HON’BLE SRI JUSTICE GHULAM MOHAMMED MA C.M.A.No. 1396 oF 2003 AND THE CORSS OBEJCTIONS (SR) 64544 OF 2003 JUDGMENT: The New India Assurance Company Limited is the appellant who field the appeal challenging the quantum of compensation granted in O.P.No. 1050 of 1999 dated 6.6.2002 on the file of the Motor Accidents Claims Tribunal-cum- Additional District Judge, Nizamabad, filed under Section 166 of the Motor Vehicles Act, claiming compensation of Rs. 6,00,000/- as against which, the Tribunal awarded Rs. 5,48,000/- together with interest at 9% per annum. Brief facts of the case are that on 11.8.1999 the deceased Varkala Venugopal was traveling as pillion rider a Motor Cycle bearing No. AP-15H 96 from Gandhari towards Nizamabad side at about 9 PM, a lorry bearing No. AP25T 2388 driven by its driver came in an opposite direction in a rash and negligent manner at high speed and dashed against the deceased. As a result of which, the deceased sustained grievous injuries and was shifted to Government Head Quarters Hospital, Nizamabad and succumbed to injuries on the way to hospital. It is stated that the deceased was working as Medical Representative at Glaxo India Limited and was earning a sum of Rs. 10,000/- per month. Therefore, claimants laid a claim for total compensation of Rs. 6,00,000/-. Respondent No. 1 owner of the lorry bearing No. AP-25-T 2388 was set ex parte. The second respondent is the Insurance Company filed its written statement denying all the material allegations made in the claim petition and it does not admit the health condition of the deceased at the time of accident and also denied that the deceased was earning Rs. 10,000/- per month. On the basis of the above pleadings, the Tribunal framed the following issues: 1. Whether the accident was due to rash and negligent driving of the lorry bearing No. AP- 25-T 2388 by its driver? 2. Whether the petitioners are entitled for compensation. If so to what amount and against which of the respondent? 3. To what relief? On behalf of the claimants, claimant himself was examined as PW-1 and also examined one Anjaneyulu as PW-2 and also got marked Exs A1 to A23. The Tribunal after taking into consideration of the evidence available on record and the evidence of PW-1 and also the evidence of PW-2 who is an eye witness to the incident and the documents under Exs. A1 to A4 i.e., CCS of FIR, Charge Sheet, Inquest Panchanama and PME report, came to the conclusion that the accident occurred only due to rash and negligent driving of the crime lorry bearing No. AP25 T 2388 by its driver and taking into consideration the age and income of the deceased awarded a total compensation of Rs. 5,48,000/- by following the multiplier method. The learned counsel appearing for the appellant contended that the judgment passed by the Court below is contrary to the law and without any income tax returns, fixed the income of the deceased at Rs. 9,000/-permonth and the Tribunal applied the highest multiplier of ‘11’ as the deceased was aged 50 years and the Tribunal has not passed the award reasonably. On the other hand, the claimants filed cross objections claiming more compensation. Heard the learned counsel appearing for both sides and also perused the entire material made available on record. As seen from the record, it is no doubt true that the accident occurred on 11.8.1999 and the deceased was traveling as a Pillion Rider on a motor cycle bearing No. AP 15 H96 from Gandhari towards Nizamabad and he succumbed to injuries on the same day at about 12.30 night. The deceased was earning Rs. 10,000/- per month. In support of the same, claimants filed Ex. A7 Visiting Card, which shows that the deceased was working as Medical Representative on behalf of Glaxo India Limited and also field the letter issued by Glaxo India Limited which reveled that the deceased was given a DD bearing No. 704762 dated 14.5.1999 for Rs. 9,061/- towards commission for the month of April 1999 as seen from Ex. A8. Claimants also filed the receipts under Exs A-14 to A-23 which reveal that the deceased was getting commission from Annavarapu Enterprises, Vijayawada for selling the products of medicines in Nizamabad District. Taking into consideration of the earnings of the deceased at Rs. 6,000/- per month which comes to Rs. 72,000/- per annum (6000 x 12) and after deducting 1/3rd of the amount towards personal expenses of the deceased, the net contribution of the deceased comes to Rs. 48,000/- and after applying multiplier of ‘11’, the Tribunal granted Rs. 5,28,000/- (48,000 x 11). In addition to that the Tribunal granted Rs. 15,000/- towards loss of love and affection and Rs. 5,000/- towards funeral expenses totaling a sum of Rs. 5,48,000/- fixing the liability on the respondents 1 and 2 to pay the compensation. The learned counsel appearing for the appellant- Insurance Company has brought to our notice the judgment of the Supreme Court reported in ORIENTAL INSURANCE COMPANY LIMITED VS. MEEN VARIYAL AND OTHERS[1], wherein the liability of the Insurance Company to pay the compensation was exonerated since there was no award