IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS TUESDAY, THE 14TH JULY 2009 / 23RD ASHADHA 1931 MACA.No. 1242 of 2008() ---------------------------------- (AGAINST THE AWARD DATED 8.1.2008 IN OPMV.1316/2004 of MOTOR ACCIDENT CLAIMS TRIBUNAL, MUVATTUPUZHA) .................... APPELLANT(S): IST RESPONDENT: ------------------------------------------------- MATHEW, S/O. DEVASSIA, KUNNINU HOUSE, VAZHAKULAM KARA, MAJALOOR VILLAGE, ERNAKULAM DISTRICT. BY ADV. SMT.P.P.STELLA SRI.BIJIMON C.CHERIAN RESPONDENT(S): PETITIONER & 2ND RESPONDENT: ---------------------------------------------------------------------------- 1. SHAJI MATHEW, W/O. MATHEW, KUNNINU HOUSE, VAZHAKULAM KARA, MAJALOOR VILLAGE, ERNAKULAM DISTRICT. 2. THE BRANCH MANAGER, UNITED INDIA INSURANCE COMPNAY LTD., MUVATTUPUZHA. R2 BY ADV. SMT.P.A.REZIYA. THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 14 /07/2009 ALONG WITH MACA NO. 1905 OF 2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M.JOSEPH & M.L.JOSEPH FRANCIS, JJ. ------------------------------------------------------ M.A.C.A.No.1242 of 2008-D & M.A.C.A.No.1905 of 2008-D ---------------------------------------------- Dated, this the 14th day of July, 2009 J U D G M E N T K.M.Joseph, J. These two appeals are connected and they are disposed of by this common judgment. M.A.C.A.1242 of 2008 is filed by the Ist respondent in O.P.(MV) No.1316/2004 which is a petition filed under Section 166 of the Motor Vehicles Act by the appellant in M.A.C.A No.1905/2008. The vehicle driven by the appellant in MACA No.1242/2008 was involved in an accident resulting in injuries being caused to his wife namely, the appellant in MACA No.1905/2008. The Tribunal has awarded a total compensation of Rs.86,550/- with interest at 8.5 percent from the date of application till satisfaction. We shall refer to the appellant in MACA No.1242/2008 as the owner of the vehicle and the appellant in MACA No.1905/2008 as the claimant. 2. The Tribunal has exonerated the 2nd respondent insurance company from liability. The owner has filed the M.A.C.A.Nos.1242, 1905/2008 -2- appeal challenging the exoneration of the insurance company. The claimant has preferred the appeal seeking enhancement of the compensation awarded. 3. We heard learned counsel appearing for the owner, the claimant and the insurance company. We will take up the appeal filed by the owner. The question posed for our consideration and decision is whether the Tribunal was justified in exonerating the insurance company from liability to reimburse the amount payable by the owner. This is a case of a private car package. We will straight away extract the relevant terms of the policy. The relevant clauses under Section II read as follows: “1. Subject to the limits of liability as laid down in the Schedule hereto the Company will indemnify the insured in the event of an accident caused by or arising out of the use of the vehicle against all sums which the insured shall become legally liable to pay in respect of :- (i) death of or bodily injury to any person including occupants carried in the vehicle (provided such occupants are not carried for hire or reward) but except so far as it is necessary to meet the requirements of Motor Vehicles Act, the Company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured. M.A.C.A.Nos.1242, 1905/2008 -3- (ii) damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured. 2. The Company will pay all costs and expenses incurred with its written consent. 3. In terms of and subject to the limitations of the indemnity granted by this section to the insured, the Company will indemnify any driver who is driving the vehicle on the insured's order or with insured's permission provided that such driver shall as though he/she was the insured observe fulfill and be subject to the terms exceptions and conditions of this Policy in so far as they apply. In the Schedule the limits of the liability is stated as follows: Limits of Liability: Under Section II (i) in respect of any one accident: As per Motor Vehicles Act 1988. Under Section II (ii) in respect of any one claim or series of claims arising out of one event Rs.750000 4. The Schedule of premium reads as follows: M.A.C.A.Nos.1242, 1905/2008 -4- ---------------------------------------------------------------------------------------------------------------- SCHEDULE OF PREMIUM (IN RS.) ---------------------------------------------------------------------------------------------------------------- A: OD- BASIC 4,558,50 B:T.P.=BASIC 500.00 NCB 24% 1,139.63 COMPULSORY PA TO OWNER- DRIVER AMOUNT 200000 100.00 WC TO EMPLOYEE 25.00 GROSS (B) 627 GROSS OD & TP 4,046 LOADING ON TP PREMIUM 2.00 GROSS (A) 3,419 NET PREMIUM 4,046 SERVICE TAX 8% 324 MINIMUM PREMIUM RS.100 NET AMOUNT PAYABLE (ROUNDED) 4,370 ---------------------------------------------------------------------------------------------------------------- 5. There is also a clause which deals with personal accident cover for the owner-driver with which we may not be concerned. We notice that a Division Bench of this Court had occasion to consider a clause which though not identical bears some similarity to the clause which falls for our consideration reported in New India Assurance Company Ltd. v. Hydrose (2008 (3) KLT 778). The Court was considering a “B” policy. The Court inter alia held as follows: “ Here it is not an Act only policy. It is a “B” policy and S.II (1) (i) of the conditions attached to the policy issued in this case shows M.A.C.A.Nos.1242, 1905/2008 -5- that as per the terms and conditions of the policy, gratuitous occupants of the vehicle are covered. Insurer has undertaken liability in respect of death or bodily inujuries to any person including a person conveyed in or on the motor cycle provided such person is not carried for hire or reward. Here no limitation of liability is mentioned in the Schedule. In fact, specific coverage is provided for the risk of gratuitous passenger as per the conditions of policy regarding the coverage of risk due to the death or bodily injury to any person, provided, the person is not carried for hire or reward. In these circumstances, the Insurance Company has by contract agreed to indemnify the insured of the risk of gratuitous passenger in the motor cycle.” 