S. Manikumar, J.@mdashBeing aggrieved by the liability fastened on the appellant insurance company to pay compensation of Rs. 13,000/- to the injured in M.C.O.P. No. 40 of 2005 and Rs. 2,45,000/- to the legal representatives of the deceased K. Abdul Basha, in M.C.O.P. No. 41 of 2005, by a common award, the present Civil Miscellaneous Appeals have been filed. Negligence of the driver of the offending vehicle bearing registration No. AP-16-TU-6706 insured with the appellant insurance company, and the quantum of compensation awarded to the respondents/claimants in both the appeals, are not in dispute and therefore, there is no need to advert to the same, except to the extent of adjudicating the only issue as to whether the Claims Tribunal had committed any manifest illegality in fastening liability on the insurance company. As the question involved in both the appeals, submissions advanced by both parties are one and the same, both the appeals are being disposed of by a common judgment and decree.
2. Facts leading to the appeals are as follows: -
That on 11.1.2005 at 5.00 p.m., the claimant in M.C.O.P. No. 40 of 2005 drove a Two Wheeler, bearing registration No. TN-23-M-2865 and, the deceased Abdul Basha, in M.C.O.P. No. 41 of 2005 was the pillion rider. When both of them were proceeding from Kallur to Sodam in the mud road near Battuvaripalli turning, a bus bearing registration No. AP-16-TV-6706, driven in a rash and negligent manner by its driver, hit the two wheeler and due to the accident, the claimant in M.C.O.P. No. 40 of 2005 sustained injuries. He was taken to Government Hospital, Peelari, for treatment and the pillion rider Abdul Basha sustained grievous injuries and died on the spot.
3. In M.C.O.P. No. 41 of 2005, wife and sons and daughters were the claimants. According to the abovesaid claimants, the accident occurred solely due to the rash and negligent driving of the Andhra Pradesh Transport Corporation bus bearing registration No. AP-16-TU-6706, and therefore, the injured and the legal representatives of the deceased made separate claims.
4. Andhra Pradesh State Transport Corporation, represented by its Palamaner, Depot Manager, 2nd and 11th respondent in C.M.A. Nos. 1519 and 1520 of 2010 respectively, denied rash and negligent manner of driving on the part of the bus driver. The corporation blamed the motor cyclist for the accident. Without prejudice to the above, the Corporation further submitted that they are not liable to pay compensation. Mr. Sivaprasad, 3rd and 12th respondent in C.M.A. Nos. 1519 and 1520 of 2010 respectively, and the National Insurance Company, Chennai, appellant in both CMA, also disputed the manner of accident. Without prejudice to the same, they disputed the age, occupation, income of the injured and the deceased.
5. On the above pleadings, the Tribunal framed two points of consideration:
1) Whether the accident occurred due to the rash and negligent driving of the bus bearing registration No. AP-16-TU-6706?
2) Whether the petitioners are entitled to compensation? And to what extent?
3) To what relief?
6. A joint trial memo was filed and common evidence was let in as stated supra. The Tribunal found that the driver of the bus bearing registration No. AP-16-TU-6706 belonging to the Andhra Pradesh State Transport Corporation was responsible for the accident and quantified the compensation at Rs. 13,000/-and Rs. 2,45,000/-in M.C.O.P. No. 40 and 41 of 2005 respectively.
7. Assailing the correctness of the common award, Mr. S. Vadivel, learned counsel for the appellant insurance company submitted that the'' vehicle bearing registration No. AP-16-TU-6706 belongs to Mr. Sivaprasad, the 2nd respondent in the claim petitions, who had entered into an agreement with Andhra Pradesh State Transport Corporation Limited, on hire, which has been marked as Exhibit R-1. He further submitted that as per Exhibit R-2 Insurance Policy, the owner of the vehicle, the second respondent in both the claim petitions, has not transferred the policy in favour of the State Transport Corporation or any other person and that therefore, the Motor Accidents Claims Tribunal ought to have dismissed the claim petitions, on the ground that there was no privity of contract between the person who hired the vehicle and the National Insurance Company. Consequently, the Tribunal ought to have fastened the liability only on the owner of the vehicle, the second respondent in both the claim petitions, for violating the terms and conditions of the policy. According to him, when the possession and control of the vehicle, at the time of accident was with the Andhra Pradesh State Transport Corporation Ltd., the State Transport Corporation alone should be made liable to pay compensation to the accident victims or in the alternative, the owner of the vehicle alone ought to have been made liable, on the ground of violation of policy conditions. To support his contentions, he placed reliance on a decision of the Supreme Court in National Insurance Company Ltd. v. Deepa Devi and Others, 2008 (1) TNMAC 126(SC): LNIND 2007 SC 1449.
