1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD FIRST APPEAL NO. 606 OF 2009 The ICICI General Insurance Company Limited, ICICI Bank Tower Bandra-Kurla Complex, Bandra (East) Mumbai 400 051 Through its Branch Manager ...Appellant Versus 1 Mr. Gangadhar Dadba Kasbe Age 42 years, Occ. Agriculture, R/o. Kolhewadi, Tq1. Nagar, District Ahmednagar 2 Nilesh Babusaheb Chaudhari, Age adult, Occ. Owner, R/o. Dhamangaon, Tq. Ashti, District Beed. ...Respondents ALONGWITH FIRST APPEAL NO. 607 OF 2009 The ICICI General Insurance Company Limited, ICICI Bank Tower Bandra-Kurla Complex, Bandra (East) Mumbai 400 051 Through its Branch Manager ...Appellant Versus 1 Mr. Gangadhar Dadba Kasbe Age 42 years, Occ. Agriculture, R/o. Kolhewadi, Tq. Nagar, District Ahmednagar 2 Nilesh Babusaheb Chaudhari, Age adult, Occ. Owner, R/o. Dhamangaon, Tq. Ashti, District Beed. ...Respondents 2 ..... Mr. S.S. Patil, advocate for the appellant Mr. D.R. Jaybhar, advocate for respondent No. 1 Mr. H.D. Deshmukh, advocate for respondent No.2 ..... CORAM: R.G. KETKAR, J. Date of reserving the judgment : 03.12.2009 Date of pronouncing of judgment : 14.12.2009 ORAL JUDGMENT:- 1 These appeals are directed against the judgment and order dated November 17, 2008, passed by the learned Member, Motor Accident Claims Tribunal, Ahmednagar (for short "the Tribunal), below Exh.5 in Motor Accident Claims Petition Nos. 691 of 2007 and 718 of 2007. By the impugned judgment and order, the Tribunal disposed of the petitions under Section 140 of the Motor Vehicles Act, 1988 (for short "the Act"), by common order, as they arise out of the same accident. Heard Shri S.S. Patil, learned counsel for the appellant in both the appeals, Shri D.R. Jaybhar, learned counsel for respondent No.1 and Shri H.D. Deshmukh, learned counsel for respondent No.2. Admit. By consent, appeals are heard finally. 2 The facts in M.A.C.P. No. 691 of 2007 are that on July 25, 2007, deceased Khirnabai was coming back alongwith Gangadhar Dadarao Kasbe, respondent No.2 herein-original petitioner No.2, from 3 Dhamangaon to Kolhewadi in pick up van No. MH-23-4887. When the said pick up van reached near Matoshree Doodh Sangh, Ambilwadi, due to rash and negligent driving of the driver of pick-up van he lost control over pick-up van and pick-up van turned turtle. Khirnabai died in the accident on July 29, 2007. 3 During pendency of the petition, the claimant moved application Exh.5 under Section 140 of the Act for grant of compensation on the principle of no fault liability. Respondent No.3 herein (original respondent No.1) owner of the pick-up van filed written statement as well as the reply to Exh.5 resisting the claim. In that, he categorically raised the contention that while employing the driver, he specifically instructed him not to allow travelling of passengers in goods vehicle. If contrary to this specific instructions, the driver had allowed passengers to travel in goods vehicle, he cannot be held responsible and consequently he would not be liable to pay the compensation. 4 The appellant herein, who was original respondent No.2 filed written statement resisting the claim petition. Among other contentions, it was contended that the owner of the vehicle committed several breaches of the terms and conditions of the Insurance policy. The vehicle involved in the accident is goods carriage vehicle and as per the general terms and conditions of the policy and as per permit, no persons either gratuitous or fair paying are allowed to travel in the 4 vehicle. The risk of the occupants is not covered under the policy. Knowing this fact fully well, the owner has allowed the claimants and others to travel in vehicle in breach of the terms and conditions of the policy and so the Insurance Company is not liable to indemnify the owner. 5 The facts in M.A.C.P. No. 718 of 2007 are that respondent No.1 herein was travelling with his mother in the said pick-up van and in the accident he sustained injuries which resulted into his permanent disablement of 25%. This claim petition was resisted by the owner and the Insurance Company on similar contentions as were raised while resisting the claim petition No. 691 of 2007. 6 Before the Tribunal, the only dispute was whether carrying of passengers in the pick up van amounts to breach of condition. It was also not disputed that the passengers were being carried in the pick up van, which is admittedly goods vehicle. 