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CASE NO.: Appeal (civil)  1232 of 2008

PETITIONER: The New Indian Insurance Company

RESPONDENT: Darshana Devi & Ors

DATE OF JUDGMENT: 12/02/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T

S.B. Sinha, J.

1.      Leave granted. 2.      This appeal is directed against a judgment and order dated 13.02.2004   passed by a Division Bench of the Punjab and Haryana High Court whereby  and whereunder the appeal preferred by the appellant herein against the  judgment and order dated 3.12.2003 passed by the Motor Accident Claims  Tribunal, Hoshiarpur under Section 166 of the Motor Vehicles Act, 1988 ,  was summarily dismissed. 3.      The facts necessary to be noticed for the present appeal are that the  tractor bearing Registration Number PB-070-1026 was owned by three  brothers, namely, Mahinder Singh, Joginder Singh and Jagdev Singh.   Ajay Kumar son of Mahinder Singh was driving the said vehicle on  18.10.2000.  He did not have a driving licence.  The accident occurred at  about 7.00 pm on the aforementioned date.  The deceased, Baldev Singh,  was said to have been travelling on the mudguard of the said tractor which  was going to Hoshiarpur loaded with ’safeda’ wood.  Owing to rash and  negligent driving by Ajay Kumar, the deceased fell down and came  underneath the said tractor.   A claim petition was filed before the Motor Vehicle Accident Claims  Tribunal on 19.07.2001 by the heirs and legal representatives of the said  deceased.   Appellant, in its written statement, inter alia, raised the following  contentions :  (1)     The deceased being a passenger in the said tractor, was not a third  party within the meaning of the provisions of Section 147 of the  Motor Vehicles Act. (2)     As he was travelling on the mudguard of the tractor in breach of  conditions of contract of insurance, the insurance company was not  liable to reimburse the owner of the vehicle; and (3)     Ajay Kumar, being the son of one of the owners of the tractor and  having no licence to drive the same, the case comes within the  purview of the exeption as regards the liability of the insurer as  envisaged under sub-section (2) of Section 149 of the Motor Vehicles  Act.  4.      The Tribunal in the said proceedings, inter alia, framed the following  issues : "(2) Whether the respondent No.1 was not having  any valid driving licence at the time of accident?  OPR-2"

       The findings of fact arrived at by the Tribunal are as under : (i)     Mohinder Singh, Baldev Singh and Jagdev Singh son of Pannu  were the owners of the tractor.  

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(ii)    Ajay Kumar is son of Mahinder Singh, co-respondent.   (iii)   The tractor used to be plied on hire.   (iv)    At the relevant time, it was not being used for agricultural  purposes for which it was insured.   (v)     Although the owners had contravened the contracts of  insurance, the insurance company cannot escape its liability in  regard to third party risk but was entitled to recover the amount  of compensation from the insurer, namely, the owner of the  offending vehicle.   The Tribunal awarded a sum of Rs.2,04,000/- by way of  compensation in favour of the claimants.   5.      As indicated hereinbefore, a Division Bench of the High Court  dismissed the appeal preferred by the insurance company summarily.   6.      Ms.Kiran Suri, learned counsel appearing on behalf of the appellant,  submitted that the Tribunal committed a serious error in passing the  impugned judgment insofar as it failed to take into consideration that in a  case of this nature, the insurance company was not liable at all in terms of  the provisions of the Motor Vehicles Act, 1988. 7.      Mr. Bakshi, learned counsel appearing on behalf of the respondent, on  the other hand, urged that although no exception to the legal proposition can  be taken but it is not a fit case where this Court should exercise its  discretionary jurisdiction under Article 136 of the Constitution of India.   8.      The liability of an insurance company to recompense the owner and  driver of a vehicle, who are primarily responsible for payment of  compensation to a victim or dependent of a deceased arising out of use of a  motor vehicle, is statutory in nature.   Whereas an owner of a motor vehicle is under a statutory obligation to  get it compulsorily insured, the defence of an insurance company is limited.   Sub-section (2) of Section 149 of the Motor Vehicles Act, 1988 reads thus : "(2) No sum shall be payable by an insurer under  sub-section (1) in respect of any judgment or  award unless, before the commencement of the  proceedings in which the judgment of award is  given the insurer had notice through the Court or,  as the case may be, the Claims Tribunal of the  bringing of the proceedings, or in respect of such  judgment or award so long as execution is stayed  thereon pending an appeal; and an insurer to whom  notice of the bringing of any such proceedings is  so given shall be entitled to be made a party  thereto and to defend the action on any of the  following grounds, namely:-

(a)     that there has been a breach of a specified  condition of the policy, being one of the  following  conditions, namely:-

(i)     a condition excluding the use of the  vehicle-

(a)     for hire or reward, where the vehicle  is on the date of the contract of  insurance a  vehicle not covered by  a permit to ply for hire or reward, or

(ii)    a condition excluding driving by a named  person or persons or by any person who  is not duly  licensed, or by any person  who has been disqualified for holding or  obtaining a driving licence  during the  period of disqualification; or

(iii)   a condition excluding liability for injury  caused or contributed to by conditions of  war, civil war,  riot or civil commotion;

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or

(b)     that the policy is void on the ground that it  was obtained by the nondisclosure of a  material fact or by a  representation of fact  which was false in some material particular."

