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Judgment
This appeal against the award of the Motor Accidents Claims Tribunal (District Court), Salem, in M. A.C.O.P. No. 408 of 1983, has been
preferred by the owner of the motor vehicle bearing registration No. TNS 6297, which was involved in an accident on 28-9-1982 resulting in the
death of one Thangavelu Achari. The legal heirs of deceased Thangavelu Achari, who are respondents 1 to 3 herein, in M.A.C.O.P. No. 408
1983, stated that the accident in which Thangavelu Achari lost his life took place only on account of the rash and negligence driving of the vehicle
by its driver, the fifth respondent herein, and that they should be awarded compensation in a sum of Rs.50,000/-. The appellant herein resisted the
claim so made on the ground that the accident took place while the driver of the vehicle attempted to avoid a boy who suddenly crossed the road
and in that process, the vehicle capsised and that the deceased jumped out of the vehicle and that resulted in the accident. The fourth respondent-
insurance company also disputed its liability for payment of compensation. On a consideration of the oral as well as the documentary evidence, the
Tribunal found that the accident took, place only on account of the rash and negligent driving of the vehicle belonging to the appellant by its driver.
Considering the quantum of compensation awardable to respondents 1 to 3, the Tribunal found that the deceased could have contributed to his
family Rs. 3.200/- per annum and at that rate, owing to the death of Thangavelu Achari, respondents 1 to 3 had lost the benefit of contribution to
the tune of Rs. 64,000/-. Towards loss of consortium for the first respondent, the Tribunal awarded Rs.5,000/- and to respondents 2 and 3,
towards loss of a predominantly happy life and parental affection, compensation in a sum of Rs. 5,000/- was awarded. Deducting from out of the
compensation as determined 10% towards lump sum payment and other uncertainties in life, the Tribunal determined the amount of compensation
payable to respondents 1 to 3 at Rs.50,000/-. Dealing with the question of liability for the payment of the amount of Rs. 50,000/- by way of
compensation, the Tribunal took the view that the fourth respondent-insurance company would be liable to pay Rs. 19,200/- and the balance of
the amount of compensation should be paid by the appellant. Certain other directions were given by the Tribunal regarding the investment of the
amount of compensation. It is the correctness of this award that is challenged in so far as it imposed a liability on the appellant for the payment of
compensation in a sum of Rs. 30,800/-.
Learned counsel for the appellant contended that deceased Thangavelu Achari lost his life while travelling in the motor vehicle belonging to the
appellant and he was on the vehicle in pursuance of a contract of employment, though not with the owner of the vehicle, and for business reasons
of the owner and, therefore, the Tribunal was in error in not festering liability on the insurance company u/s 95(2)(b)(i) of the Motor Vehicles Act
(hereinafter referred to as ''the Act''). Reference was also made by learned counsel to certain decisions which have construed the words ""by
reasons of or in pursuance of a contract of employment"" as not limited to a case of employment by the owner; to contend that the entire liability for
the payment of compensation should be borne by the insurance company. On the other hand, learned counsel for the insurance company submitted
that both under the relevant provision of the Motor Vehicles Act as well as the terms of the policy, the liability of the insurance company for
payment of compensation is listed to that payable under the provisions of the Workmen''s Compensation Act and the Tribunal was, therefore, quite
right in having made the insurance company liable for payment of Rs. 19,200/- only and in festening the liability for the balance of the amount of
compensation on the appellant. Attention was also drawn by learned counsel in this connection to the decisions reported in Abdul Jabbar Vs.
Muniammal, and G. Dhyanand and Another Vs. Zaamni Bi and Others, .
Before proceeding to accertain the liability of the appellant and the insurance company for the payment of compensation awarded by the
Tribunal, certain undisputed facts have to be borne in mind. That the accident took place only on account of the rash and negligent driving of the
vehicle belonging to the appellant by the fifth respondent as found by the Tribunal has not been disputed before this Court Similarly, the quantum of
compensation awardable to respondents 1 to 3 in a sum of Rs. 50,000/-has also not been challenged before this Court. The only point for
consideration is, whether the fourth respondent-insurance company, would be liable for the payment of compensation only to the extent of Rupees
19,200/- or whether it would be liable to pay the entire compensation amount of Rs. 50,000/-. A decision on this question would necessarily
depend upon the circumstances under which deceased Thangavelu Achari was found to have travelled in the vehicle belonging to the appellant. It is
in this connection that the evidence of P.W.2 is relevant. Accordingly to his evidence, at about the time when the accident took place he was
building a house in which deceased Thagavelu Achari was working as a carpenter and that on the day of the accident, he and deceased
Thangavelu Achari went to Erode to purchase asbestos sheets and were returning in the vehicle of the appellant. The further evidence of P.W. 2 is
that he was seated next to the driver and deceased Thangavelu Achari was seated next to him P.W. 2 clearly stated that he did not pay any
amount for the purpose of travelling in the vehicle and that for bringing the goods to his place, he paid Rs. 85/-. In the course of cross-examination
of P.W.2 by the fourth respondent, P.W.2 stated that the driver did not object to P.W. 2 and deceased Thangavelu Achari accompanying him in
his vehicle. In the absence of evidence of either the appellant or the fifth respondent there is no reason as to why the evidence of P.W.2 should not
be accepted. Indeed, no material was placed before this Court to show that this testimony of P.W. 2 regarding the circumstances under which
deceased Thangavelu Achari was found to be travelling in the vehicle is not acceptable. Therefore, from the evidence of P.W. 2, it is clearly
established that P.W. 2, after having bought the asbestos sheets required for the construction of his house, with the assistance of deceased
Thangavelu Achari, had loaded the goods in the vehicle of the appellant and had also accompanied the goods in the vehicle along with deceased
Thangavelu Achari, when the accident took place. Whether in such circumstances deceased Thangavelu Achari could be stated to have been
found on the vehicle in pursuance of a contract of employment is the question.
