* THE HON’BLE MR. JUSTICE R. KANTHA RAO + M.A.C.M.A.Nos. 1999 of 2007, 2003 of 2007 and 2026 of 2007 % Dated 28.08.2009 # United India Insurance Company Ltd. rep. By its D.M.,Hyderabad. ..... APPELLANT AND $ M.Om Prakash and others .....RESPONDENTS ! Counsel for the Appellant: Mr.V.Sambasiva Rao ^ Counsel for the Respondent Nos.1 to 3: Mr.K.L.N.Rao <GIST: > HEAD NOTE: ? Cases referred [1] 2007 ACJ 1284 2 2008 ACJ 1158 3 AIR 1987 SC 1690(1) 4 AIR 2004 SC 3884 5 2001 ACJ 428 THE HON’BLE MR. JUSTICE R. KANTHA RAO M.A.C.M.A.Nos. 1999 of 2007, 2003 of 2007 and 2026 of 2007 Date:28.08.2009 United India Insurance Company Ltd. rep. By its D.M.,Hyderabad. ..... APPELLANT AND M.Om Prakash and others .....RESPONDENTS THE HON’BLE MR JUSTICE R. KANTHA RAO M.A.C.M.A.Nos. 1999 of 2007, 2003 of 2007 and 2026 of 2007 COMMON JUDGMENT: M.A.C.M.A.Nos.2026 and 2003 of 2007 are directed against the common order passed in O.P.Nos.1160 and 1117 of 2004 dated 11.06.2007, whereas M.A.C.M.A.No.1999 of 2007 is directed against the award, dated 11.06.2007 passed by the Motor Accidents Claims Tribunal-cum-XXII Additional Chief Judge, Hyderabad. 2. The claimants are different in all the original petitions, but the claims arise out of the same accident involving motor vehicle Tata Sumo bearing No. AP-23-B-5656. The accident took place on the intervening night of 10/11.01.2001 at 12’o clock, while the said vehicle was on the way from Hyderabad, after crossing Gachibowli near Doyens Colony at which place the vehicle turned turtle and Mr.M.Rajeshwar, his son M.Krishna and M.Basavalingam were traveling in the vehicle. Mr. M.Rajeshwar and his son Krishna died on the spot. Basavalingam was shifted to Gandhi Hospital, Secunderabad and he succumbed to the injuries while undergoing treatment. 3. O.P.No.1160 of 2004 was filed by the legal representatives of the deceased M.Rajeshwar on account of death of Rajeshwar in the motor vehicle accident. O.P.No.1117 of 2004 was filed by M.Shobha who is the mother of the sole surviving legal representative of M.Krishna. She is no other than the wife of M.Rajeshwar and thus, she is also the first claimant in O.P.No.1160 of 2004. O.P.No.1116 of 2004 was filed by the legal representative of M.Basavalingam. 4. The learned Tribunal granted an amount of Rs. 6,50,000/- to the claimants in O.P.No.1160 of 2004 and an amount of Rs.1,50,000/- to the sole claimant in O.P.No.1117 of 2004 and granted an amount of Rs.4,00,000/- to the claimants in O.P.Nos.1116 of 2004. 5. All the appeals have been filed by the United India Insurance Company, Gunfoundry, Hyderabad which is the second respondent before the Tribunal. The main challenge by the Insurance Company to the award relates to its liability to pay compensation, though the quantum of compensation has also been assailed. 6. Since all the claims against which the present appeals have been filed arise out of the same accident, and common questions of law and fact would arise for consideration, they are being disposed of by the following common judgment. 7. The brief facts, relevant for considering the appeals, may be stated, as follows: Mr. M.Rajeshwar borrowed the Tata Sumo bearing No. AP- 23-B-5656 from his brother Omprakash who is the first respondent herein for the purpose of getting his sons from the residential school in Hyderabad on the eve of Sankranthi festival holidays, and he left his house on 09.01.2001 at about 5 p.m. in the Tata Sumo vehicle along with the driver Basavalingam, picked up his two sons from the hostel and was returning back and while the vehicle was on the way, after crossing Gachibowli, when it reached Doyens Colony, the vehicle turned turtle at 12’o clock, as a result of which, all the inmates of the vehicle sustained severe injuries. M.Rajeshwar and M.Krishna died on the spot. Basavalingam was shifted to Gandhi Hospital for treatment and he also died while undergoing treatment. Admittedly, at the time of accident, Basavalingam who was said to be the driver of the vehicle was not driving, but M.Rajeshwar was driving the same. 8. The contention urged by the appellant/insurance company is that it is not liable to pay compensation since the insured Omprakash committed breach of terms of the policy and further that the claims preferred by all the claimants under Section 166 of the Motor Vehicles Act are not maintainable in as much as there is no evidence establishing the rash and negligent driving of the said vehicle at material time. 9. The learned Tribunal framed issued No.1 as follows: Whether the accident took place on the intervening night of 10/11.01.2001 due to rash and negligent driving of Tata Sumo bearing No. AP-23-B-5656 by its driver resulting in the death of deceased? 