9.      Extent of liability of an insurance company in terms of the said  provision came up for consideration before this Court in a large number of  decisions.  We may notice some of these. In Dhanraj v. New India Assurance Co. Ltd. & Anr. [(2004) 8 SCC  553], this Court held : "In the case of Oriental Insurance Co. Ltd. v.  Sunita Rathi [(1998) 1 SCC 365] it has been held  that the liability of an insurance company is only  for the purpose of indemnifying the insured against  liabilities incurred towards a third person or in  respect of damages to property.  Thus, where the  insured i.e. an owner of the vehicle has no liability  to a third party the insurance company has no  liability also."

       In United India Insurance Co. Ltd., Shimla v. Tilak Singh & Ors.  [(2006)4 SCC 404], it was opined : "In our view, although the observations made in  Asha Rani case were in connection with carrying  passengers in a goods vehicle, the same would  apply with equal force to gratuitous passengers in  any other vehicle also.  Thus, we must uphold the  contention of the appellant Insurance Company  that it owed no liability towards the injuries  suffered by the deceased Rajinder Singh who was  a pillion rider, as the insurance policy was a  statutory policy, and hence it did not cover the risk  of death of or bodily injury to a gratuitous  passenger."

10.     This Court, inter alia, opined that in a case where the driver has no  licence to drive a particular category of motor vehicle, the insurance  company would not be liable.  [See National Insurance Company v. Swaran  Singh & Ors. [(2007) 3 SCC 297, para 84].  11.     We may also take notice of a few recent pronouncements of this  Court.   12.     In New Indian Insurance Company Ltd. v. Vedwati & Ors. [2007 (3)  SCALE 397], this Court held that passenger of a motor vehicle is not a third  party, stating : "The difference in the language of "goods vehicle"  as appear 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 expression "in  addition to passengers" as contained in definition  of "good vehicle" in the old Act. The position  becomes further clear because the expression used  is "good 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

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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".

11. 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  therefor."

       In Oriental Insuirance Co. Ltd. v. Smt. Jhuma Saha & Ors. [AIR 2007  SC 1054], it was held : "11. Liability of the insurer-company is to the  extent of indemnification of the insured against the  respondent or an injured person, a third person or  in respect of damages of property.  Thus, if the  insured cannot be fastened with any liability under  the provisions of Motor Vehicles Act, the question  of the insurer being liable to indemnify insured,  therefore, does not arise."

       {See also New India Assurance Co. Ltd. v. Asha Rani & Ors. [(2003)  2 SCC 428}.         In Oriental Insurance Co. Ltd. v. Meena Variyal & Ors. [(2007) 5  SCC 428], this Court held : "It is Section 147 that sets out the requirement of  policies and limits of liability. It is provided  therein that in order to comply with the  requirements of Chapter XI of the Act, a policy of  insurance must be a policy which is issued by an  authorised insurer; or which insures the person or  classes of persons specified in the policy to the  extent specified in Sub-section (2) against any  liability which may be incurred by the owner in  respect of the death of or bodily injury or damage  to any property of a third party caused by or  arising out of the use of the vehicle in a public  place. With effect from 14.11.1994, injury to the  owner of goods or his authorised representative  carried in the vehicle was also added. The policy  had to cover 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. Then, as per the proviso, the policy shall not  be required to cover liability in respect of the  death, arising out of and in the course of his  employment, of the employee of a person insured  by the policy or in respect of bodily injury  sustained by such an employee arising out of and  in the course of his employment, other than a  liability arising under the Workmen’s  Compensation Act, 1923 in respect of the death of,  or bodily injury to, an employee engaged in  driving the vehicle, or who is a conductor, if it is a  public service vehicle or an employee being  carried in a goods vehicle or to cover any  contractual liability. Sub-section (2) only sets

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down the limits of the policy. As we understand  Section 147(1) of the Act, an insurance policy  thereunder need not cover the liability in respect of  death or injury arising out of and in the course of  the employment of an employee of the person  insured by the policy, unless it be a liability arising  under the Workmen’s Compensation Act, 1923 in  respect of a driver, also the conductor, in the case  of a public service vehicle, and the one carried in  the vehicle as owner of the goods or his  representative, if it is a goods vehicle. It is  provided that the policy also shall not be required  to cover any contractual liability."