7 In para 15 of the impugned order, the Tribunal observed that it is no doubt true that in the goods vehicle the passengers are not permitted to be carried unless premium to that effect is paid. Therefore, if passengers are being carried in the goods vehicle, it is undoubtedly the breach of condition of policy and the dependent or the heirs of the victim cannot claim compensation from Insurance 5 Company. In other words, the Insurance company will not be liable to indemnify the owner, in such eventuality. The Tribunal, thereafter proceeded to consider the defence of the owner to the effect that there was no willful breach on his part as the driver of the pick up van had carried the passengers against his clear and specific instructions. 8 The Tribunal considered the judgment in the case of New Janta Stone Company Vs. United Insurance Company Ltd., 1999 (2) T.A.C. (Raj) 1, wherein it was held that if passengers were carried in goods vehicle by the driver without the knowledge of the insured, the insurer would be liable to indemnify the insured. The Tribunal also considered the judgment of the Apex Court in the case of Sohan Lal Passi Vs. P. sesh Reddy and others, 1996 A.C.J. 1044, wherein it has been held that unless it is established on the material on record that it was insured, who had willfully violated the conditions of the policy, insurer wold be liable to indemnify the insured. He therefore, came to the conclusion that the Insurance company will be liable to be indemnify the owner if the driver carried the passenger without knowledge of the owner of the vehicle. 9 The Tribunal also considered the F.I.R. wherein it has been set out by the complainant Machindra Borude that on July 25, 2007, he alongwith the driver Kaisar Shaikh were carrying the grocery articles of one Shivlal Kasar for selling the same in the market. Near 6 Mhasobawadi, when they halted the said pick-up van for taking tea, at that time about 4 to 5 persons boarded in the pick up van. On the basis of the F.I.R., learned Tribunal prima facie came to the conclusion that the passengers were taken into pick up van after the pick up van had left the place of owner. Prima facie, there was no willful breach of the owner of the condition of policy. In the result, the Tribunal held that the Insurance Company is liable to indemnify the insured. The Tribunal directed the owner and the Insurance company to jointly and severally pay Rs.50,000/- to the claimants in M.A.C.P. No. 691 of 2007 as compensation on account of no fault liability, within a period of one month from the date of order, failing which it shall carry 9% interest p.a. In so far as the claim petition No.718 of 2007 is concerned, the Tribunal directed the Insurance company and the owner jointly and severally pay Rs.25,000/- to the appellant on account of no fault liability, within a period of one month from the date of order, failing which it shall carry 9% interest p.a. 10 On behalf of the appellant, it was submitted that for awarding compensation under Section 140 of the Act, the Tribunal is required to satisfy itself as to whether;- i) the accident has arisen out of the use of the motor vehicle; 7 ii) the said accident has resulted in a permanent disablement of the person who is making claim or death of the person, whose legal representatives are making claim; and iii) the claim is made against the owner of the insurer of the motor vehicle involved in the accident; In terms of the judgment of the Apex Court in the case of Yellawa and others Vs. National Insurance company Limited, 2007 ACJ 1934 (SC), one more defence available to the insurer is breach of conditions specified in the policy. When such defence is raised, the Tribunal is required to go into the said question. Section 140 of the Act, does not contemplate that the Insurance company shall also be liable to deposit the amount while it has no fault whatsoever in terms of the sub Section (2) of Section 147 of the Act. The learned counsel for the appellant invited my attention to the Insurance policy and in particular Limitations as to use, which read as under;- A) Goods Carrying Vehicles – Class A Use only for carriage of goods within the meaning of the Motor Vehicles Act. 8 The policy does not cover; (1) ........ (2) ....... (3) Use for carrying passengers in the vehicles, except employees (other than the driver) not exceeding the number permitted in the registration document and coming under the purview of Workmen’s Compensation Act, 1923. He also submitted that the policy in question is an act policy and therefore, the Insurance company cannot be held liable. 11 On the other hand, learned counsel for respondent No.3 owner, supported the impugned order. He submitted that in the written statement and reply to Exh.5, the owner had categorically raised defence that at the time of employing the driver he had specifically instructed him not to permit travelling of the passengers in the goods vehicle. If the driver has acted contrary to his instructions, he cannot be held liable for payment of compensation. There is no willful breach of condition of policy on his part. He further submitted that having regard to the scope of inquiry under Section 140 of the Act, the Insurance Company should be directed to pay the compensation. In support of this submission, he relied upon the judgment of the Apex Court in the case of Shivaji Dayanu Patil and another s. Smt. Vatsala 9 Uttam More, AIR 1991 S.C. 1769 and other judgments. 12 The question whether the insurer is liable to pay compensation to the dependents of the deceased passenger or the injured person who were travelling in the goods vehicle that met with an accident, as the case may be, is no longer res integra. The said issue is concluded by the following judgments of the Apex Court. i) New India Assurance co. Ltd. Vs. Asha Rani and others, (2003) 2 SCC 223 ii) Oriental Insurance Co. Ltd. Vs. Devireddy Konda Reddy and others, (2003) 2 SCC 339 iii) National Insurance Co. Ltd. Vs. Ajit Kumar and others, (2003) 9 SCC 668 iv) National Insurance co. Ltd. Vs. Baljit Kaur and others, (2004) 2 SCC 1 v) National Insurance Co. Ltd. Vs. Bommithi Subbhayamma and others, (2005) 12 SCC 243 vi) New India Assurance co. Ltd. Vs. Vedwati and others, (2007) 9 SCC 486 vii) Oriental Insurance Co. Ltd. Vs. Birj Mohan and others, 2007 ACJ 1909 10 viii) National Insurance Company Limited Vs. Prema Devi and others, (2008) 5 SCC 403 13 In the case of New India assurance Company Ltd. Vs. Asha Rani (supra), the Apex Court considered the provisions of (i) Motor Vehicles act, 1939, (ii) Motor Vehicles Act 1988 prior to amendment of 1994 and (iii) the Motor Vehicles Act 1988, after the amendment of 1994. In para 9 of the judgment, the Apex Court observed as under:- “9. ....... If the Motor Vehicles Amendment Act of 1994 is examined, particularly Section 46, by which the expression “injury to any person” in the original Act stood substituted by the expression “injury to any person including owner of the goods or his authorized representative carried in the vehicle”, the conclusion is irresistible that prior to the aforesaid Amendment Act of 1994, even if the widest interpretation is given to the expression “to any person” it will not cover either the owner of the goods or his authorized representative being carried in the vehicle. The objects and reasons of clause 46 also state that it seeks to amend Section 147 to include owner of the goods or his authorized representative carried in the vehicle for the purpose of liability under the insurance policy. It is no doubt true that sometimes the legislature amends the law by way of amplification and clarification of an inherent position which is 11 there in the statute, but a plain meaning being given to the words used in the statute, as it stood prior to its amendment of 1994, and as it stands subsequent to its amendment in 1994 and bearing in mind the objects and reasons engrafted in the amended provisions referred to earlier, it is difficult for us to construe that the expression “including owner of the goods or his authorized representative carried in the vehicle” which was added to the pre-existing expression “injury to any person” is either clarificatory or amplification of the pre-existing statute.” In a separate but a concurring judgment Hon’ble Mr. Justice S.B. Sinha, after considering the changes in (i) Motor Vehicles act, 1939, (ii) Motor Vehicles Act 1988 prior to amendment of 1994 and (iii) the Motor Vehicles Act 1988, after the amendment of 1994, observed in para 26 as under;- “26 In view of the changes in the relevant provisions in the 1988 Act vis-a-vis the 1939 Act, we are of the opinion that the meaning of the words “any person” must also be attributed having regard to the context in which they have been used i.e. “a third party”. Keeping in view the provisions of the 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the 12 insurers would not be liable therefor.” 