Allahabad High Court Judgement

Allahabad High Court Judgement

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JUDGEMENT HEADLINE : Premium For Driver Not Paid - Insurance Company Not Liable To Pay Compensation.
JUDGEMENT TITLE : New India Assurance Co. Ltd Vs. Smt. Uma Devi And Others On 03/24/2011 By Allahabad High Court
CORAM : Hon'ble Yatindra Singh,J. And Hon'ble Shyam Shankar Tiwari,J.


Court No.40
First Appeal From Order No. 406 Of 1992

New India Assurance Company Limited Gorakhpur ... Opposite Party/Appellant
Smt. Uma Devi And Others ... Respondents

Hon. Yatindra Singh, J.
Hon. Shyam Shankar Tiwari, J.
1. The Main Question Involved In This Appeal Is,
'When An Insurance Company Of Is Liable To Compensate The Heirs Of The Deceased Driver Of A Two Wheeler?'

2. Scooter No. U.P.-55/5026 (the Scooter) Was Owned By Smt. Uma Devi (the Widow). She Was Wife Of Ugrasen Singh (the Deceased).

3. The Deceased Was Going On The Scooter On 26.5.1990 From Sahjanwa To Mahuli. He Was Driving The Same. While Saving A Child, The Scooter Slipped Into A Ditch Adjoining The Road And Collided With A Tree. The Deceased Received Injuries And Died On The Spot.

4. The Widow Alognwith Her Three Daughters And The Son (the Claimants) Filed Motor Accident Claim Petition No.75 Of 1990 Before The Motor Accident Claim Tribunal, (District Judge) Basti (the Tribunal). In This Claim Petition, The New India Insurance Company Limited (the Company), The Insurer Of The Scooter, Was The Only Opposite Party.

5. The Claim Petition Was Partly Allowed By The (Tribunal) On 22.1.1992 For `2,00,000/- Along With 12% Per Annum Interest From 10.7.1979. The Compensation Was Awarded Under The Following Heads:
`10,000/- For Damage To The Scooter;
`1,80,000/- Towards Family Dependency. This Was After Deducing ¼th Namely `60,000 From The Total Dependency Of `2,40,000/-.
`5,000/- For Loss Of Consortium;
`5000/- For Funeral Expenses.
Hence The Present Appeal By The Company.

6. We Have Heard Shri Kartikeya Saran, Counsel For The Company And Shri SK Singh Holding Brief Of Shri A.K. Srivastava, Counsel For The Claimants. The Following Points Arise For Determination In The Case.
(i) Whether The Insurance For The Driver Or The Vehicle Is Mandatory Under The Motor Vehicle Act, 1988 (the MV Act);
(ii) Whether The Company Is Liable To Pay For The Damage To The Scooter;
(iii) Whether The Insurance Company Is Liable To Pay Compensation On The Death Of The Deceased.

7. The Insurance Is Only A Contractual Obligation. Nevertheless, The MV Act Mandates Insurance For Specified Purposes.

8. Chapter XI Of The MV Act Is Titled 'INSURANCE OF MOTOR VEHCILES AGAINST THIRD PARTY RISKS'. Section 146 Of This Chapter Is Titled 'Necessity For Insurance Against Third Party Risk'. It Provides That No Motor Vehicle Can Be Used In The Public Place Unless It Is Insured As Required By This Chapter.

9. Section 147 Is Titled 'Requirement Of Policies And Limits Of Liability'. It Mandates Insurance Against The Liability,
To Owner Of Goods Or His Authorised Representative Carried In The Vehicle;
To Damage To Any Property Of Third Party;
Towards Passengers Of A Public Service Vehicle;
Under The Employees' Compensation Act 1923 (the EC Act) Of The Driver (who Is An Employee) And Conductor (examining Tickets) Of Public Service Utility Vehicle.

10. A Driver Of The Vehicle, Is Not A Third Party. In Case He Is An Employee Of The Owner Then He Is Covered Under The EC Act And Insurance Is Mandatory, Otherwise, It Is Not Necessary To Insure Against Any Risk To The Driver.

11. Nevertheless, The MV Act Does Not Debar An Insurance Company From Agreeing To Indemnify Any Person Or Undertake To Pay Any Other Liability. This Is Clear From Section 147(5) Of The MV Act. This Was Also So Held In New India Assurance Company Limited Vs. Sadanand Mukhi And Others 2009 (2) SCC 417 (the Sadanand Cases).

12. In The Sadanand Case, The Supreme Court Observed (paragraph 11):
'The Provisions Of The Act, Therefore, Provide For Two Types Of Insurance-- One Statutory In Nature And The Other Contractual In Nature'.

