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Thursday, January 13, 2011

Apex Court on ‘liability arising out of USE OF A VEHICLE IN A PUBLIC PLACE”

Most of the insurance is ‘Motor Insurance’ – the bread and butter of most Insurer (should we say curd rice !].  This business was for long tariffed.  There are two types of policies -  Package policy (called Comprehensive) and Liability only Policy. 

The Liability policy covers the Third party liability for bodily injury  and/or death and property damage.  Whilst the other would cover loss or damage to the vehicle as well.

Tanker lorries are covered under Motor Policies and what is the exposure – is it the lorry (own damage), the cargo that is carried inside, or the death / injury to third parties that they may cause arising out of an accident ?
There is an enactment regulating the usage of Motor Vehicles – The Motor Vehicles Act 1988 (which replaced the earlier MV Act 1939).  Sec 147 of the Act spells out the Requirements of policies and limits of liability.   Presently, it spells out the persons to be covered – the amount being unlimited for death or bodily injury to persons and an amount of Rs.6000/- in respect of property damage.

The present Act clearly states that ‘the death of or bodily injury to any person or damage to any property of a third property shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place’………….

A very recent judgment (though a reiteration in some ways] on the interpretation of ‘use of vehicle – arising out of use of the vehicle in a public place’ has been given an extended meaning and a broader perspective, which from one angle is to affect the Insurers badly.  It is sad that such definition comes after a protracted legal battle traceable to an accident in Oct 1987.

The cause of action arose, in the early hours of October 29, 1987 - a petrol tanker bearing registration no.MXL7461, was proceeding on National Highway 4, coming  from the Pune side and going towards Bangalore. As it reached near village Kavathe, in the district of Satara, Maharashtra, a truck, bearing registration no.MEH4197, laden with onions, was coming from the opposite direction.  At the point where the two vehicles crossed each other, there was a pile of rubble on the left side of the road. As the two vehicles crossed each other,  the rear right side of the petrol tanker was hit by the rear left side of the truck. As a result of the impact, the petrol tanker was thrown off the road  and it came to rest on its left side/ cleaner's side on the kutcha ground, about  5 feet below the road.

As a result of the collision and the falling down of the petrol tanker on its side, petrol started leaking from the tanker. The tanker driver was unable to stop the leak even though he tried to tighten the lid. The  accident took place at around 3:15am. Shortly after the accident, another tanker, coming from the Bombay side passed by. In that tanker, apart from the driver, there was also an officer of the Indian Oil Company. Both of them assured the driver of the fallen down tanker that they would report the accident at the police station and asked him to wait near the place of the accident. Later on, yet another tanker from Sangli arrived at the spot and then the cleaner of the ill-fated tanker and the owner of the Sangli tanker together went to village Kavathe in search of a telephone to inform the  tanker owner about the accident.

After they came back from the village all of them, the driver and the cleaner of the tanker that had met with accident and the owner, the driver and the cleaner of the tanker coming from Sangli waited near the accident site. At daybreak, the local people started collecting  near the fallen down tanker and some of them brought cans and tried to  collect the petrol leaking out from the tanker. The driver of the tanker tried to stop them from collecting petrol or even going near the tanker, explaining to them that doing so would be risky and dangerous. No one, however, listened to him and he was even manhandled. In the melee, the petrol caught fire and there was a big explosion in which 46 persons lost their lives.

The impugned judgment was pronounced by Honble Aftab Alam J & RM Lodha  in the Supreme Court of India – Civil Appellate Jurisdiction in CA no. 3744 of 2005 where New India Assurance was the appellant.   This was an  appeal under Article 133 of the Constitution of India read with Order XV Rule 1 of the Supreme Court Rules,1966 on a certificate  granted by the Bombay High Court under Article 134A(b) of the  Constitution.

The Insurers sought  to assail  the judgment and order passed by the High Court in an appeal from a motor  accident claim case.   Since the accident occurred in 1987, the provisions of MV Act 1939 were relevant and not the present MV Act 1988.  The petitioners had sought immediate relief pleading under Sec 92 A
Now we sail back in the history a bit to know of an important amendment to MV Act 1939.  Sec 92A of MV Act is in the nature of a beneficial legislation enacted with a view to confer the benefit of expeditious payment of a limited amount by way of compensation to the victims of an accident arising out of the use of a motor vehicle on the basis of no fault liability.   This was introduced in the Act by Motor Vehicles (Amendment) Act, 1982 (Act 47 of 1982). The said Chapter bears the heading "Liability Without Fault In Certain Cases" and contains Ss.92A to 92E.