under Workmen’s Compensation Act that is required to be satisfied by the insurer. The relevant portions at paragraphs 9.10.20, 23, 24, 26 and 27 read as udder: “9. Before we proceed to consider the main aspect arising for decision in this Appeal, we would like to make certain general observations. It may be true that the Motor Vehicles Act, insofar as it relates to claims for compensation arising out of accidents, is a beneficent piece of 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 made. Therefore, under general principles, one would expect the driver to be impleaded before an adjudication is claimed under Section 166 of the Act as to whether a claimant before the Tribunal is entitled to compensation for an accident that has occurred due to alleged negligence of the driver. Why should not a Tribunal insist on the driver of the vehicle being impleaded when a claim is being filed? As we have noticed, the relevant provisions of the Act are not intended to jettison all principles of law relating to a claim for compensation which is still based on a tortious liability. The Tribunal ought to have, in the case on hand, directed the claimant to implead Mahmood Hasan who was allegedly driving the vehicle at the time of the accident. Here, there was also controversy whether it was Mahmood Hasan who was driving the vehicle or it was the deceased himself. Surely, such a question could have been decided only in the presence of Mahmood Hasan who would have been principally liable for any compensation that might be decreed in case he was driving the vehicle. Secondly, the deceased was employed in a limited company. It was necessary for the claimants to establish what was the monthly income and what was the dependency on the basis of which the compensation could be adjudged as payable. Should not any Tribunal trained in law ask the claimants to produce evidence in support of the monthly salary or income earned by the deceased from his employer Company? Is there anything in the Motor Vehicles Act, which stands in the way of the Tribunal asking for the best evidence, acceptable evidence? We think not. Here again, the position that the Motor Vehicles Act vis-a-vis claim for compensation arising out of an accident is a beneficent piece of legislation, cannot lead a Tribunal trained in law to forget all basic principles of establishing liability and establishing the quantum of compensation payable. The Tribunal, in this case, has chosen to merely go by the oral evidence of the widow when without any difficulty the claimants could have got the employer-company to produce the relevant documents to show the income that was being derived by the deceased from his employment. Of course, in this case, the above two aspects become relevant only if we find the insurance company liable. If we find that only the owner of the vehicle, the employer of the deceased 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 @page-SC1614 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 arising out of the use of the vehicle in a public place. With effect from 14.11.1994, injury to the owner of goods or his authorised representative carried in the vehicle was also added. The policy had to cover death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place. Then, as per the proviso, the policy shall not be required 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 in respect of the death of, or bodily injury to, an employee engaged in driving the vehicle, or who is a conductor, if it is a public service vehicle or an employee being carried in a goods vehicle or to cover any contractual liability. Sub-section (2) only sets down the limits of the policy. As we understand Section 147 (1) of the Act, an insurance policy thereunder need not cover the liability in respect of death or injury arising out of and in the course of the employment of an employee of the person insured by the policy, unless it be a liability arising under the Workmen's Compensation Act, 1923 in respect of a driver, also the conductor, in the case of a public service vehicle, and the one carried in the vehicle as owner of the goods or his representative, if it is a goods vehicle. It is provided that the policy also shall not be required to cover any contractual liability. Uninfluenced by authorities, we find no difficulty in understanding this provision as one providing that the policy must insure an owner against any liability to a third party caused by or arising out of the use of the vehicle in a public place, and against death or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place. The proviso clarifies that the policy shall not be required to cover an employee of the insured in respect of bodily injury or death arising out of and in the course of his employment. Then, an exception is provided to the last forgoing to the effect that the policy must cover a liability arising under the Workmen's Compensation Act, 1923 in respect of the death or bodily 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. 