Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6
CASE NO.:
Appeal (civil) 6476 of 1998
PETITIONER:
National Insurance Co.
RESPONDENT:
Prembai Patel and others
DATE OF JUDGMENT: 18/04/2005
BENCH:
R.C. Lahoti, G.P. Mathur & A.K. Mathur
JUDGMENT:
J U D G M E N T
G.P. MATHUR, J.
1. The appellant insurance company has preferred this appeal, by
special leave, against the judgment and order dated 9.1.1998 of High
Court of Madhya Pradesh by which the appeal preferred by
respondent Nos. 3 to 6 (claimants) was allowed and the appellant
insurance company was directed to pay Rs.2,10,000/- along with
interest @ 12% per annum from the date of filing of the claim
petition, i.e., 21.4.1994 as compensation to them on account of death
of Sunder Singh in an accident.
2. The respondent No. 2, Chiman Patel, was owner of truck No.
CIL 5248 and the same was got insured by him with the appellant
National Insurance Company Ltd. for the period 18.1.1993 to
17.1.1994. The deceased Sunder Singh, aged about 35 years, was
employed by him as a driver of the truck on a salary of Rs,1,500/- per
month. The truck, while carrying a heavy load of firewood
overturned on 9.11.1993, resulting in death of its driver Sunder Singh.
Respondent Nos. 3 to 6, who are parents, widow and son of the
deceased Sunder Singh, then filed a claim petition under Section 166
of the Motor Vehicles Act, 1988 (hereinafter referred to as "the Act"),
claiming Rs.5,40,000/- as compensation. Their case was that the truck
was more than fifteen years old, had been poorly maintained and was
not in roadworthy condition. While Sunder Singh was driving the
truck its arm bolt broke down and on account of heavy load it got
overturned in which Sunder Singh was crushed and he died
instantaneously. The claim petition was contested by the owner of the
truck mainly on the ground that Sunder Singh was driving the truck
after consuming liquor and the accident took place on account of his
own fault. It was denied that the truck was not properly maintained or
that it was not in roadworthy condition or that it was overloaded. The
appellant insurance company also contested the claim petition taking
various pleas.
3. The Motor Accident Claims Tribunal, Bilaspur, after
appreciating the evidence on record, held that the deceased Sunder
Singh was himself responsible for the accident and accordingly
dismissed the claim petition. Feeling aggrieved, the claimants
preferred an appeal before the High Court under Section 173 of the
Act. The High Court held that it was fully established that the
accident took place due to the fact that the arm bolt of the truck broke
down and not on account of any negligence on the part of the driver of
the truck. Taking into consideration the age of the deceased and the
salary which he was drawing, an amount of Rs.2,10,000/- was
awarded as compensation. The claimants were also held entitled to
interest on the aforesaid amount @ 12% per annum from the date of
filing of the claim petition. It was further held that the insurance
company was liable to satisfy the whole award and consequently a
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6
direction was issued to the appellant to pay the entire amount of
compensation awarded to the claimants.
4. The judgment of the High Court has been challenged by the
appellant insurance company only on one ground, namely, that having
regard to the insurance policy taken by the owner of the vehicle and
provisions of Sections 147 and 149 of the Act, its liability is restricted
to that, which is provided under The Workmen’s Compensation Act,
1923 (hereinafter referred to as "the Workmen’s Act") and it is not
liable to satisfy the entire award made in favour of the claimants.
Learned counsel for the appellant has submitted that the owner, while
getting his vehicle insured, had paid only that much amount of
premium as was required to cover the liability under the Workmen’s
Act. He had not paid such premium so as to cover the entire amount
of liability qua an employee and, therefore, the liability of the
appellant would be a restricted one and it would not be to satisfy the
entire award made in favour of the claimants.
5. Learned counsel for the respondents has, on the other hand,
submitted that the truck was comprehensively insured and, therefore,
the insurance company is liable to satisfy the entire award made in
favour of the claimants and the view taken by the High Court is
perfectly correct.