10. The second issue, however, relates to the liability of the insured Omprakash and the appellant/insurance company to pay compensation and also in respect of quantum of compensation. 11. On a consideration of the evidence of Balaji (PW-2) in O.P.Nos.1160 of 2004 and 1117 of 2004 and (PW-3) in O.P.No.1116 of 2004 who claims to be one of the inmates of the Tata Sumo vehicle at relevant time and who lodged the F.I.R. with Chandanagar police, the evidence of RW-1 who is the Assistant Manager in the appellant’s insurance company and examining the terms and conditions of Ex.B-1, copy of the insurance policy, the learned Tribunal gave a finding that the appellant/insurance company and the insured Omprakash are jointly and severally liable to pay compensation and inconsequence thereof, granted compensation to the claimants in the original petitions as mentioned above. 12. The crucial question being as to the maintainability of the claim petitions under Section 166 of the Motor Vehicles Act before the learned Motor Vehicle Accidents Claims Tribunal-cum-XXII Additional Chief Judge, Hyderabad and the liability of the insurance company to pay compensation to the legal representatives of the deceased, this Court has to examine the correctness and legality of the said finding in the first place. The other question relating to quantum of compensation only arises in the event of concurring with the finding of the learned Tribunal that the appellant/insurance company is liable to pay compensation. 13. The evidence of Balaji, the sole eyewitness as well as one of the inmates of the Tata Sumo vehicle involved in the accident and who lodged the F.I.R. discloses that when the vehicle reached Doyens Colony near Gachibowli, they heard sound from the engine, thereafter the vehicle turned turtle while negotiating a small curve, in the course of which, he did not sustain any injuries, but the deceased received injuries. This witness was confronted in the course of the cross examination by the learned counsel appearing for the appellant/insurance company with the averments of the F.I.R. wherein it is mentioned that “while negotiating the curve, the driver of the vehicle lost control over the vehicle, and the vehicle turned turtle.” Though Balaji, the alleged eyewitness to the accident denied the suggestion, the fact remains that it is specifically mentioned as such in the F.I.R. and there is no mention about the inmates hearing any sound from the engine. 14. Perusal of the claim petitions filed before the Tribunal discloses that it is mentioned in the claim petitions that the accident occurred at Doyens Colony near Gachibowli while the vehicle was negotiating the curve, it turned turtle. Thus, there is no mention about the inmates hearing sound from the engine in the claim petitions also. From the above, it is thus obvious that the said version was only introduced to focus that the vehicle turned turtle due to the mechanical defect. Since it was not specifically mentioned in the claim petitions as well as in the F.I.R. and the presence of Balaji, the alleged eyewitness being not mentioned in the claim petitions, it is highly difficult to place reliance on the evidence of Balaji and the learned Tribunal ought not to have placed reliance on his evidence. 15. However, admittedly, the accident occurred while the Tata Sumo which is a motor vehicle was used in a public place, in the strict sense the claimants are not required to prove negligence on the part of person who was driving the vehicle and the liability of the insurance company depends upon the question whether there was violation of terms and conditions of policy by the insured and whether the deceased in all the three claim petitions who were traveling in the vehicle at relevant point of time are third parties within the meaning of Section 147 of the Motor Vehicles Act. 16. Reliance has been placed by the learned counsel appearing for the appellant/insurance company on the following decisions: 1) I n ORIENTAL INSURANCE COMPANY LTD. v. MEENA VARIYAL AND OTHERS[1] the relevant proposition has been laid down as follows: “Where a person is not a third party within the meaning of the Act the insurance company cannot be made automatically liable merely by resorting to Swarna Singh’s ratio; deceased being an employee not covered under Workmen’s Compensation Act, has not to be covered compulsorily under Motor Vehicles Act and there is no special contract covering such a person, insurance company cannot be made liable to pay the compensation first and then to recover it from the insured; even if the case of the claimants that car was driven by the driver was true, then also the claimant had to establish negligence of the driver before the insurance company could be asked to indemnify the insured