       Swaran Singh (supra) was also distinguished stating that therein the  vehicle involved having a third party risk stating : "17.    It is difficult to apply the ratio of this  decision to a case not involving a third party. The  whole protection provided by Chapter XI of the  Act is against third party risk. Therefore, in a case  where a person is not a third party within the  meaning of the Act, the insurance company cannot  be made automatically liable merely by resorting  to the Swaran Singh (supra) ratio. This appears to  be the position. This position was expounded  recently by this Court in National Insurance Co.  Ltd. v. Laxmi Narain Dhut [2007 (4) SCALE 36].  This Court after referring to Swaran Singh (supra)  and discussing the law summed up the position  thus:

In view of the above analysis the following  situations emerge:

1. The decision in Swaran Singh’s case (supra) has  no application to cases other than third party risks.

2. Where originally the licence was a fake one,  renewal cannot cure the inherent fatality.

3. In case of third party risks the insurer has to  indemnify the amount and if so advised, to recover  the same from the insured.

4. The concept of purposive interpretation has no  application to cases relatable to Section 149 of the  Act.

The High Courts/Commissions shall now consider  the mater afresh in the light of the position in law  as delineated above.

We are in respectful agreement with the above  view."

       Asha Rani (supra) was followed.         Yet again, in Oriental Insurance Co. Ltd. v. Brij Mohan & Ors. [2007  (7) SCALE 753], wherein one of us (S.B. Sinha, J.) was a member, this  Court noticed Asha Rani and other decisions.  Following the same, it was  stated : "10. Furthermore, respondent was not the owner of  the tractor. He was also not the driver thereof. He  was merely a passenger travelling on the trolley

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attached to the tractor. His claim petition,  therefore, could not have been allowed in view of  the decision of this Court in New India Assurance  Co. Ltd. v. Asha Rani and Ors. [(2003) 2 SCC  223] wherein the earlier decision of this Court in  New India Assurance Co. v. Satpal Singh [(2000)  1 SCC 237] was overruled. In Asha Rani (supra) it  was, inter alia, held: ’25. Section 147 of the 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 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 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.’ [See also National Insurance Co. Ltd. v. Bommithi  Subbhayamma and Ors. [(2005) 12 SCC 243];  United India Insurance Co. Ltd., Shimla v. Tilak  Singh and Ors. [(2006) 4 SCC 404]; Prem Kumar  & Ors. v. Prahlad Dev & Ors. [2008 (1) SCALE  531] and Oriental Insurance Co. Ltd. v. Prithvi Raj  [2008 (1) SCALE 727]"

       Having said so, we must take notice of the fact that the deceased  Baldev Singh was labourer. The Tribunal has found that besides being a  labourer, he also used to deal in Safeda wood.  He was the owner of the  ’Safeda’ wood which was being transported to the market for its sale.  The  first respondent, Darshana Devi, in her deposition, stated that the deceased  used to purchase wood from the State of Himachal Pradesh on contract  basis.  Only Gurdial Singh and Ravinder Singh  were accompanying him as  labourer.  His income was assessed only at Rs.2,400 per month. 13.     In this view of the matter, we are of the opinion that it is not a fit case  where this Court should exercise its discretionary jurisdiction under Article  136 of the Constitution of India.  Even in Brij Mohan (supra), this Court

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held : "13. However, respondent No. 1 is a poor labourer.  He had suffered grievous injuries. He had become  disabled to a great extent. The amount of  compensation awarded in his favour appears to be  on a lower side. In the aforementioned situation,  although we reject the other contentions of Ms.  Indu Malhotra, we are inclined to exercise our  extraordinary jurisdiction under Article 142 of the  Constitution of India so as to direct that the award  may be satisfied by the appellant but it would be  entitled to realize the same from the owner of the  tractor and the trolley wherefor it would not be  necessary for it to initiate any separate proceedings  for recovery of the amount as provided for under  the Motor Vehicles Act. 14. It is well settled that in a situation of this nature  this Court in exercise of its jurisdiction under  Article 142 of the Constitution of India read with  Article 136 thereof can issue suit directions for  doing complete justice to the parties."

14.     We, therefore, while dismissing the appeal would direct that for the  purpose of realization of dues, the insurance company need not file a  separate execution petition against the owner.  If an application is filed for  realization or recovery of dues before the Tribunal, the Tribunal shall take  appropriate steps in this behalf.  The appeal is disposed of accordingly.  No  costs.