6. Therefore, if we accept the reasoning of the Division Bench of this Court, the owner is justified in contending that insofar as the claimant was his own wife and a gratuitous passenger she was clearly covered by the terms of the policy. But, Smt.P.A.Reziya, learned counsel appearing for the insurance company would submit that there is a fundamental distinction in the provision which was considered by the Division Bench and the provision which is applicable in the facts of this case. That is to say, she would contend that the clause in this case does not end with the words “death of or bodily injury to any person including occupants carried in M.A.C.A.Nos.1242, 1905/2008 -6- the vehicle not for hire or reward”. She would contend that it is followed by the words “ but except so far as it is necessary to meet the requirements of Motor Vehicles Act” She would therefore contend that the addition of this clause in the policy which is issued after 2001 makes all the difference in regard to the question of liability to be shouldered by the insurance company. In other words, she submits that there is no liability to the insurance company to reimburse the owner the amount which he has been found liable to pay by the Tribunal. Learned counsel for the insurance company would also contend that no premium is paid to cover the liability. 7. Learned counsel for the owner would point out that there are no words limiting the liability. An occupant in the vehicle provided the occupant is not for hire or reward is covered by the policy. She would further contend that as far as employees is concerned the owner has paid Rs.25 extra to cover an employee and in this case as the claimant is none other than the wife of the owner who was carried as a gratuitous passenger in the private car and the insurance M.A.C.A.Nos.1242, 1905/2008 -7- company is liable. We are of the view that there is merit in the contention of the owner that the Tribunal should not have exonerated the insurance company from liability. The reasoning of the Tribunal reads as follows: “Next question is whether second respondent is liable. Its contention is that it is not liable for any compensation as the policy issued by it was for a private vehicle and such a policy will not cover a passenger like the petitioner who was travelling as a gratuitous passenger. To establish its case second respondent produced Ext.B1 policy, which shows that vehicle is a private vehicle and the policy did not take care of a passenger for gratis. It covered only third parties and workman and owner and driver. Petitioner did not come within any of these categories. As such I hold that second respondent is not liable to pay any compensation.” I am supported in taking the above view by the decision in Mathew Joseph V.Janaki & others (2007 (1) KLJ (FB) 296)”. 8. We will have to first consider as to what has been laid down by the Full Bench decision in Mathew Joseph vs. Janaki {2007 (1) KLT 747 (F.B)}. The Full Bench inter alia held as follows: “12. In view of our earlier observations, it cannot be perceived that observations in the Full Bench judgment continue to operate. There was available an “Act only” policy to bank upon. The M.A.C.A.Nos.1242, 1905/2008 -8- observations in paragraph 11 of the judgment in Oriental Insurance Co.Ltd v. Ajayakumar (1999 (2) KLT 886 F.B.) reads as following: “Therefore, it has to be taken that the term “any person” referred in clause (b) (i) would take in all passengers for hire or reward or otherwise. We do not find any merit in the contention raised by the learned counsel for the appellant that if the term “any person” in clause (b) (i) would take in passengers in private vehicle carried in for hire or reward then it was unnecessary for the Legislature to bring in the amendment under Act 54 of 1994 to include owner of the goods or his authorised representative carried in the vehicle in clause (i).” The decision substantially had rested on United India Insurance Company Limited v.Appukkuttan (1995 (1) KLT 807). Definitely later decisions have found that the expression 'any person' can have relevance only vis a vis a third party. So long as the view as above prevails, it may not be proper for this Court to hold that the observations made in the Full Bench judgment are to govern the situation. Appukuttan's case is to be deemed as wrongly decided. Gratuitous passengers in transport vehicles, including a motor cycle, can have coverage only when a comprehensive policy or extended policy as might be possible to be issued has been availed of by the owner of the vehicle. Only in such cases, the Insurance Company is required to compensate. We hold that the guidelines set by the Supreme Court are unambiguous viz., that payment of premium alone can cast a corresponding duty on the insurer for rendering coverage on any such group, M.A.C.A.Nos.1242, 1905/2008 -9- when they are not required to be mandatorily brought under insurance protection.” 