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2020 Supreme(Mad) 1863
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. Jayachandran, J.
United India Insurance Company Limited, Udumalpet – Appellant
Versus
N. Thangavel & Others – Respondents
C.M.A. No. 1408 of 2016
Decided On : 06-10-2020
For the Appellant :Malar, Advocate.
For the Respondent:D.R. Arun Kumar, Advocates.
The main legal point established in the judgment is that the insurance company cannot be held liable for the liability arising from the accident on the strength of the insurance policy, and the application of the Principle of Pay and Recover is not applicable in cases involving gratuitous passengers and policy violations.
Headnote:
Motor Vehicles Act - Insurance Coverage - 173 - 147 - 142 - 2006 (4) SCC 404 - 2015 (1) TN MAC 19 - 2012 1 TAN MAC 25 SC - MANU/TN/1853/2015 - 2017 (1) TN MAC 184 - 2017 (1) TN MAC (SC) - New India Assurance Company Vs. S. Krishnasamy and others reported in 2015 (1) TN MAC 19 - United India Insurance Company Vs. Lalitha Dhamodharan and others reported in MANU/TN/1853/2015 - United India Insurance Company Limited Vs. Tilak Singh reported in 2006 (4) SCC 404 - Manager, National Insurance Company Limited Vs. Saju P.Paul and another reported in 2012 1 TAN MAC 25 SC - New India Assurance Company Limited Vs. Murugan S/o.Mathaiyan reported in 2017 (1) TN MAC 184 - Manuara Khatun and others Vs. Rajesh Kr.Singh and others reported in 2017 (1) TN MAC (SC) - The court discussed the interpretation of insurance coverage under the Motor Vehicles Act, particularly in relation to the liability of insurance companies for gratuitous passengers and the application of the Principle of Pay and Recover. The court considered various judgments, including United India Insurance Company Limited Vs. Tilak Singh, New India Assurance Company Limited Vs. S.Krishnasamy, Manager, National Insurance Company Limited Vs. Saju P.Paul, United India Insurance Company Limited Vs. Lalitha Dhamodharan, and New India Assurance Company Limited Vs. Murugan S/o.Mathaiyan, to determine the liability of the insurance company and the vehicle owner in cases of policy violations and accidents involving gratuitous passengers.
Fact of the Case:
The deceased, a gratuitous passenger, died in a car accident due to the negligence of the driver, who did not have a valid driving license. The insurance coverage was an Act only policy, and the deceased was not covered as an occupant or passenger. The Tribunal awarded compensation to the claimants, holding the insurance company liable to pay for the third party deceased.
Finding of the Court:
The court analyzed the interpretation of insurance coverage under the Motor Vehicles Act and the liability of insurance companies for gratuitous passengers. It considered various judgments and held that the insurance company cannot be held liable to suffer the liability arising from the accident on the strength of the insurance policy. The court also discussed the Principle of Pay and Recover and the narrow interpretation of the term 'third party' in relation to insurance coverage.
Issues: The issues involved the liability of the insurance company and the vehicle owner in cases of policy violations and accidents involving gratuitous passengers, as well as the application of the Principle of Pay and Recover.
Ratio Decidendi: The court held that the insurance company cannot be held liable for the liability arising from the accident on the strength of the insurance policy. It also discussed the narrow interpretation of the term 'third party' in relation to insurance coverage and the application of the Principle of Pay and Recover.
Final Decision: The court allowed the Civil Miscellaneous Appeal with directions, holding that the law is not in favor of pay and recover in cases of this nature. It permitted the insurer to proceed against the insured for recovery and allowed the claimant to recover from the vehicle owner for the unsatisfied award amount.
JUDGMENT :
(Prayer: Civil Miscellaneous Appeal filed under Section 173 of the Motor Vehicles Act, 1988, against the judgment and decree dated 15.02.2013 made in M.C.O.P.No.176 of 2010, on the file of the MACT (Sub-Court), at Udumalpet.)
(The case has been heard through video conference)
1. This Appeal is filed by the Insurance Company aggrieved by the award passed by the Tribunal directing the Insurance Company to pay the award amount of Rs.6,73,000/- to the claimants and recover the same from the vehicle owner.
2. The facts of the case is that, Kalimuthu, aged about 22 years at the time of accident was working as Supervisor in Hudson Milk Diary Farm and earning Rs.15,000/- per month. He along with his friends went to Kodaikanal in a Tata Sumo car bearing registration No.TN-59-H-9270, owned by the 2nd respondent. The 1st respondent was the driver of the Tata sumo. Near 13/14 Hairpin bend, the driver of the Tata sumo when he applied sudden brake to avoid the upcoming vehicle, lost the control of the vehicle and turned turtle. Mr.Kalimuthu, who was one of the occupants in the Tata sumo got crushed and died on the spot. Attributing negligence on the Tata sumo driver, claim petition for Rs.15,00,000/- has been filed by the parents of the deceased Kalimuthu against the driver, owner and the insurer.
3. The Insurance Company, in the counter contended that the car driver had no valid driving license. Hence, there is a violation of policy terms. The insurance coverage is only for the third party and one employee. No extra premium paid for the occupants. Therefore, the Insurance Company is not liable to pay compensation.
4. The Tribunal, on considering the rival submissions held that there is policy violation by allowing person to drive the vehicle without license. However, the occupant being a third party directed the insurer has to pay for the third party deceased. Taking note of the other documents, fixed the income of the deceased at Rs.4,500/- per month and awarded a total sum of Rs.6,73,000/- as compensation.
5. In the appeal, the Insurance Company contended that the vehicle insured was under Act only policy. It does not covers the occupants or passenger. Having proved that on the date of accident, the vehicle insured under the Act only policy, that is coverage only to third party and not the occupant or passengers, the appellant/insurer is not liable to pay any compensation. Further, the deduction of personal expenses of the deceased as 1/3rd instead of ½ also impugned as unsustainable.
6. In support of the submission, the Learned Counsel would relied upon the below mentioned judgments of the Hon'ble Supreme Court and High Court.
(i). United India Insurance Company Limited Vs. Tilak Singh reported in 2006 (4) SCC 404.
(ii). New India Assurance Company Limited Vs. S.Krishnasamy and others reported in 2015 (1) TN MAC 19.
7. Per contra, the Learned Counsel for the claimant/respondent would submit that the law laid down in Tilak Singh has been considered by the Hon'ble Supreme Court in the subsequent judgments and has been clarified that, any person other than the owner of the vehicle and the insurer, all others are third parties including the person travelling in the vehicle as gratuitous passenger or coolie. Therefore, the Insurance Company is liable to pay and recover it from the vehicle owner, if there is any violation of policy terms and conditions.
8. In support of this argument, the Learned Counsel for the respondent has circulated the following judgments.
(i). Manager, National Insurance Company Limited Vs. Saju P.Paul and another reported in 2012 1 TAN MAC 25 SC.
(ii). United India Insurance Company Limited Vs. Lalitha Dhamodharan and others reported in MANU/TN/1853/2015.
(iii).New India Assurance Company Limited Vs. Murugan S/o.Mathaiyan reported in 2017 (1) TN MAC 184.
9. Heard the Learned Counsel for the appellant and the Learned Counsel for the respondents.
10. The admitted facts of this case is that, the Tata sumo in which the deceased
