New India Assurance
Co. Ltd. Vs. Sadanand Mukhi & Ors.  INSC 2225 (18 December 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELALTE JURISDICTION CIVIL APPEAL NO. 7402 OF 2008 ( Arising
out of SLP (C) No. 23953 of 2007 ) New India Assurance Company Ltd. ....
Appellant Versus Sadanand Mukhi and others .... Respondents
S.B. SINHA, J.
appeal is directed against a judgment and order dated 18th January, 2007 passed
by a Division Bench of the High Court of Jharkhand at Ranchi whereby and where under
an appeal preferred by the appellant herein under Section 173 of the Motor
Vehicles Act, 1988 (for short `the Act') from a judgment and award dated 26th
March, 2004 passed by the District Judge-cum-Motor Vehicle Accident Claim
Tribunal at Seraikella was dismissed.
admitted fact of the mater is as under :- First respondent was owner of a motor
cycle. He got the said vehicle insured with the appellant company; the policy
being valid for the period 9.9.1999 and 8.9.2000. On 8th September, 2000 Tasu
Mukhi, son of the insured, while driving the motor cycle met with an accident
and died. The accident allegedly took place as a stray dog came in front of the
vehicle. A First Information Report was also lodged. Respondents herein filed a
claim petition. Amongst them, first respondent, who is the owner of the insured
vehicle, was the applicant.
herein raised a specific contention that keeping in view the relationship
between the deceased and the owner of the motor vehicle i.e. father and son, he
was not a third party, stating :- "5. That section 165 M.V. Act clearly
postulates that the insurer is liable to indemnify the risk of the Third party.
During the motor vehicle accident and the policy also speaks that in the case
of rash and negligent driving the insurer is liable to indemnify the owner.
Here in this case 2 the driver of the vehicle is admittedly not a third party
and as such the Tribunal has no jurisdiction to pass any order under the Motor
6. That so far the
negligence of the driver of the Motor cycle is concerned the claimants must
establish affirmatively and unless it is proved the Claim Tribunal cannot pass
any order of compensation under the Motor Vehicle Act, 1988.
7. That it is further
submitted that the claimants had failed to plead in their claim petition about
the negligence which resulted the accident.
On the other hand,
the circumstances speak that it was the deceased himself who was driving the
motor vehicle in uncontrollable speed and in rash and negligent manner which
cause accident as a result of which he and the pillion rider fell down and
deceased died. Therefore, in absence of negligence on the part of the owner of
the vehicle the Claimants cannot seek compensation on the basis of the
provisions of the Act.
8. That the act
suggests that the deceased not being a third party himself caused the accident
and out of such act the loss allegedly occurred to him is not supposed to be a
person coming within the scope, ambit and provisions of either section 165 (1)
of section (1) of the Motor Vehicles Act, 1988."
view of the aforementioned pleadings of the parties, issues were framed in the
following terms :- 3 "1. Whether the claimants have any cause of action
or right to sue and the case is maintainable and the deceased was a third
2. Whether the
accident took place due to rash and negligent driving of the vehicle Yamaha
Motor Cycle No.BR-16B-6002 by the driver? 3. Whether the deceased was himself
negligent in driving
the vehicle and was responsible for the accident and whether the deceased died
due to motor vehicle accident?
4. Whether the owner
have violated the terms and conditions of the vehicle for which the vehicle has
been insured under the Insurer, The New India Assurance Co. Ltd. ?
5. Whether the
claimants are entitled to receive the compensation amount and if so what should
be the quantum of compensation?
6. Whether the
insurer of the vehicle is liable to indemnify the insured owner of the vehicle?
7. Whether the
claimants are entitled to get any relief or reliefs as claimed by them?"
Tribunal did not enter into the question involved herein.
4 However, while
determining issue Nos.2 and 3 it was held :- "So the evidence led on
behalf of claimant is practically ex-parte in nature and it goes to show that
the deceased died in connection with a vehicular accident. In other words, he
died out of the use of a vehicle. Both the issues are decided in this way in favour
of the claimants.
On issue Nos. 1 and 7
it was opined :- "Issue Nos. 1 and 7 : On the basis of the discussions
made above, it follows that the claimants application is maintainable and the
applicants are entitled to receive compensation from the O.P. No.1 as indicated
above. Both the issues are accordingly decided in favour of the
no decision was rendered on the said issue.
the High Court appellant raised specific contentions in its Memorandum of
Appeal, which are as under:- "C. For that the learned Court below ought to
have considered that as in the present case the deceased was not third party
rather he was the son of the insured at the relevant time of accident who was
driving the vehicle rashly and negligently, the insured 5 cannot claim
compensation until and unless negligence on the part of the insured is
established and proved.
D. For that the
learned Court ought to have considered that Motor Vehicle Act provides
provisions for compensation for the death of the third party from the insured
vis-`-vis the insurance company but there is no provision in the Act wherein an
insured may claim himself compensation from himself"
High Court has also not expressed its opinion on the said issue.
