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The New India Assurance Co. Ltd., Represented by its Manager v/s Girija & Another


Company & Directors' Information:- THE NEW INDIA ASSURANCE COMPANY LIMITED [Active] CIN = L66000MH1919GOI000526

Company & Directors' Information:- THE NEW INDIA ASSURANCE COMPANY LIMITED [Active] CIN = L99999MH1919GOI000526

Company & Directors' Information:- THE NEW INDIA ASSURANCE COMPANY LIMITED [Active] CIN = U99999MH1919GOI000526

Company & Directors' Information:- TO THE NEW PRIVATE LIMITED [Active] CIN = U72900DL2006PTC235208

Company & Directors' Information:- NEW INDIA CORPORATION PRIVATE LIMITED [Strike Off] CIN = U36999TN1940PTC001776

    M.F.A. Nos. 2628, 2629 of 2010 (MV)

    Decided On, 15 September 2020

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE H.P. SANDESH

    For the Appellant: P.B. Raju, Advocate. (Physical Hearing). For the Respondents: R1, L.S. Chikkanagoudar, Advocate.



Judgment Text

(Prayer: This M.F.A is filed Under Section 173(1) of MV Act against the judgment and award dated 21.12.2009 passed in MVC.No.274/2002 on the file of Civil Judge (Senior Divison) and MACT, Madikeri, awarding a compensation of Rs.10,000/- with interest at 6% P.A. from the date of petition till deposit.This M.F.A is filed Under Section 173(1) of MV Act against the judgment and award dated 21.12.2009 passed in MVC.No.275/2002 on the file of Civil Judge (Senior Divison) and MACT, Madikeri, awarding a compensation of Rs.5,000/- with Interest at 6% P.A. from the date of petition till deposit.)1. These two appeals are filed challenging the judgment and award passed in MVC Nos.274/2002 and 275/2002 dated 21.12.2009 on the file of Civil Judge (Senior Division) and MACT at Madikeri ('the Tribunal' for short) fastening of liability on the Insurance Company.2. The parties are referred to as per their original rankings before the Tribunal to avoid confusion and for the convenience of the Court.3. Heard learned counsel for the appellant/ Insurance Company and learned counsel for respondents.4. The factual matrix of both the claim petitions are that on 18.02.2002 at about 12.30 p.m. when the claimants were traveling in a jeep No.CTA 911 (hereinafter called as "offending owner") from Thakeri Village to Somwarpet town nearby the coffee estate of one C.M.Chengappa the respondent No.1 being the driver and owner of the said jeep drove the same in a rash and negligent manner, due to that the jeep capsized and they sustained severe injuries. They were immediately shifted to the Government Hospital, Somwarpet and took treatment. They were coolies and earning not less than Rs.1,500/- per month and due to the said accident, they are unable to work as earlier. Hence, filed claim petitions claiming compensation from the respondents.5. Respondent Nos.1 and 2 appeared through their counsel and filed their written statement. Respondent No.1 would contend that the jeep was insured with respondent No.2 whereby the policy was in force and the compensation claimed by the claimants is payable by respondent No.2.6. Respondent No.2 resisted the claim petition by denying the averments. However, admitted that the vehicle has been insured with them and the same is subject to the terms and conditions specified in the policy. But, it is their specific contention that the driver was having no valid and effective driving license to drive the said vehicle and the compensation claimed in both the cases are exorbitant.7. The claimants, in order to substantiate their claim, examined themselves as P.Ws.1 and 2 and got marked documents Exs.P1 to 22. The Insurance Company also examined one witness as R.W.1 and got marked documents Exs.R1 and R2. The Tribunal, after considering both oral and documentary evidence, allowed both the claim petitions granting compensation of Rs.10,000/- and Rs.5,000/- respectively with interest at the rate of 6% per annum from the date of petition till its realization.8. Being aggrieved by the judgment and award of the Tribunal fastening the liability on the Insurance Company, the present appeals are filed contending that the Tribunal has failed to appreciate the fact that the policy which is marked as Ex.R1 is only an 'Act only Policy'. Hence, the Insurance Company is not liable to indemnify the owner in respect of the injury suffered by the occupants and admittedly, the claimants are occupants. Though the said defence has been taken and the policy being marked as Ex.R1, the Tribunal failed to consider the said issue and committed an error in fastening the liability on the Insurance Company.9. Learned counsel for the Insurance Company, in his arguments, would vehemently contend that the Tribunal failed to consider the policy-Ex.R1, which is an 'Act only Policy'. The law is settled that unless the specific premium is paid, under the Act Policy, the Insurance Company is not liable to pay the compensation to the occupants of the Car/Jeep.10. Learned counsel for the appellant/Insurance Company in support of his contentions relied upon the following judgments:-(i) The Branch Manager, The New India Assurance Co., Ltd., Vs. Mahadev Pandurang Patil and Another reported in ILR 2011 KAR 850;(ii) Oriental Insurance Company Limited Vs. Sudhakaran K.V. and Others reported in (2008) 7 SCC 428;(iii) National Insurance Company Ltd., Vs. Balakrishnan and Another reported in 2012 (3) G.L.H. 748;11. Learned Counsel, referring to these judgments, would submit that the principles laid down therein clearly depicts that if the specific or additional premium is not paid to cover the risk of the occupants of the vehicle, then the Insurance Company is not liable to pay any compensation for the injury suffered by