1 IN THE HIGH COURT OF BOMBAY AT GOA FIRST APPEALS NO. 277, 278,279,280 & 281 OF 2008 ` FIRST APPEAL NO. 277 OF 2008 National Insurance Company Ltd. .... Appellant V/s Shri Anand Sawant & 2 Ors. .... Respondents WITH FIRST APPEAL NO. 278 OF 2008 National Insurance Company Ltd. .... Appellant V/s Smt. Shubhangi Fadte & anr. .... Respondents WITH FIRST APPEAL NO. 279 OF 2008 National Insurance Company Ltd. .... Appellant V/s Shri Datta Sawant & 2 Ors. .... Respondents WITH FIRST APPEAL NO. 280 OF 2008 National Insurance Company Ltd. .... Appellant V/s Shri Datta Sawant & 2 Ors. .... Respondents WITH FIRST APPEAL NO. 281 OF 2008 National Insurance Company Ltd. .... Appellant V/s Shri Anand Sawant & 2 Ors. .... Respondents Mr. R.G. Ramani, Advocate for the Appellant. Mr. J.P. Mulgaonkar, Advocate for Respondents No. 1 & 2. Mr. J. Godinho, Advocate for Respondent No.3. CORAM : N.A. BRITTO, J. DATE : 26 th MARCH, 2009 ORDER: These appeals can be conveniently disposed of by a common order as they involve facts which are common and the law applicable thereto. 2 2. These appeals are directed against the order dated 4/07/2008 of the learned MACT (Motor Accident Claims Tribunal), Mapusa by which the the learned MACT has directed that compensation under Section 140 of the MV Act, 1988 be paid by the insurer (appellant, herein) as well as the insured (respondent no.3). 3. The appellant had issued a third party policy for a private vehicle bearing No. GA-01-N-9955 which was driven and owned by respondent no.3 and which was involved in an accident on 9/04/2006 at about 15.30 hrs. in which 5 occupants of the said vehicle died. The other respondents are the legal representatives of 4 out of 5 of the said occupants who filed claim petitions against the driver/owner as well as the insurer of the said vehicle including a claim under Section 140 of the Act, which as already stated, came to be decided by the impugned order dated 4/07/2008. 4. The said van bearing no. GA-01-N-9955 along with the said occupants was carrying fire crackers which exploded, due to which the van caught fire and the said occupants suffered severe burn injuries to which they succumbed in the hospital. A panchanama drawn subsequently, prima facie, shows that the said van caught fire as fire crackers were found in it. It appears that an FIR has been lodged on 1/05/2006 against the Committee members of 3 Vithoba Rukmini Temple, Betim and one Suresh Narcekar. The post mortem report dated 12/04/2006 showed that the said occupants died due to burn injuries. 5. There is no dispute that the policy issued by the appellant was produced before the learned MACT at the time of passing the impugned order. The said policy admittedly is a third party policy and it appears that the insured/owner of the said van had paid additional premium to cover certain other risks which included a premium of Rs.40/- covering risk of 4 unnamed passengers in the sum of Rs.20,000/- per person. Another sum of Rs.100/- was paid to cover personal accident to the owner cum driver in the sum of Rs.2 lacs and a sum of Rs.25/- was also paid to cover the risk of an employee, presumably under workman compensation. 6. Not only the policy was produced before the MACT at the time of deciding the application under Section 140 of the Act, but, it was also admitted that the said vehicle was insured with the respondent no.2 (the appellant, herein), and it was specifically stated in the reply filed by the appellant that the liability, if any, was limited to the terms and conditions of the policy. 7. However, it appears from the impugned order that certain submissions 4 were made on behalf of the appellant-respondent no.2 that there were certain breaches committed in relation to the said policy. It was contended that there was a breach of policy of insurance since the fire crackers were kept in the van and, therefore, the insurer had no liability, but, this submission was declined to be accepted as the learned Tribunal found that no such plea was taken in the written statement or in the reply filed to the application for compensation under no fault liability. It also appears that another submission was made that the driver (respondent no.1) had no valid driving licence and this plea also was rejected as no plea was taken in that regard. The learned MACT proceeded on the basis that the vehicle belonged to the respondent no.3, herein, and was used at the time of the accident and the deceased were some of the occupants. The vehicle had caught fire and in that process the deceased had suffered grievous injuries and had died and therefore the respondent no.3 was primarily liable to pay statutory compensation and since the vehicle was insured at the relevant time with the appellant (respondent no.2) and since there was no specific defence raised regarding the breach of policy conditions, the said respondent no.2 (appellant, herein) was liable to indemnify. 8. Shri Ramani, the learned Counsel on behalf of the appellant, has submitted that the policy issued by the appellant in favour of the respondent no.3 was a third party policy. Learned Counsel has further submitted that the 5 occupants, who were not passengers, but, could be taken as gratuitous passengers, were travelling in the said vehicle and, as such, were not third parties and, therefore, the appellant Company was not liable to indemnify respondent no.3, on account of their death. Learned Counsel further submits that the appellant may not be able to skip the contractual liability incurred by the appellant in relation to 4 occupants, but, that is not the issue at present. Shri Ramani's contention is that none of the occupants were third parties and, as such, their legal representatives on account of their death could claim that the appellant, as insurer, should indemnify respondent no.3, the driver and owner of the said vehicle. 