Full Judgment Text
REPORTABLE
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
J U D G M E N T
S.B. SINHA, J.
1. Leave granted.
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2. This appeal is directed against a judgment and order dated 18
January, 2007 passed by a Division Bench of the High Court of Jharkhand
at Ranchi whereby and whereunder an appeal preferred by the appellant
herein under Section 173 of the Motor Vehicles Act, 1988 (for short ‘the
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Act’) from a judgment and award dated 26 March, 2004 passed by the
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District Judge-cum-Motor Vehicle Accident Claim Tribunal at Seraikella
was dismissed.
3. The 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
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9.9.1999 and 8.9.2000. On 8 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.
4. Appellant 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
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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 Vehicle Act.
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.”
5. In view of the aforementioned pleadings of the parties, issues were
framed in the following terms :-
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“1. Whether the claimants have any cause of
action or right to sue and the case is
maintainable and the deceased was a third
party?
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 rash &
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?”
6. The Tribunal did not enter into the question involved herein.
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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
applicants.”
Evidently, therefore, no decision was rendered on the said issue.
7. Before 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
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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-à-vis the
insurance company but there is no provision
in the Act wherein an insured may claim
himself compensation from himself”
8. The High Court has also not expressed its opinion on the said issue.
9. Mr. 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
10. Mr. 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
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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 with.
11. Provisions 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 stated therein.
12. Section 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.
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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:
“147. 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—
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( 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),
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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 contractual liability.
Explanation .—For the 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.”
13. The 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
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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.
14. It 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.
15. Contract 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
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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.
16. Only 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.
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17. Keeping 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.
18. We 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
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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 maintainable.
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 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
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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
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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-à-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.”
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19. Learned 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.
These decisions, clearly, are applicable to the fact of the present case.
20. In 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.
………………………J.
[ S.B. Sinha ]
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………………………J.
[ Cyriac Joseph ]
New Delhi
December 18, 2008
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