It in seen that under S. 95(2)(b)(i) of the Act that where the vehicle is a vehicle in which passengers arc carried for hire or reward or by reason
of or in pursuance of a contract of employment, the limit of liability of the insurance company is stated to be Rupees 50,000/- in respect of persons
other than passengers carried for hire or reward. If that provision is applicable, on the footing that Thagavelu Achari was carried in the vehicle by
reasons of or in pursuance of a contract of employment, then, undoubtedly, the fourth respondent-insurance company would be liable for the entire
compensation awarded. It is significant that the words used with reference to the carriage of passengers in the vehicle are ""by reason of or in
pursuance of a contract of employment."" While setting out under the proviso to Section 95(1) of the Act cases in which a policy shall not be
required, care has been taken to specify that the employees referred to therein should be the employees of a person insured by the policy.
However, under sub-clause (ii) of the proviso to S. 95(1) of the Act, carving out the exception to the non-requirement of a policy, it is stated that if
the vehicle is a vehicle in which passengers are carried by reason of or in pursuance of a contract of employment, then a coverage would be
necessary in respect of death or bodily injury to such persons carried in or upon or entering or mounting or alighting from the vehicle at the time of
the occurrence of the event out of which a claim arises. The liability imposed u/s 95(2)(b)(i) of the Act is with reference to the passengers so
carried by reason of or in pursuance of a contract of employment in a sum of Rs. 50,000/ - in all. However, it has not been clearly stated either in
sub-clause (ii) of the proviso to S. 95(1) or in S. 95(2)(b)(i) of the Act with whom the contract of employment should have been entered into, viz.,
whether with the owner of the vehicle or with the hirer. It is in view of this that Lord Wright in Izzard v. Universal Insurance Co. Ltd., 1937 AC
773 : (1937) 3 All ER 79, dealing with S.36 of the Road Traffic Act, 1930, comparable to S. 95 of the Act, observed as follows:--
I cannot accept the respondents'' contentions that ''Contract of employment'' should be construed in the Act subject to the implied limitation ''with
the person insured by the policy."" Such a departure from the clear language used cannot, I think, be justified. I think the Act is dealing with the
persons who are on the insured vehicle for sufficient practical on business reasons, and has taken a contract of employment in pursuance of which
they are on the vehicle as the adequate criterion of such reasons. But there is no sufficient ground for holding that this criterion should be limited to
employees of the insured person. Such employees, if injured or killed would ordinarily fall under Exception (1), though I am not prepared to say
that there might not be in certain events an employee of the assured who could claim as a passenger. But such cases must be rare. The most
probable case is where the man killed or injured was on the vehicle in pursuance of a contract not with the owner of the vehicle but with some one
else, for instance, with the person whose goods were being carried on the vehicle; thus a commercial vehicle carrying a contractor''s or merchant''s
goods would frequently and perhaps even normally have on it an employee of the goods-owner to see to loading or unloading or delivering the
goods or caring for them in transit. For these purposes such a man may be carried as a passenger.
Referring to the aforesaid decision, in The Venguard Insurance Co. Ltd., Madras Vs. Chinnammal and Others, , this Court laid down that though
on a superficial view of the section it might appear that the words ''contract of employment'' found in S. 95 of the Act would cover only a contract
of employment with the owner of the insured vehicle, there is a preponderance of authority in favour of the other view that it would cover not only
such persons, but also persons who are on the vehicle in pursuance of a contract of employment with the owner of the goods carried in it. In that
case also, the deceased was the employee not of the insured but of the person whose goods were carried in the insured vehicle and this Court held
that the insurance company cannot be permitted to deny its liability for the payment of compensation. In South Indian Insurance Co. Ltd. Vs. P.