14 The learned counsel for the owner submitted that having regard to the scope of Section 140 of the Act, whether there was willful breach of the terms and conditions of the policy or not, cannot be gone into. In view of the limited scope of Inquiry under section 140 of the Act, the Insurance company should be directed to pay the compensation. 15 It is not possible to accept the submissions made on behalf of the owner. In the case of United India Insurance company Limited Vs. Sarjerao, 2008 ACJ 254, the challenge was to the order passed by the learned Single Judge of this Court, (Aurangabad Bench), dismissing the writ petitions filed by the Insurance company. In that case, the respondents were travelling in the trolley attached to a tractor, as labourers. They claimed to have suffered injuries because the tractor with the trolley in each case met with an accident. The petitions claiming compensation under the Act were filed alongwith application under Section 140 of the Act. The M.A.C.T. passed order on the principle of no fault liability. The Insurance company took a stand that it had no liability in respect of the persons travelling in the trolley and owner of the tractor is liable to pay compensation. The said plea was rejected by the M.A.C.T. The High Court dismissed the writ petitions holding that though arguable questions are involved the writ petitions 13 do not deserve consideration. The Apex Court considered its judgment in Yellwwa Vs National Insurance Co. Limited (supra) as also the Oriental Insurance company Limited Vs. Brij Mohan, 2007 ACJ 1909 (SC) and in para 8, observed as under;- “8. So far a the question of liability regarding labourers travelling in trolleys is concerned, the matter was considered by this Court in Oriental Insurance Co. Ltd. Vs. Brij Mohan, 2007 ACJ 1909 (SC) and it was held that the insurance company has no liability. In view of the aforesaid two decisions of this Court, we set aside the impugned order in each case and remit the matters to the High Court to consider the matters afresh in the light of what has been stated by this court in Yallwwa’s case, 2007 ACJ 1934 (SC) and Brij Mohan’s case, 2007 ACJ 1909 (SC).” 16 In the case of Oriental Insurance Company Vs. Brij Mohan and others, 2007 ACJ 1909, the facts were that the respondent No.1 Brij Mohan, who was labourer had filed the claim petition contending that on or about March 11, 1998, he was travelling on a trolley attached to a tractor. He was sitting on earth loaded on the trolley. The tractor was allegedly being driver rashly and negligently by Hemraj, driver. 14 He slipped down from the trolley and came under the wheels thereof injuring his gall bladder and left thigh, as a result whereof he suffered grievous injuries. Before the Apex Court one of the contentions raised on behalf of the Insurance Company was that respondent No.1 Brij Mohan was gratuitous passenger and thus the claim was not covered under Section 147 of the Act. The Apex court considered the judgment of the New India Assurance Company Ltd. Vs. Asha Rani as also the judgment of the Apex Court in the case of National Insurance Company Ltd. Vs. Bommithi Subbhayamma (supra) and others and held that the Insurance company is not liable to pay compensation. However, in exercise of powers under Article 142 of the Constitution of India, the court directed the Insurance company to satisfy the award and realize the same from owner of the tractor and trolley. 