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Smt. Santra Bai and Etc. Etc. Vs. Prahlad and ors., Etc. Etc. - Court Judgment

LegalCrystal Citation
SubjectMotor Vehicles;Civil
CourtRajasthan High Court
Decided On
Case NumberCivil Appeal Nos. 111 of 1974, 66 and 165 of 1975, 84 and 111 of 1977, 28, 39, 48, 99 and 182 of 197
Judge
Reported inII(1985)ACC1; AIR1986Raj101; [1986]59CompCas714(Raj); 1985(2)WLN240
ActsMotor Vehicles Act, 1939 - Sections 95(1); Rajasthan Motor Vehicles Rules, 1951 - Rule 133
AppellantSmt. Santra Bai and Etc. Etc.
RespondentPrahlad and ors., Etc. Etc.
Advocates: U.N. Bhandari,; K.K. Mehrish,; S.M. Mehta,;
Cases ReferredHindustan Ideal Insurance Corpn. Ltd. v. Manne Chimparamma
Excerpt:
motor vehicles act, 1939 - section 95 and rajasthan motor vehicles rules, 1951--rule 133--liability of insurance company in respect of passengers--4 principles of: (a) company not liable for a gratuitous passenger, (b) company liable for a passenger carried on hire or reward or in contract of employment, (c) company not liable far driver or conductor or person carried with goods, (d) company not to cover contractual liability.;taking in view the entire case law and the provisions of section 95 of the act read with rule 133 of the rules following principles can be deduced:;(i) in case of a gratuitous passenger going an joy ride or on his own responsibility, insurance company is not liable;;(ii) in case of passengers carried for hire or reward or by reason of or in pursuance of a contract.....kasliwal, j. 1. learned single judge by order dated aug. 9, 1984, has referred all the above appeals to a larger bench for authoritative decision on the question of liability of the insurance company under sections 95 and 96 of the motor vehicles act, 1939 (hereinafter called 'the act') in respect of the death or injury caused to persons who travelled in the goods vehicle with the goods or without goods or either in contract of service of the owner of the vehicle or otherwise.2. learned single judge has observed :'the accidents cover different species of claims and, it would not be possible to generalise them except to the limited extent that in all such cases, the vehicle, the owner of which is asked to pay compensation, is essentially to be a 'goods vehicle' in which the goods are to be.....
Judgment:

Kasliwal, J.

1. Learned single Judge by order dated Aug. 9, 1984, has referred all the above appeals to a larger bench for authoritative decision on the question of liability of the Insurance Company under sections 95 and 96 of the Motor Vehicles Act, 1939 (hereinafter called 'the Act') in respect of the death or injury caused to persons who travelled in the goods vehicle with the goods or without goods or either in contract of service of the owner of the vehicle or otherwise.

2. Learned single Judge has observed :

'The accidents cover different species of claims and, it would not be possible to generalise them except to the limited extent that in all such cases, the vehicle, the owner of which is asked to pay compensation, is essentially to be a 'goods vehicle' in which the goods are to be transported and in the course of the accident, the injury is caused or death is caused to a person travelling in that goods vehicle in the capacity either of owner of the goods or representative of the owners of the goods or of a passenger being allowed to travel in the truck-goods vehicle or, of an employee of the owner of the goods vehicle or, as a person in contract of employment or otherwise of the owner of the goods vehicle or, as a person travelling wholly in an unauthorised manner. Even, these cases are illustrative and they are no exhaustive.'

It has been further observed that divergent views have been taken by the various High Courts and there is no authoritative pronouncement of Hon'ble the Supreme Court directly laying down the principles of law for the guidance of High Court or tribunals to adjudicate such cases under the provisions of the Act. Learned single Judge has given citations of various High Courts taking divergent views on the above question and thought it proper to refer the cases for authoritative decision of a larger bench of not less than 3 judges so that the controversy beset at rest and important guidelines may be provided for decision of such cases. In the above circumstances, these appeals have been placed before us by order of Hon'ble the Chief Justice.

3. There is divergence of opinion between different High Courts in this country on the question whether an insurer is liable to indemnify the owner of the goods, when he receives bodily injury or death while accompanying the goods or without goods in a goods vehicle which he hires from the owner of the vehicle. Bombay, Karnataka, Gujarat, Orissa. Kerala and Allahabad High Courts have taken the view that insurance company is statutorily liable to indemnify the owner of the goods also while Punjab, Calcutta, Madras and Andhra Pradesh High Courts have taken a contrary view.

4. Before dealing with the cases, it would be proper to reproduce the relevant provisions of the Act and the Rules in this regard.

