M.M. Ismail, J.
1. The third defendant in O.S. No. 140 of 1969 on the file of the Court of the Subordinate Judge, Vellore is the appellant herein. The first respondent, viz., Union of India owning the Southern Railway by its General Manager, Park Town, Madras-3, instituted the suit for recovery of a sum of Rs. 18,323-19 being the damages incurred under the following circumstances: The Southern Railway owned one tractor with attached trailer bearing registration mark MYD 8748. It was the product of Ashok Leyland and was bought for Rs. 72,000. In 1967, the Railway was. laying a railway line between Salem and Bangalore. This tractor was used in the project for transporting rails : On 21st December, 1967, the tractor was on its way to Chandapur with a load of 25 rails. While so, one Deccan Express Bus came in the opposite direction. The allegation of the first respondent plaintiff in the plaint was that the lorry bearing registration mark MDJ 3588, which was owned by the first defendant (2nd respondent) and was driven by the second defendant (3rd respondent) overtook the Deccan Express Bus, and in so doing, dashed against the tractor and thereby caused heavy damage. This accident, according to the plaintiff (1st respondent), was the result of the rash and negligent driving of the lorry by the second defendant. The second defendant was taken into custody and was prosecuted for rash and negligent driving. He was convicted. As the tractor could not be driven because of the. heavy damage it sustained, it was towed to Messrs Sundaram. Motors Private Limited, Bangalore, who were the authorised dealers and engineers for tractors such as the one owned by the plaintiff-first respondent, and it was repaired at a, cost of Rs. 18,323-19. The plaintiff-first respondent further stated that the first defendant's lorry was insured with the appellant.
2. In the written statement filed by him, the first defendant admitted that he was the owner of lorry bearing registration mark MDJ 3588 and that at the time of the accident, it was driven by his driver, the second defendant. He, however, disputed his liability to pay any damages as claimed in the plaint, because at the time of the accident, the lorry was driven at a moderate speed. The Deccan Express Bus, which was running in front of it suddenly stopped with the result that the second defendant had to swerve the lorry to.. the right wife a view to avoiding collision. After it was stopped by applying the brakes, the plaintiff's tractor ran and collided with the lorry. The damage, according to the first defendant, was very light, and the repairs could have been effected by expending a sum of Rs. 250 only.
3. The appellant, in his Separate written statement, contended that there is no privity of contract between the plaintiff-first respondent on the one hand and the appellant herein on the other, that there was no statutory liability, that the driver of the first respondent-plaintiff was guilty of contributory negligence and that the plaintiff's claim was exaggerated and had no basis. The appellant also contended that the suit was barred by time.
4. The second defendant, who appeared in person, made an endorsement on the back of the plaint stating that he had no objection for a decree being passed against him.
5. On these pleadings, the following issues were framed 'for trial:
1. Whether MDJ 3588 was driven rashly and negligently and dashed against the plaintiff's tractor - trailer causing damages as alleged?
2. Did plaintiff's vehicle collide with the lorry MDJ 3588 when it was allegedly stationary at the extreme right of the road as alleged by the 1st defendant?
5. Was the plaintiff's driver guilty of contributory negligence as pleaded by 3rd defendant?
6. Which of the defendants are liable and to what sum in damages to the plaintiff?
7. Is the suit barred by limitation?
8. Whether there is no cause of action against 3rd defendant?
9. What is the extent of the damage sustained to the plaintiff's vehicle and what are the expenses necessary to repair it?
16. Whether the suit is maintainable without details of claim for Rs. 18,323-19 being, given?
17. To what relief, is the plaintiff entitled?
6. By his judgment and decree dated 30th March, 1974, the learned Additional Subordinate Judge, Vellore, held that the accident took place as a result of the rash and negligent driving of the first defendant's lorry by the second defendant, and, therefore, the first defendant was liable. He also held that the expenses of Rs. 18,323-19 incurred by the first respondent for repairing the tractor has been proved. He further held that there was no evidence to show that there was any contributory negligence on the part of the driver of the tractor. He negatived the contention of the appellant herein that because of want of privity of contract, he would not be liable to pay damages to the first respondent herein. In the result, the suit was decreed as prayed for. It is against this judgment and decree that the third defendant in the suit, viz., the Insurance Company, has filed the present appeal. Thus, the decree against the, defendants 1 and 2 has become final.
7. Mr. K.C. Srinivasan, the learned Counsel for the appellant, addressed only two arguments. One was there was no negligence on the part of the second defendant (third respondent), viz., the driver of the lorry owned' by the first defendant (second respondent). The second was that no decree can be passed' against the appellant since there was no privity of contract between the plaintiff-first respondent and the appellant with reference to the policy of insurance taken by the first defendant-second respondent with the appellant herein.
