FA/2030/2008 1/54 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 2030 of 2008 With CIVIL APPLICATION No. 5492 of 2008 In FIRST APPEAL No. 2030 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE H.K.RATHOD ========================================================= 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 ? ========================================================= NATIONAL INSURANCE COMPANY - Appellant(s) Versus SHABBIR MOHMAD KUNJADA & 2 - Defendant(s) ========================================================= Appearance : MR DAKSHESH MEHTA for Appellant(s) : 1, None for Defendant(s) : 1 - 3. ========================================================= CORAM : HONOURABLE MR.JUSTICE H.K.RATHOD Date : 25/08/2008 ORAL JUDGMENT 1. Heard learned advocate Mr. Dakshesh Mehta appearing on behalf of appellant – National Insurance Company. 2. The Insurance Company has challenged the award FA/2030/2008 2/54 JUDGMENT passed by Motor Accident Claims Tribunal, Godhra in Motor Accident Claim Petition No.2121 of 1999 Exh.85 dated 6th September 2007. The Claims Tribunal has awarded Rs.1,57,000/- being a compensation with 7.5% interest in favour of respondents – claimants. It is a case of injury received by the claimant – Minor Sabbir Mahmmad Kunjada who was working as Mechanic. The accident occurred on 27th August 1999 when applicant and other friends and relatives were travelling in private vehicle Tata Sumo No.GJ-17-C- 3428 from Dahod to Ajmer. On 27th August 1999 at about 5-00 am, when Tata Sumo was reached near Vijayvada- Bakalvada, at that occasion, opponent No.1 who was driving the vehicle in a rash and negligent manner and turned turtle and due to that, the left hand of the applicant was crushed and he was admitted in hospital and complaint was lodged with Mina Police Station – Rajasthan and medical treatment was obtained in Baroda. The total claim was made by claimant Rs.3 lakhs. The Insurance company – opponent No.3 has filed reply vide Exh.19 and vide Exh.59, issues were framed by Claims Tribunal. 3. Learned advocate Mr. Mehta raised contention before this Court that in Tata Sumo, ten passengers and one driver were not allowed as per condition, but, beyond sitting capacity they were travelling which amounts to breach of insurance policy and also raised contention that looking to the evidence of injured person, he was travelled in Tata Sumo on hire from Dahod to Ajmer. Therefore, it is a clear breach FA/2030/2008 3/54 JUDGMENT of condition of insurance policy being a private vehicle taken on hire. Therefore, insurance company is not liable to pay compensation to the claimant. The insurance company has not raised specific contention in written statement Exh.19. The insurance company has not led any oral evidence either of driver or owner – respondents No.1 and 2. Respondents No.1 and 2 – driver and owner of Tata Sumo remained absent before the Claims Tribunal and against them, ex-parte proceedings were initiated. Only insurance company – respondent No.3 has filed reply vide Ehx.19. So, before the Claims Tribunal, except claimant and his father's evidence was there which was cross-examined by advocate of insurance. The evidence of the claimant Exh.61 was not clear as to whether Tata Sumo was taken on hire by claimant or not. At the time when the accident was occurred, applicant Sabbirbhai was minor represented by his father Mahmmadbhai Chhotubhai Kunjada who was examined vide Exh.80. According to evidence of Sabbirbhai Exh.61, they were travelling in Tata Sumo No.GJ-17-C-3428 on 26th August 1999 along with his friends and relatives and accident occurred on early in the morning at 5-00 am on 27th August 1999 within 15 km. away from Ajmer in jurisdiction of Mina Police Station. Mahmmadbhai Chhotubhai Kunjada was examined vide Exh.80 and according to his evidence, his friend Kamleshbhai Parsottambhai Patel was having Tata Sumo and due to friendship for religious purpose, the Tata Sumo was taken from his friend. Therefore, Tribunal has considered the evidence of Mahmmadbhai Chhotubhai FA/2030/2008 4/54 JUDGMENT vide Exh.80 and come to conclusion that from the evidence of Mahmmadbhai, it was not come out the facts that Tata Sumo was taken on hire by claimant. There was no evidence from insurance company to examine the owner and driver to prove their contention before the Claims Tribunal that Tata Sumo was taken on hire by claimants. So, in absence of evidence of owner and driver, the Claims Tribunal has believed the evidence of Shri Mahmmadbhai Chhotubhai Kunjada