Pradeep Kumar Bakshi, learned counsel appearing on behalf of the appellant
would submit that having regard to the provisions contained in Sections 146,
147 and 149 (2) of the Act, for the death of the son of the insured, it could
not have been held to be liable
Arup Banerjee, learned counsel appearing on behalf of the respondents, on the
other hand, would contend that the legislative policy underlining compulsory
insurance of a motor vehicle was thought of in view of the fact that life being
uncertain, the same was required to be covered.
Learned counsel would
contend that it cannot be held to exclude a rider, although son of the owner, and,
thus, he would be a third party in relation to the insurance company. According
to the learned counsel, it would be wholly unfair to exclude a driver using the
vehicle as on his death his family suffers.
Mr. Banerjee would
contend that, indisputably, use of a motor vehicle is hazardous in nature and
thus there cannot be any reason whatsoever to hold that the provisions
containing compulsory insurance would be held to have excluded the driver.
According to learned counsel the matter might have been different if the
accident had occurred due to rash and negligent driving on the part of the
driver and in a case of this nature, where the accident had occurred, which was
beyond anybody's control, the High Court judgment should not be interfered
relating to grant of compensation occurring in Chapter XI and XII of the Act
have been enacted by the Parliament in order to achieve the purpose and object
146 of the Act lays down the requirements for insurance against third party
risk. Where a third party risk is involved, an insurance policy is required to
be mandatorily taken out.
7 The requirements
of policies and the limits of liability, however, have been stated in Section
147 of the Act. Section 147(1)(b) of the Act, reads as under:
Requirements of policies and limits of liability.--(1) In order to comply with
the requirements of this Chapter, a policy of insurance must be a policy
which-- * * * (b) insures the person or classes of persons specified in the
policy to the extent specified in sub-section (2)-- (i) against any liability
which may be incurred by him in respect of the death of or bodily injury to any
person, including owner of the goods or his authorised representative carried
in the vehicle or damage to any property of a third party caused by or arising
out of the use of the vehicle in a public place;
(ii) 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:
Provided that a
policy shall not be required-- (i) 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 (8 of 1923), 8 in
respect of the death of, or bodily injury to, any such employee-- (a) engaged
in driving the vehicle, or (b) if it is a public service vehicle engaged as a
conductor of the vehicle or in examining tickets on the vehicle, or (c) if it
is a goods carriage, being carried in the vehicle, or (ii) to cover any
removal of doubts, it is hereby declared that the death of or bodily injury to
any person or damage to any property of a third party shall be deemed to have
been caused by or to have arisen out of, the use of a vehicle in a public place
notwithstanding that the person who is dead or injured or the property which is
damaged was not in a public place at the time of the accident, if the act or
omission which led to the accident occurred in a public place."
provisions of the Act, therefore, provide for two types of insurance - one
statutory in nature and the other contractual in nature.
Whereas the insurance
company is bound to compensate the owner or the driver of the motor vehicle in
case any person dies or suffers injury as a result of an accident; in case involving
owner of the vehicle or others are proposed to be covered, an additional
premium is required to be paid for covering their life and property.
is not a case where even Section 163-A of the Act was resorted to.
Respondents filed an
application under Section 166 of the Act. Only an act policy was taken in
respect of the motor vehicle. Submission of the learned counsel that being a
two wheelers, the vehicle was more prone to accident and, therefore, whosoever
becomes victim of an accident arising out of the use thereof would come within
the purview of the term "a person" as provided for in Section 147 of
the Act, in our opinion, is not correct.
of insurance of a motor vehicle is governed by the provisions of the Insurance
Act. The terms of the policy as also the quantum of the premium payable for
insuring the vehicle in question depends not only upon the carrying capacity of
the vehicle but also on the purpose for which the same was being used and the
extent of the risk covered thereby. By taking an `act policy', the owner of a
vehicle fulfils his statutory obligation as contained in Section 147 of the
Act. The liability of the insurer is either statutory or contractual. If it is
contractual its liability extends to the risk covered by the policy of
insurance. If additional risks are sought to be covered, additional premium has
to be paid. If the contention of the learned counsel is to be accepted, then to
a large extent, the provisions of the Insurance Act become otiose. By reason of
such an interpretation the insurer would be liable to cover risk of not only a
third party but also others who would not otherwise come within the purview
thereof. It is one thing to say that the life is uncertain and the same is
required to be covered, but it is another thing to say that we must read a
statute so as to grant relief to a person not contemplated by the Act. It is
not for the court, unless a statute is found to be unconstitutional, to
consider the rationality thereof. Even otherwise the provisions of the Act read
with the provisions of the Insurance Act appear to be wholly rational.
because driving of a motor vehicle may cause accident involving loss of life
and property not only of a third party but also the owner of the vehicle and
the insured vehicle itself, different provisions have been made in the
Insurance Act as also the Act laying down different types of insurance
policies. The amount of premium required to be paid for each of the policy is
governed by the Insurance Act. A statutory regulatory authority fixes the norms
and the guidelines.
in view the aforementioned Parliamentary object, let us consider the fact of
the present case so as to consider as to whether the insurer is liable to pay
the amount of compensation in relation to the accident occurred by use of the
vehicle which was being driven by the son of the insured.
may, for the said purpose, notice certain decisions covering different
categories of the claims.