8. As far as the first point is concerned, that need not detain us. The second defendant, the driver of the lorry, as we have pointed out already, appeared in person and made; am endorsement on the back of the plaint to the effect that he has no objection to the decree being passed against him. Secondly, the said' second defendant was not examined to show that he was not rash and negligent in driving-the lorry. Thirdly, the second defendant was. prosecuted and convicted for rash and negligent driving. Fourthly, the location of the vehicles immediately after the occurrence of: the accident clearly established that the accident should have happened only because of the rash and negligent driving of the second defendant. In view of the clinching circumstances establishing the rash and negligent driving on the part of the second defendant, the learned Counsel for the appellant himself did not seriously pursue the first point, with the result we confirm the conclusion of the learned Subordinate Judge that the accident Was the result of rashness and negligence on the part of the second defendant in driving the lorry of the first defendant.
9. That takes us to the second point, viz., that there being no privity of contract between the plaintiff and the Insurance Company, could the Insurance Company be made liable by passing a decree against it in a suit instituted by the plaintiff for recovery of damages? It may be pointed out that the decision of the learned Judge on this point does not appear to be very clear. He had not borne in mind the distinction between the statutory liability as imposed by Section 95 of the Motor Vehicles Act, 1939, and the contractual liability as imposed by the policy of insurance entered into between the first defendant and the appellant herein. The learned Counsel for the appellant contended that at the relevant time, the statute had contemplated there being a policy of insurance covering only the liability for the personal injuries of a third party, and not the liability for damages caused to the property of a third party, and, therefore, in the present case, the damages claimed being with reference to the damage suffered by a tractor belonging to the first respondent-plaintiff and that not being covered by Section 95(1)(b) of the Motor Vehicles Act, the liability in this behalf is not statutory, but only contractual, and with reference to such a contractual liability there is no privity of contract between the appellant and the plaintiff-first respondent. In support of this contention, he also relied on a decision of Mohan, J., dated 25th April, 1977 in A.S. No. 5 of 1973 Sri A. Ramamoorthy and Anr. v. S. Ganapathy Nadar and Anr., which fully supports his contention.
10. As far as the statutory provisions are concerned, Chapter VIII of the Motor Vehicles Act, 1939, deals with the insurance of motor vehicles against third party risks. Section 95, in so far as it is relevant, as it stood prior to its amendment by Central Act LVI of 1969, stated as follows:
95. (1) In order to comply with the requirements of this Chapter, a policy of Insurance must be a policy which-
* * * * * *(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.
Only by the amendment of the year 1969, after the words 'any person', the following words were added:
or damage to any property of a third party-caused by or arising out of the use of the vehicle in a public place.
Thus, on 21st December, 1967, when the accident occurred in the present case, Section 95(1)(b) of the Act did not cover the liability for damage to any property of a third party caused by or arising out of the use of the vehicle in a public place and it covered only a liability which may be incurred by the insurer in respect of the death of or bodily injury to any person. In the present case, the damage being to the tractor of the plaintiff-first respondent, the liability with reference thereto was not covered by Section 95(1)(b) at the relevant time. It is only on this basis the learned Counsel contended that the statute itself not imposing any such liability, the plaintiff-first respondent cannot claim a decree against the appellant in this behalf. It is this view that was upheld by Mohan, J., in the judgment referred to above.
11. However, in the present case, the actual policy issued by the appellant herein (marked as Exhibit B-7) clearly covers both the personal and property liability in respect of third' parties. The policy states:
Section 11 - Liability to third parties.
1. Subject to the Limits of Liability the Company will, indemnify the insured against all sums including claimant's cost and expenses which the Insured shall become legally liable to pay in respect of-
(i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the Motor Vehicle.
(ii) damage to property caused by the use (including the loading and/or unloading) of the Motor Vehicle.
However, the liability shown as 1 (i) in Section 11 will be a statutory liability with reference to Section 95(1)(b) and the liability shown as 1 (i) in Section 11 will be a contractual liability. The question that arises for consideration is, will the considerations which apply to the statutory liability covered by 1 (i) in Section 11 apply to the contractual liability covered by 1 (ii) in Section 11?
12. The learned Counsel for the plaintiff first respondent very strenuously contended that in view of the provisions contained in Section 96 of the Act, even in respect of a contractual liability, the insurer can be made liable in this suit itself. For the purpose of understanding the arguments, it is necessary to refer to one or two statutory provisions. Section 94 of the Act provides for the necessity for insurance against third party risk. Section 94(1) of the Act states:
94. (1) 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 the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.