20. We are thus satisfied that based on the ratio in Swaran Singh (supra), the insurance company cannot be made liable in the case on hand to pay the compensation first and to recover it from the insured, the owner of the vehicle. The deceased being an employee not covered by the Workmen's Compensation Act, of the insured, the owner of the vehicle, has not to be covered compulsorily under the Act and only by entering into of a special contract by the insured with the insurer could such a person be brought under coverage. There is no case that there is any special contract in that behalf in this case. 2004 AIR SCW 663. 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 AIR 1987 SC 1690AIR 1977 SC 1248@page-SC1618 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 of the provision as to who could make a claim, noticing that the application under Section 110A of the Act had to be made on behalf of or for the benefit of all the legal representatives of the deceased. This Court has not stated that on a claim based on negligence there is no obligation to establish negligence. This Court was dealing with no-fault liability and the departure made from the Fatal Accidents Act and the theory of strict liability in the scheme of the Act of 1939 as amended. This Court did not have the occasion to construe a provision like Section 163A of the Act of 1988 providing for compensation without proof of negligence in contradistinction to Section 166 of the Act. We may notice that Minu B. Mehta's case was decided by three learned Judges and the Gujarat State Road Transport Corporation case was decided only by two learned Judges. An obiter dictum of this Court may be binding only on the High Courts in the absence of a direct pronouncement on that question elsewhere by this Court. But as far as this Court is concerned, though not binding, it does have clear persuasive authority. On a careful understanding of the decision in Gujarat State Road Transport Corporation (supra) we cannot understand it as having held that in all claims under the Act proof of negligence as the basis of a claim is jettisoned by the scheme of the Act. In the context of Sections 166 and 163A of the Act of 1988, we are persuaded to think that the so called obiter observations in Minu B. Mehta's case (supra) govern a claim under Section 166 of the Act and they are inapplicable only when a claim is made under Section 163A of the Act. Obviously, it is for the claimant to choose under which provision he should approach the Tribunal and if he chooses to approach the Tribunal under Section 166 of the Act, we cannot see why the principle stated in Minu B. Mehta's case should not apply to him. We are, therefore, not in a position to accept the argument of learned counsel for the respondents that the observations in Minu B. Mehta's case deserve to be ignored. 24. We think that the law laid down in Minu B. Mehta and Anr. v. Balkrishna Ramchandra Nayan and Anr. (supra) was accepted by the legislature while enacting the Motor Vehicles Act, 1988 by introducing Section 163A of the Act providing for payment of compensation notwithstanding anything contained in the Act or in 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 of the owner of the vehicle or the driver of the vehicle. AIR 1977 SC 1248 26. On the facts of this case, there is no finding that Mahmood Hasan, another employee of the owner was driving the vehicle. Even if he was, there is no finding of his negligence. The victim was the Regional Manger of the Company that owned the car. He was using the car given to him by the Company for use. Whether he is treated as the owner of the vehicle or as an employee, he is not covered by the insurance policy taken in terms of the Act - without any special contract - since there is no award under the Workmen's Compensation Act that is required to be satisfied by the insurer. In these circumstances, we hold that the appellant- Insurance Company is not liable to indemnify the insured and is also not obliged to satisfy the award of the Tribunal/Court and then have recourse to the insured, the owner of the vehicle. The High Court was in error in modifying the award of the Tribunal in that regard. 27. We therefore allow the appeal and reversing the decision of the High Court, restore the award of the Tribunal exonerating the appellant from liability. We make no order as to costs. Appeal allowed.” In view of the law laid down by the Supreme Court in the above judgment, the appellant-Insurance Company is not liable to indemnify the insurer and is also not obliged to satisfy the award of the claims Tribunal/Court. Hence, Following the above Supreme Court Judgment, the appeal filed by the Insurance Company is allowed and the matter is remitted for fresh consideration keeping in view the law laid down by the Supreme Court in the above said judgment. In view of allowing and remanding the appeal, no further orders are necessary in the cross objections filed by the claimants and accordingly the cross objections filed by the claimants are closed. There shall be no order as to costs. _____________________ GHULAM MOHAMMED, J Date: 01.07.2010 KA [1] 2007 ACJ 1284