Mobile View
Main Search Forums Advanced Search Disclaimer
Cites 3 docs
The Motor Vehicles Act, 1939
Section 2 in The Motor Vehicles Act, 1939
Section 2(14) in The Motor Vehicles Act, 1939
Citedby 1 docs
New India Assurance Co. Ltd. vs R. Anantha Reddy And Ors. on 28 September, 2005

User Queries
Andhra High Court
The New India Assurance Co. vs Sandepudi Mariyamma & Others. on 13 February, 2003


Civil Miscellaneous Appeal No. 3266 of 2000.


The New India Assurance Co.

Ltd., rep. By its Branch Manager,



Sandepudi Mariyamma & others.


Counsel for appellant: Mr. Kota Subba Rao.

Counsel for respondents: Mr. K.Ramakoteswara Rao

for RR 1 to 5.

Mr.P.Prabhakar Rao,

For R.6.


1. This appeal is filed against the award dated 21.7.2000 in M.V.O.P.No.200 of 1997 on the file of Motor Accidents Claims Tribunal-cum-II Additional District Judge, Guntur. The Insurance Company filed this appeal.

2. On 26.11.1996 deceased S. Yesupadam was bringing Napa slabs to his village Suddapalli in a tractor-trailer AP-7V-2344 and ADM5461 belonging to the first respondent. He was sitting on the load of Napa slabs. On the way the tractor met with an accident, deceased fell down from the tractor, sustained grievous injuries, he was taken to a hospital and while undergoing treatment in the hospital, he succumbed to the injuries on 4.2.1997. His wife, children and mother filed the claim application seeking a total compensation of Rs.5,50,000=00. The owner of the tractor-trailer insured the vehicles with the appellant - Insurance Company. According to the claimants the accident took place due to rash and negligent driving of the tractor by its driver. The owner of the vehicle filed a counter denying all the averments in the claim application. He also pleaded that the deceased never engaged his vehicle to carry Napa slabs. The Insurance Company filed a counter initially taking the plea that the deceased was an unauthorised passenger traveling in the tractor and as per the terms and conditions of the policy, in case of violation of its terms and conditions by the owner, the Insurance Company is not liable to indemnify the owner. Later the Insurance Company filed an additional written statement stating that the policy issued covers the vehicles with a condition to use the said vehicle for agricultural purpose only and the policy does not cover use of the vehicle for hire or reward. It also pleaded that as the deceased hired the vehicle for bringing Napa slabs for his newly constructed house, the owner violated the terms and conditions of the policy and therefore the Insurance Company is not liable to pay any compensation. The owner of the vehicles did not give evidence. He did not adduce evidence on his behalf. The Insurance Company examined its Administrative Officer as R.W.1. The claimants examined three witnesses as P.Ws. 1 to 3 on their behalf.On a consideration of oral and documentary evidence, the Tribunal held that the accident took place due to rash and negligent driving by the driver of the tractor. Regarding the liability of the Insurance Company, the Tribunal held that as there is no evidence adduced by the respondents to show that any amount was paid by the deceased towards hire charges, it cannot be said that the tractor was hired and even otherwise, as the vehicle was covered by the insurance policy, the Insurance Company is liable to meet the claim of the petitioners. Accordingly the Tribunal awarded a compensation of Rs.2,39,000=00 payable jointly and severally by the owner as well as the Insurance Company. Aggrieved by the said award, the Insurance Company preferred the present appeal.

3. Ex.B.1 is true copy of the insurance policy. The policy was in force on the date of accident. It is not in dispute.There is a limitation in user stipulated in the insurance policy. The said limitation reads as follows:

" Use for agricultural purpose only.

The policy does not cover use for

(a) Hire or reward.

(b) Organised races or speed testing".

On the basis of the above terms of the insurance policy, it is contended by the Insurance Company that at the time of accident, the tractor was not used for agricultural purposes and therefore it is not liable to pay compensation or indemnify the owner. Regarding its liability, it is further contended that as the vehicle was under hire at the time of the accident, it is not liable to pay compensation to the claimants or to indemnify the owner.