At the time of enactment, it was stated that considering the rapid development of road transport over the years and large increase in the number of motor vehicles on the road, the incidence of road accidents by motor vehicles has reached serious proportions. The victims of these accidents are generally pedestrians belonging to the less affluent sections of society. The provisions of the Act as to compensation in respect of accidents can be availed of only in cases of accidents which can be proved to have taken place as a result of a wronglful act or negligence on the part of the owners or drivers of the vehicles concerned. Having regard to the nature of circumstances in which road accidents take place, in a number of cases, it is difficult to secure adequate evidence to prove negligence. Further, in what are known as 'hit-and-run" accidents, by reason of the identity of the vehicle involved in the accident not being known, the persons affected cannot prefer any claims for compensation. It is, therefore, considered necessary to amend the Act suitably to secure strict enforcement of road safety measures and also to make, as a measure of social justice, suitable provisions first for compensation without proof of fault or negligence on the part of the owner or driver of the vehicle and, secondly, for compensation by way of solatium in cases in which the identity of the vehicle causing an accident is unknown............"

In this background came in Sec 92 A Liability to pay compensation in certain cases on the principle of no fault.  It reads that where the death of permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle, the owner of the vehicle shall be liable to pay compensation.  The amounts were Rs.15000/- in respect of death and Rs.7500/- in respect of permanent disability.  A petition under this Sec need not plead and establish that this was due to any wrongful act, neglect, or default of the owner of the vehicle or any other person.

The heirs and legal representatives of those people who died at the accident site filed claim petitions for compensation under section 110A of the Motor Vehicles Act, 1939 before the MACT, Satara, against the owner of the petrol tanker and its insurer.

In all the cases, claims were also made for payment of Rs.15,000/- as no fault compensation under section 92A of the Act. The owner of the tanker and the insurer contested the claim petitions filed by the applicants under section 92A of the Act and questioned the jurisdiction of the Claims Tribunal to entertain such petitions on the ground that the fire and the explosion causing the death of those who had assembled at the  accident site could not be said to be an accident arising out of the use of a motor vehicle. The Claims Tribunal upheld the objection raised by the insurer and the owner of the petrol tanker, and by a common order dated  December 2, 1989, dismissed all the claim petitions filed under section 92A of the Act on the ground that the fire and the explosion could not be said to be accident arising out of the use of the petrol tanker and hence, the provisions of section 92A of the Act were not attracted. The Claims Tribunal pointed out that there was a time gap of about 4 hours between the tanker meeting with the road accident and the fire and explosion of the tanker and there was absolutely no connection between the road accident and the fire accident that took place about 4 hours later. The Claims Tribunal also observed that the local people were trying to steal petrol from the petrol tanker and the fire and the explosion were the result of their attempt to steal the petrol leaking out from the tanker.  The fire and the explosion could not be said to be an accident arising out of the use of the tanker.

Against the order of the Claims Tribunal passed on December 2, 1989, appeals were filed before the High Court.  A learned single judge of the High Court allowed the appeal and by judgment dated February 5, 1990, reversed the order passed by the Claims Tribunal. Against the decision of the single judge, the owner of the petrol tanker and the insurance company filed a  Letters Patent Appeal which was dismissed by a division bench of the High Court by judgment dated August 16, 1990. The owner of the petrol tanker and the insurance company then took the matter to  Apex Court as Special Leave Petition  SLP no.14822 of 1990 challenging the judgment and order of the High Court passed on August 16, 1990. The SLP  was dismissed by judgment and order passed on July 17, 1991.

In that case 14822 of 1990, the Court  considered at length, the questions whether the fire and explosion of the petrol tanker in which Deepak Uttam More lost his life could be said to have resulted from an accident arising out of the use of a motor vehicle, namely the petrol tanker. The court answered the question in the affirmative, that is to say, in favor of the claimant and against the insurer.

That was the fate of claim under No Fault Liability, then came the main applications for compensation filed under section 110A of the Act. There were altogether 44 claim applications in which, case no.168 of 1988 was treated as the lead case. In the main claim cases too, the owner and the insurer of the tanker inter alia raised the same objections as taken earlier against the claim of no fault compensation.

The Claims Tribunal framed five issues in which  issue no.3, was as follows:
      " Whether sustaining of injuries was  arising out of use of
      the petrol tanker and was the result of negligence on the part of
      the petrol tanker driver?"

After nearly  a decade, the Claims Tribunal answered the issue in the negative and as a consequence dismissed all the claim cases by its judgment and order dated July 31, 1997.