8. Per contra, to sustain the finding of the Claims Tribunal, fastening liability on the appellant insurance company to pay compensation to the accident victims and placing reliance on the subsequent decision of the Supreme Court in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others, 2011 SAR (Civil) 910: LNIND 2011 SC 687, Mr. N. Manokaran, learned counsel for the respondents/claimants in both the appeals, submitted that the accident victims are third parties. He further submitted that though the insured vehicle was operated under Exhibit R-1 Agreement of Contract by the corporation, the vehicle has been given only on hire basis with the existing insurance policy. According to the learned counsel, it should be deemed that me vehicle was transferred along with the insurance policy and even assuming that the vehicle and the driver were under the control of the corporation under Exhibit R1 Agreement, the insurance company cannot escape from its liability to pay compensation. In view of the dictum laid down in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others (supra), he submitted that there is no substance in the contentions of the appellant.
9. Heard the learned counsel for the parties and perused the materials available on record.
10. Before adverting to the facts of the present case, it is necessary to extract few statutory provisions:
owner" has been defined in Section 2(19) of the Act, which as follows:
owner" means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a higher purchase agreement, the person in possession of the vehicle under that agreement.
The said definition underwent a change in 1988 and as per Section 2(30) of the Act, 1988 owner means,
owner" means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement.
Section 157 of the Motor Vehicles Act reads as follows:
157. Transfer of certificate of insurance-(1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provision of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.
Explanation. For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.
(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.
11. In National Insurance Co. Ltd. v. Deepa Devi and Others (supra), relied on by the learned counsel for the appellants, respondent No. 3 therein, was the owner of Maruthi Gypsy bearing registration No. HIS 6095. The appellant before the Supreme Court issued a policy of insurance in favour of respondent No. 4 therein, for the said Maruthi Gypsy, for the period from 10.6.1993 to 9.6.1994. The insurance policy provided thus,
For private car IXI and Motor Cycle/Scooter IYI. Use only for social, domestic and pleasures and insured''s own purpose.
The Car in question was requisitioned during the Assembly Elections in the year 1993 by the Sub-Divisional Magistrate, Rampur, through the Deputy Commissioner, Shimla. The said vehicle was in possession, and also under the control of the said officer. On 17.11.1993, while Sub Divisional Magistrate, Rampur, was travelling in the said vehicle, an accident occurred, as a result, a boy died. Legal representatives made a claim for compensation in terms of Section 166 of 1988 Act. The State of Himachal Pradesh as well as Sub Divisional Magistrate, Rampur, were impleaded as parties. The Claims Tribunal, held that under the terms of the insurance policy, they were not liable to reimburse the owner of the vehicle, as regards their liability to pay compensation on account of the accident. However, a Division Bench of the Himachal Pradesh High Court set aside the award of the Tribunal and modified the same, by holding that the owner of the vehicle, the State Government and the insurance company as jointly and severally liable to pay compensation. As the vehicle was insured with the appellant insurance company, the Division Bench directed the company to deposit the amount payable to the claimants.
12. Placing reliance on a decision of the Supreme Court in
13. Per contra, placing reliance on a judgment of the Supreme Court in
10. Parliament either under the 1939 Actor the 1988 Act did not take into consideration a situation of this nature. No doubt, Respondent Nos. 3 and 4 continued to be the registered owner of the vehicle despite the fact that the same was requisitioned by the District Magistrate in exercise of its power conferred upon it under the Representation of People Act. A vehicle is requisitioned by a statutory authority, pursuant to the provisions contained in a statute. The owner of the vehicle cannot refuse to abide by the order of requisition of the vehicle by the Deputy Commissioner. While the vehicle remains under requisition, the owner does not exercise any control thereover. The driver may still be the employee of the owner of the vehicle but he has to drive it as per the direction of the officer of the State, who is put in-charge thereof. Save and except for legal ownership, for all intent and purport, the registered owner of the vehicle loses entire control thereover. He has no say as to whether the vehicle should be driven at a given point of time or not. He cannot ask the driver not to drive a vehicle on a bad road. He or the driver could not possibly say that the vehicle would not be driven in the night. The purpose of requisition is to use the vehicle. For the period the vehicle remains under the control of the State and/ or its officers, the owner is only entitled to payment of compensation therefore in terms of the Act but he cannot not exercise any control thereupon. In a situation of this nature, this Court must proceed on the presumption that the Parliament while enacting the 1988 Act did not envisage such a situation. If in a given situation, the statutory definitions contained in the 1988 Act cannot be given effect to in letter and spirit, the same should be understood from the common sense point of view.