17 In the case of National Insurance Company Ltd. v. Bommithi (supra), the Apex Court held that Insurance Company is not liable for payment of any compensation for death of gratuitous passengers travelling in the goods vehicle. In the case of Oriental Insurance Company Ltd. Vs. Devireddy Konda (supra), after considering the provisions of Section 145(c) and 147 of the Act, the Apex Court came to the conclusion that the 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 insurer would have no liability therefor. This was reiterated by the Apex Court in the case 15 of National Insurance company Vs. Ajit Kumar (supra). The Apex Court in the case of National Insurance Company Ltd. Vs. Baljit Kaur (supra) observed in para 20 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 of persons other than the owner of the goods or his authorized representative remains the same. Although the owner of the goods or his authorized 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.” 18 In the case of New India Assurance Company Ltd. Vs Vedwati (supra), the Apex Court held thus;- “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 the 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 16 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 liability under the Workmen's Compensation Act, 1923. There is no reference to any passenger in ‘goods carriage’.” This view was reiterated by the Apex Court in the case of National Insurance Company Ltd. Vs. Prema Devi (supra) 19 The learned counsel for the owner submitted that having regard to the scope of enquiry under Section 140 of the Act, the Insurance company should be directed to pay amount of no fault liability. He further submitted that there was no willful breach of the conditions of Insurance policy on the part of the owner. 20 From the material on record, prima facie, it is clear that the accident took place while the driver Kaisar Shaiakh was carrying grocery articles of one Shivlal Kasva for selling the same in the market. The driver permitted travelling of passengers, albeit it was improper to do. This was however, prima facie during the course of 17 employment and consequently if the employee does act in such a manner as to cause injury to third person, the employer cannot escape liability on the ground that he did not actually authorize the particular manner in which the act was done, or even on the ground that employee was acting on his own behalf and not on the behalf of his employer. (Please see Hulsbury’s Laws of England, 4th Edn. Vol.16, para 739). In the case of Pushpabai Purushottam Udeshi V Ranjit Ginning and Pressing Co. 1977 ACJ 343 (SC), it was held that; “..... we would like to point out that the recent trend in law is to make the master liable for acts which do not strictly fall within the term ‘in the course of the employment as ordinarily understood. We have referred to Sitaram Motilal Kalal vs. Santanuprasad Jaishankar Bhatt, 1966 ACJ 89 (SC), where this court accepted the law laid down by Lord Denning in Ormrod v. Crosville Motor Service Ltd., (1953) 2 All ER 753, that the owner is not only liable for the negligence of the driver if that driver is his servant acting in the course of his employment but also, when the driver is, with the owner’s consent, driving the car on the owner’s business or for the owner’s purposes. This extension has been accepted by this Court. The law as laid down by Lord Denning in Young v. Edward Box and CO. Ltd. (1951) 1 TLR 789, already referred to, i.e., the first question is to see whether the servant is liable and if the answer is yes, the second question is to see whether the employer must shoulder the servant’s liability, has been uniformly accepted as stated in 18 Salmond’s Law of Torts, 15th Edn., p. 606, in Crown Proceedings Act, 1947 and approved by the House of Lords in Stareley Iron & Chemicals Co. Ltd. v. Jones, (1956) 1 All ER 403 and I.C.I. Ltd. v. Shatwell, (1956) AC 656.” 21 I am also supported by the decision of this court in the case of United India Insurance co. Ltd. Vs. Anubai Gopichand Thakare and others, 2008 (1) Mh.L.J. 73, Paragraph 10 of the said judgment reads as under;- “10 It is amply clear that sub-clause (2) carves out an exception in respect of the liability of the insurer, which is enumerated in sub-clause (1) of section 149. The immunity available to the insurer is under special circumstances. It is also manifest that the insurer has a duty to satisfy the award against persons insured in respect of third party risk. Obviously, a question is as to whether gratuitous passengers or passengers allowed to travel in a goods vehicle for hire or reward can be regarded as “third parties” vis-a-vis, the insurer. They