Report No. 149
3.9. We think that sub-clause (i) should also be amended to make it clear that the insurance policy also covers the no-fault liability of the owner or user of the vehicle under section 140 of the Act. We, accordingly, recommend the substitution of the following clause (b) in place of the existing clause (b) of section 147(1):
"(b) 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 him (including the one under section 140) in respect of the 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."
3.10. Clause (i) of the proviso to section 147 is also very ambiguous in its wording. The purport, apparently, is that insurance cover is not necessary in respect of liability on account of death or personal injury of the employees of the insured. This is apparently because such liability would be normally covered by the Workmen's Compensation Act, 1923 and it need not be covered by insurance. But the proviso reads as if it requires a policy to be taken specifically covering the liability under the said Act in respect of injury to the employee. Even assuming this, the language of the proviso can be improved upon. Secondly, it is not clear why the need for a policy is restricted only to the cases of employees who fall within one of the three descriptions.
(a) conductor or ticket examiner of a public service vehicle;
(b) the driver of the vehicle in all cases; and
(c) an employee who is a passenger on a goods vehicle.
There could be employees other than the driver, conductor or ticket examiner travelling in a private or public service vehicle in the course of their duties, the liability for injury to whom due to an accident to the vehicle may be covered by the 1923 Act. Thirdly, the language of the proviso is also very clumsy and repetitive, the words "arising out of and in the course of his employment" and "in respect of the death of or bodily injury to" being repeated over twice. If the only idea is that a policy of insurance need not extend, in the case of employees, beyond the cover provided by the 1923 Act, it could perhaps be expressed in much simpler words. The proviso needs to be recast in this regard.
3.11. The above drafting inadequacies apart, we are of the opinion that the first exception carved out by the section is totally uncalled for and gives rise to certain unintended anomalies. The extent of liability of a person injured or killed in a motor vehicles accident is determined by the Tribunals constituted under the Act on general principles for determination of damages for tortious liability. These principles envisage the assessment of damages with reference to the facts and circumstances of each individual case by taking into account several factors, such as the age of the victim, his earnings, his expectation of life at the time of the accident, the extent to which he was providing financial support to his kinsmen and so on.
Of late, the amount of compensation awarded by these Tribunals are generous, substantial and in tune with the economic conditions of the present day. On the other hand, the Workmen's Compensation Act (Act 8 of 1923) is an enactment framed at the beginning of the century and the scales of compensation provided by it in section 4 are inadequate and divorced from present day realities and values.1
If we examine the proviso keeping this essential difference in mind, it would be apparent that while the owner of a motor vehicle and his insurer will be liable to third parties who may be injured in an accident involving the vehicle to the fullest extent of the loss or injury caused to the victim, the liability, where the victim happens to be an employee of the owner, will be restricted to the limited extent specified in the Workmen's Compensation Act, 1923.2 It could not have been the intention of the legislature to create such a wide disparity.
This may perhaps even amount to discrimination violative of the Constitution. It is, however, sufficient to say that this limitation on the extent of compulsory insurance qua workmen to the extent of the liability under the 1923 Act and its restricted application only to the categories of employees specified in the proviso, cannot be justified.
1. Indeed, even without this provision, it could well be contended that the owner, as employer, cannot be called upon to pay higher compensation than the amounts specified in the 1923 Act and that the insurer's liability, being one of an indemnifier, cannot be higher.
2. He cannot obviously claim both reliefs. This is made clear by section 167 of the Motor Vehicles Act, 1988.
3.12. Secondly, the proviso also leads to another, perhaps unintended, consequence. It implies that an employee injured in a motor accident may, in certain cases, be entitled to make a claim for relief under the 1923 Act. If he does so, the employer, to meet the liability, should protect himself by taking out a policy of insurance which is compulsory under this section to cover such liability. But such an employee has also the alternative remedy of claiming compensation under this Act and, if he exercises the option,1 the liability of the employer would arise under this Act and not under the 1923 Act.