the occupants. Thus, the Tribunal has failed to consider the Policy-Ex.R1 and also the evidence of R.W.1, who has been examined before the Tribunal in its right perspective and has erroneously fastened the liability on the Insurance Company. Hence, it requires interference of this Court.12. Per Contra, learned counsel appearing for the respondents/claimants would submit that the contentions raised by the Insurance Company cannot be accepted. The compensation of Rs.10,000/- and Rs.5,000/- awarded by the Tribunal in both the respective claim petitions is meager, the Tribunal has rightly fastened the liability on the Insurance Company. The counsel also would submit that under the new Act, compulsorily it requires to cover the risk of the passengers of a private Car.13. In support of the said contentions, learned counsel relied upon the decisions of this Court in Ramachandra and Another Vs. Shantaram and Others reported in ILR 2004 KAR 398, wherein it is held that an insurer under the new Act is compulsorily required to cover the risk of passengers of a private car or of any passenger carrying vehicle including a two wheeler and the insurer of the car is liable to indemnify the insured to the extent of his liability arising out of the claim in question.14. Learned counsel also relied upon the decision of the Apex Court in the case of Samundra Devi and Others Vs. Narendra Kaur and Others reported in ILR 2008 KAR 4664 and brought to the notice of this Court para Nos.15 and 16 in respect of the statutory liability of the insurer to indemnify the insured by keeping in view of the exceptions.15. Learned counsel further relied upon the decision of this Court in the case of The Oriental Insurance Co., Limited Vs. Sri.Purushotham T.M. and Others reported in ILR 2006 KAR 889, wherein it is held that the passenger in a private car is also covered by the Act Policy under Section 147 of the Motor Vehicles Act, 1988 (for short 'the Act').16. Learned counsel for the claimants, relying upon the above referred judgments, would submit that both this Court as well as the Apex Court in the decisions referred supra, have come to the conclusion that the policy covers the occupants of a private car. Hence, the Tribunal has rightly fastened the liability on the Insurance Company and the same does not require any interference and so also the contentions of the Insurance Company cannot be accepted.17. In reply to the arguments canvassed by the learned counsel appearing for the claimants, the learned counsel for the appellant would submit that the judgments which have been relied upon by the claimants are old judgments whereas the Apex Court, recently in Sudhakaran's case and also in Balakrishnan's case (referred supra), categorically held that unless separate or additional premium is paid to cover the risk of the occupants of vehicle, the insurer is not liable. The occupants cannot be treated as a "third-party" as defined under Section 147 of the Act and such occupants or a pillion rider would be covered only in case of additional cover is purchased under the contract of insurance. Learned counsel would further submit that this Court in the decision reported in ILR 2011 KAR 850 made reference to the decision of Sudhakaran's case and has come to the conclusion that under the liability only policy, the risk of the occupants of a private car is not covered.18. Having heard the arguments of the learned counsel for the appellant-Insurance Company and learned counsel appearing for the respondents-claimants, the points that arise for consideration before this Court are:-(i) Whether the Tribunal has committed an error in fastening the liability on the Insurance Company in the absence of any additional premium being paid and the Act Policy does not cover the risk of the occupants of the vehicle under the contract of insurance?(ii) What Order?Point No.(i):-19. Before considering the question of law involved in the matter, first I would like to make it clear that, on perusal of the pleadings of the parties before the Tribunal, there is no dispute as to the facts that the claimants were travelling in a jeep and due to rash and negligent driving on the part of the driver of the jeep, it was capsized and as a result, both the claimants sustained injuries.20. Now the question before this Court is as to whether the insurer is liable to pay the compensation when the policy is an 'Act Policy'. First, this Court would like to have a look into the document - Ex.R1 - Insurance Policy and on perusal of the same, it is marked through R.W.1 and the premium of a sum of Rs.509/- is collected towards liability to public-Basic; a sum of Rs.15/- is collected towards the legal liability to paid-driver and a sum of Rs.50/- is collected towards increased third-party property damage risks. No other premium is paid to cover the risk of the occupants of the vehicle and hence, the learned counsel for the insurer would contend that it is only an Act Policy and no specific or additional premium is paid to cover the risk of the occupants of the vehicle.21. R.W.1 has also been examined before the Tribunal. In the written statement, a specific stand has been taken by the Insurance Company that the liability is subject to the terms and conditions of the policy. R.W.1, in his affidavit, reiterates that the said policy is a 'Liability Only Policy' and the same does not cover the risk of the inmates or the passengers travelling in the said vehicle as the same is a private vehicle. In order to cover the risk of inmates or the passengers in a private car, an additional premium is required to be paid. The owner of the vehicle has not paid any additional premium to cover the risk of inmates or