'Section 95 -- Requirements of policies and limits of liability -- (1) In order to comply with the requirements of this chapter a policy of insurance must be a policy which -- .

( a) is issued by a person who is an authorised insurer (or by a co-operative society allowed under Section 108 to transact the business of an insurer), and

(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2) -

(i) against any liability which may be incurred by him in respect of the death of, or bodily injury to, any person or damage to any property of a third party, caused by or arising out of, the use of the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place :

Provided that a policy shall not be required -

(i) to cover liability in respect of the death arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923, inrespect of the death of, or bodily injury to any such employee -

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

(c) if it is a goods vehicle, being carried in the vehicle, or

(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, or

(iii) to cover any contractual liability.

Explanation -- For the removal of doubts it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party, shall be deemed to have been caused by, or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person, who is dead or injured or the property which is damaged, was not in a public place, at the time of the accident, if the act or omission which led to the accident, occurred in a public place.

(2) Subject to the proviso to Sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely :

(a) where the vehicle is a goods vehicle, a limit of (one lakh and fifty thousand rupees) in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to employees (other than the driver), not exceeding six in number, being carried in the vehicle;

(b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of, or in pursuance of, a contract of employment -

(i) in respect of persons other than passengers, carried for hire or reward, a limit of fifty thousand rupees in all;

(ii) in respect of passengers, a limit of fifteen thousand rupees for each individual passenger;

(c) save as provided in Clause (d) where thevehicle is a vehicle of any other clause, the amount of liability incurred;

(d) irrespective of the class of the vehicle, a limit of rupees (six thousand) in all in respect of damage to any property of a third party.

(4) A policy shall be of no effect for the purposes of this chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.

(4-A) Where a cover note issued by the insurer under the provisions of this chapter or the rules made there under is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered'-or to such other authority as the State Government may prescribe.

(5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person,

Comment

The policy should undertake to indemnify the insurer against any. liability which may be incurred by him in respect of death or bodily injury to-any person caused by or arising out of the use of vehicle in a public place.'

Section 96 of the Act deals with the duty of insurers to satisfy judgments against persons insured against third party risks. Section 96(2) of the Act also provides the grounds on-which alone the insurer is entitled to defend the action.

5. Rule 133 -of -the Rajasthan Motor Vehicles Rules, 1951 (hereinafter referred to as 'the Rules') provide for carriage of persons in goods vehicle. Rule 133 reads as under : --

'Rule 133 -- Carriage of persons in goods vehicle (a) Save in the cases of a vehicle which is used for the carriage of troops or police or a stage carriage in which goods are being carriedin addition to passengers, no person shall be carried in a goods vehicle other than a bona fide employee of the owner or the hirer of the vehicle, and except in accordance with this Rule.

(b) No person shall be carried in the cab of a goods vehicle beyond the number for which there is seating accommodation at the rate of fifteen inches measured along with the seat excluding the space reserved for the driver, foreach person, and not more than six persons in all in addition to the driver shall be carried in any goods vehicle.

(c) No person shall be carried upon the goods or otherwise in such a manner that such person is in danger of falling from the vehicle, and in no case shall any person be carried in a goods vehicle in such a manner that any part of his person, when he is in a sitting position, is at a height exceeding ten feet from the surface upon which the vehicle rests.

(d) Notwithstanding the provisions of Sub-rule (b) a Regional Transport Authority may, as a condition of the permit granted for any goods vehicle, specify the condition subject to which a larger number of persons may be carried in the vehicle provided that such number shall not exceed the area in square feet of the floor of the vehicle divided by.

(e) Nothing contained in this rule shall be deemed to authorise the carriage of any person for hire or reward on any vehicles, unless there-is force in respect of the vehicle a permit authorising the use of the vehicle for such purpose, and save in accordance with the provisions of such permit.'

6. Chapter VIII of the Act deals with the provisions of insurance of Motor Vehicles against third party risks. Section 94 provides that no person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place unless there is in force in relation to use of the vehicle by that person, or that other person, as the case may be, a policy of insurance complying with the requirement of this Chapter. Section 95 then deals with requirements of policies and limits of liabilities with which we are directly concerned. Section 95(1)(b)(i) and (ii) lays down that in order to comply with the requirements of this chapter a policy of insurance must be a policy which insures the person or classes of persons specified in thepolicy to the extent specified in Sub-section (2) ofSection 95. The above provisions lay down astatutory liability of the insurer in respect of apolicy of insurance required to be made beforeuse of a motor vehicle in the public place.Section 95(l)(b)(i) clearly lays down that suchpolicy must be against any liability which maybe incurred by the insured 'in respect of thedeath, or bodily injury to any person or damageto a third party caused by or arising out of theuse of the vehicle in a public place. (Emphasisadded). The above provision clearly uses theterm 'any person' which is of wide importand would include every person, who mighthave incurred death or bodily injury causedby or arising out of the use of the vehicle in apublic place. Here there is no restriction inrespect of the class of vehicle and the termused is 'vehicle'. Thereafter Section 95(1)(b)(ii)provides that policy of insurance must be apolicy against the death or bodily injury toany passenger of a public service vehicle causedby or arising out of the use of the vehicle in apublic place. Under this provision the liabilityof the insurer is restricted against the death ofor bodily injury to any passenger of a publicservice vehicle. Thus, this provision will onlyapply where death or bodily injury is causedto any passenger of a public service vehicleonly. A goods vehicle is not a public servicevehicle and as such will not fall within thisprovision and shall only come within thepurivew of Section 95(1)(b)(i).