9. Shri Godinho, the learned Counsel on behalf of respondent no.3 submits that whether the occupants were third parties or not has got to be decided at trial. He further submits that in that event, it can be left open for the appellant to recover the compensation from the insured, but, for the present, the appellant as well as respondent no.3 are liable to pay the compensation on the principle of no fault. 10. Shri Mulgaonkar, the learned Counsel for other respondents has submitted that the point raised before this Court was not raised before the tribunal and the reply filed was only of denial. Learned Counsel further submits that in the alternative, the other respondents would be entitled to 6 compensation of Rs.20,000/- as per premium paid. Further, learned Counsel submits that at present the appellant ought to pay the compensation under no fault liability, keeping the option open for them to recover the same from the insured. 11. On behalf of the parties, several decisions have been cited and I have perused the same, and, reference will be made to those found relevant. 12. As already stated, there is no dispute that the policy was produced before the trial Court and on behalf of the appellant/respondent no.2, it was contended that the liability of respondent no.2, if any, was limited as per terms and conditions of the policy and, if that be so, it was necessary for the learned MACT to have perused policy and found out whether in terms thereof, the insurer was liable to indemnify the owner of the vehicle towards no fault liability and in this context the submission made by the advocate for the claimants/other respondents that there was no plea taken cannot be accepted. 13. There is no dispute that the appellant had issued a third party policy in favour of respondent no.3, the owner of the vehicle though further premiums were also paid to cover other liabilities, reference to which has already been made. Two questions fall for consideration of this Court. First, whether the 7 appellant having issued only a third party policy, on the facts of the case, was liable to indemnify the insured owner of the vehicle, and if not, could the insurer be directed to pay the compensation with option to recover the same from the insured? 14. As regards the first question, there is no dispute that none of the deceased, whose legal representatives filed the claim petitions, can be considered as third parties, as rightly contended by Shri Ramani, the learned Counsel on behalf of the appellant, relying on Orienal Insurance Company Limited V/s. Sudhakaran K.V. & Ors. (2008 (7) SCC 428). In this case, the Hon'ble Supreme Court has made reference to its various other decisions. The Hon'ble Supreme Court stated that it had in a catena of decisions categorically held that gratuitous passenger in a goods carriage would not be covered by a contract of insurance entered into by and between the insurer and the owner of the vehicle in terms of Section 147 of the Act. Referring to United India Insurance Co. Ltd. V/s. Tilak Singh (2006 (4) SCC 404), the Hon'ble Supreme Court stated that although the observations in New India Assurance Co. Ltd. V/s. Asha Rani (2003(2) SCC 223) were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also and, thus, the Apex Court upheld the contention of the Insurance Company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who 8 was a pillion-rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to gratuitous passenger. At the same time, the Apex Court noted that the provisions of the Act and, in particular, Section 147 of the Act were enacted for the purpose of enforcing the principles of social justice but they had to be kept confined to a third party risk. A contract of insurance which is not statutory in nature should be construed like any other contract. The liability of the insurer to reimburse the owner in respect of a claim thus is statutory whereas the other claims are not. The Apex Court also noted that in terms of the contract of insurance it was entered into for the purpose of covering the third party risk and not the risk of the owner or a pillion rider. An exception in the contract of insurance was made by covering the risk of the driver of the vehicle. The deceased was indisputably, not the driver of the vehicle and thus the contract of insurance did not cover the owner of the vehicle and certainly not the pillion rider and the deceased who was travelling as a passenger, stricto sensu, may not be as a gratuitous passenger as in a given case she may not be a member of the family, a friend or other relative, in the sense of the term which is used in common parlance, she might not be even a passenger. Referring to case of United India Insurance Co. Ltd. V/s. Serjerao (2007 (13) Scale 80) the Apex Court stated that; When a statutory liability has been imposed upon the owner, in our opinion, the same cannot be extended to the liability of an insurer to indemnify the owner, although in terms of the insurance policy or under the Act, it would not be liable 9 therefore. In a given case, the statutory liability of an insurance company therefore, either