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Judgment
R. Banumathi, J.—Being aggrieved by the order of the Tribunal/Sub Court, Coimbatore in M.C.O.P. No. 1219/1996, awarding
compensation of Rs. 3,30,000/-, Insurance Company has preferred this appeal.
Brief facts as set out in the claim petition are as follows : Deceased Kannan Kumar was employed in Selzar Electronics as Executive Secretary
and he was getting monthly salary of Rs. 5,000/-. On 11.05.1995, deceased Kannan Kumar was travelling as occupant in Tata Estate Car bearing
registration No. KL 9B 707 belonging to the fourth respondent Salzer Electronics Ltd. Car was driven by one Babu Gopalakrishnan. At about
11.30 p.m. while the said car was proceeding near Mettupalayam Road near Madras Oil Company, the car was turned upside and rolled all of a
sudden. Due to the accident, deceased Kannan Kumar sustained fatal injuries and he became unconscious and was immediately taken to K.R.H.
Hospital, from where he was shifted to Ramakrishna Hospital, Coimbatore. The deceased Kannan Kumar succumbed to the injuries. Alleging that
the accident was due to rash and negligent driving of the car driver, mother, brother and unmarried sister of the deceased Kannan Kumar have
filed Claim Petition claiming compensation of Rs. 8,00,000/-.
Opposing the Claim Petition, Insurance Company has filed counter stating that at the time of accident, the driver did not have valid driving
licence and therefore, the Insurance Company is absolved of its legal liability. The Insurance Company has also denied the income of the deceased.
The Insurance Company had also taken the stand that the deceased Kannan Kumar was employed in Salzer Group of Companies and deceased
being an employee of the Insured, as per ''Personal Accident Claim'' Insurance Company has already paid Rs. 2,00,000/- and no further amount
need be paid as compensation.
Before the tribunal, mother of deceased examined herself as PW-1. Eye witness was examined as PW-2. Authorized representative of Salzer
Textiles was examined as PW-3, who has produced Ex.P-6 Salary Certificate to show that the deceased was drawing salary of Rs. 5,000/- p.m.
Officer of Insurance Company was examined as RW-1. Upon consideration of oral and documentary evidence, the Tribunal held that both Salzer
Textiles and Salzer Electronics are different companies. Relying upon II 1997 ACC 276 [Orissa Cooperative Insurance Society Ltd. v. Santosh
Gupta and Ors.], the Tribunal held that the contract of insurance would also include a gratuitous passenger in the car and Insurance Company is
liable to indemnify the Insured. Taking monthly income as Rs. 3,500/- and applying multiplier 11, the Tribunal has awarded a total compensation of
Rs. 3,30,000/-.
Assailing the impugned award, the learned Counsel for the Appellant Insurance Company has submitted that the deceased was carried in a
private car owned and Insured by the fourth Respondent Employer Group and deceased being under contract of employment, risk to such
employee was excluded u/s II of Ex.R-1 Comprehensive Insurance Policy. It was further submitted that if the employee is not workman under the
Workmen Compensation Act, the insurer was not liable for the deceased who was carried in the vehicle in the course of employment of fourth
Respondent. The learned Counsel for the Appellant further argued that in any event, under ''Personal Accident Cover'' a sum of Rs. 2,00,000/-
was already paid and the same is to be deducted if the court comes to the conclusion that compensation is payable to the claimants.
In response, the learned Counsel for the claimants submitted that the deceased being an occupant in the car, claimants are entitled to
compensation. Placing reliance upon The National Insurance Co. Ltd. Vs. Smt. Sarojini, , the learned Counsel submitted that ''Personal Accident
Cover'' pre-supposes that it would be additional coverage and it would not affect the basic cover policy. The learned Counsel further submitted
that by entering into an agreement of contract with Insurance, the occupants of the car are covered under the contract of insurance and the
Insurance Company cannot shirk its liability.
Deceased Kannan Kumar was employed in Salzer Textiles. The evidence of P.W.3 - Authorized representative of Salzer Textiles and Ex.A-6
would show that deceased Kannan Kumar was employed as a Executive Officer in Salzer Textiles on monthly salary of Rs. 5,000/-.
The offending Vehicle KL 9B 707 was a private vehicle of the insurer - Salzer Electronics Ltd. One Gopalakrishnan was driving the vehicle at
the time of accident. Case of Insurance Company is that Salzer Textiles and Salzer Electronics belong to one group of companies and deceased
being an employee of Salzer Group of Companies, Insurance Company need not pay compensation since risk to such employee was excluded u/s
II of Ex.B-1 ''Comprehensive Insurance Policy''. It is the case of Appellant/Insurance Company that the deceased Kannan Kumar was not a
workman under Workmen''s Compensation Act and there was no statutory requirement to be covered u/s 147 of the Motor Vehicles Act and
therefore, insurer is not liable to pay compensation.