Exh.80 and come to conclusion that Tata Sumo was not taken on hire, but, it was taken for religious purpose based on relationship of friendship. The Tata Sumo is a private vehicle and owner of the vehicle is entitled to travel with the friend for social obligation or religious purpose and without taking any fare from such friends. There was no slightest evidence on record that fare was paid by claimant to Kamleshbhai Patel, the evidence of Mahmmadbhai Kunjada Exh.80 was not rebutted by evidence of driver and owner of Tata Sumo. The insurance policy issued by insurance company is a comprehensive policy in favour of owner of Tata Sumo. In comprehensive policy, according to terms and conditions of such policy, if occupants of Tata Sumo are entitled to travel if their travelling is without paying any fare to the owner of the Tata Sumo, in this case also, fare was not paid by claimant and there was no positive evidence contrary to the evidence of claimant produced by insurance company on record before the Claims Tribunal. The appellant company had not made any request to Tribunal to issue FA/2030/2008 5/54 JUDGMENT summons to driver and owner of Tata Sumo. No such efforts have been made. Therefore, Tribunal has rightly examined the matter as discussed in Para 7 of the award and come to conclusion that Tata Sumo was not taken by claimant on hire. 4. The other contention raised by learned advocate Mr. Mehta is that in Tata Sumo, more than sitting capacity, passengers were travelling, therefore, it amounts to breach of insurance policy. But, it was not the case of insurance company that because of travelling of more passengers in Tata Sumo, the accident has occurred. The Tribunal has relied upon the decision of Apex Court reported in 2005 ACJ SC 721 and 2005 ACJ 173. This Court had an occasion to consider the identical question in case of United India Insurance Company Limited v. Lalitaben Vinodbhai Punjabhai Vankar and Six Others in First Appeal No.1579 of 2008 decided on 31st July 2008, where, this Court has considered the same question as to whether Jeep was hired by the deceased or not. The relevant discussions are made in Para 7 to 13, therefore, the same are quoted as under : “7. The important question raised by learned advocate Mr. Mazmudar is that according to complainant, this jeep was hired by the deceased, therefore, deceased was travelling as a passenger not as a friend or relative of the owner or driver of the jeep. It is necessary to consider Exh.34 that the complainant was examined in view of the FA/2030/2008 6/54 JUDGMENT admitting the contents of the complaint correct, but, in cross-examination, he denied the suggestions of the advocate of the insurance company that whether jeep was hired by the deceased or not. He gave answer 'No'. Therefore, this Court has to consider the evidence as a whole not only chief and not only cross-examination of the person. The entire evidence of Exh.34 suggests that contents of the complaint admitting by complainant, but, he denied the fact that private jeep was hired by deceased going to attend the marriage function. Therefore, in such circumstances, it is a duty of the insurance company to prove by leading proper evidence on record that deceased and other persons those who were travelling in the jeep were travelling as a passenger on hire, but, no evidence was led by insurance company before the Tribunal. The driver was available. Notice, issued by the Claims Tribunal, was served on the driver, then, some efforts must have to be made by the insurance company to substantiate their contention before the Tribunal. Accordingly, raising the contention in written statement and to get some clue from the complaint is not enough for the insurance company to prove their contention before the Claims Tribunal. The driver and owner both are the persons who must have the knowledge as to whether jeep was hired or not, then, insurance company must have to make efforts by making an FA/2030/2008 7/54 JUDGMENT application before the Claims Tribunal to issue the summons as a witness to driver or owner for giving evidence before the Claims Tribunal in respect to the fact that whether jeep was hired or not. But, no such efforts have been made by insurance company. Merely relying upon the contents of the complaint and admission of the complainant. That contents of the complainant are true, but, in cross- examination, he denied this fact. Therefore, in such circumstances, a duty of the insurance company to prove by cogent evidence their defence before the Claims Tribunal. 