may be nil or a sum lower than the amount specified under Section 140 of the Act. Thus, when a separate application is filed in terms of Section 140 of the Act, in terms of Section 168 thereof, an insurer has to be given a notice in which event, it goes without saying, it would be open to the insurance company to plead and prove that it is not liable at all. The Court also referred to the case of Oriental Insurance Co. Ltd. V/s. Brij Mohan (2007 (7) Scale 753) wherein it was held that the insurance company had no liability. Again, referring to the case of Ghulam Mohammad Dar V/s. State of J & K (2008 (1) SCC 422), the Apex Court opined that the words “injury to any person” as inserted by reason of the 1994 Amendment would only mean a third party and not a passenger travelling on a goods carriage whether gratuitous or otherwise. Summarising the decisions quoted, the Apex Court noted that; (i) The liability of the insurance company in a case of this nature would not extend to a pillion-rider of the motor vehicle unless the requisite amount of premium is paid covering his/her risk; (ii) The legal obligation arising under Section 147 of the Act cannot be extended to an injury of the death of the owner of vehicle or the pillion-rider; (iii) The pillion-rider in a two-wheeler was not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle. 15. In National Insurance Company Ltd. V/s. Jethu Ram & Ors. (1998 10 (2) T.A.C. 805), the Apex Court referred to Section 92-A which corresponds now to Section 140 of the Act and other Sections of the Act and observed that: On a close scrutiny of the aforesaid provisions, we do not find anything contained therein which would suggest that the liability which accrues under the provisions of Section 92-A has to be borne by the insurer even if it is ultimately held that under the policy of insurance the insurer is not liable to pay the compensation in question. Their Lordships then opined that the Tribunal as well as the High Court has misread the provisions of the Act and therefore the judgment of the Tribunal and the High Court could not be sustained so far as it related to the liability of the insurer arising under Sections 92-A and 92-B of the Act. The Court held that the insurer having paid the amount under the aforesaid provisions was entitled to get it reimbursed from the owner. 16. In New India Insurance Co. Ltd. V/s. Darshana Devi (2008 (7) SCC 416), on which reliance has been placed by learned advocate Shri Mulgaonkar, the Apex Court has taken note of various decisions regarding the liability of an insurance company to indemnify the insured. Some of the decisions/relevant paras are: 13. In Dhanraj V/s. New India Assurance Co. Ltd. (2004 (8) SCC 553) this Court held: “9. In Oriental Insurance Co. Ltd. V/s. Sunita Rathi (1998 (1) SCC 365) it has been held that the liability of an insurance company is only for the purpose of indemnifying the insured against liabilities incurred towards a third person or in respect of damages to property. Thus, where the insured i.e. an owner of the vehicle has no liability to a third party the insurance company has no liability also.” 11 14. In United India Insurance Co. Ltd. V/s. Tilak Singh (2006 (4) SCC 404), it was opined: “21. ... In our view, although the observations made in Asha Rani's case were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also. Thus, we must uphold the contention of the appellant Insurance Company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to a gratuitous passenger.” This Court, inter alia, opined that in a case where the driver has no licence to drive a particular category motor vehicle, the insurance company would not be liable. (See National Insurance Co. Ltd. V/s. Swaran Singh (2004 (3) SCC 297)). 16. In New India Assurance Co. Ltd. V/s. Vedwati (2007 (9) SCC 486) this Court held that passenger of a motor vehicle is not a third party, stating: “9. ... The difference in the language of 'goods vehicle' as appearing in the old Act and 'goods carriage' in the Act is of significance. A bare reading of the provisions makes it clear that the legislative intent was to prohibit goods vehicle from carrying any passenger. This is clear from the expression 'in addition to passengers' as contained in definition of 'goods vehicle' in the old Act. The position becomes further clear because the expression used is 'goods carriage' is solely for the carriage of 'goods'. Carrying of passengers in a goods carriage is not contemplated in the Act. There is no provision similar to clause (ii) of the proviso appended to Section 95 of the old Act prescribing requirement of insurance policy. Even Section 147 of the Act mandates compulsory coverage against death of or bodily injury to any passenger of 'public service vehicle'. The proviso makes it further clear that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in goods vehicle would be limited to 12 liability under the Workmen's Compensation Act, 1923 (in short “the WC Act”). There is no reference to any passenger in 'goods carriage'. 10. The inevitable conclusion, therefore, is that provisions of the Act do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the insurer would have no liability therefore.” 17. In Oriental Insurance Co. Ltd. V/s. Jhuma Saha (2007 (9) SCC 263), it was held: “11. Liability of the insurer Company is to the extent of indemnification of the insured against the respondent or an injured person, a third person or in respect of damages of property. Thus, if the insured cannot be fastened with any liability under the provisions of the Motor Vehicles Act, the question of the insurer being liable to indemnify the insured, therefore, does not arise.” (See also New India Assurance Co. Ltd. V/s. Asha Rani (2003 (2) SCC 223)). 