FA/1368/2008 1/12 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1368 of 2008 With CIVIL APPLICATION No. 3446 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE D.H.WAGHELA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= UNITED INDIA INSURANCE COMPANY LTD THROUGH REGIONAL OFFICE - Appellant(s) Versus NARSHIBHAI KESHABHAI GOVANI - Defendant(s) ========================================================= Appearance : (MR PV NANAVATI) for Appellant(s) : 1,MR VIBHUTI NANAVATI for Appellant(s) : 1, None for Defendant(s) : 1, 1.2.1, 1.2.2, 1.2.3, 1.2.4, 1.2.5,1.2.6 ========================================================= CORAM : HONOURABLE MR.JUSTICE D.H.WAGHELA Date : 16/04/2008 ORAL JUDGMENT 1. This First Appeal under Section 173 of the Motor Vehicles Act, 1988 (for short, “the Act”) is preferred from award dated 30.10.2007 of M.A.C.T. (Auxiliary), Rajkot in Claim Case FA/1368/2008 2/12 JUDGMENT No.1449 of 2000; and learned counsel having produced the relevant and essential material on record, it was heard for final disposal at the admission stage. 2. The brief facts of the case about which there is no dispute are that the heirs and legal representatives of deceased Mukeshbhai Narshibhai Govani approached the Tribunal under Section 166 of the Act for compensation of Rs.4,00,000/- for death of Mukeshbhai in the vehicular accident involving tractor and trailer insured by the appellant. The accident happened on 12.07.2000 at about 4:30 pm. on the outskirts of village Mevasa when it was on its way to a nursery and the deceased was travelling on it as a labourer. The father of the deceased deposed at Exh.31 and admitted to have no personal knowledge about the accident. It was, however, admitted by him that on 13.07.2000 police had recorded his statement and, in his statement, he had dictated that his son Mukesh was sitting on the mudguard of the tractor and he was crushed under the wheel of the tractor after falling down. Panchnama of the scene of accident was produced at Exh.33. It was admitted in the statement at Exh.36 of the driver of the tractor that on the day of occurrence, he himself, labourer Mukesh (deceased) and Bharwad Maya were working on the tractor of respondent FA/1368/2008 3/12 JUDGMENT No.6 herein (owner-insured) for taking plants of nursery from different places and the labourers were sitting on the mudguard of the tractor when, on a slope, he could not control the tractor and met with the accident while one wheel of the tractor got detached, the deceased fell down from the mudguard and wheel of the tractor ran over his head. 3. Learned counsel Mr.Nanavati, appearing for the appellant-Insurance Company, vehemently argued that, since the deceased was travelling on the mudguard of the tractor in violation of the Motor Vehicles Rules and tractor was not a vehicle for carrying passengers or insured as such, the insurer was not liable to indemnify the insured or pay any amount by way of compensation to the claimants. Learned counsel relied upon recent order of the Supreme Court in Oriental Insurance Co.Ltd. V/s. Natthi Bai and Ors. [S.L.P.(Civil) No.3900 of 2006], which relied on judgment of the Supreme Court in National Insurance Co.Ltd. V/s. Baljit Kaur and others [(2004)2 SCC 1]. The quantum of compensation of Rs.2,31,000/- with interest at the rate of 9% and cost was not called into question by the appellant. 4. It was seen from the aforesaid judgment FA/1368/2008 4/12 JUDGMENT in National Insurance Co.Ltd. V/s. Baljit Kaur and others that the question before the Supreme Court was as to whether an insurance policy in respect of a goods vehicle would also cover a gratuitous passenger in view of the latest amendment in 1994 to Section 147 of the Motor Vehicles Act, 1988. The conclusion drawn by the Court was summarised in paragraph 20 of the judgment as under:- “20. It is, therefore, manifest that in spite of the amendment of 1994, the effect of the provision contained in Section 147 with respect to persons other than the owner of the goods or his authorised representative remains the same. Although the owner of the goods or his authorised representative would now be covered by the policy of insurance in respect of a goods vehicle, it was not the intention of the legislature to provide for the liability of the insurer with respect to passengers, especially gratuitous passengers, who were neither contemplated at the time the contract of insurance was entered into, nor was any premium paid to the extent of the benefit of insurance to such category of people.” 