling in it at the time of the accident.

    10. The question to be determined is: whether the carrying of the additional passengers contributed, in any way, to the motor vehicular accident. There is nothing recorded in the impugned judgment to show that the carriage of excess persons contributed to the accident. In the circumstances, the insured cannot be said to have committed such a fundamental breach of the contract of insurance, so as to facilitate the insurer to resile from the contract or to reject the claim for indemnification. The law in this regard is settled in view of the dicta of the Supreme Court in Lakhmi Chand v. Reliance General Insurance, (2016) 3 SCC 100, in which it was held that in order to avoid its liability, an insurer has to establish that there was a fundamental breach of policy that resulted in the contract ending. It further held that mere carrying of more passengers than the permitted capacity in a goods driving vehicle would not tantamount to fundamental breach of insurance policy. It held:

    “16. …….the insurance company, in order to avoid liability must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the owner/insured of the vehicle for which the burden of proof would rest with the insurance company. In the instant case, the respondent Company has not produced any evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods-carrying vehicle. Further, as has been held in B.V. Nagaraju [B.V. Nagaraju v. Oriental Insurance Co. Ltd., (1996) 4 SCC 647] that for the insurer to avoid his liability, the breach of the policy must be so fundamental in nature that it brings the contract to an end.”

    11. Furthermore, in National Insurance Co. Ltd. v. Anjana Shyam, (2007) 7 SCC 445, the same test was laid down. It was held that the insurer would be liable to the extent of the permitted number of passengers. A ‘passenger’ under section 147(1)(b)(ii), Motor Vehicles Act, 1988, must be understood as a passenger authorised to be carried in the vehicle in its permitted user. It held that since there were no means of ascertaining as to which of the overloaded passengers constituted the passengers covered by the insurance policy, the practical way forward would be to determine the compensation payable by the insurance company for the permitted number of passengers who were insured, however the higher of the amounts awarded would be paid. It held inter alia as under:

    “20. In spite of the relevant provisions of the statute, insurance still remains a contract between the owner and the insurer and the parties are governed by the terms of their contract. The statute has made insurance obligatory in public interest and by way of social security and it has also provided that the insurer would be obliged to fulfil his obligations as imposed by the contract and as overseen by the statute notwithstanding any claim he may have against the other contracting party, the owner, and meet the claims of third parties subject to the exceptions provided in Section 149(2) of the Act. But that does not mean that an insurer is bound to pay amounts outside the contract of insurance itself or in respect of persons not covered by the contract at all. In other words, the insured is covered only to the extent of the passengers permitted to be insured or directed to be insured by the statute and actually covered by the contract.

    21. The High Court has considered only the aspect whether by overloading the vehicle, the owner had put the vehicle to a use not allowed by the permit under which the vehicle is used. This aspect is different from the aspect of determining the extent of the liability of the Insurance Company in respect of the passengers of a stage carriage insured in terms of Section 147(1)(b)(ii) of the Act. We are of the view that the Insurance Company can be made liable only in respect of the number of passengers for whom insurance can be taken under the Act and for whom insurance has been taken as a fact and not in respect of the other passengers involved in the accident in a case of overloading.”

    12. In the present case, there were two fatalities and four claims of injuries. Accordingly, the six claims being lesser than the permitted number of twelve passengers, each of the compensation amounts shall be payable by the insurance company. The impugned order is modified to the extent that the compensation shall be paid by the insurer.

    13. The awarded amount, if not already deposited, shall be deposited by the insurer before the learned Tribunal, within three weeks from the date of receipt of copy of this order, alongwith interest accrued thereon from the date of filing of the claim petition till its realization, to be released to the beneficiary(ies) of the Award in terms of the scheme of disbursement specified therein.

    14. The statutory amount, alongwith interest accrued thereon, shall be returned to the appellant.

    15. The appeals are disposed-off in the above terms.

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    Comments

    Raj Rani Arora v. Vasu And Others
    (Jan 7, 2020)