8. In this case, the jeep, where, the deceased was travelling, was a private jeep allowing the passengers upto 9 and for that, additional premium of Rs.450/- was paid by the owner to the insurance company. Therefore, in private jeep, risk of nine passengers is covered and not disputed by insurance company, but, in such a private jeep, passengers for hire is not permitted as per insurance policy, otherwise, it amounts to breach of policy. The factual aspect is discussed by Tribunal that private jeep of friend was taken by deceased to attend the marriage function. Therefore, similarly in private car, occupants sitting in the car, their risk are covered in insurance policy. Therefore, in private jeep also, risk of nine passengers is covered as additional premium was paid. The Division Bench of FA/2030/2008 8/54 JUDGMENT Karnataka High Court has examined this question in respect to private car in case of Oriental Insurance Company Limited v. Purushotham T.M. and others reported in 2006 ACJ 983, where, the Divison Bench has observed that while travelling in private car, one Nagendra died and claimants filed claim petition before the Tribunal. Whether the risk of such passenger travelling in private car is covered or not has been, in detail, examined. The relevant Para 3 to 8 are quoted as under : “3. In this appeal, Mr. Poonacha, learned counsel appearing for the insurance company, while fairly did not challenge the quantum of compensation awarded by the Claims Tribunal but strongly urged that the deceased being an occupant in a private car, the Tribunal has seriously erred in law in fastening the liability on the insurance company. According to learned counsel that in the absence of additional premium having been paid to the insurance company to cover the risk of the passengers, the insurance company could not have been made liable to satisfy the award passed by the Tribunal. In other words, it is his submission that the risk of an occupant/passenger in a private car is not compulsorily required to be covered under section 147 of Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') and there being no additional premium paid by the FA/2030/2008 9/54 JUDGMENT insured to cover the risk of the occupants, the insurance company could not have been made liable to pay compensation to the claimants, by the Tribunal. In support of his submission, the learned counsel relied upon the decision of this Court in the case of New India Assurance Co. Ltd. v. Kusum, 2003 ACJ 1992 (Karnataka) and also the unreported decision of this Court rendered in the case of Veerappa v. Sarmuddin, M.F.A. No.2209 of 1995; decided on 26.5.1997. 4. We have gone through the judgments relied upon the learned counsel. In our view, there is no merit in this appeal. It is necessary to point out that Tribunal in the impugned order has fastened the liability on the insurance company following the decision of this court in the case of Ramachandra v. Shataram, 2005 ACJ 462 (Karnataka), rendered by one of us (H.G. Ramesh, J.). In the case of Ramachandra (supra), this court, after elaborately considering the law on the subject and more particularly the Full Bench decision of Insurance Co. Ltd. v. Ajayakumar, 1999 ACJ 1499 (Kerala), has held that under the provisions of Motor Vehicles Act, 1988 the insurer is compulsorily required to cover the risk of the passengers of a private car or of any passenger carrying vehicle including a two-wheeler. It is useful to refer to the observation made in the said judgment at para FA/2030/2008 10/54 JUDGMENT 15, which reads as hereunder: “(15) In view of the change in law as explained by this court and the High Courts of Kerala, Madras and Madhya Pradesh in the above referred decisions, I hold that an insurer under the new Act is compulsorily required to cover the risk of passengers of a private car or of any passenger carrying vehicle including a two-wheeler...” 5. It is also useful to refer to the observation made by Full Bench of Kerala Hig Court in the case of Ajayakumar, 1999 ACJ 1499 (Kerala), at paras 11, 12 and 13 of judgment, which reads as follows : “(11) It is in the light of the above we have to examine the effect of deletion of proviso (ii) while enacting section 147 of the Motor Vehicles Act, 1988. Clause (b)(i) of section 147 now stands limited only by proviso (i) and also the contractual liability which was incorporated originally as proviso (iii) in section 95(1)(b), but as proviso (ii) in section 147 (1)(b). Proviso (i) deals with only the case of employees. The liability referred FA/2030/2008 11/54 JUDGMENT in clause (i) would apply to the death of or bodily injury to 'any person'. Since the limitation brought under proviso (ii) that is, by excluding liability in respect of death of or bodily injury to a passenger except a passenger who is carried for hire or reward or by reason of or in pursuance of contract of employment is no longer available in the statute. 