Case: Raghunath Eknath Hivale Vs. Shardabai Karbhari &amp; Others

The accidents in question took place at about0 a.m. on the 28th July, 1982 near Chandnapuri Shivar one Road. The truck in question bearing Motor Vehicle No. MWA 548 was owned and driven by appellant Raghunath. At the relevant time, it was loaded with 700 baskets full of tomatoes. Along with tomato baskets, the truck was also carrying 15 to 16 owners thereof. Some of them were sitting in the receptacle of the truck and two of them were sitting by the side of the driver. As the truck proceeded after crossing a corner, according to the appellant, a jeep car came from the front and on the wrong side of the road. He therefore, tried to avert a collision, with the result that he took the truck to the extreme side of the road on his side. However, about 2 to 3 persons were working at the time on the left hand side of the road from which side the truck was proceeding ahead. As a result of the appellants attempt to avert the collision with the jeep, the truck went into the nearby agricultural field and turned turtle. Two of the persons who were walking came under the truck and died on the spot. The heirs and legal representatives of the two deceased thereafter filed the present claims for compensation before the Tribunal. The claims were resisted by the appellant as well as by the New India Assurance Limited with which the truck was insured during the relevant period. The appellant resisted the claims on various counts including the ground that since the truck was insured, the insurance company alone was liable to pay the compensation. The insurance company on the other hand took the stand that since at the relevant time the truck was also carrying passengers for which purpose admittedly the truck had no permit, the company had no liability to pay the compensation and it was the owner and the driver of the truck who were liable to pay the same. It is not necessary to refer to the other defences raised by ther of the truck and the insurance company before the Tribunal, since the only point which is involved in and canvassed by the appellant in the present appeal is whether it is the owner or the insurance company who is liable to pay the compensation3. The Tribunal on the basis of the pleadings and the evidence on record came to the conclusion that the negligence was proved and it was only the owner of the vehicle who was also the driver at the relevant time, who was liable to pay the compensation amount of Rs. 25,000/in each case. The Tribunal exonerated the insurance company from the liability to pay the compensation on the ground that the truck was carrying more than seven persons as passengers which is prohibited under Rule 118 of the Motor Vehicles Rules, 1959, (hereinafter referred to as the Rules). However, the Tribunal in the operative part of the order, also stated as follows : The question of liability of the Insurance Company to make initial payment under section 96 of the Motor Vehicles Act, 1939, however, is kept open. We will deal with this observation at the proper time. Suffice it to say at this stage that since the Tribunal allowed ther of the truck and dismissed it against the insurance company, the

Reasoning:
The number of persons that a goods vehicle is permitted to carry is governed by Rule 118 and the present vehicle being not a light transport vehicle, it could not have carried more than seven persons under the said rule. At the relevant time admittedly the vehicle was carrying about 15 to 16 persons. Hence the truck was being run in breach of the permit issued to it to ply it as a goods vehicle. The further argument on behalf of the Insurance Company was that by carrying persons in excess of seven, the owner had also committed a breach of the contract of insurance since the conditions on which the insurance policy was issued had prohibited the use of the truck for a purpose other than for carrying the goods. It was, therefore, contended that Clauses (b)(i)(a) as well as Clauses (b)(i)(c) of section 96(2) were directly contravened and the Insurance Company was not liable to pay the compensation8. We are inclined to negative the contentions of the insurance company on the following grounds. It is true that at the relevant time the truck was carrying about 15 to 16 persons in addition to the goods for the carriage of which alone the permit was issued to ply it. However, it must not be lost sight of that under the said Rule 118, even a goods vehicle is permitted to carry persons though upto seven in number. Those persons include the owner or the hirer of the vehicle. The only condition for carrying such persons is that they have to be carried free of charge. Hence, even if a vehicle has a permit for carrying goods, the carrying of persons is not prohibited absolutely. The evidence on record admittedly shows that the passengers in question were the owners of the goods, i.e. the hirers of the vehicle. It is nobodys case that they were charged any fare. The only condition of the permit which was breached was that the persons in question were in excess of the number permitted by the rule. This was a breach of the condition of the permit issued for plying the vehicle. The vehicle was however being used essentially for carrying the goods. It cannot therefore, be said that the vehicle was not being used for the purpose for which the permit was issued. A breach of the condition of the permit is not the same thing as a breach of the purpose for which it is issued. The contravention of one or the other condition of the permit is not a contravention of the purpose for which the permit is issued. There was, therefore, no contravention either of Clauses (b)(i)(a) or of (b)(i)(c) of section 96(2) which clauses alone are and can be pressed into service on behalf of the insurance company9. The insurer can avoid his liability only if the conditions specified in section 96(2) are satisfied, and not otherwise. The contract between the insurer and the insured may permit the insurer to avoid his liability under various circumstances. However, if these circumstances do not satisfy the provisions of section 96(2), the insurer cannot escape his liability for the third party risks. The statute recognises no other condition for an insurer to escape his liability except those given in section 96(2) whatever the terms of the contract between the insurer and the insured. The terms of the contract between the insurer and the insured determining their right and liability towards each other are not and should not be confused with the statutory liability of the insurer for the third party risks. If there is a breach of the contract on the part of the insured, the insurer may proceed against the insured. As far as the third party risks are concerned, the liability being statutory, it cannot ben by the terms of the contract of insurance between the parties10. This being the legal position, we see no jurisdiction for the defence advanced on behalf of the insurance company in the present case. We are fortified in the view we are taking by a decision of the learned Single Judge of the Kerala High Court reported in 1971 A.C.J. at page 219 (Kesavan Nair v. State Insurance Officer)1, and by a decision of the Division Bench of the Karnataka High Court reported in A.I.R. 1977 Karnataka at page 46 (The Madras Motor & General Insurance Company Ltd. & another v. Nanjamma & others)2. More or less a similar view is taken by the Andhra Pradesh High Court in a decision reported in 1979 A.C.J. at page 110 (United India Fire & General Insurance Company Ltd. v. Maddali Suseela)3. With respect these decisions adopt the same line of reasoning as we have done here. It is, therefore, not necessary to discuss the said decisions in detail11. In view of what we have held above, it is clear that it is the insurance company which is respondent No. 5 in Appeal No. 51 of 1985 and respondent No. 3 in Appeal No. 52 of 1985 and which will be liable to pay the compensation awarded by the Tribunal and not the Appellant who is ther of the truck in question. Hence to that extent the decision of the Tribunal will have to be set aside12. It has however been rightly pointed out on behalf of the insurance company that the Tribunals observations in both the cases, that the question of liability of the insurance company to make initial payment under section 96 of the Act is kept open is uncalled for and unless it is set aside it is likely to give rise to a further litigation. There is no indication in the body of the judgment as to why the Tribunal has found it necessary to keep that question open. The learned Counsel appearing for the claimants in both the cases were also unable enlighten us on the point. It appears that probably the Tribunal had in mind the amendment to the Act whereby Chapter VIIA dealing with liability without fault in certain cases, was introduced. Since the accident in the present case occurred on the 28th July, 1982 and the provisions of the section came into force on a subsequent date, they will not be applicable to the facts of the present case. Hence the said observations have to be set aside.