The learned Counsel for the claimants has submitted that Salzer Textiles and Salzer Electronics Ltd., are two different entities. It was further
submitted that the deceased being employee in Salzer Textiles, was travelling in the car owned by Salzer Electronics Ltd., and therefore, deceased
Kannan Kumar, an occupant in the car, was a ''third party'' and in case of death or bodily injury to a third party, Insurance Company was liable to
satisfy the decree passed against the Insured/owner of the vehicle. Placing reliance upon 1997 II ACC 276 (cited supra), the learned Counsel for
the claimants submitted that the words ''death or bodily injury to any person'' appearing u/s II(i)(a) of the Contract of Insurance will include a
gratuitous passenger and there is nothing under the provisions of the M.V. Act to exclude the liability of the Insurance Company, in case of death
or bodily injury to occupant/passenger in the car.
Referring to New Asiatic Insurance Co. Ltd. Vs. Pessumal Dhanamal Aswani and Others, , the Delhi High Court has held as under in 1997 II
ACC 276:
It is clear from the observations of the Supreme Court in New Asiatic Insurance Co. Ltd.''s case that it had never been in dispute before the
Supreme Court that a passenger in the car was a third party and in case of death of or bodily injury to the said passenger the Insurance Company
was liable to satisfy the decree that might be passed against the owner of the vehicle. Mr. Sabharwal has not shown us any condition in the policy
of insurance under which the Insurance Company could avoid its liability to pay to respondents 1 to 6, who were the heirs of the deceased sitting in
the car at the time of the accident. In our view, unless the Insurance Company has specifically agreed with the owner of the vehicle to avoid its
liability in respect of a passenger in the car, the liability of the Insurance Company to pay in case of death of the said passenger is absolute and it
cannot escape its liability by taking shelter under the provisions of Section 95 of the Act.
In that case accident occurred on 05.05.1971 for which M.V. Act 1939 was applicable. In the present case, the accident was on 11.05.1995
subsequent to the amendment to M.V.Act 1988 on 14.11.1994. Therefore the present case would be covered by the provisions of M.V.Act,
after amendment.
The main question to be determined is under what capacity the deceased Kannan Kumar travelled in the car at the time of accident. There was
serious dispute as to whether the deceased Kannan Kumar was an employee of Salzer Textiles or Salzer group of companies and whether he was
covered under the Contract of Insurance or not. In the light of the said dispute between the parties, one would normally expect the Tribunal to
apply its mind to the question and record satisfactory answer to the question which arose for decision. The Tribunal merely referred to the
contention of the parties and referring to 1997 II ACC 226, has simply rejected the contention of the Insurance Company without any specific
finding.
Mother of the deceased who examined herself as PW-1 has stated that her son Kannan Kumar was employed in Salzer Textiles. PW-3 has
also stated that the deceased was employed as Executive Secretary in Salzer Textiles. By going through the records it appears that both Salzer
Textiles and Salzer Electronics belong to the same group of companies. Deceased was employed under the said group of companies. Additional
premium of Rs. 500/- was paid to cover personal accident benefits as per ENDT 4. After the accident, Salzer Electronics made a claim in respect
of deceased Kannan Kumar claiming compensation of Rs. 2,00,000/- as covered under Personal Accident Claim. In Ex.B-2 ''Personal Accident
Claim Form'', it was stated that the deceased Kannan Kumar was employed as Steno in Salzer Electronics. Salzer Electronics had sent Ex.B-4
Communication to Insurance Company stating that they have no objection in settling the claim directly to the legal heir of Kannan Kumar -
Komalam [first claimant].
It is the contention of Appellant/Insurance Company Salzer Electronics that having submitted Personal Accident Claim Form, claiming
compensation cover under Personal Accident Claim, the claimants cannot turn round and contend that the deceased was a third party travelling in
the car at the time of accident on the ground that he was employed in Salzer Textiles. It is the further contention of the appellant Insurance that if
the deceased was to be treated as employee of Salzer Group of Companies, as per the Personal Accident Claim, as per Contractual Personal
Accident Cover, an amount of Rs. 2,00,000/- was already paid. Laying emphasis upon Section II in Ex.R-1 Insurance, it was contended that
deceased being employed under Salzer Group and deceased not being an employee covered under Workmen''s Compensation Act, Insurance
Company is not liable to pay any further compensation.
Though the claimants have stated that the deceased was an employee under Salzer Textiles, plea of Insurance Company that deceased was
employed under Salzer Group of Companies appears to be more probable. This is because, earlier under Ex.B-2, Personal Accident Claim was
made for deceased Kannan Kumar stating that he was employed as Steno in Salzer Electronics.