4. The owner did not prefer any appeal against the award passed by the Tribunal. In view of the decision of Apex Court reported in NATIONAL INSURANCE CO. LTD., CHANDIGARH., Vs. NICOLLETTA ROHTAGI (1), the Insurance Company is not entitled to file any appeal disputing the quantum of compensation and the manner of accident. The important aspect to be considered is whether the insured hired the vehicle? The deceased himself gave complaint to the police about the accident. His complaint was registered by the police as F.I.R. Ex.A.1 is certified copy of F.I.R. In his complaint the deceased stated that hehired the tractor and trailer for transporting Napa slabs to his village. It is an important circumstance. The wife of the deceased, who is the first claimant, gave evidence as P.W.1. In her chief examination she categorically deposed that on the date of accident, her husband hired a tractor-trailer to transport Napa .

slabs from Narakodur. In view of this unambiguous evidence, there is no need for the second respondent to adduce evidence to show that the deceased paid a particular sum as hire charges to the owner of the tractor. I, therefore, unhesitatingly hold that the insured hired the tractor-trailer belonging to the deceased.

5. Regarding the use of the vehicle for purposes other than agriculture, the appellant relied upon some decisions. Reliance was placed on a judgment of Gujarat High Court reported in BHOI VANAJI DHULAJI Vs. PATEL SHIVABHAI KASHIBHAI (2).In this case the appellant imposed a restriction for user of the vehicle. It restricted the user for agricultural purpose only. The tractor driver permitted persons to travel in the trailer of the tractor. The Gujarat High Court held in para 11 as follows:

" In the case at hand, the question which directly arises is as to whether, by virtue of a specific condition in the policy laying down that the user was restricted for agricultural and forestry purposes and that the policy did not cover use for carriage of passengers for hire or reward coupled with a specific mention in the caption 'Important Notice' that the insured would not be indemnified if the vehicle is used or driven otherwise than in accordance with the schedule, which contained these restrictions with regard to the use of the vehicle, the insurance company would be absolved from the liability of satisfying the award with regard to third-party risk by virtue of the provisions contained in sub-section (2) of Section 96 and as discussed above, on analysis of the section, we are of the view that in such a case, if it is proved that the vehicle at the time of the accident, was used for carriage of passengers for hire or reward, in breach of a specific condition to that effect in the policy as aforesaid, then, the insurance company would not be bound to satisfy the award, so far as third-party risk is concerned".

6. Another decision relied upon is a decision of Madras High Court reported in MUTHU THANGIAH THEVAR RICE MILL Vs. MARIYAAYEE (3). The policy provided that the tractor and trailer can be used only for agricultural and forestry purposes. At the time of accident, the vehicle was carrying drinking water.The Madras High Court held that using the vehicle for transporting drinking water cannot be characterized as for agricultural or forestry purposes and the Insurance Company is not liable to pay the compensation. It held that the owner alone is liable to pay the compensation.

7. The third decision relied upon in this regard is a judgment of Himachal Pradesh High Court reported in ORIENTAL INSURANCE CO. LTD. Vs. DHALU DEVI (4).In that case also the policy envisaged limitation to use as "agricultural tractor only". At the time of accident the tractor was used for carrying stones from the stone crusher. In para 14 it held that by putting limitation as to use for agricultural purpose only, the tractor could not be engaged at the stone crusher for hire and reward. As such, the insured definitely breached a specific condition in the insurance policy on the basis of whichthe insurance company can claim its

exoneration under Clause 3 of General Exceptions that liability was incurred while the tractor was being used for other than the limitations as to use. It was further held that the liability incurred by its accident is definitely of the owner of the tractor but he could not pass it on to the insurance company as he himself has contracted out as per specific condition in the insurance policy.

8. In the present case it is very clear that the tractor was used to carryNapa slabs and it is not an agricultural purpose. Further, it was hired by the owner of the vehicle. Thus, there is a violation of the terms of the insurance policy.In view of the principles of law laid down in the above three decisions, it is very clear that the Insurance Company is not liable to pay the compensation.

9. However, the learned counsel for the owner of the vehicle relied upon two decisions of Apex Court. In AMRIT LAL SOOD Vs. KAUSHALYA DEVI THAPAR (5) the insurance policy is a comprehensive policy.The brother of the owner of the car was driving the car. It collided with a goods carrier. As a result of collision, a person traveling in the car sustained injuries. He filed claim application for compensation. The Tribunal granted

compensation to the injured. The Single Judge in an appeal held that the claimant was a gratuitous passenger traveling in the car and the insurer was therefore not liable. In Letters Patent Appeal, the order of the Single Judge was confirmed. The Apex Court held that as per Section 95 of M.V.Act, 1939, the statutory insurance does not cover injury suffered by the occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. The Apex Court further held that it does not prevent the insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby the risk to gratuitous passengers could also be covered. It held that in such cases where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer. It further held that insofar as gratuitous passengers are concerned, there is no limitation in the policy as such and hence under the terms of the policy, the insurer is liable to satisfy the award passed in favour of the claimant. This decision has no application to the facts of this appeal as the present insurance policy is not entered into to cover a risk wider than the statutory requirement.

