FAO No.5063 of 2006 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH FAO No.5063 of 2006 Date of decision:24.08.2010 Oriental Insuarance Co.Ltd. ......Appellant Versus Gurmel Kaur & ors. ......Respondents CORAM:HON'BLE MR.JUSTICE K.KANNAN Present: Mr.R.K.Bashamboo, Advocate, for the appellant, Mr.Vijay Lath, Advocate, for respondents No.1 to 4, Mr.Ashwani Arora, Advocate, for respondents No.5 & 6. ****** K.Kannan J.(Oral) 1. The Insurance Company is in appeal contending that the deceased was a person travelling on the mudguard of the tractor and the Insurance Company is, therefore, not liable. The Tribunal reasoned that when there was a valid insurance for the tractor, the liability must be taken to be available for a person travelling on the mudguard also. The defence was that the driver did not have a valid driving licence and, therefore, the liability of the Insurance Company was considered at the trial, only on whether there was a breach in the term of the policy. It was only at the time of arguments, for the first time, it was contended by the insurer that the deceased, who was travelling on the mudguard of a tractor was not a person who was entitled to make the insurer liable at all. The contention by the respondents in defence to the arguments made on behalf of the insurer was that the Tribunal was justified in rejecting the insurer's plea and awarding to the claimants, a compensation FAO No.5063 of 2006 2 against the insurer also. If the Tribunal was adverting to the contention of the insurer that the liability could not be attached for a death resulting from a person travelling on the mudguard of a tractor, it was only to address all the contentions of the bar in the judgment. 2. While the learned counsel appearing on behalf of the insurer would contend again in appeal that the Insurance Company would not be liable for a person who was travelling on the mudguard of a tractor, the counsel was not arguing for any violation of the term of policy. On the other hand, the contention is that the scheme of the Motor Vehicles Act itself does not make provision for obtaining enforcement of an award for a death of a person travelling in a tractor when he was not himself a driver. The tractor is defined under Section 2(44) of the Motor Vehicles Act, 1988 which reads as follows: “ The tractor means a motor vehicle which is not itself constructed to carry any load other than (the equipments used for the purpose) or propulsion but excludes a road roller.” A perusal of the definition of word 'tractor' shows that the tractor itself is not designed to carry any load without the equipments. The tractor could carry load only when a trailer is attached. It then becomes even a goods carriage. A trailer is defined under Section 2(46) of the Motor Vehicles Act, 1988. When attached to a tractor, the two become a 'goods carriage'. While defining a 'light motor vehicle' under Section 2(21) of the Motor Vehicles Act, 1988, it includes within its definition a tractor also. All that it means, therefore, is that a tractor is also a light motor vehicle FAO No.5063 of 2006 3 that can be attached to a trailer to qualify for a definition of a goods carriage. If there is an insurance, which is necessary under Section 147 of the Motor Vehicles Act, 1988, any owner could obtain indemnity on the policy of the insurance, only for a claim arising out of the death or bodily injury for a person who was driving a tractor or to a third party who is involved in an accident with the tractor. A tractor, on a stand-alone basis, is simply not designed to carry passengers and hence there was no insurance cover necessary for carrying passengers. It would become necessary to make a specific pleading in a case where the insurer is pleading for a limitation of liability or any of the statutory defences which Section 149 (2) of the Motor Vehicles Act prescribes. 3. The learned counsel appearing for the respondents refers me to a judgment of the Hon'ble The Supreme Court of India in 'National Insurance Co.Ltd. V. Jugal Kishore and others' reported in 1988 ACJ 270. In the said judgment, The Hon'ble Supreme Court of India, while considering the issue of restriction of liability to a particular amount, the Court said that when an Insurance Company wishes to take a defence in a claim petition that its liability is not in excess of the statutory liability, it should file a copy of the insurance policy along with its defence. These observations, the learned counsel would urge as giving a complete answer to a situation arising in this case. The same judgment also refers: “ It is the duty of the party which is in possession of a document which would be helpful in doing justice in the clause, to produce the said FAO No.5063 of 2006 4 document and such party should not be permitted to take shelter behind the abstract doctrine of burden of proof. This duty is greater in the case of instrumentalities of the State who are under an obligation to act fairly.” 