25 August 2004
Supreme Court
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NATIONAL INSURANCE CO. LTD. Vs V. CHINNAMMA .

Bench: N. SANTOSH HEGDE,S.B. SINHA,A.K. MATHUR
Case number: C.A. No.-005478-005478 / 2004
Diary number: 2675 / 2003
Advocates: SUDHIR KUMAR GUPTA Vs K. SHARDA DEVI


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CASE NO.: Appeal (civil)  5478 of 2004

PETITIONER: National Insurance Co. Ltd.                                      

RESPONDENT: V. Chinnamma & Ors.                                              

DATE OF JUDGMENT: 25/08/2004

BENCH: N. Santosh Hegde,S.B. Sinha & A.K. Mathur

JUDGMENT: J U D G M E N T (Arising out of S.L.P. ) No. 12019 of 2003)

S.B. SINHA, J:

       Leave granted.

       The Appellant \026 Insurance Company aggrieved by and dissatisfied  with a judgment and order dated 28th March, 2002 passed by the High Court  of Judicature Andhra Pradesh at Hyderabad in AAO No. 216 of 1997 is in  appeal before us.

       The respondents herein are heirs and legal representatives of one V.  Gopal.  The said V. Gopal (the deceased) used to carry on business in  vegetables.  He purchased 5 bags of vegetables on 24.11.1991 in a village  known as Ayyapareddipalem and loaded the same in a trailer of a tractor  bearing No. MH33-8109.  He was traveling therein.  He wanted to buy some  more vegetables at a village known as Peddapadu.  While the tractor  approached the said village, a bus was seen coming from opposite direction.   Because of rash and negligent driving on the part of the driver of the said  tractor, and which was driven at a very high speed,  it went to the extreme  left side of road margin and because of heavy jerks, the deceased fell down  and received serious injuries.  He was immediately shifted to Peddapadu  where he breathed his last.

       A claim petition was filed by the respondents herein before the Addl.  Motor Accidents Claims Tribunal, Nellore claiming a sum of Rs. 1,00,000/-.   The  Appellant herein denied and disputed its liability to pay any amount to  the Respondents by way of compensation inter alia on the ground that the  deceased was traveling in the said tractor as a ’paid passenger’.   

       The learned Addl. Motor Accidents Claims Tribunal inter alia held  that carrying the goods, i.e., vegetables, by the deceased as owner thereof  would entitle the Applicants to receive compensation from the Appellant.

       The learned Tribunal observing that a person who is not a party to  contract of insurance would be the ’third party’ and in that view of the  matter the respondents would be entitled to the amount of compensation  even if the vehicle was only having third party insurance (Act policy).  It  was further held that the Tribunal was empowered to grant compensation  over and above the amount claimed.  A sum of Rs. 1,53,000/- was awarded  by way of compensation in favour of the Respondents.  The High Court by  reason of the impugned judgment has dismissed the appeal preferred by the  Appellant herein from the said judgment and award holding that as the  deceased was traveling in the trailer alongwith his goods being vegetables, it  was liable to pay compensation.   

       Mr. P.K. Seth, learned counsel appearing on behalf of the appellant

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would submit that as this Court in New India Assurance Co. Ltd. Vs. Asha  Rani and Others [(2003) 2 SCC 223] overruled its earlier decision in New  India Assurance Co. Vs. Satpal Singh [(2000) 1 SCC 237] holding that the  insurance company would not be liable for paying compensation to a  passenger in a goods vehicle, whether he was travelling as an owner of the  goods when that vehicle meets with an accident, the impugned judgment is  not sustainable.  

       Mrs. K. Sharda Devi, learned counsel appearing on behalf of the  respondents, on the other hand, would submit that a tractor is not a ’goods  carriage’ vehicle and as carrying of vegetables in a tractor would be for  agricultural purpose, the appellant cannot be absolved from its liability to  pay the amount of compensation.

       Section 147(1) of the Motor Vehicles Act, 1988 is in pari materia with  the provisions of Section 95(1) of the Motor Vehicles Act, 1939.  In the  year, 1994, Section 147 was amended by reason of Act 54 of 1994 with  effect from 14.11.1994 in terms whereof the words "including owner of the  goods or his authorized representative carried in the vehicle" were added  after the words "against any liability which may be incurred by him in  respect of the death of or bodily injury to any person".