10. The second decision is a judgment of Apex Court reported in ORIENTAL INSURANCE CO. LTD. Vs. CHERUVAKKARA NAFEESSU (6). The questions that fell for determination in this case before the Apex Court are the extent of liability of an Insurance Company towards third party as per Section 95(1)(b) of Motor Vehicles Act, 1939 and what are its rights in case of payment of an amount in excess of the limits of the liability under the insurance policy vis--vis the insured?The Apex Court held that despite holding the liability under the policy limited to the extent of Rs.50,000=00, the Claims Tribunal and the High Court were not unjustified in directing the appellant Company to pay the whole of the awarded amount to the claimants on the basis of contractual obligations contained in clauses relating to the liability of third parties and avoidance clause. It was so held in view of the avoidance clause in the insurance policy.The said avoidance clause in that insurance policy provided that the company will indemnify the insured against all sums including claimant's costs and expenses which the insured become legally liable to pay in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle or damage to the property caused by such use. The Apex Court further held that the insured is liable to repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the condition of liability relating to third party. Even in Amrit Lal's case (5 supra), referring to the avoidance clause in that insurance policy, the Apex Court held that the above clause does not enable the Insurance Company to resist or avoid the claim made by the claimant. In the present case, it is not the case of the owner of the vehicle that there is such an avoidance clause in the insurance policy obtained by him. Therefore, these two decisions are not applicable to the facts of the present case.

11. The learned Advocate for the claimants relied upon two decisions. The first decision is a judgment of a learned Single Judge of this court reported in MANAGER, NATIONAL INSURANCE CO. LTD., Vs. SMT. KOYA RATNAM (7). The learned Single Judge held that since the claim arose in connection with the death of a third party, the appellant is bound to satisfy the claim of the claimants and after establishing that the driver was not having a valid driving licence at the time of the accident, the appellant can recover the amount paid by it to the claimants from the owner but it cannot avoid the liability to the claimants.

12. Another decision relied upon is a judgment of the Supreme Court reported in NEW INDIA ASSURANCE CO., SHIMLA Vs. KAMALA (8). In that case the driver driving the vehicle held a fake licence. However that fake licence was renewed by the Licensing Authority without knowing it to be forged. The Supreme Court held that no Licensing Authority has the power to renew a fake licence and renewal if at all made cannot transform fake licence as genuine. Regarding the liability of the Insurance Company, it held that the insurer has to pay to third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle but the insurer is entitled to recover any such sum from the insured if the insurer was not liable to pay such sum to the insured by virtue of the conditions of contract of insurance indicated in the policy. It held that the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount to be paid to the third parties, if there was any breach of the policy conditions on account of the vehicle being driven without any valid driving licence. However, these two decisions are not applicable to the facts of the present case inasmuch as the deceased was traveling in the vehicle as owner of the goods transported in the vehicle when the vehicle was not permitted to be hired and its user was restricted for agriculture only and when the vehicle was hired and used for a purpose other than agriculture. Three decisions of Gujarath, Madras and Himachal Pradesh referred to above clearly indicate that the Insurance Company is not liable to pay compensation if there is a restriction to using of the vehicle and if the vehicle was used violating the restrictions mentioned in the insurance policy.Carrying of passengers in a goods carriage is not permitted as clear from the definition of "goods carriage" in Section 2(14) of Motor Vehicles Act, 1988. Carrying of passengers in a goods vehicle was permissible as per the definition of "goods vehicle" as defined in Section 2(a) of Motor Vehicles Act, 1939.I am, therefore, of the opinion that the Insurance Company is not liable to pay compensation to the claimants or indemnify the owner of the vehicle. It is, therefore, clear that the award of the Tribunal fastening liability on the appellant - Insurance Company is liable to be set aside.

13. In the result, the appeal is allowed without costs. The award insofar as it relates to the direction directing the appellant - Insurance Company also to pay the compensation to the claimants is set aside. ?(1) 2002 (6) ALD 1 (SC).

(2) 1981 ACJ. 107.

(3) 1997 ACJ 919.

(4) 1998 ACJ 210.

(5) (1998) 3 SCC 744.

(6) (2001) 2 SCC 491.

(7) 2002 (1) ALT 265.

(8) (2001) 4 SCC 342.