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 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). As was clearly observed by the Supreme Court in Mallawwa v. Oriental Insurance Co. Ltd., 1999 ACJ 1 (SC), it would not be proper to consider a goods vehicle as a vehicle in which passengers are carried normally. It FA/2030/2008 12/54 JUDGMENT was under these circumstances, an amendment was required to include the owner of the goods or his authorised representative carried in the vehicle by specific amendment in clause (i). (12) In Road Transport Co. v. Bhan Singh, 1998 ACJ 1101 (SC), a claim put forward for compensation in respect of death of 35 passengers travelling in a bus came up for consideration. The contention raised on behalf of the appellant was that the claim in respect of the death of the passengers in the bus should be considered under section 95(1)(b)(i) and if that be so, the limitation regarding the quantum of compensation provided under section 95(2)(b)(ii) will not be applicable. It was submitted that wording of section 95(1)(b)(i) is very wide to include a passenger in a bus, since the words used are 'any person'. This contention was rejected by the Supreme Court. It was held that section 95(1)(b)(ii) being a specific provision made in respect of passengers of a public service vehicle, it is that provisions which is applicable in the case and not the general provision contained in FA/2030/2008 13/54 JUDGMENT section 95(1)(b)(i), when the insured incurs liability in respect of the passengers travelling in his public service vehicle. As mentioned earlier it was proviso (ii) which excluded passengers in private vehicle from the net of section 95(l)(b)(i), since that proviso is not available in section 147 of the Motor Vehicles Act, 1988, the general provision in clause (i) has to be taken as applicable to passengers carried in private vehicles not for hire or reward. A similar view was taken by Madhya Pradesh High Court in Oriental Insurance Co. Ltd. v. Radha Rani, 1999 ACT 1524 (MP). It was held that an Act policy under section 147 would cover occupant of a jeep who is carried without hire or reward. (13) We, therefore, fully agree with the view taken in Apukuttan's case, 1995 ACJ 888 (Kerala), that a gratuitous passenger in a private vehicle is also covered by the Act policy under section 147 of the Motor Vehicles Act, 1988...” (Emphasis supplied) 6. We are in full agreement with the view expressed by this court in the case of FA/2030/2008 14/54 JUDGMENT Ramachandra, 2005 ACJ 462 (Karnataka) and also by the Full Bench of Kerala High Court in case of Ajayakumar, 1999 ACJ 1499 (Kerala). Further, it i also necessary to point out that the High Court of Madras in case of New India Assurance Co. Ltd. v. Vijay Kumar, 2003 ACJ 523 (Madras) and also the decision of the High Court of Madhya Pradesh in the case of Oriental Insurance Co. Ltd. v. Radha Rani, 1999 ACJ 1524 (MP), have also taken the similar view. 7. In the light of what is stated above, we are of the view that the two single Judge decisions of this court in the case of Kusum, 2003 ACJ 1992 (Karnataka) and in the case of Veerappa, M.F.A. No.2209 of 1995; decided on 26.5.1997, do not lay down correct law. In the case of Kusum (supra), the learned single Judge has proceeded to take the view that the insurance company is not required to cover the risk of the gratuitous passenger in a private vehicle relying upon the judgment of Supreme Court in the case of Ramesh Kumar v. National Insurance Co. Ltd., 2001 ACJ 1565 (SC); in the case of New India Assurance Co. Ltd. v. Asha Rani, 2003 ACJ 1 (SC) and also the decision of Orissa High Court in the case of Jibanananda Mohanty v. Artatrana Misra, 1992 ACJ 851 (Orissa) and the decision of Andhra Pradesh High Court in the case of Oriental Fire & Genl. Ins. Co. Ltd. v. M. Bhanumathi, 1990 ACJ FA/2030/2008 15/54 JUDGMENT 1043 (AP). In our view, the learned single Judge has failed to notice that the question that came up for consideration before the Apex Court in the case of Ramesh Kumar (supra) and also in the case of Asha Rani (supra) was with