the passengers of the vehicle.22. R.W.1 was subjected to cross examination, wherein a suggestion was made that the policy was in force and the same was admitted. It was suggested that only the receipt has been given to the policy holder and the witness volunteers that the policy was also handed over to him. The witness was cross- examined only in respect of driving license and nothing else has been suggested in the cross-examination of R.W.1 as to whether the policy issued by the Insurance Company is a 'Liability Only Policy'.23. The question that arose before this Court is whether the Tribunal has committed an error in fastening the liability on the insurer. In order to come to the right conclusion, this Court has already discussed the contents of the policy marked at Ex.R1 and the evidence of R.W.1, and so also, the defence taken by the Insurance Company in the written statement. It is important to note that there is a specific mention in the Policy that the liability is subject to the terms and conditions of the policy. I have already pointed out that in Ex.R1, no specific or additional premium is paid to cover the risk of the occupants of the jeep, but the payment is made only to cover the legal liability to paid- driver as well as the public and so also to cover the risk or damage of third-party property.24. No doubt, this Court in the decision referred supra by the learned counsel for the claimants in Purushotham's case (supra) has held that in an Act Policy also there exists the liability of the insurer and the same is covered under Section 147 of the Act.25. Learned counsel appearing for the claimants referring to the decision reported in ILR 2008 KAR 4664 brought to the notice of this Court para Nos.15 and 16 which reads as hereinunder:-"15. A contract of insurance as is well known is a contract of indemnity. In a case of accident, the primary liability under law for payment of compensation is that of the driver. The owner of the vehicle also becomes vicariously liable therefor. In a case involving a third party to the contract of insurance in terms of Section 147 of the Motor Vehicles Act, 1988 providing for a compulsory insurance, the insurer becomes statutorily liable to indemnify the owner. Indisputably, the insurance company would be liable to indemnify the insured in respect of loss suffered by a third party or in respect of damages of property. In a case, therefore, where the liability is fastened upon the insurer, the insurer would be bound to indemnify the insured unless the exceptions contained in Section 149 of the Act are attracted.16. It has not been disputed before that in certain situations while opining that the insurance company would not be liable to reimburse the insured, a direction upon the insurance company to pay the amount of compensation to a third party and recover the same from the owner of the vehicles is permissible. Such a direction has been issued by the High Court. The said directions are not under challenge.26. The Apex Court vide para No.15 held that the owner of the vehicle also becomes vicariously liable therefor. In a case involving a 'third party' to the contract of insurance in terms of Section 147 of Act providing for a compulsory insurance, the insurer becomes statutorily liable to indemnify the owner. Indisputably, the Insurance Company would be liable to indemnify the insured in respect of loss suffered by a third-party or in respect of damages of property. It has further observed in para No.16 that it has not been disputed that under certain situations the Insurance Company would not be liable to reimburse the insured, a direction upon the Insurance Company to pay the amount of compensation to a third party and recover the same from the owner of the vehicles is permissible and such a direction has been issued by the High Court.27. Having taken note of the principles laid down in the decisions of the Apex Court, it is clear that it is on the insured to mandatorily take the policy to compulsorily insure covering the risk of 'third-party' and also in respect of damages of the property of the third-party. Now the question before this Court is as to whether the occupants of a private car are third-party or not.28. Though in the decisions referred to by the claimants reported in ILR 2006 KAR 889, ILR 2004 KAR 398, this Court held that an insurer under the new Act is compulsorily required to cover the risk of passengers of a private car or of any passenger carrying vehicle including a two wheeler and the insurer of the car is liable to indemnify the insured to the extent of his liability arising out of the claim in question and in an Act Policy, the insurer is liable, this Court has to examine the principles laid down in the judgments of the Apex Court, which are of the year 2008 and 2013. The Apex Court in Sudhakaran's case (referred supra) categorically held that the insurer is not liable to pay compensation in respect of the pillion-rider in terms of the statutory cover mandated by Section 147 of the Act when the accident has taken place owing to rash and negligent driving of the motor vehicle carrying the pillion-rider concerned. Such a pillion-rider is not to be treated as a 'third-party' under Section 147 of the Act. It is further held that such a pillion-rider would be covered only in case additional cover is purchased under the contract of insurance. The legal obligation arising under Section 147 cannot be extended to an injury or death of the owner of the vehicle or a pillion-rider travelling thereon.29. The Apex Court also in the decision of National Insurance Company Ltd., Vs. Balakrishnan and Another reported in 2012(3) G.L.H. 748 in para No.21 held as hereunder:-"21. In