6. A person, who has sustained injury or where death has resulted
from an accident all or any of the legal representatives of the deceased
can claim compensation by moving an application under Section 166
of the Act by filing a claim petition before the Motor Accident Claims
Tribunal. Section 3 of the Workmen’s Compensation Act lays down
that if personal injury is caused to a workman by accident arising out
of and in the course of his employment, his employer shall be liable to
pay compensation in accordance with the provisions of Chapter II of
the said Act. Section 167 of the Motor Vehicles Act, 1988 lays down
that notwithstanding anything contained in the Workmen’s
Compensation Act, 1923 where the death of, or bodily injury to, any
person gives rise to a claim for compensation under the Act and also
under the Workmen’s Act, the person entitled to compensation may
without prejudice to the provisions of Chapter X claim such
compensation under either of those Acts but not under both. The
claim petition had been filed by respondents 3 to 6 claiming
compensation for the death of Sunder Singh, who was an employee of
respondent No. 2, in an accident arising out of and in the course of his
employment. Therefore, they could claim compensation under either
of the Acts. But they chose the forum provided under the Motor
Vehicles Act. In a petition under the Workmen’s Act the injured or
the legal heirs of the deceased workmen have not to establish
negligence as a pre-condition for award of compensation. But the
claim petition before the Motor Accident Claim Tribunal is an action
in tort and the injured or the legal representatives of the deceased have
to establish by preponderance of evidence that there was no
negligence on the part of the injured or deceased and they were not
responsible for the accident. The exception to this general rule is
given in Section 140 of the Act where the legislature has specifically
made provisions for payment of compensation on the principle of no
fault liability.
7. The High Court, after a careful analysis of the evidence on
record, has held that the deceased Sunder Singh was not responsible
for the accident. The accident occurred on account of breaking of the
arm bolt of the truck and the owner of the vehicle had not taken
adequate care in maintaining the vehicle and in keeping the same in
roadworthy condition. This finding has not been assailed before us,
nor is there any reason to take a contrary view.
8. The main question which requires consideration in this appeal
is, whether the appellant insurance company is liable to pay the entire
amount of compensation awarded to the claimants or its liability is
restricted to that which is prescribed under the Workmen’s Act. In
this connection learned counsel for the appellant has drawn our
attention to the insurance policy, which had been taken by the owner
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6
for the concerned vehicle, and, especially to the following
endorsements made therein: -
1. Policy No.320801/31/ \026 A POLICY FOR ACT
92-93/21/01753 LIABILITY
2. PREMIUM (Act Liability) Rs.1245/-
3. Limitation as to use : For Act only Cover
At the end of the policy the following is written: -
"IMPORTANT NOTICE
The Insured is not indemnified if the Vehicle is used or
driven otherwise than in accordance with this Schedule.
Any payment made by the Company by reason of wider
terms appearing in the Certificate in order to comply with
the Motor Vehicle Act, 1988 is recoverable from the
insured. See the clause headed AVOIDANCE OF
CERTAIN TERMS AND RIGHT OF RECOVERY in
the policy.
NOTE: - This Schedule, the attached Policy and the
Endorsements mentioned here above shall be read
together and any word or expression to which a specific
meaning has been attached in any part of this Policy or
the Schedule shall bear the same meaning wherever it
may appear."
9. The learned counsel for the appellant has submitted that the
owner of the truck had got his vehicle insured by paying only that
much amount of premium which, so far as his employees were
concerned, covered the liability to the extent it is provided under the
Workmen’s Act. It has been submitted that the words "a policy for
Act Liability" or "Act Liability" clearly indicate that the liability of
the insurance company was not an unlimited one but that which was
mandatorily required under the Act so as to cover the liability under
the Workmen’s Act and no further. Learned counsel has further
submitted that in order to cover unlimited liability the owner has to
pay higher amount of premium and in such a case the words "a policy
for Act Liability" or "Act Liability" are not written. The insurance
policy being in the nature of a contract, the parties are bound by it
and, therefore, the appellant cannot be saddled with any extra liability
to pay the entire amount of compensation, which has been awarded to
the claimants.
10. The learned counsel for the respondents has, on the other hand,
submitted that having regard to the provisions of Sections 147 and
149 of the Act, the owner having got his vehicle insured, the insurance
company is liable to satisfy the entire award made in favour of the
claimants and there is no provision in law under which its liability
may be restricted or curtailed.
