New Indian Insurance Company Vs. Darshana Devi & Ors  Insc 182 (12 February 2008)
Sinha & V.S. Sirpurkar
APPEAL NO. 1232 OF 2008 (Arising out of SLP (C) No.15673 of 2004 S.B. Sinha, J.
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.
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.
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
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.
in its written statement, inter alia, raised the following contentions :
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.
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
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.
Tribunal in the said proceedings, inter alia, framed the following issues :
Whether the respondent No.1 was not having any valid driving licence at the
time of accident? OPR-2"
findings of fact arrived at by the Tribunal are as under :
Singh, Baldev Singh and Jagdev Singh son of Pannu were the owners of the
Ajay Kumar is son of Mahinder Singh, co-respondent.
The tractor used to be plied on hire.
At the relevant time, it was not being used for agricultural purposes for which
it was insured.
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.
Tribunal awarded a sum of Rs.2,04,000/- by way of compensation in favour of the
indicated hereinbefore, a Division Bench of the High Court dismissed the appeal
preferred by the insurance company summarily.
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.
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.
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
an owner of a motor vehicle is under a statutory obligation to get it
compulsorily insured, the defence of an insurance company is limited.
(2) of Section 149 of the Motor Vehicles Act, 1988 reads thus :
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:-
there has been a breach of a specified condition of the policy, being one of
the following conditions, namely:-
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
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
condition excluding liability for injury caused or contributed to by conditions
of war, civil war, riot or civil commotion;
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
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.
v. New India Assurance Co. Ltd. & Anr. [(2004) 8 SCC 553], this Court held
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."
United India Insurance Co. Ltd., Shimla v. Tilak Singh & Ors. [(2006)4 SCC
404], it was opined :
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."
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].
may also take notice of a few recent pronouncements of this Court.
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
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 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").
is no reference to any passenger in "goods carriage".
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."
Oriental Insuirance Co. Ltd. v. Smt. Jhuma Saha & Ors. [AIR 2007 SC 1054],
it was held :
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."
also New India Assurance Co. Ltd. v. Asha Rani & Ors. [(2003) 2 SCC 428}.
Oriental Insurance Co. Ltd. v. Meena Variyal & Ors. [(2007) 5 SCC 428],
this Court held :
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 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
Singh (supra) was also distinguished stating that therein the vehicle involved
having a third party risk stating :
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].
Court after referring to Swaran Singh (supra) and discussing the law summed up
the position thus:
view of the above analysis the following situations emerge:
decision in Swaran Singh's case (supra) has no application to cases other than
third party risks.
Where originally the licence was a fake one, renewal cannot cure the inherent
case of third party risks the insurer has to indemnify the amount and if so
advised, to recover the same from the insured.
concept of purposive interpretation has no application to cases relatable to
Section 149 of the Act.
High Courts/Commissions shall now consider the mater afresh in the light of the
position in law as delineated above.
in respectful agreement with the above view."
(supra) was followed.
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 :
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 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:
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
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.
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]"
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.
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 held :
However, respondent No. 1 is a poor labourer.
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.
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
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.