The applicant of MACP no.168 of 1988, preferred an appeal before the High Court. Before the High Court it was contended on behalf of the claimants that the question whether the death of the victims resulted from an accident arising out of the use of the petrol tanker was concluded by the decision of this Court in Shivaji Dayanu Patil and any finding recorded by the Claims  Tribunal contrary to the decision of this Court was completely illegal and untenable. On the other hand, on behalf of the insurer and the owner of the  petrol tanker, it was argued that the decision of this Court in Shivaji Dayanu  Patil was rendered on a claim for no-fault compensation under section 92A  of the Act. It was, thus, a judgment against an interlocutory order, before any evidences were recorded in the proceeding and, therefore, the decision in Shivaji Dayanu Patil cannot be taken as binding and it was open to the  Claims Tribunal or the High Court to come to a different finding on the basis of the evidences adduced in course of the main proceeding.

The High Court did not accept the arguments advanced on behalf of the owner and the insurer of the petrol tanker, but agreed with the claimants that the decision of this Court in Shivaji Dayanu Patil was conclusive on the issue that the death of the  victim, caused by the fire and explosion of the petrol tanker, had resulted from an accident arising out of the use of the motor vehicle, namely, the petrol tanker and it was not open to the Claims Tribunal to take a contrary view. It, accordingly, allowed the appeal and by judgment and order dated March 24, 2005, set aside the judgment of the Claims Tribunal and allowed  the claim petition with costs.

Though this was totally against the Insurer, the High Court, on a prayer  made before it, granted certificate to appeal to  Supreme Court by order dated  April 28, 2005,  prescribing the  following terms:
      “ The issue involved that is for the purpose of this leave to go to the Supreme Court on, whether the order of the Supreme Court    under section 92A was for all purposes an interim order or it   concluded and decided the question as to whether the vehicle   i.e. the tanker was in use when exploded”
In the  Apex Court , it was argued that the decision earlier was rendered on Sec  92A and should not be binding on the present application which should be  determined on the evidences and facts of the case.    It was also sought to place that petrol tanker was not a motor vehicle  as defined in Section 2(18) of the Act at the time when the   explosion and fire took place because at that time the petrol  tanker was lying turtle and was not capable of movement on the  road.

Then when the tanker was lying immobile it  could not be said that the petrol tanker, even if it be assumed  that it was a motor vehicle, was in use as a motor vehicle at the  time of the explosion and fire.

Further, even if it is found that the petrol tanker was in  use as a motor vehicle at the time of the explosion and fire, there was no causal relationship between the collision which  took place between the petrol tanker and the truck at about 3 A.M. and the explosion and fire in the petrol tanker which took   place about four and half hours later and it cannot, therefore, be said that explosion and fire in the petrol tanker was an accident arising out of the use of a motor vehicle."

The  Apex Court having considered all these held and observed that : -   In   our view, in the facts and circumstances of the present case, this question must be answered in the affirmative. That the  learned       Judges of  the High Court have rightly concluded that the collision between the tanker and the other vehicle which had occurred earlier and the escape of petrol from the tanker which ultimately resulted in the explosion and fire were not unconnected but related events and merely because there was interval of about four to four and half hours between the said collision and the explosion and fire in the tanker, it cannot be necessarily inferred that there was no causal relation between explosion and fire. In the circumstances, it must be held that the explosion and fire resulting in the injuries which led to the death of Deepak Uttam More was due to an accident arising out of the use of the motor vehicle viz. the petrol tanker No. MKL 7461.

The Court held that High Court was  perfectly justified in observing that whether the vehicle was in use or not was a question before the  Suprement Court and even after evidence that aspect has not changed.  The Supreme Court on 7th Jan 2011 concluded that  it must be held that in the facts and circumstances of the present case, the decision rendered in Shivaji Dayanu Patil was completely binding on the Claims Tribunal and it was not open to the Claims Tribunal to come to any finding inconsistent with the aforesaid decision of this Court. The issue framed by the High Court is answered accordingly. There is no merit in the appeal and it is, accordingly, dismissed with costs.

Thus the vehicle owner and the Insurer are held liable for the death / bodily injury to persons arising out of explosion after hours of the accident.As stated on earlier occasions also, each judgment in its wake brings in new knowledge and we have to learn with changing times.

Regards – S. Sampathkumar


  1. Sir, Shocking for Insurers - thanks for the details provided - Ragavan

  2. Looks a wide and far fetched interpretation - Shaw

  3. sir,
    On going through the same, a query comes to my mind, what if the accident to a tanker of hazardous chemical doesnot result into a leak but the tanker gets stranded on the road and the villagers in vicinity try to steal the same thinking that the same is petrol. The same results into a fire due to very nature of chemical and third parties get injured.
    Whether the judgement still holds true.
    To my opinion the apex court while giving the judgement derived a connect between the incident and resultant leak which consequently resulted into accident. In the above referred case there is no leakage but its a malicious act.