11. The contentions raised turn on the interpretation of sub-
Sections (1) of Sections 147 and 149 of the Act and the same are
being reproduced below: -
"147. Requirements of policies and limits of liability. \026
(1) In order to comply with the requirements of this
Chapter, a policy of insurance must be a policy which \026
(a) is issued by a person who is an authorized insurer;
and
(b) insures the person or classes of persons specified
in the policy to the extent specified in sub-section
(2) \026
(i) against any liability which may be incurred
by him 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;
(ii) against the death of or bodily injury to any
passenger of a public service vehicle caused
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6
by or arising out of the use of the vehicle in
a public place;
Provided that a policy shall not be required \026
(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),
in respect of the death of, or bodily injury to, any
such employee \026
(a) engage 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 \026 ................. (omitted as not relevant)
149. Duty of insurers to satisfy judgments and
awards against persons insured in respect of third
party risks. \026 (1) If, after a certificate of insurance has
been issued under sub-section (3) of Section 147 in
favour of the person by whom a policy has been effected,
judgment or award in respect of any 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) is obtained against any person
insured by the policy then, notwithstanding that the
insurer may be entitled to avoid or cancel or may have
avoided or cancelled the policy, the insurer shall, subject
to the provisions of this section, pay to the person entitled
to the benefit of the decree any sum not exceeding the
sum assured payable thereunder, as if he were the
judgment debtor, in respect of the liability, together with
any amount payable in respect of costs and any sum
payable in respect of interest on that sum by virtue of any
enactment relating to interest on judgments."
12. The heading of Chapter XI of the Act is Insurance Of Motor
Vehicles Against Third Party Risks and it contains Sections 145 to
164. Section 146(1) of the Act provides that no person shall use,
except as a passenger, or cause or allow any other person to use, a
motor vehicle in a public place, unless there is in force in relation to
the use of the vehicle by that person or that other person, as the case
may be, a policy of insurance complying with the requirements of
Chapter XI. Clause (b) of sub-section (1) of Section 147 provides that
a policy of insurance must be a policy 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 him in
respect of death of or bodily injury to any person or passenger or
damage to any property of a third party caused by or arising out of the
use of the vehicle in public place. Sub-clauses (i) and (ii) of clause
(b) are comprehensive in the sense that they cover both ’any person’
or ’passenger’. An employee of owner of the vehicle like a driver or a
conductor may also come within the purview of the words ’any
person’ occurring in sub-clause (i). However, the proviso (i) to clause
(b) of sub-Section (1) of Section 147 says that a policy shall not be
required to cover liability in respect of 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 Act if the employee is such as
described in sub-clauses (a) or (b) or (c). The effect of this proviso is
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6
that if an insurance policy covers the liability under the Workmen’s
Act in respect of death of or bodily injury to any such employee as is
described in sub-clauses (a) or (b) or (c) of proviso (i) to Section
147(1)(b), it will be a valid policy and would comply with the
requirements of Chapter XI of the Act. Section 149 of the Act
imposes a duty upon the insurer (insurance company) to satisfy
judgments and awards against persons insured in respect of third party
risks. The expression \026 "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)" \026 occurring in sub-
section (1) of Section 149 is important. It clearly shows that any such
liability, which is mandatorily required to be covered by a policy
under clause (b) of Section 147(1), has to be satisfied by the insurance
company. The effect of this provision is that an insurance policy,
which covers only the liability arising under the Workmen’s Act in
respect of death of or bodily injury to any such employee as described
in sub-clauses (a) or (b) or (c) to proviso (i) to Section 147(1)(b) of
the Act is perfectly valid and permissible under the Act. Therefore,
where any such policy has been taken by the owner of the vehicle, the
liability of the insurance company will be confined to that arising
under the Workmen’s Act.
13. The insurance policy being in the nature of a contract, it is
permissible for an owner to take such a policy whereunder the entire
liability in respect of the death of or bodily injury to any such
employee as is described in sub-clauses (a) or (b) or (c) of proviso (i)
to Section 147(1)(b) may be fastened upon the insurance company and
insurance company may become liable to satisfy the entire award.