9. It is submitted by the learned counsel for the insurance company that in the Full Bench decision the policy which fell for consideration was a comprehensive policy. The Full Bench was not dealing with a clause as we have in the case before us and we also notice that the Court was also dealing with the contention of the effect of violation of terms of the policy. In order to resolve the controversy we are called upon to construe the terms of the contract. The mere fact that there is a comprehensive policy would not necessarily mean that the liability of the insurance company is unlimited. However, it is open to the parties to enter into contract by which the insurance company undertakes liability on an extended basis. In other words, it is open to the insurance company to assume liability covering such number of persons in excess of what it is liable to cover under the Act only policy. The terms of Section II(1) has in our view the following result-- It starts with the limiting of liability with reference to the limits of liability laid down in the Schedule. M.A.C.A.Nos.1242, 1905/2008 -10- We had already indicated the limits of liability. The limits of liability is related and conditioned only by the limits under the Motor Vehicles Act, 1988. Under Section II (i) in respect of any one accident it is as per Motor Vehicles Act, 1988. The question arises is as to what is the effect of reference of Motor Vehicles Act,1988. Sub-section 1 of Section 147 of the Motor Vehicles Act, 1988 reads as follows: 147: Requirements of policies and limits of liability--(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- (a) is issued by a person who is an authorised insurer; and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section(2)- xx xx xx xx Then we must necessarily consider Sub-section 2. Sub-section 2 of Section 147 reads as follows: (2). Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, upto the following limits, namely:- (a) save as provided in clause (b), the M.A.C.A.Nos.1242, 1905/2008 -11- amount of liability incurred; (b) in respect of damage to any property of a third party, a limit of rupees six thousand: Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.” 10. Therefore, the liability which is undertaken by the insurance company is the amount of liability incurred that is this is the meaning of the words in clause (a) which provides save as provided in clause (b), the amount of liability incurred. This means that the liability which is incurred by the insured is the liability which the insurance company undertakes to reimburse, that is, the liability which is ultimately determined by the Tribunal. Therefore, once the liability is determined by the Tribunal as the compensation payable, the insurance company would be saddled with the liability to pay the said amount. This, we consider as the limits of liability within the meaning of Section II (1) (i). 11. Having thus dealt with the limits of liability of the insurance company, the further question which is before M.A.C.A.Nos.1242, 1905/2008 -12- us is whether a person like the claimant in this case who was an occupant carried in the vehicle and where there is no dispute that she was carried not for hire or reward is covered by the terms of policy? On the one hand, it is pointed out by the learned counsel for the insurance company that the presence of the words but except so far as it is necessary to meet the requirements of Motor Vehicles Act, will detract from the liability of the insurance company. On the other hand, the learned counsel for the owner contended that the liability which is spoken of in the earlier part of Section II (1) is not any way diluted. It is true that the word 'but' does not have a capital 'B' and when one reads the provision one may at first blush get the impression that the words but except so far as it is necessary to meet the requirements of Motor Vehicles Act, will qualify or limit the word death of or injury to gratuitous occupants carried in the vehicle also. We asked the learned counsel for the owner that if these words are read as meaning that it is part of the same sentence and then it is meant to qualify the earlier part which we have referred what would be the effect. Learned counsel for the M.A.C.A.Nos.1242, 1905/2008 -13- insurance company was not in a position to offer a meaningful interpretation to the words of the clause. In other words, an interpretation would have to be evolved by us which would make the words 'occupants carried in the vehicle (provided such occupants are not carried for hire or reward) meaningful. Now, let us examine whether it is possible for us to pour meaning into the clause without doing violence to the express words occupants carried in the vehicle (provided such occupants are not carried for hire or reward). We are of the view that the words but except so far as it is necessary to meet the requirements of Motor Vehicles Act, is relatable to abridging the liability of the insurance company in respect of a death or injury caused to a person who was travelling in the vehicle in the course of the employment of such person by the insured. In other words, the insurance company wanted to make it clear that it was not undertaking the liability in respect of a death or injury of a person in the course of employment of such person by the insured except so far as it is necessary to meet the requirements of Motor Vehicles Act. The question then arises is what is the meaning of the word M.A.C.A.Nos.1242, 1905/2008 -14- to meet the requirements of Motor Vehicles Act. Proviso to Section 147 (1) reads as follows: “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 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 (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 conductor of the vehicle or in examining tickets on the vehicle, or (c) if it is a goods carriage, being carried in the vehicle, or (ii) to cover any contractual liability.” 