2008 Supreme(Mad) 4747

High Court of Judicature at Madras
THE HONOURABLE ACTING CHIEF JUSTICE MR. S.J. MUKHOPADHAYA, THE HONOURABLE MR. JUSTICE P.K. MISRA & THE HONOURABLE MR. JUSTICE D. MURUGESAN
Branch Manager, United India Insurance Co. Ltd., Branch Office, Nethaji Bye Pass Road, Dharmapuri Town
Versus
Nagammal & Others
C.M.A.NOs.1808 of 2002 and 2833 of 2002
Decided on: 23-12-2008

Ratios:
a. Insurer is not liable to satisfy the claim of passenger in a goods vehicle.
b. Pay and recover principle is not an inflexible rule.

Headnote:(A) Motor Vehicles Act, 1988 (59 of 1988)- Sec.166, 168-Motor Accident-Compensation-Liability of Insurer-Pay and recover principle-Principles explained-Discretion of the Court to be exercised depending upon facts and circumstances of the case.

       (B) Motor Vehicles Act, 1988 (59 of 1988)- Sec.149(2)-Defences available to insurer enumerated.

        Section 149(2) encapsulates the defences which are available to the Insurer. The defences, which are contemplated, as per Section 149(2), are :

       (a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:

        (i) a condition excluding the use of the vehicle

        (a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

        (b) for organised racing and speed testing, or

        (c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or

        (d) without side-car being attached where the vehicle is a motor cycle; or

        (ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or

        (iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or

       (b) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular. Para 3

       (C) Motor Vehicles Act, 1988 (59 of 1988)- Sec.149-Motor Accident-Compensation-Liability of Insurer-Pay and recover principle-Recognised by Sec.149.

        It is thus seen that Section 149 itself contemplates that under certain contingencies, even though ultimately the insurer may not be liable, it is required to satisfy the award and recover the same subsequently from the owner. Para 4

       It is now apparent that under the Motor Vehicles Act, 1939, the Insurance Company was not required to cover the liability in respect of a passenger, whether gratuitous or otherwise travelling in a goods vehicle. Of course the liability in respect of a driver, cleaner or coolie was required to be covered to the extent envisaged under the Workmen Compensation Act. Para 14

       (D) Motor Vehicles Act, 1988 (59 of 1988)- Sec.166, 168-Motor Accident-Compensation-Liability of Insurer-Passenger in goods vehicle-Insurer not liable.

        The insurer is not liable to pay compensation in respect of a liability arising on account of death or injury to a passenger in a goods vehicle other than the liability in respect of such accident where the owner of the goods or its authorised agent is travelling in such goods vehicle. Para 14

       (E) Motor Vehicles Act, 1988 (59 of 1988)- Sec.166, 168-Motor Accident-Compensation-Liability of Insurer-Pay and recover principle-Not an inflexible rule-Principle explained.

       Therefore, it cannot be said as an inexorable principle of law that in each case where the liability is in respect of a passenger in a goods vehicle, which is not required to be covered under Section 147 of the Act, the Insurance Company would be directed to first pay the amount and thereafter recover the same from the owner and such discretion is obviously with the Court either to apply such principle or not. Para 30

       The following picture emerges :

        (i) The Insurance Policy is required to cover the liability envisages under Section 147, but wider risk can always be undertaken.

        (ii) Section 149 envisages the defences which are open to the Insurance Company. Where the Insurance Company is not successful in its defence, obviously it is required to satisfy the decree and the award. Where it is successful in its defence, it may yet be required to pay the amount to the claimant and thereafter recover the same from the owner under such circumstance envisaged and enumerated in Section 149(4) and Section 149(5).

        (iii) Under Section 147 the Insurance Company is not statutorily required to cover the liability in respect of a passenger in a goods vehicle unless such passenger is the owner or agent of the owner of the goods accompanying such goods in the concerned goods vehicle.

        (iv) Since there is no statutory requirement to cover the liability in respect of a passenger in a goods vehicle, the principle of "pay and recover", as statutorily recognised in Section 149(4) and Section 149(5), is not applicable ipso facto to such cases and, therefore, ordinarily the Court is not expected to issue such a direction to the Insurance Company to pay to the claimant and thereafter recover from the owner.

        (v) Where, by relying upon the decision of the Supreme Court in Satpal Singh’s case, either expressly or even by implication, there has been a direction by the Trial Court to the Insurance Company to pay, the appellate court is obviously required to consider as to whether such direction should be set aside in its entirety and the liability should be fastened only on the driver and the owner or whether the Insurance Company should be directed to comply with the direction regarding payment to the claimant and recover thereafter from the owner.

        (vi) No such direction can be issued by any trial court to the Insurance Company to pay and recover relating to liability in respect of a passenger travelling in a goods vehicle after the decision in Baljit Kaur’s case merely because the date of accident was before such decision. The date of the accident is immaterial. Since the law has been specifically clarified, no trial court is expected to decide contrary to such decision.

        (vii) Where, however, the matter has already been decided by the trial court before the decision in Baljit Kaur’s case, it would be in the discretion of the appellate court, depending upon the facts and circumstances of the case, whether the doctrine of "pay and recover" should be applied or as to whether the claimant would be left to recover the amount from the person liable i.e., the driver or the owner, as the case may be. Para 31