14. In the above reported case, though the policy of insurance was in the name of the registered owner of the vehicle, the Apex Court held that no doubt, the registered owner continues to be "owner", even if the vehicle remains in possession of the 3rd party, but on the facts and circumstances of the case, when a vehicle is requisitioned by a statutory authority, the registered owner of the vehicle cannot refuse to abide by an order of such authority and when the vehicle remained under requisition, the registered owner does not exercise any control thereover and save and except for legal ownership for all intent and purport registered owner loses entire control of the vehicle. Therefore, in a situation of this nature, the Court should proceed on presumption that State Government shall be liable to pay amount of compensation to claimants, However, in a subsequent decision made in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others (supra), relied on by the learned counsel for the respondents in the present appeal, a Mini Bus owned by X entered into agreement of contract with Uttar Pradesh State Transport Corporation (hereinafter referred to as Corporation). For allowing the Mini Bus, a permit was issued in favour of the corporation by the concerned R.T.O. On account of state amendment incorporated in Section 103 of the Motor Vehicles Act, 1988, the Corporation was vested with the right to take vehicles on hire as per the contract and to ply the same, on the routes as per the permit granted. According to the terms and conditions of the agreement, the Mini Bus was to be operated by the corporation on the routes as per the permit issued by R.T.O. in favour of the corporation. Except for the services of the driver which were to be provided by the owner, all other rights of owner were to be exercised by the Corporation only. The Conductor was to be an employee of the corporation. The collection so made was to be deposited with the corporation. While so ,when the Mini Bus was operated under the contract of the corporation, it rammed into Gumti causing injuries, to one Vijay Pal, his children and also the Barber-Majeed, owner of a Gumti Shop. On account of severe bodily injuries suffered by them, they died. Wife and mother of the three deceased children filed four claim petitions. Wife of the deceased, owner of the Gumti shop also filed a separate claim petition for compensation. Relying on the decision of the Supreme Court in Rajasthan State Road Transport Corporation v. Kaiiash Nath Kothari and Others (supra), all the claim petitions were allowed, fastening liability on the Uttar Pradesh State Transport Corporation, on the ground that, at the time of accident, the offending vehicle was under the control and run by the corporation. Being aggrieved by the awards of the Tribunal, corporation preferred appeals. The owner of the bus also filed cross objections against the finding on issue No. 4, recorded by the Tribunal, holding that the insurance company was not liable to make, payment and fastening liability on the owner also, on account of the alleged breach of insurance policy. However, the finding had a caveat that the liability of the owner would arise only, in a case, the corporation failed to make payment. The National Insurance Company with whom the Mini Bus was insured for the relevant period was exonerated from the payment of compensation. Being aggrieved by the decision, Uttar Pradesh State Transport Corporation preferred appeals to the Supreme Court. After considering the definition of the word "owner" as provided in Section 2(30) of the Motor Vehicles Act, 1988, Chapter XI of the Motor Vehicles Act, dealing with the provisions of insurance of motor vehicles against third party risks particularly Sections 146, 147, 149, and 157 of the Act dealing with transfer of certificate of insurance, earlier decision of the Supreme Court in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari and Others (supra), and the relevant clauses of the agreement, upon which, the Mini Bus was hired by the transport corporation; the Supreme Court at paragraph No. 29 held as follows:
29. Critical examination thereof would show that the Appellant and the owner had specifically agreed that the vehicle will be insured and a driver would be provided by owner of the vehicle but overall control not only on the vehicle but also on the driver, would be that of the Corporation. Thus, the vehicle was given on hire by the owner of the vehicle together with its existing and running insurance policy. In view of the aforesaid terms and conditions, the Insurance Company cannot escape its liability to pay the amount of compensation. There is no denial of the fact by the insurance company that at the relevant point of time the vehicle in question was insured with it and the policy was very much in force and in existence. It is also not the case of the insurance company that the driver of the vehicle was not holding a valid driving licence to drive the vehicle. The Tribunal has also held that the driver had a valid driving licence at the time of accident. It has also not been contended by it that there has been violation of the terms and conditions of the policy or that the driver was not entitled to drive the said vehicle.