4. These observations of the Hon'ble Supreme Court of India could easily be understood to mean that in situations where the statute provides for some restriction of liability, it shall still become possible for an insurer to make for a special contract covering a liability in excess of what the statute prescribes for. In other words, this could happen typically in situations where statute makes it compulsory certain types of insurance under section 147 of the Motor Vehicles Act 1988 and if a claim is made by a person, say for instance, a gratuitous passenger in a private vehicle, unless the insurance company specifically pleads that there is no cover for a passenger, it shall not become possible for an insurer to contend that it is not liable. The reason is that there could be a term in a policy to cover a particular state of things which could be in excess of what is provided under section 147 of the Motor Vehicles Act 1988. This decision must, therefore, answer only situations where there is a possibility of making the insurer liable by an additional term in a policy and, therefore, if a restriction of liability is sought to be made by the insurer, it should be specifically pleaded. 5. The decision of the Hon'ble Supreme Court cannot apply, in my respectful view, to situations where there is simply no scope for founding cause of action for any liability. Here, we are not merely talking about the violation of terms of policy under Section 147 of the Motor Vehicles Act 1988. We are, however, addressing FAO No.5063 of 2006 5 an issue of a situation which the Act itself did not contemplate. A particular vehicle such as a tractor is simply not designed to carry passengers. It cannot provide for any place for anyone to sit on a mudguard though it must be a commonplace occurrence. If there is a need for stricter enforcement of this law, I would take a strict approach as absolutely essential. The dilution of a norm of safety of travel coming through Judgment will sound a wrong signal. Persons travelling on bus roof or hanging out of it or swirling on a foot board are common sights too but they are not permitted. It is time to respond strictly to certain types of claims so that wrong practices of transporting oneself from one place to another which are dangerous in themselves are not adopted. This is perhaps a hard situation for the claimants who are shown the door for what wrong that they did not do. There are equally difficult situations such as when there are hit and run cases where the driver or the owner of the vehicle is not traced and the hapless representatives of a deceased bread-winner get no more than a pittance of a State assistance through fund contemplated under section 163 of the Motor Vehicles Act 1988. 6. Various civil societies have responded in various ways to address the claims arising in this fashion. In United Kingdom, there is a Motor Insurance Bureau which is a fund constituted by several Insurance Companies to satisfy the claims of persons who are otherwise not entitled to compensation such as in a hit and run situation or when there is no driving licence or when there is an insolvent owner who cannot satisfy the claim. Among the most important changes brought in the MV Act viz., the provision that contemplates a scheme for payment out of a fund for victims of hit FAO No.5063 of 2006 6 and run cases came after the 51st Report of the Law Commission of India. Making reference to Article 41 of the Constitution of India, the Commission exhorted the need to compensate victims as arising under the Directive Principles of State Policy that 'The State shall within limits of its economic capacity and development, make effective provision for securing the right to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want'. Further tracing the justification for this provision to U.K., the Law Commission referred to the agreement of Motor Insurance Bureau (MIB) with the Minister of Transport that provided for enforcement of 'a judgment in respect of any liability which is required to be covered by a policy of insurance, whether or not such person is in fact covered by a contract of insurance and such judgment is not satisfied in full within 7 days from the day when the judgment was given, then the MIB will satisfy the judgment.' Initially the agreement did not provide for payment in cases where the offending vehicle could not be traced or when the driver had no valid driving licence. This was strongly criticized by Sachs J., in Adams v Andrews (1964)2 LR347 (QBD)that dealt with a case of negligence of an untraced motor-cyclist, who caused the driver of a car, in which the plaintiff was travelling a passenger, to swerve and overturn. He observed as illogical the MIB's unwillingness to come to the rescue of the individual who had to go cap-in-hand for an ex- gratia payment. In South Africa, the legislation has been to provide for a petroleum surcharge to satisfy the claims arising from every kind of situation through a motor accident. These cases are probably reminders to a civil society of India and to the Parliament to set the FAO No.5063 of 2006 7 things in order. The Courts only show the way; they does not legislate. I have attempted to show a way and I will make no attempt to provide for a relief through a non-existent legislative provision. 