7. After the above provisions a proviso is contained in Section 95. which lays down that a policy shall not be required in some cases. Clauses (i) and (iii) to the proviso to Sub-section (1) of Section 95 of the Act thus deal with the exceptions to statutory insurance. Under Clause (i) to the proviso to Sub-section (1) of Section 95 of the Act shall be cases of death arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment, other than a liability under the Workmen's Compensation Act. 1923 in respect of the death of or bodily injury to, any such employee -- (a) engaged in driving the vehicle, or (b) if it is a public service vehicle, engaged us a conductor of the vehicle or in examining tickets on the vehicle; or (c) if it is a goods vehicle, being carried in the vehicle. The above provision will thus apply to an employee ofthe insured engaged in driving the vehicle i.e. a driver or a conductor in case of a public service vehicle and any class of employee if carried in a goods vehicle. This exception of not requiring any insurance policy will apply to the employees of the insured only. Clause (iii) to the proviso makes an exception to cover contractual liability with which we are not concerned.

8. We shall now consider Clause (ii) to the proviso to Sub-section (1) of Section 95 of the Act which is directly relevant to the controversy raised in the present cases and on which there is a divergence of opinion between the various High Courts. It may be mentioned that this provision is an exception to an exception and as such if a case falls within the purview of this provision, then it would mean that there is statutory liability of the insurer and the provision of not taking the policy as contained in the proviso will not apply in such cases. Clause (ii) of the proviso includes passengers carried for hire or reward and also passengers, who are carried by reason of or in pursuance of a contract of employment. It may be important to mention here that the legislature has not mentioned the class of vehicle but has only qualified the word 'vehicle' being such a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. An argument has been raised by learned, counsel for the Insurance Company that goods vehicle cannot be considered as a vehicle in which passengers are carried for hire or reward. In our view, there is no force in this contention as Rule 133 of the Rules permits the carrying of persons in a goods vehicle also subject to limitation of number of persons and seating capacity etc. The Legislature has not used the words 'public service vehicle' in the above clause and this clearly shows that a goods vehicle will also come within the purview of this clause if passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment even in goods vehicle. Now so far as the employees of the owner of the vehicle are concerned if carried in goods vehicle they would be covered under Sub-clause (c) of Clause (i) to the proviso of Sub-section (1) of Section 95. Thus, the other category of passengers carried in a vehicle in pursuance of a contract of employment under Clause (ii) of the proviso will be those, who would be employees of theowners of the goods or of such person who had hired such goods vehicle.