view of the aforesaid factual position, there is no scintilla of doubt that a comprehensive/package policy would cover the liability of the insurer for payment of compensation for the occupant in a car. There is no cavil that an Act Policy stands on a different footing from a Comprehensive/Package Policy. As the circulars have made the position very clear and the IRDA, which is presently the statutory Authority, has commanded the insurance companies stating that a Comprehensive/Package Policy covers the liability, there cannot be any dispute in that regard. We may hasten to clarify that the earlier pronouncements were rendered in respect of the Act Policy which admittedly cannot cover a third party risk of an occupant in a car. But, if the policy is a Comprehensive/Package Policy, the liability would be covered. These aspects were not noticed in the case of Bhagyalakshmi (supra) and, therefore, the matter was referred to a larger Bench. We are disposed to think that there is no necessity to refer the present matter to a larger Bench as the IRDA, which is presently the statutory Authority, has clarified the position by issuing circulars which have been reproduced in the judgment by the Delhi High Court and we have also reproduced the same."30. Having considered the principles laid down in this judgment, no doubt the Apex Court held that the comprehensive/package policy would cover the liability of the insurer for payment of compensation for the occupant in a car and there cannot be any dispute with regard to payment of compensation in a case of comprehensive package policy. It is further observed that they are hastened to clarify that the earlier pronouncements were rendered in respect of the Act Policy which admittedly cannot cover a third-party risk or of an occupant in a car. But, if the policy is a comprehensive/package policy, the liability would be covered and the said position has been clarified by issuing circulars. The policy is not the Comprehensive Package Policy and the policy which is marked as Ex.R1 is the 'Act only policy' and no specific premium was paid to cover the risk of the occupant of the Car.31. This Court also in the judgment reported in ILR 2011 KAR 850 (referred supra) discussed the principles laid down in the decision of Sudhakaran's case and held that in view of the authoritative pronouncement of the Apex Court holding that an occupant or inmate or passenger in a private car is not a third-party, the finding recorded by the Tribunal that the insurance policy issued covers the risk of such persons and therefore, the Insurance Company is liable to pay compensation amount is illegal and contrary to the law declared by the Apex Court.32. In view of the principles laid down in the judgment referred supra and also on perusal of the judgment and award of the Tribunal, the Tribunal no where discussed with regard to the liability of the Insurance Company and answered with regard to the question of liability under the Act Policy. Referring only to the decision of The Oriental Insurance Company Vs. Mohammed Sab Ali Sab Kaladagi and Others reported in ILR 1998 KAR 4014, in respect of the validity of the driving license, the Tribunal has come to the conclusion that the contention of respondent No.2 that it is not liable to pay compensation cannot be accepted and directed the insurer- respondent No.2 to pay the compensation. There is no discussion with regard to the policy-Ex.R1 and also with regard to the evidence of R.W.1. The evidence of R.W.1 is specific that the policy issued by the company is only an 'Act Only Policy' and the same does not cover the risk of the occupants.33. Admittedly, the claimants are the occupants of the jeep and the principles laid down in the decisions of the Apex Court both in Sudhakaran's case and Balakrishnan's case, it is clear that unless specific or additional premium is paid to cover the risk of the occupants, the insurer is not liable. The statutory insurance does not cover injuries suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. The occupants/passengers/inmates of a private vehicle did not fall within the definition of the word third-party. Therefore, the legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of the vehicle, passengers in such private vehicle or a pillion-rider in the case of a two wheeler. Gratuitous passengers who are not carried for hire or reward in a vehicle other than public service vehicle, cannot be considered as third-party.34. If the risk of an occupant of the car, inmate of a vehicle or passenger in a private car is to be covered, additional premium has to be paid. If no such additional premium is paid, their risk is not covered. The statutory liability under Sections 146 and 147 of the Act has to be read with terms of the insurance policy issued under Section 146 of the Act. But that does not prevent an insurer entering into a contract of insurance covering a risk wider than the minimum requirement of the statute, whereby the risk to gratuitous passenger could also be covered. A third-party Policy does not cover liability to gratuitous passengers, who are not carried for hire or reward. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid.35. In view of the authoritative pronouncement of the Apex Court in Sudhakaran's case as well as in Balakrishnan's case, the occupant/inmate/passenger in a car is not a third- party. No doubt in the case on hand, the claimants are occupants in a private car and on perusal of Ex.R1, no premium is paid to cover the risk of the occupants of the car and the premium is paid only to cover the risk against the paid-driver and also the public and damages to the public property. In fact, in th