12. Therefore, under the Motor Vehicles Act there is no requirement of law that policy should cover the liability arising in respect of the death arising in the course of 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 M.A.C.A.Nos.1242, 1905/2008 -15- other than a liability arising under the Workmen's Compensation Act in respect of the death of, or bodily injury to, any such employee engaged in driving the vehicle, or in the case of a public service vehicle engaged as conductor of the vehicle or in examining tickets on the vehicle, and if it is a goods carriage, being carried in the vehicle, or to cover any contractual liability. Thus in respect of an injury to a person in the course of employment the liability is limited under the Act. The liability in respect of such employee in respect of death or bodily injury is covered provided he is engaged in driving the vehicle, or engaged as conductor of the vehicle or in examining tickets on the vehicle, or goods carried on the goods vehicle. It is clear that though it is stylled as a private car package policy and though the opening words would make it appear that the liability is undertaken in respect of a gratuitous occupant it may purport to enlarge the scope of liability it is obliged to undertake under the Act Policy in respect of employees. In other words, the words except so far as it is necessary to meet the requirements of Motor Vehicles Act is relatable to the latter clause whereunder the M.A.C.A.Nos.1242, 1905/2008 -16- company was dealing with its liability in respect of an employment injury or employment death. This we feel is the interpretation to be placed on this clause. By this interpretation we are keeping alive and rendering meaningful and purposeful the words 'death or bodily injury to any person including occupants carried in the vehicle provided such occupants are not carried for hire or reward' and at the same time, protecting the insurance company against any claim by any person who may be carried on in the vehicle in the course of his employment which it is not required to cover under the proviso to S.147 (1) of the Motor Vehicles Act. For instance, if a cleaner is carried in the car he would not be covered by such a policy as he is not covered by the proviso to Section 147(1) of the Motor Vehicles Act. 13. Smt.P.A.Reziya, the learned counsel for the insurance company refer to two decisions of the Apex Court. In the decision reported in New India Assurance Co.Lts. vs. Jaya (2002 (1) KLT 596) the Apex Court had to deal with the question of the liability incurred by the insurance company and the question posed was whether the liability is M.A.C.A.Nos.1242, 1905/2008 -17- unlimited or higher than the statutory liability. Therein the Court undertook an exhaustive survey of the case law. It referred in particular the decision of the Apex Court in Amrit Lal Sood and Another v. Kaushalya Devi Thapar and Others (1998 (3) SCC 744). Therein the clause which was considered by the Apex Court is as follows: 7. The relevant clauses of the policy are reproduced in paragraph 6 of the said judgment Clause 1 (a) under S.11 relating to liability of third party reads:- 1. The company will indemnify the insured in the event of accident caused by or arising out of the use of the motor car against all sums including claimant's cost and expenses which the insured shall become legally liable to pay in respect of (a) death of or bodily injury to any person but except so afar as is necessary to meet the requirements of S.95 of the Motor Vehicles Act, 1939, the company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured. “Thus under S.11 (1)of the policy the insurer has agreed to indemnify the insured against all sums which the insured shall become legally liable to pay in respect of death of or bodily injury to “any person”. The expressioin “any person” would undoubtedly include an occupant of the car who is gratuitously travelling in the car. The remaining part of Cl(a) relates to cases of death or injury arising out of and in the course of employment of such person by the M.A.C.A.Nos.1242, 1905/2008 -18- insured. In such cases the liability of the insurer is only to the extent necessary to meet the requirements of S.95 of the Act. Insofar as gratuitous passengers are concerned there is no limitation in the policy as such. Hence, under the terms of the policy, the insurer is liable to satisfy the award passed in favour of the the claimant. We are unable to agree with the view expressed by the High Court int his case as the terms of the policy are unambiguous.” And thereafter the Apex Court with reference to Amrit Lal's case (supra) took the following view. “It is not in dispute from the admitted copy of the insurance policy produced before the court that the liability of the appellant is limited to Rs.50,000/- in regard to the claim in question. The relevant clause in the policy relating to limits of liability reads:- Limits of Liability: Limit of the amount of the company's liability under S.11 (1) (i) in respect of any one accident -Rs/50,000/-. Limit of the amount of the company's liability under