1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO .585 OF 1997 The Oriental insurance Co. Ltd …………………. ..Appellant versus M/s Yogesh Trading Co and others……. ..Respondents ......... Mr.S.R.Singh for Appellant Ms.Nikita Trivedi i/b YKS Legal for Respondents no.1and 2 Mr.M.B.Kotak for Respondent No.5 CORAM : Abhay S. Oka, J. DATE : 17th March 2010 JUDGMENT : 1) By this appeal, the appellant has taken an exception to the judgment and award made on 21st October 1995 by the learned Member of the Motor Accident Claims Tribunal on a claim petition filed by the first respondent. The said claim petition was filed under section 110A of the Motor Vehicles Act, 1939 (hereinafter referred to as "the said Act of 1939"). 2) The first respondent filed a claim petition against second to fifth respondents as well as the appellant. According to the case of the first respondent, the said respondent had engaged the tanker owned by the second respondent for carrying 11,000 litre of kerosene from 2 Mumbai to Satara. The said tanker which was being driven by the third respondent was involved with an accident with the truck owned by the fourth respondent. As a result of the impact, the tanker turned turtle and the kerosene was lost. The tanker was insured with the appellant and truck was insured with the fifth respondent. The allegation in the claim petition made by the first respondent is that the accident occurred due to rash and negligent driving by drivers of both the tanker and the truck. The case made out in the claim petition is that due to loss of kerosene, the first respondent suffered loss of RS 25,000/- and therefore , a claim was made for grant of compensation of RS 27,250/-. 3) The appellant filed written statement contending that though the tanker was insured with the appellant, the liability of goods carried in the vehicle was not covered under the terms of the policy. It was contended that the policy of insurance did not cover the risk of the goods carried in the tanker. 4) By the impugned judgment and award, it was held that both the vehicles were equally responsible for the accident. It was held that the 5th respondent, the insurer of the truck, was not liable to pay any compensation as the policy issued by the said respondent was validly cancelled before the accident. The tribunal rejected the 3 defence of the appellant by holding that the first respondent was a "third party" vis-à-vis the second respondent and the appellant. The tribunal held that the first respondent was entitled to compensation of Rs. 21, 526.25/-. The liability of the appellant and second and third respondents was restricted to Rs. 10,263 and the balance amount of Rs. 10,263 was made payable by the fourth respondent who was the owner of the truck. 5) The learned counsel appearing for the appellant submitted that the first respondent cannot be termed as a "third party" inasmuch as the said respondent had hired the tanker for carrying kerosene. He submitted that the liability of the second respondent may arise only on the basis of contractual obligation of safely carrying the goods of the first respondent. He submitted that under the proviso (iii) of section 95 (1) of the said act, a policy of insurance was not required to cover any contractual liability. He submitted that liability as regards the goods carried in the vehicle is not covered by a motor insurance policy. His submission is that such liability may be at highest under a marine insurance policy. He submitted that the appellant insurer was not at all liable. He relied upon a decision of Gujarat High Court in the case of Ahmed A.Saiyed and another (1985 ACJ 83). He relied upon a decision of Madhya Pradesh High Court in the case of Kishori Vs. Chairman ,Tribal Service Co-op 4 Society Ltd and others (1988 ACJ 636). He relied upon a decision of this Court in the case of Suba Transport Co and another Vs. Phiroze Sethane Pvt. Ltd (1993 ACJ 77). Lastly, he pointed out that a partner of the first respondent who deposed in the claim petition on behalf of the first respondent stated that the second respondent was his nephew. He submitted that the claim petition was collusive petition. He pointed out that the first and second respondents are being represented by the same advocate. 6) The learned counsel appearing for the first and second respondents supported the impugned judgment and award. She invited the attention of the Court to section 95 of the said Act of 1939. She submitted that in view of clause (aa) of sub-section 1 of section 110A of the said act of 1939, a claim petition is maintainable by the owner of the property which is damaged due to accident involving a motor vehicle. She submitted that in view of sub-section 1 of section 110, a third party who has suffered loss on account of damage to his property arising out of the use of motor vehicle, is entitled to maintain a claim petition. She pointed out that the first respondent is a third party. She submitted that the definition of the word property is an inclusive definition. She submitted that any person who is not a driver or insured is a third party. She submitted that as the goods of the first respondent who was a third party got damaged 5 due to an accident involving motor vehicle, the claim is maintainable and under section 95 of the said Act of 1939, the insurer of the vehicle in which goods are carried is liable to indemnify the owner of the vehicle against the claim made by third parties like the first respondent. She placed reliance on a decision of the Apex Court in the case of Laxmikant Jha Vs.Commissioner of Wealth Tax ([1974]3 SCC 126). She relied upon a decision of Gauhati High Court in the case of Helen Ghosh Vs Shri Babul Roy and others( I [1995] ACC 95). She relied upon a decision of the Himachal Pradesh High Court in the case of Kala Vs. Amrit Kumar and others (2005ACJ 427). She relied upon a decision of the Madras High Court in the case of Generel Assurance Society Ltd versus N.A.Mohammed Hussain (AIR 1966 Madras 388). She submitted that the relationship between a partner of the first respondent and the second respondent is not relevant inasmuch as it is the statutory liability of the appellant to indemnify the second respondent. She submitted that no interference is called for. The learned counsel appearing for the fifth respondent also assisted the Court by making submissions. 7) I have given careful consideration to the submissions. Section 95 reads thus: 6 “95. Requirements of policies and limits of liability.