Having thus provided for the necessity for insurance, Section 95 deals with the requirements of policies and limits of liability. As we have pointed out already, on the date when the accident took place, i.e., on 21st December/1967, Section 95(1)(b)(i) provided for a liability which may be incurred by an insurer in respect of the death of or bodily injury to any person, and did not actually provide for the liability in respect of the damage to any property of a third party. It is against the) background of Sections 94 and 95, we shall have to consider the scope of Section 96.
13. Before actually referring to the provisions contained in Section 96, it is necessary to refer to Sub-section (4) and Sub-section (5) of Section 95 itself. Sub-section (4) of Section 95 provides:
(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.
Sub-section (5) reads:
(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.
Thus, Sections 94 and 95 provide for the necessity for taking out a policy and the requirements of such policy and the liability that should be covered by the policy, and also impose an obligation on the insurer 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 persons. It is against the background of this position we shall have now to see what Section 96 provides.
Sub-section (1) of Section 96 states:
96 (1). If, after a certificate of insurance has been issued under Sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
Sub-section (2) of Section 96, so far as is relevant for the purpose of this case, reads:
(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through, the Court of the bringing of the proceedings, or in respect of any judgment so stayed thereon pending an appeal and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto.
Having made such a provision, Sub-section (2) enables the insurer so made a party to defend the action on the grounds enumerated in the sub-section. Thus, if we read Sections 94, 95 and 96 together, the consequences are : (1) No person can use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance. (2) Such a policy must satisfy certain conditions, one of the conditions being the liability to be covered by the policy, and the liability so far as the present case is concerned, on the relevant date was the liability which may be incurred by the insured in respect of the death of or bodily injury to any person arising out of the use of the vehicle in a public place. (3) In respect of this liability, the insurer has been called upon to indemnify the insured. (4) Section 96 is procedural in character, and provides for the working out of such indemnity by entitling the insurer to notice in the proceedings taken out by the affected party against the insured and enabling the insurer to put forward certain specified defences. (5) Once a decree has been passed after such notice, the insurer will have to, satisfy the decree subject to the extent of financial liability undertaken by him under the Insurance policy.
14. In our opinion the position of the insurer is made clear, viz., that no decree can be passed against such insurer in the proceedings initiated by the injured for the recovery of compensation against the insurer, and this is made abundantly clear by Section 96(1) itself, where it talks of a judgment being obtained against any person insured by the policy and the insurer paying to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder as if he were the judgment-debtor. Once the statute uses the expression 'as if he were the judgment-debtor', it is clear that really he is not the judgment-debtor. That means, no decree could be passed, and is passed against the insurer. Notwithstanding the fact that no such decree is passed against the insurer, and, therefore, the insurer is not a judgment-debtor, still in view of the obligation imposed on the insurer under Section 95(5), Section 96(1) obliges him to pay to the person who was entitled to the benefit of the decree, by way of indemnification of the insured, who is the actual decree-holder, any sum not exceeding the sum assured payable under the policy.
15. However, the argument of Mr. Srisailam, the learned Counsel for the first respondent-plaintiff is that Section 96(1) is not subject-to the limitations of Section 95(1). According to the learned Counsel, Section 96(1) applies not merely to the statutory liability' provided for in Section 95(1), but it applies, even to contractual liability. We are unable to appreciate this argument. Section 96 does not purport to extend or enlarge the liability of the insurer, having defined or limited the said liability under Section 95(1). On the other hand, it expressly refers to 'liability as' is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 95', and thus deals only with the liability covered by Section 95(1)(b). As we have pointed out already, Section 96 is merely procedural, in character for the purpose of working out; the obligation imposed on the insurer that he should indemnify the insured in respect of the statutory liability covered by the insurance policy in terms of Section 95(5). It is not as if Section 96 is an amendment to the Code of Civil Procedure, providing for a general procedure. Even in respect of the statutory liability as contemplated by Section 95(1), it, is open to an insurer from a procedural point, of view to put forward the contention that; there is no privity of contract between the injured and the insurer, and, therefore, the injured cannot institute a suit on the contract of the policy of insurance against the insurer, and the insurer will be justified in putting forward that contention. In order to see that an injured is not driven to file a separate suit against the insurer after having first obtained a decree against the insured, provision has been made in Sections 96(1) and 96(2) for the purpose of implementing the indemnity provided for in Section 95(5). Sub-Sections (1) and (2) of Section 96 do not go beyond this. But for Section 96, even with regard to the statutory liability, it will be open to the insurer to put forward the contention that the injured cannot make the insurer a party to the proceedings even for the purpose of ultimately working out the benefits of the decree which the injured may obtain against the other, viz., the insured. But for Section 96, the position would be that the injured will have to work out his remedies against the owner of vehicle, who in turn will enforce the policy against the insurer. That being the result of the legal position as well as the statutory provisions, we are unable to appreciate the argument of the learned Counsel for the first respondent-plaintiff that the first respondent-plaintiff was entitled to obtain a decree against the insurance company.