13. In Our Opinion,
(i) The MV Act Requires Insurance Against;
Third Party Risk;
Passengers Of The Public Service Vehicle;
Driver (employee) Or Conductor Of The Public Service Vehicle To Extent Of The Employee's Liability Under The EC Act.
(ii) The MV Act Does Not Require Insurance;
Against Damage To The Vehicle; Or
For The Risk To The Driver (other Than An Under The E.C. Act) Or The Owner Of The Vehicle; Or
Against The Injury To The Passengers Sitting In The Vehicle Except In Public Service Vehicle; However
(iii) The MV Act Does Not Bar An Insurance Company From Insuring For Any Risk That Is Not Required Under The MV Act.

14. The Tribunal Below Has Recorded The Following Findings:
(i) The Scooter Slipped In A Ditch And Collided With A Tree, While Saving A Child;
(ii) The Deceased Was Driving The Scooter And Died In The Accident;
(iii) The Damage To The Scooter Was To The Tune Of `10,000/-.

15. The Counsel For The Company Has Not Raised Any Objections Against The Aforesaid Findings. They Are Upheld. However The Question Is, Whether Any Insurance Was Taken For The Damage To The Scooter Or Not.

16. Section-I Of The Policy Is Titled 'LOSS OR DAMAGE'. It Provides That The Company Will Indemnify The Insurer Against Loss Of Or Damage To The Motor Cycle (or Scooter) And/ Or It Accessories Apart From Other Reasons Due To Accidental External Means.

17. The Certificate Of Insurance Indicates That Premium For Own Damage Has Also Been Paid. It Is On This Basis That Tribunal Below Has Held That The Company Is Liable To Pay For The Damage To The Scooter.

18. The Company Has Neither Raised Any Objections Nor Is There Any Illegality In The Same. The Aforesaid Finding Is Upheld.

19. The Counsel For The Company Submitted That:
(i) No Extra Premium For The Scooter Driver Was Paid And The Company Is Not Liable To Pay Any Compensation To The Heirs Of The Deceased;
(ii) The Accident Took Place Because Of The Negligence Of The Deceased. Neither The Owner Was Liable To Pay Any Compensation Nor The Company Was Liable To Indemnify The Same.

20. In Our Opinion, The Appeal Is Liable To Be Allowed On The First Submission And It Is Not Necessary To Consider The Second Submission.

21. In Deciding The First Point, We Have Held That The MV Act Does Not Require Insurance For The Driver Unless He Is An Employee And The Liability Arises Under The EC Act. In This Case, The Deceased Was The Husband Of The Scooter Owner. He Was Neither An Employee, Nor Was There Any Liability Under The EC Act. Insurance For Accidental Risk To Driver Was Not Mandatory. Let's Consider, If The Risk Of To The Scooter Driver Was Covered By Insurance.

22. The Tribunal Below Has Held Against The Company On The Basis Of Clause 1 And 3 Of Section-II Of The Policy. Clause 3 Of Section-II (see Below)1 Covers A Case Where Driver Is Sued. It Does Not Cover The Accidental Risk Of The Driver. This Clause Is Not Applicable. Similar Is Case Of Clause 1 Of Section-II.

23. Clause 1 Of Section-II (see Below)2 Has Two Sub-clauses Namely (a) And (b). Sub-clause (b) Of Clause 1 {clause 1(b)} Is Applicable To The Case, Where There Is Damage To The Property Other Than Belonging To The Insured Or Held In Trust Or In Custody Or Control Of The Insured. Here There Is Neither Such Damage Nor Claim To Such Property. This Sub-clause Is Not Applicable.

24. Sub-clause (a) Of {clause 1 Clause 1(a)} Is Applicable On The Death Or Bodily Injury To Any Person Including Person Conveyed In Or On The Scooter Provided Such A Person Is Not Carried For Hire Or Reward. This Sub Clause Is Under Section-II Of The Policy Titled 'liability Of Third Party'. Neither The Driver Nor The Pillion Rider Is A Third Party However, This Sub-clause Indicates That This Policy Might Cover A Pillion Rider.

25. The Counsel For The Claimants Submits That :
Clause 1(a) Of Section-II Uses The Word Any Person;
This Includes The Driver; And
The Company Is Liable To Pay Compensation On The Death Of The Driver.

26. The Policy Includes A Heading 'ENDORSEMENTS'. It Contains Indian Motor Tariff (IMT). The Endorsements Mentioned In The Schedule Are A Part Of The Policy. IMT 64 Is Mentioned Therein (see Below)3. It Contemplates Covering A Driver Also On Payment Of Extra Premium. If The Driver Was Included In Clause 1(a) Of Section II, Then There Was No Necessity Of IMT 64. The Title Of Section-II Also Indicates That It Is Limited To The Third Parties, Where Driver Is Not Included.

