In the Gujarat High Court AIR 1993 Guj 171 Appellant National Insurance Co. Ltd. Respondent Kamlaben Sultansinh Jadav & ors. Date of Judgement 26th April, 1993 Bench Hon’ble Justice M Shah, Hon’ble Justice C Jani, Hon’ble Justice A Divecha
Sultan Singh, who passed away on January 8, 1976, his legal heirs were compensated by the Motor Accident Claims Tribunal. But this was challenged by the insurance company and appeal was made as the company claimed it is not liable to indemnify the insured. Also the interpretation of the term “goods vehicle” was examined crucially in this case.
Statutes & provisions involved:
- Workmen’s Compensation Act, 1923
- Sections 2(8), 2(25), 42, 92, 94, 95, 95(1), 95(2), 95(4), 96, 96(2), 108, 110B and 123 of the Motor Vehicles Act, 1939
- Sections 140 and 168 of the Motor Vehicle Amendment Act, 1988
- Rule 118 of the Bombay Motor Vehicles Rules, 1959
- Articles 14 and 300A of the Constitution of India, 1950
The compensation amount of Rs. 53,400/- on April 3, 1978, has awarded by the Motor Accident Claims Tribunal, Baroda, to the heirs of the deceased Sultan Singh who died on January 8, 1976. Insurance Company filed its first appeal thereby challenging the order.
The Insurance Company is not liable to indemnify the insured or, in any case, its liability under the statutory insurance coverage is limited. Even when a person is traveling by a “goods vehicle” by paying the fare, then also the insurance company won’t be liable; contended by the insurance company. After hearing the learned advocates for the parties to determine the matter the division bench of the court referred this matter to a larger bench.
- In respect of the death of or bodily injury to the passengers carried for hire or reward in a truck what would be the extent of liability of the insurer?
- Among the clause (a), (b), and (c) of Section 95(2) of Motor Vehicles Act which will be applied?
The Insurance Company is not liable to indemnify the insured or, in any case, its liability under the statutory insurance coverage is limited. Even when a person is traveling by a “goods vehicle” by paying the fare, then also the insurance company won’t be liable; contended by the insurance company.
It was contended by the respondent side that a policy of insurance must be a policy which insures persons or classes of persons against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person from a mishap arising out of the use of the vehicle in a public place as per the section 95(1)(b)(i) of the said act. But there is one exception that it won’t be liable in respect of the death of or bodily injury to the employee of a person insured. A policy is required to cover the liability arising out of the use of the vehicle in which passengers are carried for hire or reward because of or in pursuance of the contract of employment. It was also contended that in the said policy the legislature did not expressly use the term public service vehicle rather the term vehicle is used.
It was held that for the purpose of insurance coverage or the extent of liability of the insurance company, it would be as provided under Section 95(2)(a). Section 95(2)(a) provides that the policy of insurance shall cover any liability incurred in respect of any one accident up to 50,000/-. Insurance coverage is on the classification of the vehicles, that is, (a) goods vehicles, (b) vehicles in which passengers are carried and (c) vehicles other than goods vehicles or passenger vehicles.
The insurance policy, all in all, covers any one accident and would be liable to pay up to 50,000/- of compensation as the sub-section (2) of Section 95, inter alia, provides that. Section 96(2)(c) lays the provision that where the vehicle is of any other class the amount of liability is sustained. Here the clause (1), (2), (3) of section 95(2)(b) is not attracted, and therefore clause (4) is also not attracted which is interconnected to the above said three clauses. As a result clause (c) which provides no limits for liability will sustain. The extent of coverage insurance is covered by section 95 and the extent of coverage of insurance for goods vehicles is covered by clause (a) of section 95(2).
But ex facie clause (a) won’t be applied as it is only confined to the passengers other than the persons carried for hire or reward. It is not anymore necessary for awarding lump-sum payment to secure the interest of the dependants. Monthly payments can be paid through nationalized bank accounts. In consequence, it will reduce the burden on both parties. From the interest of the lump sum alone, only Rs.250/- will be paid monthly and the payment will be restricted only for the period of dependency.
The rule of purposive construction was applied. The insurer cannot escape from the obligation to indemnify the insured who in turn is required to pay compensation to the victim and his/her heir unless it is established that there has been a breach of specific condition policy by the insurer. The onus is on the insurance company to establish that there is a breach of a specific condition on the part of the insurer. The true goals of legislation sought to be achieved if the benevolent provision is not read with the purpose and philosophy of the statute made by the legislation.
The Insurance Company’s liability is limited as provided in Section 95(2)(a) if the breach of the conditions is not established. The Insurance Company is not expected to cover the passenger risk when a particular vehicle like goods vehicle can’t be used for the carriage of passengers. The Insurance Company would not at all be liable to reimburse the insured for the compensation for the death of or bodily injury to the passengers wrongly carried in the vehicle because in case of such vehicles there would be no liability as there is no policy as such. Nowhere it is provided that to be compensated it has to be a ‘public service vehicle’. The liability arising out of the use of the vehicle by persons being carried in a vehicle in which the persons are carried for hire or reward the insurance company should only cover the liability arising out of it.
“The views of the authors are personal“