       In Asha Rani (supra), this Court overruling its earlier decision in  Satpal Singh (supra) observed:

"9. In Satpal Singh’s case (supra) the Court  assumed that the provisions of section 95(1) of  Motor Vehicles Act, 1939 are identical with  section 147(1) of the Motor Vehicles Act, 1988, as  it stood prior to its amendment. But a careful  scrutiny of the provisions would make it clear that  prior to the amendment of 1994 it was not  necessary for the insurer to insure against the  owner of the goods or his authorised representative  being carried in a goods vehicle. On an erroneous  impression this Court came to the conclusion that  the insurer would be liable to pay compensation in  respect of the death or bodily injury caused to  either the owner of the goods or his authorised  representative when being carried in a goods  vehicle the accident occurred."

       One of us in a supplemental judgment in Asha Rani (supra) opined:

"25. Section 147 of 1988 Act, inter alia,  prescribes compulsory coverage against the death  of or bodily injury to any passenger of "public  service vehicle". Proviso appended thereto  categorically states that compulsory coverage in  respect of drivers and conductors of public  service vehicle and employees carried in a goods  vehicle would be limited to the liability under the  Workmen’s Compensation Act. It does not speak  of any passenger in a ’goods carriage’.

26. In view of the changes in the relevant  provisions in  the 1988 Act vis-a-vis the 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 the 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

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a goods vehicle, the insurers would not be liable  therefor.

27. Furthermore, sub-clause (i) of clause (b) of  sub-section (1) of section 147 speaks of liability  which may be incurred by the owner of a vehicle  in respect of death of or bodily injury to any  person or damage to any property of a third party  caused by or arising out of the use of the vehicle  in a public place, whereas sub-clause (ii) thereof  deals with liability which may be incurred by the  owner of a vehicle against the death of or bodily  injury to any passenger of a public service  vehicle caused by or arising out of the use of the  vehicle in a public place.

28. An owner of a passenger carrying vehicle  must pay premium for covering the risks of the  passengers. If a liability other than the limited  liability provided for under the Act is to be en- hanced under an insurance policy, additional  premium is required to be paid. But if the ratio of  this Court’s decision in New India Assurance Co.  v. Satpal Singh [2000] 1 SCC 237 is taken to its  logical conclusion, although for such passengers,  the owner of a goods carriage need not take out  an insurance policy, they would be deemed to  have been covered under the policy wherefor  even no premium is required to be paid.

29. We may consider the matter from another  angle. Section 149(2) of the 1988 Act enables the  insurers to raise defences against the claim of the  claimants. In terms of clause (c) of sub-section  (2) of section 149 of the Act one of the defences  which is available to the insurer is that the  vehicle in question has been used for a purpose  not allowed by the permit under which the  vehicle was used. Such a statutory defence  available to the insurer would be obliterated in  view of the decision of this Court in Satpal  Singh’s case (supra)."

       Asha Rani (supra) was followed by this Court in Oriental Insurance  Co. Ltd. Vs. Devireddy Konda Reddy and Others [(2003) 2 SCC 339]  holding:

"10. The inevitable conclusion, therefore, is that  provisions of the Act do not enjoin any statutory  liability on the owner of a vehicle to get his vehicle  insured for any passenger travelling in a goods  carriage and the insurer would have no liability  therefore."

       Yet again in National Insurance Co. Ltd. Vs. Ajit Kumar and Ors. [JT  2003 (7) SC 520] this Court held:

"11. The difference in the language of "goods  vehicle" as appearing in the old Act and "goods  carriage" in the Act is of significance. A bare  reading of the provisions makes it clear that the  legislative intent was to prohibit goods vehicle  from carrying any passenger. This is clear from the

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expression "in addition to passenger" as contained  in definition of "goods vehicle" in the old Act. The  position becomes further clear because the expres- sion used is "goods carriage" is solely for the  "carriage of goods". Carrying of passengers in a  goods carriage is not contemplated in the Act.  There is no provision similar to clause (ii) of the  proviso appended to section 95 of the old Act  prescribing requirement of insurance policy. Even  section 147 of the Act mandates compulsory  coverage against death of or bodily injury to any  passenger of "public service vehicle". The proviso  makes it further clear that compulsory coverage in  respect of drivers and conductors of public service  vehicle and employees carried in goods vehicle  would be limited to liability under the Workmen’s  Compensation Act, 1923 (in short ’WC Act’).  There is no reference to any passenger in "goods  carriage"."