The main plank of argument of claimants is that the deceased travelled in car and was a third party, who is covered under basic policy as per
Section II(1)(i). Section II in Ex.B-1 deals with liability to third parties, which reads as under:
Subject to the limits of liability as laid down in the Schedule hereto the Company will indemnify the Insured in the event of an accident caused by
or arising out of the use of Motor Car against all sums including claimant''s costs and expenses which the Insured shall become legally liable to pay
in respect of
(i) death of or bodily injury to any person including occupants carried in the motor car (provided such occupants are not carried for hire or reward)
but except so far as it is necessary to meet the requirements to Motor Vehicles Act, the Company shall not be liable where such death of injury
arises out of and in the course of the Employment of such person by the Insured.
Onbehalf of the claimants, claim is made that deceased was covered under Basic Cover Policy as occupant/third party in the car.
The above plea of the claimants is contrary to their earlier stand. For Personal Accident Benefits additional premium was paid for 5 persons as
per ENDT 4. ENDT 4 in Ex.B-1 deals with ''Personal Accident Benefits''. IMIT 4 in Ex.B-1 Policy reads as under:
ACCIDENT TO INSURED OR ANY NAMED PERSON OTHER THAN A PAID DRIVER OR CLEANER
In consideration of the payments of an additional premium it is hereby understood an agreed that the Company undertakes to pay compensation on
the scale provide below for bodily injury as hereinafter defined sustained by _________ in direct connection with the motor car or whilst mounting
and dismounting from or travelling in private motor car and caused by violent accident external and visible means which independently of any other
cause shall within six calendar months of the occurrence of such injury.
As pointed out earlier, claimants were paid Rs. 2,00,000/- as per the coverage under ''personal accident benefits''. While so, claimants cannot turn
round and make further claim from insurance on the premise that deceased was a third party occupant in car at the time of accident.
Assuming for the sake of arguments that deceased was a occupant in the car in his capacity as employee of Salzer Textiles, question falling for
consideration is whether the appellant Insurance Company is liable to pay compensation to an occupant/passenger in the car ?
In New India Assurance Co. Ltd. Vs. C.M. Jaya and Others, , deceased was travelling as a pillion rider in the two wheeler when it met with
accident with a truck, insured by the appellant Insurance Company by Comprehensive Insurance Policy. In the said case, as per the insurance
policy, liability of the Insurance Company is limited to Rs. 50,000/- in regard to the claim in question. Observing that the liability of the Insurance
Company was not limited merely on the ground that the insured had taken a comprehensive policy, the Supreme Court has held as follows:
The liability of Insurance Company could be statutory or contractual. A statutory liability cannot be more than what is required under the statute
itself. However, there is nothing in Section 95 of the Act prohibiting the parties from contracting to create unlimited or higher liability to cover wider
risk. In such an event, the insurer is bound by the terms of the contract as specified in the policy in regard to unlimited or higher liability as the case
may be. In the absence of such a term or clause in insurance policy, pursuant to the contract of insurance, a limited statutory liability cannot be
expanded to make it unlimited or higher. If it is so done, it amounts to rewriting the statute or the contract of insurance, which is not permissible.
It is thus clear from the above decision of the Supreme Court that the liability of the Insurance Company could be statutory or contractual and
a statutory liability cannot be more than what is required under the Statute itself. Admittedly, there is no statutory liability over the appellant insurer
to cover the risk of an occupant of a private car. However, there is nothing in Section 147 prohibiting the parties from contracting to cover wider
risk. In the absence of such a term or clause in the insurance policy, pursuant to the contract of insurance or paying additional premium, limit of
statutory liability cannot be expanded to make it higher. In the present case, insurer has not covered higher risk by paying additional premium to
cover the risk of an occupant of the car. Therefore, the Insurance Company cannot be saddled with the liability.
Sub Clause (1) of Clause (b) of Sub-section (1) of Section 147 speaks of liability which may be incurred by the owner of a vehicle in respect
of death of or bodily injury to any person or damage to any property of a third party caused by or rising out of the use of the vehicle in a public
place. Whereas Sub-clause (ii) thereof deals with liability which may be incurred by the owner of a vehicle against the death of or bodily injury to
any passenger in a public service vehicle caused by or arising out of the use of the vehicle in a public place.
In the present case, the offending vehicle was registered a private vehicle. In private vehicle, passengers who are carried gratuitous are not
compulsorily to be covered. There is no statutory requirement to cover gratuitous passenger. In respect of the passengers who are employees
other than driver, premium was paid as per ENDT 4. Insofar as occupants carried in the motor car, occupants would be covered under Basic
Policy only so far as it is necessary to meet the requirements to M.V.Act.