    Request your comments.


    L N Shanbhag

  4. Dear Shanbag

    More than looking at this from the perspective of whether there was a leakage or otherwise, this is a wider interpretation on ‘arising out of use of motor vehicle in a public place’. The impugned judgment is on Civil Appeal 3744 of 2005 made by New India Vs Yadu Sambhaji More & Ors. In this the Court concluded that the decision rendered in Shivaji Dayanu Patil was completely binding on the Claims Tribunal. That case 14822 of 1990 decided by Supreme Court was on ‘No fault liability’ petition arising out of the same accident and was decided in July 1991.

    There was an argument that when the explosion and fire took place, the tanker was not being used as a motor vehicle as it was immobile, which was not accepted by the Court. The learned Chief Justice observed: "In my opinion, the relevant use of the vehicle cannot be confined to the periods it is in motion, or its parts moving in some operation. It may be in use though stationary."

    The other Q was whether the explosion and fire which caused injuries to the deceased son of the respondent can be said to have taken place due to an accident arising out of the use of a motor vehicle. It was argued that persons were pilfering oil and that explosion was not on account of use of petrol tanker. Here the Court observed that arising out of must be taken to require a less proximate relationship of the injury to the relevant use of the vehicle than is required to satisfy the words caused by'. It stated that the words 'injury by or arising out of the use of the vehicle' postulate a causal relationship between the use of the vehicle and the injury. To the direct question of was the accident involving explosion and fire in the petrol tanker connected with the use of tanker as a motor vehicle? - the Court categorically stated that , in the facts and circumstances of the present case, this question must be answered in the affirmative.

    The rest can be logically reasoned out. Thanks - Sampathkumar.

  5. Regarding the last part of the article, not many explosions occur due to the fire igniting the petrol tanker. Most of them happen because of engine issues that occur after the accident.

  6. Dear Sampath,

    I am pretty sure that similar judgment has been pronounced by Gujarat High court way back in 1990s. You can correlate accident involving Parked Vehicles.(Parked vehicles are deemed to be is use). This judgment is not path breaking.

    Where is the negligence? The mere act of the vehicle parked(?)with easy access to Public has to be construed as an Act of Negligent Driving u/s 179 of MV Act.

    Now the important question is how to prevent accidents in such circumstances?Automobile companies, Insurers and others interested in Public should sit together and think and find out a solution.

    My suggestion is There should be a responsible Committee attached to District Collector who should take some action. The expenses should be sponsored by Insurers and IRDA.

    Thanks for an opportunity to participate.

    With regards

    M V Vijayan

  7. The entire thing revolves about usage of vehicle in a public place. But what has cargo i.e., petrol which was carried to do here. The explosion was that of petrol and other than being carried in the vehicle there is no causal connection. How an Insurer of vehicle gets saddled with this liability is beyond comprehension - Kumar

  8. Dear Mr sampath,
    A lorry was parked on a highway side and another one (without insurance in force)hit from behind resulting some deaths of passengers in the lorry in motion. The Scottish Andhra police for obvious reasons charge sheeted both the vehicles and the liability fell on the parked vehicle on the insurer.

    Any defense available for the insurer? vaidya from tirupati

  9. Sir, As could be seen above, the Apex Court has provided the widest interpretation of the vehicle in a public place, though the accident was not proximate by time or factor. In the circumstances, there appears little defence for the poor Insurer

  10. thanks Mr Srinivas. This was the reply even my counsel gave. I wanted to elicit more from you hence disturbed you. Thanks for your prompt reply-regards vaidya

  11. Tashi Norbu Basi, Sikkim

    I am unable to follow the logic of the Supreme Court. The facts as I understood from above: 1. Tanker has an accident and topples over, 2. no one is hurt or dies due to the accident, 3. all efforts are made to inform police, 4. then some villages come and start stealing petrol from tanker, 5. the persons responsible for the tanker try to stop the villages but despite their best efforts are unable to, 6. the tanker catches fire and villagers die, 7. the tanker is held responsible for the deaths and owner made to pay compensation.
    How is this possible?
    Let's view a similar scenario. I'm driving a bus and a person gets in. As the bus moves this person starts robbing the passengers. I somehow am able to throw him out of the bus and this person dies.
    The logic of the above case would mean that I will be liable to pay compensation to this robber. Wow!
    How can Supreme Court grant compensation for death of perpetrator which occurs while, and because, he was committing a crime???