Presumably, therefore, the compulsory insurance cover under the proviso will not cover the case. The employee has, therefore, to decide not only as to which of the two remedies will fetch him higher compensation, but also to take a decision as to whether it will be worthwhile to opt for the, perhaps higher, relief he may get under this Act at the risk of losing the insurance protection otherwise available to him. This is by no means an easy choice for an illiterate or semi-literate workman and the enforcement of such a difficult option will not advance the cause of justice.
1. In such cases, the 1923 Act will not apply; see section 53 of the 1948 Act.
3.13. Thirdly, the proviso ignores the impact of the provisions of the Employees' State Insurance Act (Act 34 of 1948), which may be attracted in some of these cases. The proviso does not define the extent of the insurance cover necessary in those cases. Logically, the proviso should have been amended to make it clear that no insurance cover would be necessary in cases which get insurance protection under the 1948 Act.
3.14. In this situation, there are two possible courses that can be adopted. One would be to exclude compulsory insurance cover against any liability towards employees, leaving the employees to agitate their claims against the employer in other fora available to them - under other enactments or by way of suit - and leaving the employer-owner an option to take out such insurance cover in respect of death or injury to an employee as he may consider advisable.
The other alternative would be to do away the exclusion, provided in the statute, of the need to provide compulsory insurance against liability to employees (save in respect of certain categories) and put all employees in the same position as other persons who might be killed or injured in a motor vehicles accident. In our opinion, the second course is preferable as there is no justification to distinguish between employees and other persons in the matter of compensation for death or injury caused due to motor accident.
3.15. For these reasons, we are of the opinion that the aforesaid part of the proviso has outlived its usefulness and lost its rationale and should be omitted. It is, therefore, recommended that the proviso should be amended to read thus:
"Provided that a policy referred to in this sub-section shall not be required to cover any contractual liability."
3.16. As already discussed, the statute had originally provided several limitations on the scope of the compulsory insurance cover. Fortunately, all those limitations have since been removed and it is now provided that, in the case of death or injury to any person, the insurance should cover the entire extent of actual liability Isection 147(2)(a)]. However, in respect of damage to, or loss of, property, the compulsory insurance cover is limited to Rs. 6,000 under section 147(2)(b).
3.17. We are of the opinion that the restriction of amount under clause (b) requires to be amended altogether. Apart from the fact that the amount specified in the clause is insignificant in the context of the steep rise in the value of goods carried by motor vehicles or likely to be damaged in a motor accident, we think that the insured should be required to be covered for his full liability even in respect of damage to the property of a third party; there is no logic or principle on the basis of which a partial cover can be stipulated. This is particularly so in view of the revolutionary changes that have taken place in the realm of transport in recent years.
The size of the vehicles that ply on public roads, the speed with which these are driven, the weight of the cargo that is carried on lorries and other vehicles and the nature of the goods transported by motor vehicles have undergone such transformation that the impact of any accident caused by the vehicle is far-reaching and can affect property of high value. In the distant past, an accident arising out of the use of the vehicle in a public place caused damage to third persons and to some property carried on the vehicle which was usually not of considerable value.
But accounts of recent accidents show that motor vehicles accidents can inflict heavy losses to properties of third persons. In the first place, the value of the goods or property of third persons carried on the vehicle has gone up considerably and not always covered by insurance. That apart, it is easy to conceive of incalculable damage caused to property of third parties as a result of an accident. A car, bus or truck may sometimes go out of control and plow down property belonging to third persons. An accident to a truck carrying inflammable substances can very well result in an explosion with far-reaching impact on, and extensive damage to, the property of third parties.
A huge lorry carrying a gigantic tonnage of goods, while overturning as a result of an accident, may crush beneath its weight not only human beings but even valuable property of others. Having regard to all these considerations, we think that the amount of insurance in such cases, as in clause (a), should cover the entire liability of the insured towards third parties in respect of any damage caused to their property by the use of the vehicle in a public place. We, therefore, suggest that the existing section 147(2) may be substituted by the following provision:
"Section 147(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1) shall cover any liability incurred in respect of any accident upto the full amount of the liability incurred by the insured in respect of the 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".
The proviso to section 147(2) will, however, continue in its present form.