and there is no finding of his negligence; High Courts order set aside and Tribunal’s order restored. It may be true that the Motor Vehicles Act, insofar as it relates to claims for compensation arising out of accidents, is a beneficent piece of legislation. It may also be true that subject to the rules made in that behalf, the Tribunal may follow a summary procedure while dealing with a claim. That does not mean that a Tribunal approached with a claim for compensation under the Act should ignore all the basic principles of law in determining the claim for compensation. Ordinarily, a contract of insurance is a contract of indemnity. When a car belonging to an owner is insured with the insurance company and is being driven by a driver employed by the insured, when it meets with an accident, the primary liability under law for payment of compensation is that of the driver. Once the driver is liable, the owner of the vehicle becomes vicariously liable for payment of compensation. It is this vicarious liability of the owner that is indemnified by the insurance company. A third party for whose benefit the insurance is taken, is therefore, entitled to show, when he moves under section 166 of the Motor Vehicles Act, that driver was negligent in driving the vehicle resulting in the accident; that owner was vicariously liable and that the insurance company was bound to indemnify the owner and consequently, satisfy the award made. As we understand Section 147(1) of the Act, an insurance policy thereunder need not cover the liability in respect of death or injury arising out of and in the course of the employment of an employee of the person insured by the policy, unless it be a liability arising under the Workmen’s Compensation Act, 1923 in respect of a driver, also the conductor, in the case of a public service vehicle. Section 149(1), which cast an obligation on an insurer to satisfy an award, also speaks only of award in respect of such liability as is required to be covered by a policy under clause (h) (Sic (b)) of Sub Section (1) of Section 147 (being a liability covered by the terms of the policy). This provision cannot therefore be used to enlarge the liability if it does not exist in terms of Section 147 of the Act. In claims by a third party, there cannot be much doubt that once the liability of the owner is found, insurance company is liable to indemnify the owner, subject of course, to any defence that may be available to it under Section 149 (2) of the Act. Even when the insurer, is able to prove breach on the part of the insured concerning a policy condition, the insurer would not be allowed to avoid its liability towards the insured unless the said breach of condition is so fundamental as to be found to have contributed to the cause of the accident. It is difficult to apply the ratio of this decision to a case not involving a third party. The whole protection provided by Chapter XI of the Act is against third party risk. Therefore, in a case where a person is not a third party within the meaning of the Act, the insurance company cannot be made automatically liable merely by resorting to Swaran Singh’s case, 2004 ACJ1 (SC), ratio. In other words, this court clearly held that the apparently wide words ‘ any person’ are qualified by the setting in which they occur and that ‘ any person’ is to be understood as a third party.” 2) In ORIENTAL INSURANCE COMPANY v. MAHABUNNI AND ANOTHER[2] it was held by the Single Judge of High Court of Karnataka at Bangalore, as follows: “Insurance Company of motor cycle seeks to avoid its liability on the ground that Section 147 does not require coverage of the insured who was using the motor cycle for his own purpose does not become a third party –in such an event the insurance company is not liable to pay compensation for the death of rider of insured motor cycle in a claim under Section 163-A of the Motor Vehicles Act.” 17. On the other hand, the learned counsel appearing for the claimants/respondents placed reliance on GUJARAT STATE ROAD TRANSPORT CORPORATION,AHMEDABAD v. RAMANBHAI PRABHATBHAIAND ANOTHER[3], NEW INDIA ASSURANCE COMPANY LIMITED v. KIRAN SINGH AND OTHERS[4], KAUSHNUMA BEGUM AND OTHERS v. NEW INDIA ASSURANCE COMPANY LIMITED AND OTHERS[5] for the proposition that the claimants are not required to prove negligence on the part of the driver of the vehicle. The said decisions are of no help to the claimants since according to them Mr.Basavalingam was the driver of the vehicle, but he was not the person who was actually driving the vehicle at the time of the accident. Further, the explanation offered by the claimants about Mr.M.Rajeshwar driving the vehicle instead of Basavalingam is quite unconvincing. The learned counsel also laid emphasis on the proposition that despite the failure on the part of claimants to prove negligence on the part of the driver or owner, the insurance company can be fastened with the liability on the principle of strict liability as propounded in Rylands v. Fletcher. 