9. The first and foremost question which arises for consideration is whether the owner of the goods when himself accompanying the goods in a vehicle will fall under Clause (ii) of the proviso or not. It may be mentioned at the out-set that such person cannot fall within the category of passenger being carried for hire in a vehicle. The question, however, remains whether he is a passenger carried for reward or by reason of or in pursuance of a contract of employment. We find force in the argument of learned counsel for insurers that there cannot be a contract of employment between the insured or owner of the vehicle and a person who hires such vehicle for taking his goods. For employment there should be a relationship of master and servant or employer and employee. In a case where the owner of the goods travels with the goods in a goods vehicle he cannot be considered as being carried by reason of or in pursuance of a contract of employment. The question thus which remains to be considered is whether such a person can be considered being carried for reward in the vehicle. We are unable to find any reason and even learned counsel for insurers were not able to give any answer as to why any distinction could be made between the owner of the goods himself travelling with the goods and the persons employed by such owner of the goods for loading or unloading his goods from the vehicle. In other words, if passengers carried by reason of or in pursuance of a contract of employment with the owner of the goods were to be included in Clause (ii) of the proviso and there is statutory liability of the insurer to cover their risk, then there does not seem to be any valid reason why the Legislature could have excluded the risk of the owner of the goods himself when he accompanied with the goods in the vehicle. It is a matter of common experience that when the goods are transported in a goods vehicle, some persons are necessary to be carried for loading and unloading such goods. If the owner of the goods is a big business-man, he may not like to accompany himself with the goods but a petty or small business man may accompany with the goods himself as he may not be in a position to employ others for the safe carriage of the goods or due to the nature andimportance of the goods themselves. An owner of the goods may not trust the driver of the goods or other such situations and contingencies may arise where the owner of the goods may like to travel himself along with the goods. He pays consideration for carrying his goods to the owner of the vehicle and in such circumstances, such person would be considered as a passenger being carried in the vehicle for reward. He is not a gratuitous passenger and makes a contract with consideration for transporting his goods and in such circumstances, the insurer should be liable in respect of the death or bodily injury of such person being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises. This provision has to be given a beneficial construction and the owner of the goods will certainly fall in the category of passengers carried for reward by the insured. An owner of the goods when enters into a contract of the carriage of goods, such contract implies a contract for the safe and convenient transport of the goods from the beginning till the end. The contract of carriage of goods will necessarily involve the process of loading and unloading and safe transport of goods. The contract as such is of a composite character, and accompanyment of the owner of the goods himself or his employees will be a necessary part of such contract and a consideration paid for such contract will include such condition of carrying passengers for reward. So far as employees of the owner of the goods carried by reason or in pursuance of a contract of employment is clearly spelt out from the language of Clause (ii) of the proviso to Sub-section (1) of Section 95 of the Act and even the learned counsel for insurers were unable to assail this position. If employees are covered as passengers carried in goods vehicle, there does not appear any reason why the owner of the goods could not be included in this provision. The owner of the goods does not travel for fun or joy-ride but travels for the purpose of safe carriage of the goods which is essential part of the contract. If employees are held to be legitimate passengers, why not the owner of the goods when he himself goes in the vehicle accompanying the goods or for bringing the goods. It would be further important to note that 'goods vehicle' has been defined as under in Section 2(8) of the Act : --

' 'Goods vehicle' means any motor vehicle constructed or adapted for use for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods solely or in addition to passengers.'

The above definition also shows that a goods vehicle is used for carriage of goods as well as passengers. The passengers are, therefore, legitimately permitted to be taken in a goods vehicle. 'Public Carrier' is also defined as under Section 2(23) of the Act :-

'Public carrier' means an owner of a transport vehicle who transports or undertakes to transport goods, or any class of goods, for another person at any time and in any public place for hire or reward, whether in pursuance of the terms of a contract or agreement or otherwise, and includes any person, body, association or company engaged in the business of carrying the goods of persons associated with that person, body, association or company for the purpose of having their goods transported;'

10. The Legislature has not used the term 'public service vehicle' in Clause (ii) to the proviso of Sub-section (1) of Section 95 of the Act and on the contrary has used the language 'whether the vehicle is a vehicle in which passengers are carried...........' 'public service vehicle',no doubt has been defined in Section 2(25) of the Act as 'any motor vehicle used or adopted to be used for the carriage of passengers for hire or reward and included a motor cab, contract carriage and stage carriage. But in Clause (ii) to proviso to Sub-section (1) of Section 95 of the Act neither the term 'goods vehicle' nor 'public service vehicle' has been used and as such the intention of the Legislature clearly appears to keep it wide open for any kind of such vehicle in which passengers may be carried for hire or reward or by reason of or in pursuance of a contract of employment. Thus, if passengers are allowed to be carried in a goods vehicle a goods vehicle will certainly come within the purview of the above provision.

11. We would now consider the case law cited at the bar.

12. Gujarat, Bombay, Karnataka, Orissa, Kerala and Allahabad High Courts have taken the view that the owner of the goods himself travelling in a goods vehicle is covered underthe provisions of Clause (ii) of proviso to Sub-section (1) of Section 95 of the Act which is an exception to an exception contained in the proviso. In Nasibdar Suba Fakir v. Adhia and Company, AIR 1984 Bom 1 a Division Bench of the Bombay High Court held as under : --

'We are of the view that the better view as between the two sets of authorities is the one to which we have arrived upon the analysis of the statutory provisions. We are of the view that when a hirer of a goods vehicle for carriage of his goods is travelling by the said vehicle in connection with the carriage of the goods with the consent of the driver or owner of the goods vehicle in question, he must be deemed to be a passenger on me vehicle for reward within the meaning of Clause (ii) of the proviso to Section 95(1) of the Act and hence the tortious liability of the owner towards him must be covered by the insurance policy contemplated by the said section.'