16. This position can be usefully contrasted with the' position resulting from the change of the law in constituting Claims Tribunals for adjudicating such claims. Section 110-B of the Act provides:
110-B. On receipt of an application for compensation made under Section 110-A, the Claims Tribunal shall, after giving the parties an opportunity of being heard, hold an enquiry into the claim and may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid; and in making the award the Claims Tribunal shall specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them, as the case may be.
Thus, it will be clear that this Section enables the Tribunal to' specify the amount of compensation to be paid by the insurer which is incomplete contrast with the position which we have explained above before the relevant amendments were introduced into the Act.
Mr. Srisailam very strongly relied on a judgment of the High Court of Andhra Pradesh in Bova Chinna Mallamma v. The Hindustan Ideal Insurance Co. Limited, Esplanade, Madras-I I.L.R. 1970 A.P. 1097, in support of his contention that because of Section 96, even non-statutory contractual liability can be. enforced against the insurer directly in a suit filed by a person like the first respondent-plaintiff. In that case, the suit was filed for recovery of damages of Rs. 3,000 sustained by a person as a result of negligence by the driver of the motor vehicle. The owner of the vehicle was impleaded as the first defendant, the insurance company was impleaded as the second defendant. The defence of the insurance company was that the suit against it should be dismissed as there was no privity of contract between the plaintiff and the Insurance Company. The trial Court held that the plaintiff had no cause of action against the Insurance Company and that no relief could be given against the said company, but observed:
He (plaintiff) can only obtain a decree against the insured and execute the same against the 2nd defendant (Insurance Company) treating it as a judgment-debtor' under the terms of Section 96 of the Motor Vehicles Act....
In view of this observation, the suit was dismissed against the Insurance Company. The first defendant alone filed an appeal. All the findings of the trial Court were confirmed, and the appeal was dismissed. The plaintiff herself did not file any appeal was against that part of the decree dismissing the suit against the Insurance Company. However, in the appeal preferred by the first defendant, he contended that there ought to be a decree against the Insurance Company also. But the lower appellate Court held that there being no privity of contract between the plaintiff and the Insurance Company, no decree could be passed against the Insurance Company. A second appeal against that judgment came up for disposal before a Bench of the Andhra Pradesh High Court. The Judgment of the Bench of that High Court itself states:
The only point argued before us on behalf of the appellant is that though a decree cannot be passed stright away against the second defendant alone, the Courts below erred in dismissing the suit against the second defendant.
After referring to some earlier decisions of that Court the Bench stated:
The principle laid down in these decisions is that there being no privity of contract between the Insurance Company and the third party claiming the damages, no decree can be passed in favour of the claimant as against the Insurance Company. The claimant should in the first instance obtain a decree against the owner of the vehicle and it is only after he is able to get such a decree against the insured (owner of the vehicle) that the said judgment can be enforced against the Insurance Company under the provisions of Section 96(1) of the Motor Vehicles Act as if it were the judgment-debtor. It is only for this reason that it was observed in the said decisions that the suit is not maintainable against the Insurance Company. We do not understand the said decisions as laying down that the Insurance Company is not a proper party to the suit. Even the learned Counsel for the appellant has not contended that he should have a decree against the Insurance Company also.
In such a context, it is difficult to appreciate how that decision is of any relevancy to the present case. In the first place, that case dealt with the statutory liability, viz., liability for personal injury to the victim of the accident and did not concern itself with the damage to the property as we have in the present case. Secondly, in that case also, there was no contention put forward on be1 half of the appellant before the High Court that she should have a decree against the Insurance Company also. In view of these two circumstances, we are of the opinion that that decision is not of any assistance to the first respondent-plaintiff in the present case. Consequently, we are of the opinion that the judgment of Mohan, J., referred to above, is correct, and this appeal is allowed, and the decree passed by the trial Court against the appellant herein is set aside.
17. We have to record with regret our displeasure at the manner in which the learned Counsel for the first respondent-plaintiff persisted in repeating the point which, we had told him more than once that we were not accepting. We did not give any Opportunity whatever to the learned Counsel to gather the impression that we had not understood the point urged, by him. Still, the learned Counsel took up a considerable time of the Court going on repeating what he said notwithstanding our telling him several times that no purpose whatever would be served by such repetition.
18. The appellant is entitled to its costs from the first respondent-plaintiff.