In United India
Insurance Co. Ltd. v. Tilak Singh, [ (2006) 4 SCC 404 ] this Court considered
the provisions of the Motor Vehicles Act, 1939 as also 1988 Act and inter alia
opined that the insurance company would have no liability towards the injuries
suffered by the deceased who was a pillion rider, as the insurance policy was a
statutory policy which did not cover the gratuitous passenger.
In Oriental Insurance
Co. Ltd. v. Jhuma Saha, [ (2007) 9 SCC 263 ], it was held :- "10. The
deceased was the owner of the vehicle.
For the reasons
stated in the claim petition or otherwise, he himself was to be blamed for the
accident. The accident did not involve motor 12 vehicle other than the one
which he was driving.
The question which
arises for consideration is that the deceased himself being negligent, the
claim petition under Section 166 of the Motor Vehicles Act, 1988 would be
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 the Motor Vehicles Act, the question of the insurer being liable
to indemnify the insured, therefore, does not arise."
It was furthermore
held :- "13. The additional premium was not paid in respect of the entire
risk of death or bodily injury of the owner of the vehicle. If that be so,
Section 147(b) of the Motor Vehicles Act which in no uncertain terms covers a
risk of a third party only would be attracted in the present case."
The matter came up
for consideration yet again in Oriental Insurance Co. Ltd. v. Meena Variyal
[(2007) 5 SCC 428] wherein it was observed :- "13. As we understand
Section 147(1) of the Act, an insurance policy there under 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. Uninfluenced by authorities, we find no
difficulty in understanding this provision as one providing that the policy
must insure an owner against any liability to a third party caused by or
arising out of the use of the vehicle in a public place, and against death or
bodily injury to any passenger of a public service vehicle caused by or arising
out of the use of vehicle in a public place.
The proviso clarifies
that the policy shall not be required to cover an employee of the insured in
respect of bodily injury or death arising out of and in the course of his
employment. Then, an exception is provided to the last foregoing to the effect
that the policy must cover a liability arising under the Workmen's Compensation
Act, 1923 in respect of the death or bodily injury to an employee who is
engaged in driving the vehicle or who serves as a conductor in a public service
vehicle or an employee who travels in the vehicle of the employer carrying
goods if it is a goods carriage. Section 149(1), which casts an obligation on
an insurer to satisfy an award, also speaks only of award in respect of such
liability as is required to be covered by a policy under clause (b) of sub-
section (1) of Section 147 (being a liability covered by the terms of the
policy). This provision cannot therefore be used to enlarge the liability if it
does not exist in terms of Section 147 of the Act.
14. The object of the
insistence on insurance under Chapter XI of the Act thus seems to be to
compulsorily cover the liability relating to their person or properties of
third parties and in respect of employees of the insured employer, the
liability that may arise under the Workmen's Compensation Act, 1923 in respect
of the driver, the conductor and the one carried in a goods vehicle carrying
goods. On this plain understanding of Section 147, we find it difficult to hold
that the Insurance Company, in the case on hand, was liable to indemnify the
owner, the employer Company, the insured, in respect of the death of one of its
employees, who according to the claim, was not the driver. Be it noted that the
liability is not one arising under the Workmen's Compensation Act, 1923 and it
is doubtful, on the case put forward by the claimant, whether the deceased
could be understood as a workman coming within the Workmen's Compensation Act,
1923. Therefore, on a plain reading of Section 147 of the Act, it appears to be
clear that the Insurance Company is not liable to indemnify the insured in the
case on hand."
The said principle
was reiterated in United India Insurance Co. Ltd. v. Davinder Singh, [ (2007) 8
SCC 698 ] holding :- "10. It is, thus, axiomatic that whereas an insurance
company may be held to be liable to indemnify the owner for the purpose of
meeting the object and purport of the provisions of the Motor Vehicles Act, the
same may not be necessary in a case where an insurance company may refuse to
compensate the owner of the vehicle towards his own loss. A distinction must be
borne in mind as regards the statutory liability of the insurer vis-`-vis the
purport and object sought to be achieved by a beneficent legislation before a
forum constituted under the Motor Vehicles Act and enforcement of a contract
qua contract before a Consumer Forum."
counsel for the respondents would contend that the object and purport of the
Act being to cover the risk to life of any person, the said decision should be
applied in this case also. We do not think that it would be a correct reading
of the said judgment as therein National Insurance Co.
Ltd. v. Laxmi Narain
Dhut, [ (2007) 3 SCC 700 ] has been followed. In Laxmi Narain Dhut (supra) a
distinction between a statutory policy and a contractual policy has clearly
been made out.
clearly, are applicable to the fact of the present case.
view of the aforementioned authoritative pronouncements, we have no hesitation
of hold that the insurance company was not liable. The impugned judgment,
therefore, cannot be sustained. It is set aside accordingly. The appeal is
allowed. No costs.
[ S.B. Sinha ]