13. In the above case the view taken in Karnataka and Gujarat High Courts was followed and contrary view taken in Punjab and other High Courts has been dissented. In Oriental Fire and General Insurance Co. Ltd. v. Smt. Narayanibai, AIR 1984 Orissa 43 it was held that the owner of the goods accompanying the goods in the goods vehicle hired by him is a passenger who is being carried for hire or reward. Bombay and Karnataka view has been followed and contrary view taken by Madras, Madhya Pradesh, Punjab and Calcutta has been distinguished. It was held that the view taken by these High Courts was that owner of the goods accompanying the goods in a truck cannot be said to be travelling in the truck by virtue of any contract of employment but the point that the owner of the goods accompanying the goods in the truck hired by him answered the description of the passenger who was being carried for hire or reward was not urged in these cases.

14. In Abdul Razak v. Smt. Sharifunnisan, AIR 1983 All 400 it was held as under :-

'The risk of persons who are carried in a transport vehicle is compulsorily covered by an insurance policy. Proviso (ii) to Section 95(1)(b) of the Act also lays down that a policy shall be necessary where passengers are carried in a vehicle for hire or reward or by reason of or in pursuance of a contract of employment. Theproviso is in two parts. The first part relates to carrying of passengers for hire or reward in the vehicle, while the second part contemplates carriage of passengers by reason of or in pursuance of a contract of employment. The first part of the proviso provides for insurance policy to cover liability in respect of death or bodily injury to persons being carried in a transport vehicle for hire or reward. Such a vehicle need not be a public service vehicle because risk of a passenger being carried in a public service vehicle is already covered by Clause (ii) of Section 95(1 )(b). The owner of goods travelling in goods vehicle along with his goods is also covered by third party risk and in case of death of the owner the insurer is liable to indemnify, the owner. The risk is covered by the first part of the second proviso to Section 95( l)(b) and the Act requires compulsory insurance.'

15. In State Insurance Officer, Trivandrum v. Sosamma Mani, AJR 1979 Ker 15 it was observed that :

'A person travelling in goods vehicle for and on behalf of the owner of goods in pursuance of a contract of employment with the owner of the goods is covered by the policy of insurance of the motor vehicle against third party risks.

The proviso to Section 95(1) itself is an exception to the general rule regarding insurance coverage and the second part of the proviso provides for exceptions to the exception made by the proviso itself by insisting that the policy should cover the liability of persons carried where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. The first part of the proviso deals with the employees of the insured. So the mention in the second part need not be about those employees. The only other kind of employees who can be expected to be carried by a goods vehicle is the employees of the owner of the goods carried by it. They accompany the goods in pursuance of a contract of employment because they are asked to do that by their employer to safeguard the goods. So, as per the exception contained in part (ii) of the proviso to the exceptions provided for by the proviso an employee of the owner of the goods who accompanies the goods in the vehicle gets insurance coverage under Section 95.'

16. In Channappa Chanavirappa Ketti v. Laxman Bhimappa Bajantri, AIR 1979 Kant 93, it was observed that :

'The policy of the law in making provision for compulsory insurance of vehicles is to cover the risk of innocent third parties. The owner of the goods (hirer of goods vehicle) who wants to convey his goods through a public goods-vehicle, will be an innocent third party when he dies or suffers injury while accompanying the goods carried by a public goods vehicle. The simple reason is that, in the normal course of things, it would not be possible for him to ascertain beforehand, the financial stability of the user of the vehicle, the expertise of the driver of the vehicle in driving it, or the road-worthy condition of the vehicle, as would ensure his safety. When a person travels as a passenger in a goods-vehicle which is used to advance the business interests of its owner and is permitted by law, it cannot be said that it is not a vehicle meant for carrying passengers for hire or reward, provided for in the exception to the first part of the second proviso to Section 95(1)(b).

From this it would follow that the goods vehicle which carries the owner of the goods as a passenger can be construed as a vehicle in which passengers are carried for hire or reward as would answer the exception contained in the first part of the Second Proviso so as to make the coverage of risk of such a person compulsory under Chap. VIII of the Act.'

17. In Ambaben v. Usmanbhai Amirmiya Sheikh, AIR 1979 Guj 9 (FB), it was held as under:--

'So far as the policy contemplated by Section 95(1)(b) is concerned, it does not cover the risks to (a) persons other than those who were carried for hire or reward at the time of occurrence of event which gives rise to the claim against the insurer and (b) passengers other than those who were bona fide employees of the owner or hirer of the vehicle not exceeding six in number, carried in pursuance of or by reason of a contract of employment, Consequently, where free lifts are given by the drivers of goods vehicle or public service vehicle and if an event occurs which gives rise to a claim against the owner of the vehicle and against the insurer, such passengers who are not carried for hire or reward would havenothing to fall back upon except the claim against the owner of the vehicle.'