7. Over the years, the situation has changed and MIB now operates under two agreements with the Secretary of State for the Environment namely, 'The Uninsured Drivers Agreement' and The Untraced Drivers Agreement'. The “uninsured driver” will either have no car insurance at all, or by virtue of the policy have no valid car insurance. If the uninsured driver was for example, a tourist driving a friend's car without having any car insurance, the MIB will be involved in the settlement of the Third Party injury and/ or property claim. If the uninsured driver has no valid car insurance, for example, there is only private use on the policy but whilst using the car for business the driver causes a Third Party to suffer a loss, the insurer will repudiate the claim. The MIB will however insist that the insurer will pay the Third Party. The insurer must then attempt to recover its costs from its own customer. An “untraced driver” is for example, a joy rider or someone who has failed to stop at the scene of an accident and is never found. The MIB will consider claims for losses caused by untraced drivers provided that those losses are otherwise uninsured, and the incident resulted in personal injury or death. This is because it would be too easy to submit a fraudulent claim for property only. 8. In its present form as applied in UK and other countries of the European Union, MIB addresses the concern of four situations viz, of hit and run cases, of unlicensed drivers, uninsured vehicles and non-satisfaction of the award for a period beyond 7 days when FAO No.5063 of 2006 8 the award becomes enforceable. The 1989 scheme that provides for a mechanism for payment of compensation and which was inspired by MIB, unfortunately subverts the entitlement to the nature of gratis with a further cap on the quantum of entitlement to a few thousands of rupees. Underwriting motor insurance policies is no loss making proposition, although it is always a familiar refrain trumpeted from roof tops by insurance companies. Look at the statistics: The Tariff Advisory committee -Data Repository has issued the Summary of reports form Motor Data of 4 PSUs for 2005-06 that against a total premium of Rs.6217.78 Cr collected for all categories of vehicles, the total number of claims were to the tune of 2,610,930. The total claims paid were to the tune of Rs.5544.92 Cr against total incurred liability of Rs.6180.40 cr. Both the figures could be seen to be less than total premiums collected. It is therefore not correct to assume that Insurance companies are running under loss in motor insurance business. Better management by private insurance companies and competitive policies with better collection of revenues by tapping the market effectively ought to allow for sufficient surplus to run the scheme on the lines of MIB, successfully in India. The MIB model has been successfully replicated by nearly 50 countries that include all the countries belonging to European Union. Singapore already has MIB set up as early as in 1975. In Indian situations, there is perhaps a need to cover other types of situations which are recurrent themes: one, passengers in goods carriages being carried as marriage parties in open tractor-trailer trolleys or lorries; persons sitting on mudguards of tractors; persons travelling on roof tops of buses, to state a few instances. If we are convinced that these are FAO No.5063 of 2006 9 realities of modes of travel, either we must prevent these occurrences by booking violators and punish them tellingly that as punitive or bring about a change in law that will cover these situations through the MIB model. 9. As regards claimants, this Court has already held that a victim of accident who rolls down a mudguard of a tractor and getting killed under its own wheels does not have a favourable trial for pursuing a claim for compensation in FAO No.5111 of 2006 Dated: 24.08.2010 in a case titled United India Insurance Co.Ltd. Vs. Ramjilal & ors. There is a whole body of case law that have addressed this situation and held that no claim for compensation is payable by the Insurance Company for a victim travelling on a mudguard of a tractor. The non-liability of the insurer for cases travelling on the mudguard of the tractor has been dealt with by cases of Hon'ble Supreme Court in Oriental Insurance Co. Ltd. Vs. Brij Mohan 2007(7) SCC 56, National Insurance Co. Ltd. Vs. Chinnama and others 2004(8) SCC 697 and New India Insurance Co. Vs. Darshana Devi 2008(7) SCC 416. The same issue has come up for consideration to similar results in other Courts in New India Assurance Co. Ltd. Vs. Vide Devi 2001(1) PLR 396: 2001(4) RCR (civil) 46, Kaveriammal Vs. Sambandan 2008 ACJ 974 and National Insurance Co. Ltd. Vs. Bramarbike 2006(2) RCR (civil) 394. 10. The claim petition against the Insurance Company cannot, therefore, survive and the appeal is hereby allowed. 24.08.2010 (K.Kannan) Sailesh Judge