15. On the facts and circumstances of the case in particular Clause 4.4 of the agreement, wherein the driver was supposed to drive the bus under the instructions of the conductor, appointed by the Corporation, the Supreme Court concluded that the effective control and command of the bus was with the Uttar Pradesh State Transport Corporation. Thus, for all practical purposes, for the relevant period, the corporation had become the owner of the vehicle for a specific period. If the corporation had become the owner even for the specific period and that the vehicle having been insured, at the instance of the original owner, it will be deemed that the vehicle was transferred along with the Insurance policy, in existence to the corporation and thus the corporation would not be able to escape its liability to pay the amount of compensation.
16. At paragraph 37, the Supreme Court, further added that the liability to pay compensation is based on statutory provisions. Compulsory insurance of the vehicle is meant for the benefit of the third parties. Liability of the owner to have compulsory insurance is only in regard to third party and not to the property. Once a vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the Act does not provide that any person who uses the vehicle independently, a separate insurance policy should be taken. The purpose of compulsory insurance in the Act has been enacted with an object to advance social justice.
17. After considering judgments on the rights of third party in Guru Govekar v. Filomena F. Lobo and Others (supra), and United India Insurance Company Limited v. Santro Devi and Others, (2009) 1 SCC 558 : LNIND 2008 SC 2344, and Section 14 of the Motor Vehicles Act, and under what circumstances, the insurance company would be liable to pay the amount of compensation, the Supreme Court in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others (supra), at paragraph Nos. 41 to 47 held as follows:
41. Perusal of the ratio of aforesaid judgments of this Court, shows that Section 146 of the Act gives complete protection to Third Party in respect of death or bodily injury or damage to the property while using the vehicle in public place. For that purpose, insurance of the vehicle has been made compulsory to the vehicles or to the owners. This would further reflect that compulsory insurance is obviously for the benefit of Third Parties.
42. Certificate of Insurance, between the owner and the Insurance Company contemplates, under what circumstances Insurance Company would be liable to pay the amount of compensation. The relevant conditions are reproduced hereinbelow:
Rules with respect to use of the Vehicle
Use only carriage of passengers in accordance with permit (contract carriage or stage carriage) issued within the meaning of the Motor Vehicles Act, 1988. This policy does not cover:
1. Use for organised racing pace making reliability trial speed testing.
2. Use whilst drawing a trailer except the towing (other than to reward) of any one disabled mechanically propeller vehicle.
Persons who are qualified to use the Vehicle:
Any person including the insured provided that person driving holds an effective driving licence at the time of the accident and is not disqualified from holding or obtaining such licence. Provided also that a person holding an effective learner''s licence may also drive the vehicle when non used for transport of passenger at the time of the accident and such a person satisfies the requirement of Rule No. 3 of this Central Motor Vehicle Rule, 1989
43. Perusal thereof would show that there has not been any violation of the aforesaid terms and conditions of the policy. Respondent-Insurance Company has also failed to point out violation of any Act, Rules or conditions of the Insurance. Insurance Company has no legal justification to deny the payment of compensation to the claimants.
44. In the light of the foregoing discussions, the Appeal filed by Insurance Company fails, wherein it has been directed that the amount would first be paid by the Company, with right to it to recover the same from owner of the vehicle. This we hold so, as the liability of the Insurance Company is exclusive and absolute.
45. Thus, looking re the matter from every angle, we are of the considered opinion that Insurance Company cannot escape its liability of payment of compensation to Third Parties or claimants. Admittedly, owner of the vehicle has not violated any of the terms and conditions of the policy or provisions of the Act. The owner had taken the insurance so as to meet such type of liability which may arise on account of use of the vehicle.
