TMI Blog2007 (4) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... pensation to the tune of ₹ 15 lakhs. According to the claim, the deceased was driving along with his companion Mahmood Hasan after completing his work for the employer. At about 11.30 pm the car collided with a tree due to the rash and negligent driving of the driver. The car was being driven by Mahmood Hasan at the time of the accident. The deceased was an occupant of the car. The car was being used for the business and for the benefit of the employer of the deceased at the time of the accident. The deceased was earning ₹ 9,000/- per month. He had a bright career ahead. Mahmood Hasan had lodged a first information report the same day (reiterated in the counter affidavit filed in this Court) giving wrong facts to escape from any prosecution. It was not specified in the application as to what was the wrong fact or what were the wrong facts mentioned in the complaint filed by Mahmood Hasan. The claimants as dependants were entitled to compensation as claimed. 2. The claim was filed against the employer, the owner of the motor vehicle and against the insurance company. Mahmood Hasan, who was allegedly driving the car and that too negligently, at the time of the accide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when he drove the car. Purporting to accept the interested, unsupported version of P.W. 1 that the income of her husband was ₹ 9,000/- per month, the Tribunal calculated the dependency at ₹ 6,000/- per month and applying the multiplier of 10, arrived at the compensation payable as ₹ 7,20,000/-. The Tribunal held that the claimants were entitled to receive the amount from the owner of the vehicle, the employer, but the insurance company was not liable, since the vehicle was being driven by the deceased himself who was an employee of the owner of the car and the policy of insurance did not cover such an employee. Thus, the claim was ordered directing the owner of the car to pay the claimant a sum of ₹ 7,20,000/- with interest thereon. 5. The claimants filed an appeal before the High Court. The insurance company, which had been exonerated by the Tribunal, alone resisted the appeal. The owner of the vehicle kept away. The claimants, the appellants before the High Court, contended that the Tribunal was in error in finding that the insurance company was not liable and in not granting them a decree against the insurance company. The insurance company pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other, without appreciating the facts in a given case, in the light of the law, if any, declared by this court, does not lead a court or Tribunal to a correct conclusion in the normal course. 8. On behalf of the insurance company, the appellant, it is contended that the policy was only one in terms of the Motor Vehicles Act, 1988 and the policy did not cover the employee of the owner, the insured, who was driving the vehicle while attending to the business of the employer company. The deceased was not a third party in terms of the policy or in terms of the Act. The Act did not provide for statutory coverage of such a person. This would be the position even if the deceased was only travelling in the car in his capacity as a Regional Manager of the owner \026 Company and the vehicle was being driven by Mahmood Hasan as claimed. Since the High Court has not interfered with the finding of the Tribunal that the deceased was himself driving the car at the time of the accident and that he did not have a valid licence to drive a vehicle, there was absolutely no question of the insurance company being made liable under any principle of law. It was also submitted that without imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation. It may also be true that subject to the rules made in that behalf, the Tribunal may follow a summary procedure in dealing with a claim. That does not mean that a Tribunal approached with a claim for compensation under the Act should ignore all basic principles of law in determining the claim for compensation. Ordinarily, a contract of insurance is a contract of indemnity. When a car belonging to an owner is insured with the insurance company and it is being driven by a driver employed by the insured, when it meets with an accident, the primary liability under law for payment of compensation is that of the driver. Once the driver is liable, the owner of the vehicle becomes vicariously liable for payment of compensation. It is this vicarious liability of the owner that is indemnified by the insurance company. A third party for whose benefit the insurance is taken, is therefore entitled to show, when he moves under Section 166 of the Motor Vehicles Act, that the driver was negligent in driving the vehicle resulting in the accident; that the owner was vicariously liable and that the insurance company was bound to indemnify the owner and consequently, satisfy the award m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was liable, there will be no occasion to further consider these aspects since the owner has acquiesced in the award passed by the Tribunal against it. 10. Chapter XI of the Act bears a heading, Insurance of Motor Vehicles against third party risks . The definition of third party is an inclusive one since Section 145(g) only indicates that third party includes the Government. It is Section 146 that makes it obligatory for an insurance to be taken out before a motor vehicle could be used on the road. The heading of that Section itself is Necessity for insurance against third party risk . No doubt, the marginal heading may not be conclusive. It 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 aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (h) 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. 