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Thursday, September 5, 2019

Apex Court directs Insurer - 'pay & recover' in Gratuitous passenger claim 2019


In the erstwhile All India Motor Tariff – there were Sections 14 (a) & 14 (b) – providing coverage to Third parties travelling in a Goods carrying vehicle by charging 15% & 17.5% on the TP premium. However, the coverage excluded ‘Gratuitous’ passengers !

Gratuitous (adjective) would mean – 1) done without good reason; uncalled for. 2) given or done free of charge.synonyms:         free, gratis, complimentary, voluntary, volunteer, unpaid, unrewarded, unsalaried, free of charge, without charge, for nothing, at no cost, without payment.

Sec 147 of Motor Vehicles Act 1988 seeks to exclude gratuitous passengers but provides cover for owner of the goods or their authorised agents travelling in a goods carrier.  There have been judgements exonerating the Insurer when petition claiming compensation in respect of injury of death to a passenger travelling in a goods carrying vehicle unless the reason for their travel is established to be a person connected with the journey.  The present Motor Tariff provides charging premium and extending endorsement IMT 37 – legal liability to Non-Fare Paying Passengers other than Statutory Liability except the Fatal Accidents Act, 1855 (Commercial Vehicles only).  Under this, there is coverage for any employee who is not a workman and not being carried for hire or reward.  ~ and any other person not being carried for hire or reward provided the person is  :charterer or representative of the charterer of the truck or any other person directly connected with the journey in one form or other being carried in or upon entering or mounting or alighting from any vehicle described in the schedule. 

With this background the present judgement of Apex Court dated Aug 9, 2019 is of significance to the Insurers.  (Appeal 6231-6232/2019) were appeals against the judgment and order of High Court of Punjab & Haryana relating to claim of compensation in respect of injuries sustained by two gratuitous persons in a jeep (goods vehicle).  MACT had dismissed the claim petitions on the ground that the negligence of   the   driver   was   not   proved.     However,   the   High   Court,   after holding that the accident was as a result of composite negligence of 2 the driver of the jeep and the other offending vehicle, held that the owner   and   driver   of   the   jeep   would   be   liable   for   payment   of compensation and exonerated the insurer of the jeep, on the ground that the vehicle was insured as a goods vehicle and the claimants, who   had   sustained   injuries,   were   gratuitous   passengers   in   the goods   vehicle   (Jeep)   and  would  thus  not   be   covered  under  the insurance policy as they were not travelling as owner of the goods. The insurance of the jeep, as a goods vehicle, has been found to be valid. 
 
The petition before the High Court, was of one Anu Bhanvara, aged about fifteen years at the time of the accident, who, because of injuries sustained, had to have amputation   of   wrist   resulting   in   55%   disability.     The   Tribunal assessed   total   compensation   of   Rs.5,26,000/-  that included cost of artificial limb at 3.76 lakhs.  The   High   Court  enhanced   the   compensation   to Rs.6,41,750/- after awarding additional compensation for medical expenses, pain and suffering, income loss etc. in addition to what was assessed by the Tribunal. There was another petition too – filed by  Rohit Kumar, aged about 18  years at the time of accident, who, because of the injuries sustained in the   accident,   had   to   have   his   arm   amputated   below   the  elbow resulting   in   70%   disability.  Here, High Court enhanced the compensation to Rs.7,36,000/-

Challenging the said judgments of the High Court,  appealswere    filed   by   the   claimants   for   enhancement   of compensation and also to direct payment of compensation by the insurer.   The issues before the Court were :
1.    Whether the amount of compensation was adequate ? and
2.    Whether the payment should be made jointly by Owner & driver of vehicle or by Insurer who could have recourse to recover from the owner and driver ?

Having regard to the age of the two claimants and keeping in view that compensation has been awarded on all requisite heads by the High Court, Apex Court opined  that no interference is called with regard to the quantum of compensation awarded to the two claimants.   On the Q of fixing liability  - appellants contended that vehicle was insured and Insurer should be directed to pay and recover.   The counsel for appellants relied  on the following   decisions: ManuaraKhatoon   v. 5 Rajesh Kumar Singh (2017) 4 SCC 796, Puttappa v. Rama Naik (Civil Appeal No.4397 of 2016, disposed of on 2nd  April, 2018); Manager, National Insurance Co. Ltd. v. Saju P. Paul (2013) 2 SCC 41; New India Assurance Co. Ltd. v. Vimal Devi and more. 

              The Insurers contended that since the claimants were gratuitous passengers   in   a   goods   vehicle,   the   liability   for payment   of   compensation   for   death   or   body   injury   to   the passengers of such goods vehicle would not be covered,  hence the principle of pay and recover would not apply.   It was further  contended that the order of the High Court is perfectly justified in law and calls for no interference by this Court.  In support of her submission,   learned   counsel    relied   on     decisions: New India Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223; National Insurance  Co. Ltd. v. Baljit  Kaur (2004) 2 SCC  1; National Insurance Co. Ltd. v. Kaushalya Devi (2008) 8 SCC 246; 6 National Insurance Co. Ltd. v. Rattani (2009) 2 SCC 75; National Insurance Co. Ltd. v. Prema Devi (2008) 5 SCC 403; Bharat AXA General Insurance Co. Ltd. v. Adani MANU/TN/6503/2018;   Bajaj Allianz General Insurance Co. Ltd. v. Lal Singh (2015).

               The Court on hearing the Counsels and perusing records and the various decisions cited held that -  insurance of the vehicle, though as a goods vehicle, is not disputed by the parties.  The claimants in the    case  were   young   children   who    suffered   permanent disability.  Hon’ble Court decreed that  keeping in view the peculiar facts and circumstances of the case, we are of the considered view that the principle of “pay and recover” should be directed to be invoked in the present case.   Stating to, the appeals were    disposed   of   with   the direction that the respondent no.1 – insurance company shall be liable to pay the awarded compensation to the claimants in both the appeals.  It further recorded that Insurance   company   shall have the right to realize the said amount of compensation from the 7 respondents   no.   2   and   3   (driver   and   owner   of   the   vehicle)   in accordance with law.

Order by Hon’ble RF Nariman&Vineet Saran – 9.8.2019

With regards – S. Sampathkumar
5th Sept. 2019.

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