18. As regards the above contention, the version of the appellant is that the very act of handing over the job of driving by Basavalingam to M.Rajeshwar itself constitutes negligence on the part of the driver and further that the liability has to be decided mainly basing on the question whether the three deceased who were traveling in the vehicle can be considered to be third parties within the meaning of Section 147 of the Motor Vehicles Act or whether according to the contract of insurance, the appellant insurance company is liable to pay compensation to the legal representatives of the said deceased. 19. In the instant case, the learned Tribunal as regards the contention of the appellant/insurance company that the deceased were not the third parties held that in Ex.A-1 F.I.R. lodged by Balaji, it is mentioned that Rajeshwar was driving the Tata Sumo and having been lost control, it turned turtle and the said wording in the report does not give any indication that the accident took place as Rajeshwar who was driving Tata Sumo lost control over the vehicle and the vehicle turned turtle. The leaned Tribunal further expressed the view that there was absolutely no need for Balaji, the eyewitness to give false evidence and his evidence indicates that the accident was due to mechanical defect which developed suddenly while the vehicle was proceeding. Accordingly, the learned Tribunal negatived the contention of the appellant insurance company by holding that the owner and the insurer of the vehicle are liable since the accident had taken place when the vehicle was in use. 20. It was further held by the Tribunal that since the accident took place due to the mechanical defect which was developed suddenly in the engine and while the motor vehicle was under use, the claimants can claim compensation on account of the death of the deceased under Section 166 of the Motor Vehicles Act and thereby repelled the contention of the appellant insurance company and gave a finding to the effect that the claim petitions filed by the claimants under Section 166 of the Motor Vehicles Act are maintainable. 21. The sole eyewitness examined by the claimants Mr.Balaji stated in his deposition as follows: “The accident took place on 10.01.2001. I was also traveling in said Tata Sumo along with late M.Rajeshwar. The Tata Sumo is bearing No. AP-23-B-5656. We were going to Zaheerabad. As driver of the vehicle complained that he had stomach pain, deceased Rajeshwar took driving and asked driver to sit by his side. When the car reached near Doyens Colony, at Gachibowli they heard sound from engine. The vehicle turned turtle while negotiating a small curve. I did not sustain injuries whereas late Rajeshwar, late Krishna and late Basavalingam sustained injuries. Rajeshwar died while being shifted to hospital, his son M.Krishna died on the spot. I gave complaint to the police regarding accident.” 22. From the evidence of Mr.Balaji indisputably he is only a chance witness. In a severe accident wherein three persons died on account of the injuries sustained in the accident, it is quite surprising that Mr.Balaji did not receive even a scratch. No reference was made by the claimants about him in their claim petitions. As has been already pointed out, Balaji who lodged the F.I.R. did not mention therein that the inmates of the vehicle heard the big sound from the engine and thereafter the vehicle turned turtle while a small curve was being negotiated. The F.I.R. is to the effect that while the vehicle was being driven Mr.Rajeshwar lost control over the vehicle and consequently the vehicle turned turtle. The version that the driver of the Tata Sumo complained stomach ache and thereafter Rajeshwar told the driver to take rest and he started driving the vehicle was introduced for the first time through Mr.Balaji whose name has not at all been referred in the claim petition. Thus, it is highly difficult to place reliance on the evidence of Mr.Balaji and this Court is of the view that this witness was newly introduced by the claimants as if he witnessed the accident and therefore, no reliance can be placed on his testimony before the Tribunal and the Tribunal erroneously believed his version. 