regard to the liability of the insurance company to cover the risk of a passenger travelling in a goods carrying vehicle. Similar is the position in the case of the decision in Jibanananda Mohanty (supra) and in the case of M.Bhanumathi (supra). In the case of Ramachandra, 2005 ACJ 462 (Karnataka), this Court, as noticed by us earlier, has referred to the judgment of the Supreme Court in the case of Asha Rani (supra) and has taken the view that the said decision is of no assistance to the insurance company to avoid its liability to over the risk of a passenger travelling in a private car. Therefore, we are of the view, the decision of this court in the case of Kusum (supra) relied upon by Mr. Poonacha, does not lay down correct law and the same is hereby overruled. Further, the decision rendered by the learned single Judge of this Court in the case of Veerappa (supra) also does not lay down the correct law, as the change in the law brought out by the provisions of new Act of 1988 was not considered by the learned single Judge in the said case. Therefore, we are unable to subscribe to the view expressed by the learned single Judge of this court in the case of FA/2030/2008 16/54 JUDGMENT Veerappa (supra). Therefore, the view taken by this court in the case of Veerappa (supra) that insurance company is not liable to cover the risk of passenger in a private car, does not lay down the correct law and, therefore, the same is hereby overruled. 8. In the light of the discussion made above, we have no hesitation to reiterate that the view taken by one of us (H.G. Ramesh, J.) in the case of Ramachandra, 2005 ACJ 462 (Karnataka), lays down the correct legal position. Therefore, the above appeal is liable to be dismissed and accordingly, it is dismissed. The amount deposited by the appellant before this court is directed to be transferred to the Tribunal.“ 9. In this case, Insurance Company has not appointed investigator to inquire as to whether jeep was taken by deceased on hire or not. When the Insurance Company is having the investigator, then, such work can be entrusted by the Insurance Company to investigate, but, insurance company has not made any efforts to find out the correct facts being a rebuttal evidence against the claimant. If investigator was appointed, then, he can obtain the statement of owner and driver and thereafter, he can be examined in support of his report by the insurance company to prove the contention or defence raised by insurance company before FA/2030/2008 17/54 JUDGMENT the Claims Tribunal. But, insurance company remained silent and no evidence was led for proving their defence before the Claims Tribunal. The defence of Insurance Company is that there was a breach of condition of policy has not established that insured was responsible for the breach. Section 149(2) of Motor Vehicles Act, in case of breach of terms of policy onus is on Insurance Company to prove the breach. “The proposition of law is no longer res integra that the person who alleges breach must prove the same. The Insurance Company is, thus, required to establish the said breach by cogent evidence. In the event, the Insurance Company fails to prove that there has been breach of the conditions of policy on the part of the insured, the Insurance Company cannot be absolved of its liability. Each case may post different problem which must be resolved having to a large number of factors governing the case including conduct of parties as regard duty to inform, correct disclosure, suppression, fraud on the insurer etc. It will also depend upon the fact as to who is the owner of the vehicle and the circumstances in which the vehicle was being driven by a person having no valid and effective licence. No hard and fast rule, can therefore, be laid down. If in FA/2030/2008 18/54 JUDGMENT a given case there exists sufficient material to draw an adverse inference against either the insurer or the insured, the Tribunal may do so. The parties alleging breach must be held to have succeeded in establishing the breach of conditions of contract of insurance on the part of the insurer by discharging its burden of proof. The Tribunal, there cannot be any doubt must arrive at a finding on the basis of the materials available on records. National Insurance Co. Ltd. v. Swaran Singh, 2004(2) GLR 989 (SC) : AIR 2004 SC 1531 : 2004(3) SCC 297 : 2004 (1) GLH 691 (SC). (1) United India Insurance Co. Ltd. v. Jaimy, 1998 (II) ACC 201 : 1998 ACJ 1318, approved. (2) V. Mepherson v. Shiv Charan Singh, 1998 (I) ACC 6 :