11. 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 difficulty to hold that the insurance company, in the case on hand, was liable to indemnify the owner, the employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurer. Mere absence of or production of fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third party. The insurance company to avoid liability, must not only establish the available defence raised in the concerned proceeding but must also establish breach on the part of the owner of the vehicle for which the burden of proof would rest with the insurance company. Whether such a burden had been discharged, would depend upon the facts and circumstances of each case. Even when the insurer, is able to prove breach on the part of the insured concerning a policy condition, the insurer would not be allowed to avoid its liability towards the insured unless the said breach of condition is so fundamental as to be found to have contributed to the cause of the accident. The question whether the owner has taken reasonable care to find out whether the driving licence produced by the driver was fake or not, will have to be determined in each case. If the vehicle at the time of the accident was driven by a person having a learner s licence, the insurance c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. This Court held: 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 did 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. In other words, this Court clearly held that the apparently wide words any person are qualified by the setting in which they occur and that any person is to be understood as a third party. 16. In United India Insurance Co. Ltd., Shimla Vs. Tilak Singh Ors. [(2006) 4 S.C.C. 404 ], this Court made a survey of the prior decisions and discountenanced an attempt to confine the ratio of Asha Rani (supra). This Court stated that although the observations in Asha Rani were in connection with carrying passengers in a goods vehicle, the same would apply with equal force also to gratuitous passengers in any other vehicle. This Court also noticed that the decision to the contrary in New India Assurance Co. Vs. Satpal Singh [(20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd party, who suffers injuries due to the use of the motor vehicle, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who had caused the injuries. Thus, any contract of insurance under Chapter XI of the Motor Vehicles Act, 1988 contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. That this was the object was reiterated in New India Assurance Co. Shimla Vs. Kamla Ors. [(2001) 4 S.C.C. 342], wherein it was stated that the raison d etre for the legislature making it prohibitory for motor vehicles being used in public places without covering third-party risks by a policy of insurance is to protect the members of the community who become sufferers on account of accidents arising from the use of motor vehicles. The object of Chapter XI has thus always been recognised as one intended to protect third parties as understood in the context of the Act unless of course there is a special contract in respect of protection to others. 20. We are thus satisfied that based on the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of public good has misled it into adopting a course which is nothing short of legislation. Their Lordships also noticed that proof of negligence remained the lynch pin to recover compensation. Their Lordships concluded by saying, We conclude by stating that the view of the learned Judges of the High Court has no support in law and hold that proof of negligence is necessary before the owner or the insurance company could be held to be liable for the payment of compensation in a motor accident claim case. 23. Learned counsel for the respondent contended that there was no obligation on the claimant to prove negligence on the part of the driver. Learned counsel relied on Gujarat State Road Transport Corporation, Ahmedabad vs. Ramanbhai Prabhatbhai and another (1987 (3) SCC 234) in support. In that decision, this Court clarified that the observations in Minu B. Mehta s case (supra) are in the nature of obiter dicta. But, this Court only proceeded to notice that departures had been made from the law of strict liability and the Fatal Accidents Act by introduction of Chapter VIIA of the 1939 Act and the introduction of Section 92A providing for compensation and the expansion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other law for the time being in force that the owner of a motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of the motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be, and in a claim made under sub-section (1) of Section 163A of the Act, the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle concerned. Therefore, the victim of an accident or his dependants have an option either to proceed under Section 166 of the Act or under Section 163A of the Act. Once they approach the Tribunal under Section 166 of the Act, they have necessarily to take upon themselves the burden of establishing the negligence of the driver or owner of the vehicle concerned. But if they proceed under Section 163A of the Act, the compensation will be awarded in terms of the Schedule without calling upon the victim or his dependants to establish any negligence or default on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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