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e policy, no additional premium is paid or received by the Insurance Company to cover the risk of the occupants of the car. If the additional premium has been collected then the contention of the claimants could have been accepted. Hence, the arguments of the learned counsel for the claimants cannot be accepted.36. In the facts of the case, this Court is not satisfied with the contentions of the claimants. Taking note of the fact that the insured has not paid any additional premium nor the Insurance Company has collected any additional premium to cover the risk of the occupants of a private car, the liability cannot be fastened against the insurer under the Act Policy. Hence, I answer the point in the affirmative and held that the Tribunal has committed an error in fastening the liability on the insurer without discussing the issue raised and though the specific defence has been taken in the written statement that the liability is subject to the terms and conditions of the policy. The Tribunal even had not gone to the extent of examining the quantum of premium paid under the policy and so also not noticed the fact that the policy is an 'Act Only Policy'.37. In the absence of premium not paid in respect to the occupants and when the policy is an Act Policy that means 'Liability Policy', the very finding of the Tribunal that the Insurance Company is liable to pay the compensation is illegal and contrary to the law declared by the Apex Court and also contrary to the contents of the document Ex.R1 and the same requires to be set aside. Accordingly, the appeal filed by the Insurance Company succeeds.38. In view of the discussions made above, I pass the following:-ORDER(i) The appeals are allowed.(ii) The impugned judgment and award dated 21.12.2009 of the Tribunal in MVC Nos.274/2002 and 274/2002 on the file of Civil Judge (Senior Division) and MACT at Madikeri fastening the liability on the Insurance Company is set aside. The insured is foisted with the liability to pay the compensation.(iii) However taking into note of the quantum of compensation awarded by the Tribunal i.e., Rs.10,000 and Rs.5,000 in both the respective claim petitions, the Insurance Company in magnanimity could pay the amount in favour of the claimants as exceptional case.(iv) Registry is directed to transmit the Records to the concerned Tribunal forthwith.(v) The amount, if any in deposit shall be refunded to the appellant-insurance company, forthwith.
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