5. The basic facts and the context of ascertaining the liability of the insurance company are different in the facts of the present case. The insurance company had examined Head Clerk in the R.T.O. Office (Exh.56) who deposed that the tractor involved in the accident was FA/1368/2008 5/12 JUDGMENT registered in Surendranagar R.T.O. Office and only one person, i.e. driver, could sit on it and there was no capacity to seat another person on the tractor. He also deposed that as per the Central Motor Vehicles Rules, 1989, particularly Regulation 28 of the Rules of the Road Regulations, 1989, even with consent of the owner, no other person could sit on the tractor. On that basis, even as a copy of the insurance policy was produced before the Tribunal at Exh.53, the appellant was sought to be exonerated of the liability to indemnify the insured and pay compensation to the claimants. The Tribunal noticed that the appellant had examined at Exh.61 its Divisional Manager at Rajkot, who admitted that the insurance policy (Exh.53) insured both tractor and trailer and premium was accepted on the basis of the proposal form. He admitted in the cross-examination that seating capacity of the vehicle or the number of labourers permitted to be carried on the vehicle were not mentioned in the policy. He has specifically admitted and stated of his own that, if the proposal form were produced, the exact coverage and conditions in that regard could be known. 6. Since the controversy revolved around the conditions of the policy and the coverage provided, true copy of the policy was called for FA/1368/2008 6/12 JUDGMENT and perused and it was found that relevant Section No.XIV of the “Proposal-cum-policy schedule for Farmer's Package Insurance” only mentioned the registration numbers of the tractor and trailer with addition in hand: “As Per Motor Proposal”. The other fine-print was not even readable by anyone. The premium accepted against that Clause was Rs.4042/- + 5% S.T. = Rs.4244/-. Learned counsel fairly conceded that the “motor proposal” was never produced before the Tribunal even after admission by the officer of the appellant that it would have thrown light on the aspect of the vehicle carrying labourers for the owner's purpose. Even the last relevant Clause of the “Farmers Package Policy”, i.e. “Section XIV-Agricultural Tractors” was not produced in complete form and what could be read from the copy produced before the Tribunal was: “As per the provisions, terms, exceptions, conditions and endorsements stipulated in the motor policy attached to and forming part of the policy”. Thus, admittedly, the full form of the contract of indemnity between the appellant and the insured was not placed before the Tribunal and, hence, it was left with no alternative but to draw an adverse inference on the basis of the high amount of premium collected by the appellant. FA/1368/2008 7/12 JUDGMENT 7. In the above facts and circumstances, it was argued by learned counsel Mr.Nanavati that carrying a passenger on the mudguard by the driver of the insured was obviously illegal and in violation of the Motor Vehicles Rules and, at the most, the claimants could claim compensation under the provisions of the Workmen's Compensation Act, 1923 as such passenger could not be covered under the provisions for compulsory requirement of policy as contained in Section 147 of the Act. He relied upon the proviso to that Section which reads as under: “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 FA/1368/2008 8/12 JUDGMENT vehicle, or (c) if it is a goods carriage, being carried in the vehicle, or (ii)to cover any contractual liability”. A tractor could be termed as “goods carriage” when attached with a “trailer”, but a labourer- employee carried thereon could certainly not be a passenger of a public service vehicle, nor could he be termed as a “gratuitous passenger”. Even if there were not the statutory requirement of covering the risk of person travelling by a tractor as an employee, and assuming in favour of the appellant, in absence of full text of the insurance policy, that additional contractual liability was not undertaken by the insurer, the claimants in the facts of this case were entitled to compensation under the Workmen's Compensation Act, 1923 and the quantum of compensation was nearly same as awarded by the impugned award. 