17. In Yallwwa (Smt.) & Ors. V/s. National Insurance Co. Ltd. & Anr. (2007 (6) SCC 657), the Apex Court observed that Section 140, as noticed herein before, provided for no fault liability. It used the words “accident arising out of the use of a motor vehicle”, “the owner of the vehicle” and when more than two vehicles are involved, “the owners of the vehicles” shall jointly and severally, be liable to pay compensation. The said provision, therefore, made it clear that the owners of the vehicles liable but not the insurer per se. Irrespective of the fact whether a claim petition is required to be adjudicated under Chapter X or XII of the Act, it is permissible to raise a defence in terms of sub-section (2) of Section 149 of the Act. It is even 13 possible for the owner of the vehicle to raise a contention that his vehicle being not involved in the accident, he is not liable to pay any amount in terms of Section 140 of the Act. The Apex Court further held that one of the defences available to the insurer is breach of conditions specified in the policy. When such a defence is raised, the Tribunal is required to go into the said question. Section 140 of the Act does not contemplate that an insurance company shall also be liable to deposit the amount while it has no fault (sic obligation) whatsoever in terms of sub-section (2) of Section 147 of the Act. 18. Admittedly, in the case at hand, the policy obtained by the owner of the vehicle was third party policy and the occupants who died in the said accident, and whose legal representatives have filed applications, could not be described as third parties, in the light of various judgments of the Apex Court beginning with Asha Rani (supra, a decision by 3 learned Judges) and thereafter followed in Baljit Kaur and Ors. (2004 (2) SCC 1) (again a 3 judge Bench decision) including in the case of Sudhakaran K.V. and Ors. (supra). In other words, the liability of the insurer to indemnify the insured would be confined only as regards third parties to accident. The insurer would be certainly liable to meet other contractual liability incurred by virtue of additional premiums paid and that matter can be examined at the appropriate stage since additional premium was paid only in respect of 4 unnamed passengers and 5 such passengers had died in the said accident. 14 Since the policy covered third party risk, it was only the insured who was liable to pay the compensation under no fault liability. The question to indemnify the insurer would have been there only in case any third parties were involved in the accident and not otherwise. This is a case where the liability of the insurer to indemnify the insured is nil. 19. As regards the second question, it can be seen from Oriental Insurance Company Ltd. V/s. Nanjapan & Ors. (2004 (13) SCC 224) on which reliance has been placed by Shri Mulgaonkar, that the Apex Court held that the view of the High Court that the insurer had liability to pay the compensation by way of indemnification could not be maintained in view of what has been stated by the Apex Court in New India Assurance Co. Ltd. V/s. Asha Rani (supra) and Oriental Insurance Co. Ltd. V/s. Devireddy Konda Reddy (2003 (2) SCC 339). Setting aside the judgment of the High Court, the Hon'ble Supreme Court following National Insurance Co. Ltd. V/s. Baljit Kaur (2004 (2) SCC 1) stated that the insurer should pay the quantum of compensation fixed by the Tribunal, about which there was no dispute raised, to the respondent-claimants within three months and for the purpose of recovering the same from the insured, the insurer was not be required to file a suit but it may initiate a proceeding before the executing Court concerned as if the dispute between the insurer and the owner was the subject matter of determination before the Tribunal and the issue is decided 15 against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the vehicle ought to be issued a notice and was required to furnish the security for the entire amount which the insurer will pay to the claimants. It was further directed that the offending vehicle should be attached as a part of the security and for that if necessity arose the executing court was required to take assistance of the Regional Transport Authority. 20. In New India Insurance Co. Ltd. V/s. Darshana Devi (decision dated 12/2/2008, reported in 2008 (7) SCC 416), the deceased was travelling on the mudguard of the tractor who fell and died due to the negligent driving of the tractor by the driver. The plea taken that the deceased was not a third party was accepted following various decisions cited therein, including of Asha Rani, but considering that the claimant was a poor labourer and following the ratio of Brij Mohan and exercising its extra ordinary jurisdiction under Section 142 of the Constitution the Apex Court directed the insurer to pay the compensation and recover the same from the insured without filing separate execution application. In Samundra Devi & Ors. V/s. Narendra Kaur & Ors. (2008 (9) SCC 100), the Apex Court noted in para 16 as follows ; 16.It has not been disputed before us 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 16 a third party and recover the same from the owner