46. Apart, from the above, learned counsel for Insurance Company could not point out any legal embargo which may give right to it to deny the payment of compensation. Thus, legally or otherwise liability has to be fastened or, the Insurance Company only
47. In the light of the aforesaid discussion, the Appeals of the Corporation are allowed. The impugned judgment and order passed by High Court qua the Corporation are hereby set aside and quashed and we hold that the Insurance Company would be liable to pay the amount of compensation to the Claimants."
18. Insofar as the rights of the third parties to receive compensation from the insurer, it is worthwhile to extract paragraphs 39 and 40 of the judgment in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others (supra)
39. The Apex Court in the case of Guru Govekar v. Miss Filomena F. Lobo and Others (supra) has held that:
8....Thus, if a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of the third party caused by or arising out of the use of the vehicle at a public place. The liability to pay compensation in respect of death of or injury caused to the person or property of a third party undoubtedly arises when such injury is caused when the insured is using the vehicle in a public place. It also arises when the insured has caused or allowed any other person (including an independent contractor) to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident.
13. This meant that once the insurer had issued a certificate of insurance in accordance with sub-Section (4) of Section 95 of the Act the insurer had to satisfy any decree which a person receiving injuries from the use of the vehicle insured had obtained against any person insured by the policy. He was liable to satisfy the decree when he had been served with a notice under sub-section (2) of Section 96 of the Act about the proceedings in which the judgment was delivered,
14....Any other view will expose innocent third parties to go without compensation when they suffer injury on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act.
40. In a recent judgment of this Court, in the case of United India Insurance Company Limited v. Santro Devi and Others (supra) it has been held as under:
6. The provisions of compulsory insurance have been framed to advance a social object. It is in a way part of the social Justice doctrine. When a certificate of insurance is issued, in law, the insurance company is bound to reimburse the owner. There cannot be any doubt whatsoever that a contract or insurance must fulfill the statutory requirements of formation of a valid contract but in case of a third party risk, the question has to be considered from a different angle.
17. Section 146 provides for statutory insurance. An insurance is mandatorily required to be obtained by the person in charge of or in possession of the vehicle. There is no provision in the Motor Vehicles Act that unless the name(s) of the heirs of the owner of a vehicle is/are substituted on the certificate of insurance or in the certificate of registration in place of the original owner'' (since deceased), the motor vehicle cannot be allowed to be used in a public place. Thus, in a case where the owner of a motor vehicle has expired, although there does not exist any statutory interdict for the person in possession of the vehicle to ply the same on road; but there being a statutory injunction that the same cannot be pled unless a policy of insurance is obtained, we are of the opinion that the contract of insurance would be enforceable. It would be so in a case of this nature as for the purpose of renewal of insurance policy only the premium is to be paid. It is not in dispute that quantum of premium paid for renewal of the policy is in terms of the provisions of the Insurance Act, 1938.
19. Needless to state that the judgment rendered in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others (supra) will have precedence over National Insurance Company Ltd. v. Deepa Devi and Others (supra), as the former is latter in point of time and it has also extensively considered he liability of the insurance company for payment of compensation to third parties, when admittedly the owner of the vehicle had not violated any of the terms and conditions of the policy or the provisions of the Act.
20. The injured in M.C.O.P. No. 40 of 2005 and the deceased in M.C.O.P. No. 41 of 2005, are admittedly third parties. The offending vehicle bearing registration No. AP-16-TU-6706, owned by the 2nd respondent, had admittedly been given on hire with its existing insurance policy with the appellant company to the corporation. The facts of the reported case insofar as the exclusive liability of the insurance company, to pay compensation squarely applies to the case on hand.
21. In the light of the abovesaid pronouncement in Uttar Pradesh State Road Transport Corporation v. Kulsum and Others (supra), this Court is not inclined to subscribe to the contention of the appellant. Accordingly, these Civil Miscellaneous Appeals are dismissed. M.P.Nos. 1 and 1 of 2010 and 1 and 1 of 2011 are closed. No costs. It is represented by the learned counsel for the appellant in both the appeals, that pursuant to the order made in M.P. Nos. 1 and 1 of 2010, they have deposited the entire award amount with proportionate accrued interest and costs to the credit of M.C.O.P. Nos. 40 and 41 of 2005, on the file of the Motor Accidents Claims Tribunal, Court of the Subordinate Judge, Gudiyatham, Vellore District. In view of the dismissal of the appeals, the respondents/claimants are permitted to withdraw the same, by making necessary applications. No costs.