18. Again in New India Assurance Co. Ltd. v. Smt. Nathiben Chatarbhuj, AIR, 1982 Guj 116 : (1982) 1 (23) Guj LR 41l (FB) it was observed as under : --

'Under Section 95( 1 )(b)(ii), the statutory insurance must cover the liability incurred in respect of the death of or bodily injury to any passenger of a public service vehicle resulting from the use of the vehicle in a public place Since such a vehicle is used or adapted to be used for the carriage of passengers for hire or reward, the passenger risk in respect of such vehicle is required to be covered to ensure that such passengers or their dependants will be able to recover damages in case of bodily injury or death and that recovery of damages will not be dependent on the financial condition of the driver and/or owner of the vehicle. The passenger risk even otherwise gets a limited coverage under the statutory policy by virtue of the provisions contained in Section 95(1)(b)(i) which requires coverage to be given in respect of any liability incurred in respect of the death of or bodily injury to 'any person' caused by or arising out of the use of the vehicle in a public place. The words 'any person' have wide amplitude but the field of their operation is cut down by the proviso which carves out an exception in respect of the employees' risk and passengers' risk. The first clause of the proviso provides cover in respect of the employees' risk to a limited extent only by specifying the categories of employees and limiting the extent of liability to that arising under the Workmen's Compensation Act in respect of the death of or bodily injury to such employees, arising out of and in the course of employment. The second clause of the proviso provides cover in respect of the risk to passengers even if they are carried in a vehicle which is not a public service vehicle but to a limited extent and the limitation is that the passengers must have been carried for hire or reward or by reason of or in pursuance of a contract of employment. Where, therefore, the policy of insurance covers only the risk under Section 95 or where the policy is what is usually known as the Act or statutory policy, it will not cover the risk to the passengers who are not carried for hire or reward, or by reason of or in pursuance of a contract of employment, and the insurer will not be liable for the death of or bodily injury to such passengers.

Rule 118 of the Bombay Motor Vehicles Rules, 1959, permits the carriage of owner or the hirer of a goods vehicle or his bona fide employees within the limits laid down by the said rule. The risk in relation to such owner or hirer or the bona fide employees of such owner or hirer carried on the goods vehicle free of charge would be covered under the second clause of the proviso to Section 95(1) because in the hire charges there is consideration or reward implicit for the free carriage of such passengers. In other words, the hire charges include the consideration for the travel of such persons by the goods vehicle and therefore those persons are passengers carried for hire or reward in a general sense.''

19. A Division Bench of the Andhra Pradesh High Court in Messala Suryanarayana v. Goli Satyavathi, 1979 Acc CJ 513 held as under:

'The facts of this case are exactly similar to the facts of the present case. Instead of the servant as in the Madras case, here the owner of the goods himself was travelling in the vehicle. Applying the principle contained in the said decision the contract of employment found in Section 95 covers not only a contract with the owner of the insured vehicle, but also persons who are on the vehicle in pursuance of a contract of employment with the owner of the goods carried in it. All that is necessary is that the person must be on the vehicle in pursuance of a contract of employment and if he is such a person any injury caused to him would also be covered by the section. We are in complete agreement with this view. The owner of the goods was travelling in the vehicle with the permission of the driver and the cleaner, who are the agents of the owner in the course of their employment and under the contract of employment.'

20. In the above case of Andhra Pradesh High Court even the owner of the goods was covered under the contract of employment. Bombay, Orissa and Gujarat High Courts have not gone to this extent and they have only held that the owner of the goods falls under the provision of being carried for reward. In our view also an owner cannot be said as being carried by reason of or in pursuance of a contract of employment. The owner of the goods can only fall within the purview of passengers being carried for reward.

21. Now we shall discuss the contrary view taken in cases by the various High Courts.

22. In the Oriental Fire and General Insurance Co. Ltd. v. Smt. Gurdev Kaur, AIR 1967 Punjab 486 (FB), it was held that the normal and the ordinary meaning and scope of the expression 'a contract of employment' points to a person being employed to do something or to carry out something for another person. It has the element of rendition of some service in one shape or another for the employer. So it cannot refer to the hiring of a goods carrier as a contract of employment or to the owner of such a carrier as the person with whom a contract of employment has been made. It was also held that the deceased persons as hirers and owners of the goods do not come under the Clause (ii) of the proviso to Section 95(1)(b). The hirers were not on the truck by reason or in pursuance of a contract of employment because they were not employed by anybody to go on the truck but were on it as owners of the goods carried in it.