23. Therefore, the fact remains that Mr.Rajeshwar who is no other than the brother of the owner of the vehicle was driving the same and in the mean time it met with the unfortunate accident and there was no evidence as to whether the accident took place on account of the rash and negligent driving of Mr.Rajeshwar, since the evidence of Mr.Balaji who claims to be traveling in the said vehicle and witnessed the accident is disbelieved by this Court. We have to examine the situation in the present case in the light of the above mentioned decisions relied upon by the appellant insurance company to consider whether the deceased were the third parties within the meaning of Section 147 of the Motor Vehicles Act or under the terms and conditions of the policy. 24. There is no dispute about the fact that the vehicle involved in the accident i.e. Tata Sumo bearing No. AP-23-B-5656 was insured with the appellant insurance company on the date of accident under a valid policy. Though it is mentioned in the policy, that a risk of 10 persons traveling in the vehicle is covered, they must be third parties and the driver must have been employed by the insured. Admittedly, the deceased Rajeshwar is no other than the brother of the insured Omprakash. The other deceased Krishna is no other than the son of Rajeshwar. It is specifically mentioned in Ex.B-1 policy that the vehicle has to be used for any social domestic and pleasure purpose and by the insured for own purpose. RW-1 who was working as Assistant Manager in the appellant insurance company specifically stated in his evidence before the Tribunal that Omprakash can use the vehicle for private purpose, but Rajeshwar, the brother of the deceased is not a third party to the vehicle and therefore, the appellant-insurance company is not liable to pay compensation to the claimants. He denied the suggestion in the cross examination that since the brother of the insured was driving the vehicle, the appellant insurance company is liable to pay compensation to the claimants. He also stated in the cross examination that other than the insured and his relatives, all others come within the purview of third parties. Therefore, even under the terms and conditions of the policy or as per the provisions of the Act above referred, the risk of third parties and the risk of the driver who comes under the purview of Workmen’s Compensation Act are only covered. 25. In the instant case, except filing the driving licence, which is marked as Ex.A.8 in O.P.No.1116 of 2004 in respect of deceased Basavalingam, no evidence has been adduced by the claimants to show that Basavalingam was employed as driver by Omprakash. Since Omprakash is no other than the brother of Rajeshwar, there could not have been any difficulty to M.Shobha, the widow of Rajeshwar who is one of the claimants to examine Omprakash to explain the circumstances and with what direction the vehicle was entrusted by Omprakash to Mr.Rajeshwar and also to prove the fact that Basavalingam was employed as a driver to the vehicle in question by Omprakash, the owner of the vehicle. The copy of the driving licence filed by the claimants in O.P.No.1116 of 2004 at best indicates that Basavalingam was driver by profession, but no other record is placed nor Omprakash, the owner of the vehicle was examined to show that Basavalingam was employed as driver by Omprakash and he therefore comes within the purview of Workmen’s Compensation Act. Further the evidence of Mr.Balaji which is to the effect that suddenly the driver of the vehicle got severe stomach ache and on that Mr.Rajeshwar told him to take rest and started driving the vehicle is disbelieved by this Court in view of reasons indicated in the foregoing paragraphs. Therefore, the fact remains that Mr.Rajeshwar was driving the vehicle at relevant time, but not Basavalingam. Even if Basavalingam was considered to be driving in the vehicle, he ought not to have allowed Mr.Rajeshwar to drive the vehicle and if he does so, it amounts to flouting the stipulations of the policy and thereby the appellant-insurance company cannot be held liable to pay compensation. The said act of Basavalingam in allowing Mr.Rajeshwar to drive the vehicle keeps him out of the purview of the employment exonerating the owner from liability to pay compensation on account of the death of the deceased persons. Indisputably Mr.Rajeshwar who was the brother of Omprakash and Mr.Krishna who was the son of Rajeshwar, are not the third parties, merely because they were traveling in the vehicle at relevant time, more particularly in view of the fact that the deceased Rajeshwar himself was driving the vehicle. Since no convincing evidence is forthcoming in proof of the fact that Basavalingam was appointed as driver by Omprakash, the owner of the vehicle and as admittedly Basavalingam was not driving the vehicle at the time when he met with the accident, he also cannot be considered to be a third party either under the terms and conditions of the policy or under the