8. The facts, however, lead to the more fundamental question as to whether the insurer could be absolved of its liability to indemnify the owner on the ground of violation by the driver or owner of one or the other provisions of the Motor Vehicles Rules, or, in other words, whether insurer can take advantage of such violation for reneging on the contract to FA/1368/2008 9/12 JUDGMENT indemnify the owner-insured. Reading the statutory provisions in that regard, the necessity for insurance stems from the provisions of Section 146 of the Act which requires a policy of insurance, complying with the requirements of Chapter XI, in force “in relation to the use of the vehicle” by the insured or other person allowed to use the vehicle. The requirements of policies envisaged in Chapter XI and encapsulated in Section 147 require that the policy should insure the person or classes of persons specified in the policy against “any liability” which may be incurred by him in respect of the death or bodily injury to “any person”, caused by or arising out of the use of the vehicle in a public place. These provisions are wide enough to include all persons and all the liabilities arising in respect of the death or bodily injury to any person “arising out of the use of the vehicle”, except those which are expressly excluded by the proviso. These provisions nowhere indicate that the cover of insurance is not to be provided for the liabilities arising out of the use of the motor vehicle which is in violation of any of the Motor Vehicle Rules. Therefore, in absence of any provision, not even making it a valid and permissible defence for the insurance company, which are enumerated in the exhaustive provisions of Section 149, by Sub- FA/1368/2008 10/12 JUDGMENT Section (2) and (7) in particular, it would be difficult to conclude that the insurer can reap the benefit of violation of any of the Motor Vehicle Rules in the use of the vehicle for the purpose of avoiding its liability to indemnify the insured. The Rules of the Road Regulations, 1989 which are an ideal piece of delegated legislation, should have prevented majority of the accidents, if they were observed and enforced, but they appear to be observed more in breach. To expect due and strict compliance of the rules of the road, in the context of apparent anarchy and abdication of Law-enforcement on the roads, would amount to indulging in fantacy. Could it be the legislative intention that all victims of motor vehicle accidents should be deprived of due compensation unless all the Rules of the Road Regulations were duly observed and all the provisions of the Motor Vehicles Act and Rules made thereunder were complied in the use of the vehicle concerned? The provisions of Section 149, read in their entirety, would lead to a conclusion to the contrary. Under Sub-Section (4) of Section 149, even if there were an express condition in the policy restricting the liability of the insurer to an accident arising out of only a legal and proper use of the vehicle, such condition shall have no effect, if the liability were required to be covered by a policy under FA/1368/2008 11/12 JUDGMENT Clause (b) of Sub-Section (1) of Section 147 of the Act. And that clause requires insurance against all liabilities except those excepted by the proviso quoted hereinabove. Therefore, there would be limited liability, under the Workmen's Compensation Act, 1923, in case of an employee if he is driver, a conductor or ticket-examiner in a public service vehicle or if he is carried in a goods carriage. Even in such cases of liability arising out of death of or bodily injury to such an employee, the insurer may have undertaken to indemnify the insured against greater liability by special terms and conditions of the policy and by charging additional premium. 9. Especially in the facts of the present case, when details of coverage and express conditions of the policy are practically suppressed, the labourer, who has to perforce do the bidding of his master and travel to the place of his work according to the instructions of his employer, cannot be deprived of the benefit of compulsory insurance so as to defeat primary aim of the scheme of compulsory insurance of all motor vehicles. 10. In the facts and for the reasons discussed hereinabove, the contentions sought to be reagitated by the appellant fail and, FA/1368/2008 12/12 JUDGMENT therefore, the appeal is summarily dismissed with no order as to cost. Civil Application for stay does not survive and stands disposed. The amount of Rs.25,000/- deposited with this Court for the purpose of appeal shall be transmitted to the Tribunal concerned. (D.H.WAGHELA, J.) Hitesh