       The effect of 1994 amendment came up for consideration before a 3- Judge Bench of this Court in National Insurance Co. Ltd. Vs. Baljit Kaur  and Others [(2004) 2 SCC 1] wherein again it was held:

"19. In Asha Rani (supra), it has been noticed that  sub-clause (i) of clause (b) of sub-section (1) of  Section 147 of the 1988 Act speaks of liability  which may be incurred  by the owner of a vehicle  in respect of death of or bodily injury to any  person or damage to any property of a third party  caused by or arising out of the use of the vehicle in  a public place.  Furthermore, an owner of a  passenger-carrying vehicle must pay premium for  covering the risks of the passengers travelling in  the vehicle.  The premium in view of the 1994  Amendment would only cover a third party as also  the owner of the goods or his authorised  representative and not any passenger carried in a  goods vehicle whether for hire or reward or  otherwise.

20. It is therefore, manifest that in spite of the  amendment of 1994, the effect of the provision  contained  in Section 147 with respect to persons  other than the owner of the goods or his authorized  representative remains the same.  Although the  owner of the goods or his authorized representative  would now be covered by the policy of insurance  in respect of a goods vehicle, it was not the  intention of the legislature to provide for the  liability of the insurer with respect to passengers,  especially gratuitous passengers, who were neither  contemplated at the time the contract of insurance  was entered into, nor  was  any premium paid to  the extent of the benefit of insurance to such  category of  people."  

                                               (Emphasis supplied)

       An insurance for an owner of the goods or his authorized  representative travelling in a vehicle became compulsory only with effect  from 14.11.1994, i.e., from the date of coming into force of Amending Act  54 of 1994.

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       Furthermore, a tractor is not even a goods carriage.  The "goods  carriage" has been defined in Section 2(14) to mean "any motor vehicle  constructed or adapted for use solely for the carriage of goods, or any motor  vehicle not so constructed or adapted when used for the carriage of goods"  whereas "tractor" has been defined in Section 2(44) to mean "a motor  vehicle which is not itself constructed to carry any load (other than  equipment used for the purpose of propulsion); but excludes a road-roller".   The "trailer" has been defined in Section 2(46) to mean "any vehicle, other  than a semi-trailer and a side-car, drawn or intended to be drawn by a motor  vehicle".         A tractor fitted with a trailer may or may not answer the definition of  goods carriage contained in Section 2(14) of the Motor Vehicles Act.  The  tractor was meant to be used for agricultural purposes.  The trailer attached  to the tractor, thus, necessarily is required to be used for agricultural  purposes, unless registered otherwise.  It may be, as has been contended by  Mrs. K. Sharda Devi, that carriage of vegetables being agricultural produce  would lead to an inference that the tractor was being used for agricultural  purposes but the same by itself would not be construed to mean that the  tractor and trailer can be used for carriage of goods by another person for his  business activities.  The deceased was a businessman.  He used to deal in  vegetables.  After he purchased the vegetables, he was to transport the same  to market for the purpose of sale thereof and not for any agricultural  purpose.  The tractor and trailer, therefore, were not being used for  agricultural purposes.  However, even if it be assumed that the trailer would  answer the description of the "goods carriage" as contained in Section 2(14)  of the Motor Vehicles Act, the case would be covered by the decisions of  this Court in Asha Rani (supra) and other decisions following the same, as  the accident had taken place on 24.11.1991, i.e., much prior to coming into  force of 1994 amendment.   

       For the reasons aforementioned, the impugned judgments cannot be  sustained which are set aside accordingly.  This appeal is allowed.  In the  facts and circumstances of this case, there shall be no order as to costs.