Subramaniam and Another, , the decision in The Venguard Insurance Co. Ltd., Madras Vs. Chinnammal and Others, was noticed and
distinguished on the ground that the owner of the goods travelled in the lorry and there is, therefore, no contract of em-ployement necessitating his
travelling in lorry in question and that even on the footing that the words ''contract of employment"" included not only the employees of the insured
but also the employees of the owner of the goods, the first respondent in that case cannot be said to have travelled in the lorry by reason of or in
pursuance of a contract of employment, for there was no question of employment as such in that case. However, what is significant is that it had
not been pointed out in South Indian Insurance Co. Ltd. Vs. P. Subramaniam and Another, that the principle laid down in The Venguard Insurance
Co. Ltd., Madras Vs. Chinnammal and Others, , is not correct. On the factual absence of a contract of employment, the Court proceeded to hold
that the insurance company could not be made liable. However, in this case, though P. W. 2 as owner of the goods had accompanied them, the
deceased was under a contract of employment with P.W. 2, viz., to look after the carpentry work for, his house and to procure the necessary
materials therefore and it was in that connection that he accompanied P.W. 2 to Erode and while returning with the materials bought, met with the
accident. Therefore, whatever may be the position of P.W. 2 as such in this case, in so far deceased Thangavelu Achari is concerned, he was
undoubtedly under a contract of employment with P.W. 2 and was carried in the vehicle of the appellant pursuant to such a contract of
employment with P.W. 2 and in the absence of words indicating that the contract of employment should only be with the insured, in my view, it
would take in even cases where pursuance to a contract of employment, a person is carried on a vehicle, though such a contract may not be with
the insured. The view taken in The Venguard Insurance Co. Ltd., Madras Vs. Chinnammal and Others, , has been uniformly followed by several
other Courts as well. It would suffice to make a brief reference to some of them. In State Insurance Department, State Insurance Officer,
Trivandrum Vs. Sosamma Mani and Others, , the claim for compensation on behalf of a deceased person, who was travelling in a goods vehicle
accompanying the goods, was held to be payable by the insurer, as the deceased could be said to have travelled in the vehicle in pursuance of a
contract of employment. In Oriental Fire & General Insurance Co., Ltd. v. Ganchi Ramanlal Kant Lal, 1979 ACJ 65 >1979 Lab IC 531 , the
words ''contract of employment'' were interpreted to mean that the passengers carried in a vehicle must be passengers who were either employed
by the insured or whose employment with some one else have a reasonable and notional association with the business which the insured was
carrying on. With reference to claims relating to death of persons, who were the servants of the owner of the goods, who had travelled in a goods
vehicle, in Hukam Chand Insurance Co., Ltd. v. Badruddin, 1980 ACJ 164 the insurance company was held liable to pay compensation, even
though the contract of employment of the deceased was with a person other than the insured. In National Insurance Co. Ltd. Vs. Laxmi Devi and
Others, , the employee of the owner of the goods travelled in a goods vehicle along with the goods and he was held to be a passenger travelling on
a contract of employment within the meaning of Section 95(l)(b) proviso (ii) of the Act, as the contract of employment need not only be with the
owner of the vehicle, but should be given a wider meaning as to take in persons on the vehicle in pursuance of a contract of employment with the
owner of the goods also. Similarly, in Patharibai Karan Singh v. Firm Lalji Shankarlal, 1985 ACJ 526 : AIR 1985 Mad 103, a truck carried the
labourers of the hirer of the vehicle for lifting bags and on the death of one of them, the insurer was held liable to pay compensation in respect of
the claim made, as the deceased had travelled in the truck on a contract of employment with the hirer of the vehicle and the contract of
employment need not necessarily to be with the owner of the vehicle. It is thus seen that the view in The Venguard Insurance Co. Ltd., Madras Vs.
Chinnammal and Others, , has been shared by other Courts as well and there is no justification whatever for limiting the amplitude of the words
contract of employment"" and restricting its applicability oniy to cases of contract of employment with the insured.
The two decisions strongly relied on by learned counsel for the insurance company may now be considered. In Abdul Jabbar Vs. Muniammal, ,
it was found that the contract in that case was for the carriage of the passengers and not the goods and as there was no contract to carry goods
and the owner accompanying his goods, the decision in The Venguard Insurance Co. Ltd., Madras Vs. Chinnammal and Others, was held to be
inapplicable. It is also further seen that the injured person was carried in a lorry for hire. Those considerations are inapplicable here and that
decision also cannot be pressed into service by the insurance company. In G. Dhyanand and Another Vs. Zaamni Bi and Others, , the insurance
company was held to be not liable, as by the terms of the policy, its liability in respect of a passenger in the lorry, has been specifically excluded. In
this case, under the terms of the insurance policy Exhibit B-l, with reference to the carriage of persons by reason of or in pursuance of a contract of
employment, there is no exclusion of the liability of the insurance company as such. Therefore, the decisions relied on by learned counsel for the
insurance company would be inapplicable. Under those circumstances, the award of the Tribunal holding that the appellant would be liable to pay
compensation to respondents 1 to 3 in a sum of Rs. 30,000/- cannot be sustained. In other words, the entire liability for the payment of
compensation in a sum of Rs. 50,000/-should be borne only by the fourth respondent-insurance company. In that view, the Civil Miscellaneous
Appeal is allowed and the award passed by the Tribunal is modified as indicated above and respondents 1 to 3 will be entitled to recover the
compensation amount of Rs. 50,000/- from the appellant and respondents 4 and 5, but payable under the policy by the fourth respondent-
insurance company with the interest at 6% per annum from the date of the claim petition, as awarded by the Tribunal. There will be, however, no
order as to costs.
Appeal allowed.