An insurer's liability is limited to the terms of the policy, and without a contract of insurance with the plaintiff, the insurer is not liable for employee compensation.

This Appeal, under Section 96 of the Code of Civil Procedure [for short ‘the C.P.C.’], is filed by the Appellant/defendant No.3 challenging the Decree and Judgment, dated 29.08.2003, in O.S. No.68 of 2001 passed by the learned Senior Civil Judge, Gajuwaka [for short ‘the trial Court’]. The Respondents herein are the plaintiff and the defendants 1 and 2 in the said Suit.

2. The respondent No.1/plaintiff filed the Suit for recovery of a sum of Rs.2,97,695.65 paise towards the compensation paid by the plaintiff to its employees for the act of the second defendant.

3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court.

4. The brief averments of the plaint, in O.S. No.68 of 2001, are as under:

The first defendant is the owner and the second defendant is the driver of Mahindra Jeep bearing registration No.ADD 1810, the vehicle is insured with the third defendant under policy No.620301/31/99/11312, dated 28.12.1999 valid up to 27.12.2000. The jeep is under hire to the plaintiff for its official work. On 16.01.2000 at 10.30 p.m. the Mahindra Jeep was carrying the officials of the plaintiff and the second defendant was driving the vehicle at a high speed in a rash and negligent manner and hit an electrical pole in Ukkunagaram township. As a result of it the vehicle turned upside down and the officials of the plaintiff sustained several injuries. The injured officials were taken to CDR hospital, Gajuwaka, where they were admitted as inpatients. The plaintiff paid Rs.1,64,311/- towards hospital charges and Rs.1,27,731.65 paise towards compensation. Thus the plaintiff incurred a total sum of Rs.2,91,936.65 paise. The plaintiff incurred the expenditure on account of the injuries sustained by its employees due to rash and negligent act of the second defendant.

5. The defendants 1 and 2 remained exparte. The third defendant filed a written statement by denying some of the averments mentioned in the plaint and further contended as under: -

This defendant is not aware of the extent of the injuries sustained by the officials of the plaintiff and the incurring of expenditure by the plaintiff. The policy was an act policy and the insurers liability is limited to Rs.5,000/- in respect of each passenger subject to the limit fixed under the provisions of Motor Vehicles Act. However, the third defendant is not at all liable to pay even this amount as the accident did not occur due to negligent driving of the second defendant. The plaintiff company is government undertaking and it is liable to meet all the medical expenses incurred by their staff members, workers for sustaining any injuries during the course of employment. There is no contract of insurance between the plaintiff and the third defendant. The third defendant was not informed either by the plaintiff or by the first defendant regarding the accident immediately or after the accident.

6. Based on the above pleadings, the trial Court framed the following issues:

(i) Whether the accident took place and if so the officials of the plaintiff received injuries in the accident and whether it was on account of the gross negligence of the defendants? (ii) Whether the plaintiff is entitled to claim the suit amount? (iii) To what relief?

7. During the course of trial in the trial Court, on behalf of the Plaintiff, PW1 and PW2 were examined and Ex.A1 to Ex.A23 were marked. On behalf of the Defendant No.3 DW1 was examined and Ex.B1 and Ex.B2 were marked. Defendant Nos.1 and 2 are remained set exparte.

8. After completion of the trial and on hearing the arguments of both sides, the trial Court decreed the suit with costs vide its judgment, dated 29.08.2003, against which the present appeal is preferred by the appellant/defendant No.3 in the Suit questioning the Decree and Judgment passed by the trial Court.

9. Heard Sri M.V.Vijayaditya Reddy, learned counsel, representing Sri C.Prakash Reddy, learned counsel for appellant/defendant No.3 and Sri Sai Gangadhar Cham