—(1) In order to comply with the requirements of this Chapter, a policy of insurance may be a policy which— (a) is issued by a person who is an authorised insurer or by a cooperative society allowed under Section 108 to transact the business of an insurer, and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)— (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place; (ii) against the 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: Provided that a policy shall not be required— (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employees 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 (8 of 1923), in respect of the death of, or bodily injury to, any such employee— (a) engaged in driving the vehicle, or (b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or (c) if it is a goods vehicle, being carried in the vehicle; or (ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, or (iii) to cover any contractual liability.” 7 8) A reliance has been placed on sub-clause (i) of clause ( b) of sub- section 1 of section 95. The question is what is the interpretation of "damage to property of a third party". The submission of the learned counsel appearing for the first respondent based on various decisions of the Apex Court is that the word "property" is of a widest import. Her submission was that the definition of the word "property" requires a liberal interpretation. However, the real issue is who can be a third party within the meaning of the aforesaid clause in section 95. Under section 94 of the said Act of 1939, no person can use a motor vehicle in a public place unless he has taken insurance in accordance with the provisions of the said Act of 1939. Section 95 lays down requirements of a policy of insurance which is made mandatory under section 94 of the said Act. The contention of the first respondent is that the words "third party" are wide enough to cover all persons except the driver and insured. This ar- gument has been specifically rejected by the Apex Court in the case of Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co. (P) Ltd., (1977) 2 SCC 745. In paragraph 20 of the said de- cision it was held thus: “20. Sections 95(a) and 95(b)(i) of the Motor Vehicles Act adopted the provisions of the English Road Traffic Act, 1960, and excluded the liability of the insurance company regarding the risk to the passengers. Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death or bodily injury to any person or damage to any property of a third party caused by or arising out of 8 the use of the vehicle in a public place. The plea that the words “third party” are wide enough to cover all per- sons except the person and the insurer is negatived as the insurance cover is not available to the passengers made clear by the proviso to sub-section which provides that a policy shall not be required: “(ii) except where the vehicle is a vehicle in which pas- sengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being car- ried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises.” Therefore it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire or reward. As under Section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not re- quired to be insured the plea of the counsel for the insur- ance company will have to be accepted and the insurance company held not liable under the requirements of the Mo- tor Vehicles Act.” (emphasis added) 9) Thus the very wide interpretation was sought to be made by the 1st respondent of the words "third party" by contending that the said words mean all others except the driver and the insured. The said contention was rejected by the Apex Court. The liability of all pas- sengers travelling in a goods vehicle is not required to be covered under the policy. In the present case, the first respondent had hired the tanker insured with the appellant for carrying kerosene. The compensation is sought to be recovered by the first respondent al- leging negligence against the driver of the tanker. The first respon- dent claims to be a third party. Oua the insurer of the tanker , the first respondent being the owner of the goods or property carried in 9 the tanker cannot be a third party. The tanker was being driven for delivering the kerosene of the first respondent. On plain reading of section 95, there is no requirement of policy covering the liability of the goods carried in a goods carrier. The policy is required to cover liability of the owner of goods who accompanies the goods in the goods vehicle which is hired by him for carrying his goods. The per- sons whose liability is required to be covered under section 95 are the third parties. 10) If the tanker would have given a dash to another tanker carrying kerosene and if the kerosene would be lost as a result of the impact, the owner of the kerosene could have been held to be a third party qua the insurer of the tanker which gave a dash. A policy of insurance contemplated by section 95 is issued for indemnifying the insured against the liability of the third parties contemplated by the said section incurred by the insured as a result of an accident. In the present case, under a contract between the first respondent, the second respondent was under an obligation to safely carry the goods of the first respondent to the agreed destination. As a result of the breach committed by the second respondent of the said obligation, the liability incurred by the second party is contractual. In view of clause (iii) of explanation to subsection 1 of section 95, the policy is not required to cover contractual liability. 10 11)The learned member of the Tribunal observed that the first respondent-claimant was a third party vis – a-vis the insured and the insurer. The said observation is not consistent with the scheme of section 95 of the said Act of 1939. The decision of the Apex Court in the cases of Laxmikant Jha (supra) will not help the first respondent. The decision of the Gauhati High Court will have no application as the first respondent is not a third party. For the similar reason, the decision of Himachal Pradesh High Court is of no consequence. Even the decision of Madras High Court relied upon by the first respondent does not deal with the issue as to whether such a party can be a third party. Lastly, the learned counsel appearing for the first respondent orally submitted that there is an old decision of the Privy Council (1943AC p121) taking the view that any person who is not the insured is a third party. The view expressed by the Apex court is to the contrary. Hence, the appeal by the appellant insurer must succeed. 12) Hence, I pass following order: (a) The appeal is allowed. 11 (b) The impugned award is hereby set aside as against the appellant. The rest of the award is confirmed. (c) There will be no order as to costs. (Judge)