23. The above case has been decided merely on the ground that there cannot be any contract of employment between the hirer of the truck or the owner of the goods, with the owner of the vehicle. The question whether such person could be considered as a passenger carried for reward was not decided in the above case and as such it is clearly distinguishable.

24. In the Common Wealth Assurance Co. Ltd., Bombay v. V. P. Rahim Khan Sahib, AIR 1971 Mad 415, a learned single Judge of the Madras High Court relied on the above Full Bench case of Punjab High Court and gave the same reasoning that a person, who hires a lorry for carrying goods accompanies the goods cannot be said to be a passenger carried by reason of or in pursuance of a contract of employment within the meaning of Clause (ii) of proviso to Sub-section (l) of Section 95 of the Act. This case is also thus clearly distinguishable.

25. In South Indian Insurance Co. Ltd. v. P. Subramaniam, AIR 1972 Mad 49 a learned single Judge of Madras High Court held that where the owner of the goods while not in pursuance of contract of employment but gratuitously travelling along with his goods in the goods vehicle sustained bodily injuries inan accident, the Insurance Company could not be held liable to pay any compensation for injuries to the owner of goods in these circumstances. This case is also distinguishable on the same parity of reasoning.

26. In South India Insurance Co. Ltd., Indore v. Heerabai, 1967 Ace CJ 65 a Division Bench of Madhya Pradesh High Court held that a person hiring a truck for carrying some load and accompanying the load was not a passenger carried by reason of or in pursuance of a contract of employment at the relevant time and therefore, the appellant company was not liable to pay the claim. This case is also based on the reasoning that owner of the goods does not come within the purview of a passenger carried by reason or in pursuance of a contract of employment.

27. In Indian Mutual General Insurance Society Ltd. v. Manzoor Ashan, AIR 1977 Cal 34, a Division Bench of Calcutta High Court placing reliance on Common Wealth Assurance Co.'s case AIR 1971 Madras 415 (supra) held that the words in proviso (ii) of Section 95(1)(b) 'carried for hire or reward or carried by reason of or in pursuance of a contract of employment' go with the words 'passengers' and not the word 'vehicle'. The normal and the ordinary meaning and scope of the expression, a contract of employment' points to a person being employed to do something or to carry out something for another person. A hirer thus cannot be covered by contract of employment. This case is also distinguishable on the same parity of reasoning.

28. Apart from the above cases it was held by Alagiriswami J. in the Venguard Insurance Co. Ltd., Madras v. Chinnammal, AIR 1970 Mad 236 that :

'Though a superficial view of Section 95, it might appear that the words 'contract of employment' found therein would cover only contract of employment with the owner of the insured vehicle, it would cover not only such persons but also persons who are on the vehicle in pursuance of a contract of employment with the owner of the goods carried in it. What is necessary is that for sufficient practical or business reasons, the person must be on the vehicle in pursuance of a contract of employment. If he is such a person, any injury caused to him would also be covered by the section.'

29. In Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co. Pvt. Ltd., AIR 1977 SC 1735, one Purshottam Tulsi Das Udeshi was travelling in the car which was driven by Madhavji Bhai Mathuradas Ved the Manager of the first opponent company M/s. Ranjit Ginning and Pressing Co. Pvt. Ltd. The car met with an accident travelling in rash and negligent manner. The car was insured with the second opponent Union Fire Accident and General Insurance Co. Ltd. It was submitted by the opposite parties that the deceased was travelling in the said vehicle on his own responsibility and for his own purpose and absolutely gratuitous and not on behalf of or at the instance of the opposite party No. 1 or the Driver of the vehicle and therefore, the claimants, were not entitled to any compensation. The Accident Claims Tribunal found on the pleadings that Madhavji Bhai was the employee of the Company and during the course of employment by driving the motor car he negligently caused the death of Purshottam. The High Court also confirmed the finding and found that Madhavji Bhai, the manager of the owner of the car was going on the business of the said owner and that it may be that the manager had the implied authority to drive the vehicle. Such finding was not disputed before the Supreme Court. The Supreme Court in these circumstances held :

'As section 95 of the Motor Vehicles Act, 1939, as amended by Act 56 of 1969 is based on English Act it is useful to refer to that. Neither the Road Traffic Act, 1960, or the earlier 1930 Act required users of motor vehicles to be insured in respect of liability for death or bodily injury to passengers in the vehicle being used except a vehicle in which passengers were carried for hire or reward or by reason of or in pursuance of a contract of employment. In fact, Sub-section 203(4) of the 1960 Act provided that the policy shall not be required to cover liability in respect of death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arise. The provisions of English Act being explicit the risk to passengers is not covered by the insurance policy. The provisions under the English Road Traffic Act, 1960 were introduced by the Amendment of Sec. 95 of the Indian Motor Vehicles Act. The law asregards general exclusion of passengers is stated in Halsbury's Laws of England III Edition Vol. 22 at page 368 para 755 as follows :