27. Note Of IMT 64 Is Also Not Applicable. In This Case Neither The Driver Was The Owner Of The Scooter Nor The Certificate Bears The Endorsement No. 21, 22, 23. It Only Bears The Endorsement 21, 23. It Also Does Not Bear The Endorsement No. 64.

28. In The Sadanand Case, The Supreme Court Held,
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 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.'
The Question Is Whether Any Premium For Insurance Of The Accidental Death Of The Driver Was Paid Or Not.

29. The Insurance Certificate Indicates That Premium To Public Risk (Act) Has Been Paid. However, The Premium For The Driver Has Not Been Paid. The Accidental Death Of The Driver Was Neither Covered, Nor Any Premium For The Same Has Been Paid. Had The Premium For The Accident Injury To The Driver Was Charged Then The Matter Would Have Been Different.

30. The Supreme Court In Oriental Insurance Company Limited Vs. Smt. Jhuma Saha And Others AIR 2007 SC 1054 (paragraph 13) Observed:
'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 Vehicle Act, Which In No Uncertain Terms Covers A Risk Of A Third Party Only, Would Be Attracted In The Present Case.'

31. In The Sadanand Case The Supreme Court Observed (paragraphs 11, 13):
'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 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.
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 Extends To The Risk Covered By The Policy Of Insurance. If Additional Risks Are Sought To Be Covered, Additional Premium Has To Be Paid.'

32. In Our Opinion;
No Additional Premium For Accidental Injury Or Death Of The Driver Was Paid;
There Was No Contract To Pay On The Death Or Injury To The Driver;
The Claimants (the Heirs` Of The Deceased) Are Not Entitled To Any Amount From The Company;

33. The Counsel For The Claimants Has Relied Upon The Supreme Court Decision Reported In New India Assurance Company Limited Vs. Kendra Devi And Others AIR 2008 SVC 490 (the Kendra-Devi Case) And Submitted That The Heirs Of The Driver Are Also Entitled For Compensation.

34. The Supreme Court In The Kendra-Devi Case Has Observed (paragraph 7),
'We Have Carefully Considered The Above Provision As Well The Decision Of This Court. Taking Note Of The Peculiar Fact That The Claimants Have Lost Their Only Breadwinner, We Are Not Inclined To Interfere With The Concurrent Orders Of The Tribunal As Well As The High Court'.

35. It Is Clear From The Aforesaid Observations That The Supreme Court Declined To Interfere Under Article 136 Of The Constitution Considering The Circumstances Of That Case. This Does Not Mean That It Has Been Held That Heirs Of The Driver Are Entitled For Compensation Even If No Premium Was Paid For His Accidental Death.

36. It Is A Hard Case, Where The Only Bread Earner Died Leaving The Family Without Any Support. A Policy Covering The Risk Of Injury Or Death Of The Driver (other Than Under The EC Act) Can Always Be Taken But It Is Not Mandatory.

37. Often, The Policy Covering The Risk Due To The Accident To The Driver (other Than Under The EC Act) Is Not Taken, As The Insured Is Unable To Envisage Such A Situation. The Insurance Companies Also Do Not Inform The Insured As It Increases The Premium And They Stand Loosing Them To The Other Insurance Companies, Who Might Not Inform Them And Cover The Third Party Risk At Lesser Premium.

38. The Position Of Passengers Sitting In A Private Vehicle Is The Same.

39. It Would Be Good Idea To Statutorily Require Insurance Of The Driver And The Passengers In A Private Vehicle As Is The Case For Covering The Third Party Risk. The Central Government May Consider Suitability/ Feasibility Of Amending Chapter XI Of The Motor Vehicles Act 1988.

40. Our Conclusions Are As Follows:
(a) The Claimants Are Entitled To `10,000/- For Damage To The Scooter Alongwith 12% Per Annum Interest With Effect From 10.7.1990;
(b) The Scooter Driver Or His Heirs Are Not Entitled To Any Compensation For The Injury Or On The Death Of The Driver Unless Premium For Covering The Risk Of Injury Or Death Was Also Paid;.
(c) In This Case, No Extra Premium Covering The Risk Of Accidental Death Of The Driver Was Paid.
(d) The Company Is Not Liable To Pay Any Compensation On The Death Of The Deceased Driver Or Loss Of Consortium Or Funeral Expenses.

41. In View Of Our Conclusion, The Appeal Is Partly Allowed. The Amount Deposited Here May Be Sent To The Court Below For Adjustment Towards Part Of The Award That Has Been Upheld By Us.

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