However, for this purpose the owner must take a policy of that
particular kind for which he may be required to pay additional
premium and the policy must clearly show that the liability of the
insurance company in case of death of or bodily injury to the aforesaid
kind of employees is not restricted to that provided under the
Workmen’s Act and is either more or unlimited depending upon the
quantum of premium paid and the terms of the policy.
14. The aforesaid interpretation of the relevant provisions
applicable to the case in hand is in consonance with the view
expressed by a Constitution Bench in New India Assurance Co. Ltd.
vs. C.M. Jaya and others (2002) 2 SCC 278, where, while interpreting
the provisions of Section 95(2) of Motor Vehicles Act, 1939, the
Court held as under in para 10 of the report: -
"............................The liability could be statutory or
contractual. A statutory liability cannot be more than
what is required under the statute itself. However, there
is nothing in Section 95 of the Act prohibiting the parties
from contracting to create unlimited or higher liability to
cover wider risk. In such an event, the insurer is bound
by the terms of the contract as specified in the policy in
regard to unlimited or higher liability as the case may be.
In the absence of such a term or clause in the policy,
pursuant to the contract of insurance, a limited statutory
liability cannot be expanded to make it unlimited or
higher. If it is so done, it amounts to rewriting the statute
or the contract of insurance which is not permissible."
The Bench also referred to earlier decisions rendered in New India
Assurance Co. Ltd. vs. Shanti Bai (1995) 2 SCC 539 and Amrit Lal
Sood vs. Kaushalya Devi Thapar (1998) 3 SCC 744, and observed
that in case of an insurance policy not taking any higher liability by
accepting a higher premium, the liability of the insurance company is
neither unlimited nor higher than the statutory liability fixed under
Section 95(2) of the Motor Vehicles Act, 1939. It was further
observed that it is open to the insured to make payment of additional
higher premium and get higher risk covered in respect of third party
also. But in the absence of any such clause in the insurance policy,
the liability of the insurer cannot be unlimited in respect of third party
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6
and it is limited only to the statutory liability.
15. Though the aforesaid decision has been rendered on Section
95(2) of the Motor Vehicles Act, 1939 but the principle underlying
therein will be fully applicable here also. It is thus clear that in case
the owner of the vehicle wants the liability of the insurance company
in respect of death of or bodily injury to any such employee as is
described in clauses (a) or (b) or (c) of proviso (i) to Section 147(1)(b)
should not be restricted to that under the Workmen’s Act but should
be more or unlimited, he must take such a policy by making payment
of extra premium and the policy should also contain a clause to that
effect. However, where the policy mentions "a policy for Act
Liability" or "Act Liability", the liability of the insurance company
qua the employees as aforesaid would not be unlimited but would be
limited to that arising under the Workmen’s Act.
16. The High Court, in the impugned judgment, has held that if the
legal representatives of the deceased employee approach the Motor
Accident Claims Tribunal for payment of compensation to them by
moving a petition under Section 166 of the Act, the liability of the
insurance company is not limited to the extent provided under the
Workmen’s Act and on its basis directed the appellant insurance
company to pay the entire amount of compensation to the claimants.
As shown above, the insurance policy taken by the owner contained a
clause that it was a policy for "Act Liability" only. This being the
nature of policy the liability of the appellant would be restricted to
that arising under the Workmen’s Act. The judgment of the High
Court, therefore, needs to be modified accordingly.
17. The judgment of the High Court insofar as it relates to quantum
of compensation and interest, which is to be paid to the claimants
(respondent Nos. 3 to 6 herein) is affirmed. The liability of the
appellant insurance company to satisfy the award would be restricted
to that arising under the Workmen’s Act. The respondent Nos. 1 and
2 (owners of the vehicle) would be liable to satisfy the remaining
portion of the award.
18. The record shows that no stay order was passed in favour of the
appellant. In case the appellant insurance company has deposited the
entire amount awarded by the High Court with the Motor Accident
Claims Tribunal or has paid the said amount to the claimants, it will
be open to it to recover the amount, which exceeds its liability under
the Workmen’s Act, from the owner of the vehicle in accordance with
law.
19. The appeal is disposed of with the aforesaid modifications. No
costs.