In respect of other passengers/occupants, liability could be fastened upon the Insurance Company only if additional premium is paid as per
ENDT 5. IMIT 5 reads as under:
IMIT -5 ACCIDENT TO UNNAMED PASSENGERS OTHER THAN THE INSURED AND HIS PAID DRIVER OR CLEANER.
In consideration of the payments of an additional premium it is hereby understood and agreed that the Company undertakes to pay compensation
on the scale provided below for bodily injury as hereinafter defined sustained by any passenger other than the Insured and/or his paid driver
attendant or cleaner and/or a person in the employ of the Insured coming with the scope of Workmen''s Compensation Act 1923 and subsequent
amendments of the said Act and engaged in and upon the service of the Insured at the time such injury in sustained whilst mounting or dismounting
from or travelling in the Motor Car and caused by violent accident external and visible means which independently of any other cause shall within
three calendar months of the occurrence of such injury.
To cover unnamed passengers, other than the Insured and his paid driver or cleaner, additional premium has to be paid, as per ENDT 5. But
for the vehicle in question viz., KL 9B 707, no additional premium to cover personal accident benefits as per ENDT 5 appears to have been paid.
While so, the Insurance Company - Insurer cannot be called upon to indemnify the Insured in respect of death of passenger who travelled in the
car.
As the insurer has paid premium as per ENDT 4, ""Personal Accident Benefit"", Rs. 2,00,000/- was claimed and the same was paid to the
claimants. Insofar as passengers, additional premium, as per ENDT 5 was not paid. IMIT 4 and IMIT 5 cover entirely different Personal Accident
Benefits. Treating the deceased as employee of Salzer Electronics/Insured, claimants have already received Rs. 2,00,000/- as compensation. To
claim further compensation as employee of Salzer Textiles, additional premium ought to have been paid as per IMIT 5 which covers passengers.
Since no such additional premium was paid as per ENDT 5, it cannot be contended that deceased was a third party and that he is covered under
Basic Policy Coverage.
Contending that death of a passenger travelling in a private car would be entitled to compensation and that additional premium under Clause
IMIT 5 is only additional coverage, the learned Counsel for the claimants placed reliance upon 2000 ACJ 126 [Kant] (cited supra). In the said
case, additional premium under Clause IMIT 5 was paid. The question for consideration is whether the amount received as per Personal Accident
Benefits as per ENDT 5 was deductible. Observing that it is not duplication of compensation, but it involves two sets of compensation payable
under two different heads under the same policy, Karnataka High Court held that compensation paid under Clause IMIT 5 was not deductible. In
the said case since additional premium as per ENDT 5 was paid, the ratio of the said decision cannot be applied to the case on hand. Dealing with
insurance of Motor Vehicles against third party risks, in The Oriental Insurance Company Limited Vs. Meena Variyal and Others, , the Supreme
Court has held as under:
Chapter XI of the Act bears a heading, ""Insurance of Motor Vehicles against Third Party Risks"". The definition of ''third party'' is an inclusive
one since Section 145(g) only indicates that ''third party'' includes the Government. It is Section 146 that makes it obligatory for an insurance to be
taken out before a motor vehicle could be used on the road. The heading of that section itself is ""Necessity for Insurance against third party risk"".
No doubt,t he marginal heading may not be conclusive. It is Section 147 that sets out the requirement of policies and limits of liability. It is provided
therein that in order to comply with the requirements of Chapter XI of the Act, a policy of insurance must be a policy which is issued by an
authorized insurer; or which insurers the person or classes of persons specified in the policy to the extent specified in Sub-section (2) against any
liability which may be incurred by the owner in respect of the death of or bodily injury or damage to any property of a third party caused by or
arising out of the use of the vehicle in a public place.
In my considered view, the deceased being an occupant of the car cannot be construed to be a third party u/s 145. Without paying additional
premium to cover the passengers in the car, the Insurance Company cannot be saddled with any further liability apart from the amount of Rs.
2,00,000/- already paid under ""Personal Accident Benefit"".
The Tribunal has fixed the monthly income of the deceased at Rs. 3,500/- and applying multiplier of 11, the Tribunal has awarded total
compensation of Rs. 3,30,000/-. That amount of Rs. 3,30,000/- is payable only by the Insured. Without adverting to the terms of contract of
policy, the Tribunal was not right in fastening the liability upon the Insurance Company. To that extent, order of the Tribunal in so far as the
Insurance Company is to be modified.
In the result, the order made in M.C.O.P. No. 1219/1996 by the Motor Accidents Claims Tribunal, Subordinate Court, Coimbatore is set
aside insofar as the appellant Insurance Company and the appeal is allowed. It is held that the appellant Insurance Company cannot be saddled
with liability to pay compensation to the claimants. The amount of compensation of Rs. 3,30,000/- is payable only by the fourth respondent -
Salzer Electronics Ltd. In the circumstances of the case, there is no order as to costs.