'Subject to certain exceptions a policy is not required to cover liability in respect of the death of or bodily injury to a person being carried in or upon or entering or getting into or alighting from the vehicle at the time of the occurrence of the event out of which the claim arises.' It is unnecessary to refer to the subsequent development of the English Law and as the subsequent changes have not been adopted in the Indian Statute. Suffice it to say that the Motor Vehicle (Passenger Insurance) Act, 1971, made insurance cover for passenger liable to (liability?) compulsory by repealing paragraph (a) and the proviso of Sub-section 203(4). But this Act was repealed by the Road Traffic Act, 1972 though under section 145 of 1972 Act, the coming into force of the provisions of the Act 1971 covering passenger liability was delayed under December 1, 1972. (Vide Bingham's Motor Claims Cases 7th Ed. Page 704).

Sections 95(a) and 95(b)(i) of the Motor Vehicles Act adopted the provisions of the English Road Traffic Act, 1960, and excluded the liability of the Insurance Company regarding the risk to the passengers. Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place. The plea that the words 'third party' are wide enough to cover all persons except the person and the insurer is negatived as the insurance cover is not available to the passengers made clear by the proviso to Sub-section which provides that a policy shall not be required : --

'(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises.' Therefore, it is not required that a policy of insurance should cover risk to the passengerswho are not carried for hire or reward. As under section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured the plea of the counsel for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act.'

In the above case Purshottam, who died in the incident was travelling on his own responsibility and for his own purpose and absolutely gratis. In these circumstances, it was held that a policy of insurance did not cover the risk of such passenger who was not carried for hire or reward. The above case is thus totally distinguishable and does not lend any assistance to the insurers in these cases.

30. Learned single Judge or the Andhra Pradesh High Court in the Hindustan Ideal Insurance Corpn. Ltd. v. Manne Chimparamma, AIR 1974 Andh Pra 120 placing reliance on Punjab Full Bench case and Common Wealth Assurance Co. Ltd.'s case (AIR 1971 Mad 415) (supra), South Indian Insurance Co. Ltd.'s case (AIR 1972 Mad 49) (supra) and South India Insurance Co. Ltd. Indore's case (1967 Acc CJ 65) (Madh Pra) (supra) took the same view as taken in the above cases.

31. It may, however, be mentioned that a Division Bench of the Andhra Pradesh High Court itself in Messala Suryanarayana's case (1979 Acc CJ 513) (supra) took the view that insurance company was liable to pay compensation to the owner of the goods, who travels in a goods vehicle. The view thus taken by the learned single Judge of the Andhra Pradesh High Court in the Hindustan Ideal Insurance Corporation Ltd.'s case (supra) is no longer a good law in view of the Messala Suryanarayana's case (supra) of the Division Bench of the Andhra Pradesh High Court itself.

32. Thus, taking in view the entire case law and the provisions of Section 95 of the Act read with Rule 133 of the Rules following principles can be deduced : --

(i) in case of a gratuitous passenger going on joy-ride or on his own responsibility, insurance company is not liable;

(ii) in case of passengers carried for hire or reward or by reason of or in pursuance of acontract of employment in any vehicle, the Insurance Company is liable. This would include owner of the goods as well as his employees;

(iii) the insurer shall not be liable to cover liability in respect of employee of the insured in respect of the death of or bodily injury to, any such employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 if such employee is (a) engaged in driving such vehicle or (b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle or (c) if it is a goods vehicle being carried in the vehicle;

(iv) the insurer shall not be liable to cover any contractual liability.

33. Arguments were raised before us regarding the quantum of compensation allowable to the claimants under Sub-section (2) of section 95 of the Act, but we are not inclined to deal with these arguments as we are remanding all these cases to the learned single Judge. The learned single Judge would determine the amount of compensation in accordance with law. We have only decided the scope and ambit of the provisions of section 95 of the Act and the circumstances under which insurance company would be liable or not in the case of a goods vehicle registered as a public carrier.

34. Though learned single Judge had referred the entire appeals for disposal by the larger Bench, but we do not consider it proper to dispose of the appeals as a whole and we have only determined the questions of law at issue between the parties. As the facts of each case regarding determination of compensation and even questions regarding negligence or otherwise in each case require detailed examination, we have not considered it proper to decide those issues by us.

35. All these appeals are, therefore, remanded back to the learned single Judge for deciding the same in accordance with law and according to the view expressed by us. The parties shall bear their own costs before us.


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