"Utmost Good Faith- Every declaration while obtaining insurance policy to be accurate"

Utmost Good Faith is one of the basic principle of Insurance which denotes that the parties are acting in good faith and it is understood that no material fact/information has been concealed. The contract of insurance is a contingency contract triggered if any of the event covered under the ambit of contract is triggered.

The reason for the importance of this principle comes into picture wherein there is a claim and the facts are cross verified by the Insurer. The insurer is supposed to know every relevant fact while under writing a risk so that the adequate calculation for the premium is being made or the most important aspect that any declaration may became a factor to decline a risk.

We need to know that the insurance coverage is under -written with a set of guidelines. There are formulas and calculations for covering every kind of risk based on the actuarial interpretation. The non declaration of any relevant material fact will keep the insurer in dark and the insurer will not be able to assess the risk.

I would try to explain the same by quoting some examples herein;

Example A:

A 45 years old person while filling the Proposal form for a health policy conceals his Hypertension disease and at the time of claim the insurance company repudiated the claim for the reason that the proper declaration has not been made and secondly there could be a direct co relation with the claim made and disease pre existing. In case the proper declaration has been made the insurance company has no reason to repudiate but the premium may go a little higher. The premium even if is litter higher make the insurance policy useful at the time of emergency.


Example B:

The Motor Insurance policy has a column of previous claim and "No Claim Bonus" . If a person has a claim in his previous year of policy and still the fact is concealed in obtaining the renewal. In case of claim, the insurance may repudiate the claim on this ground alone that a false declaration is being made while obtaining the insurance coverage. So, it always advised to honestly and attentively fill the proposal form at the time of obtaining the insurance policy.

Don't Dismiss those Disabled while in Service

An Article from Times of India

CHENNAI: Coming to the rescue of workers, especially those in state transport corporations dismissed from service for disabilities acquired during employment, the Madras high court has asked various transport corporation managements to form in-house cells to allocate alternative employments to such staff.

Justice K Chandru, while hearing a writ petition from driver P Varadharajan at the Madurai bench of the high court, regretted that though more than 500 judgments had been delivered by the high court and the Supreme Court covering all aspects of the issue, the management continued to dismiss employees, thereby forcing them to rush to courts.

After he threatened to haul up the entire top brass of various transport corporations for contempt of court, they informed the court that a five-member special cell had been constituted to receive and process grievances of employees who seek alternative employment based on medical report. The officials in the cell are: General Manager (Technical & Administration), Senior Deputy Manager,Corporation Medical Officer, Deputy Manager (Legal) and Assistant Manager (HR). The managing director of the respective transport corporations will take immediate action on the reports sent by the committee.

The order will spare the huge costs and a round of litigation for dismissed employees, who will now have to take up the matter with the in-house cell.

The case was filed by P Varadharajan, who was working as driver with the State Express Transport Corporation since 1992, till his dismissal from service in 2000 as he had acquired vision defects during employment. After the medical board gave an opinion that he suffered from colour blindness and hence not fit to be a driver, he was discharged from service in September 2000. He preferred the writ petition since there was no response to his repeated requests for alternative employment.

Justice Chandru, pointing out that the high court has passed more than 500 orders and the Supreme Court has delivered 10 such judgments, said: "The transport corporation need not drive parties to this court to have their cases considered as if the law is unclear. The corporation must realise its social responsibilities as well as the welfare of the workers in dealing with such cases. The corporation should immediately constitute a special cell relating to disabled workmen, comprising higher level officers to consider such grievances on day-to-day basis rather than making the workers to come to this court on each occasion and spend years together for getting relief, which is guaranteed to them under the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. This will avoid unnecessary hardship besides saving money for the workmen on costly litigation."

After the transport corporations informed the court that the five-member special cell had been created as per court orders, Justice Chandru directed the officials to give wide publicity to the facility so that the workmen could utilise it.

"In the fitness of things, the corporation must be directed to publish the formation of the cell. Apart from being exhibited in notice boards they must publish it in leading Tamil newspapers, so that the workmen will be aware of their rights and can approach the in-house committee for the redressal of their grievances."

The publication shall be made in four Tamil dailies -- Dinamani, Dinakaran, Dinamalar and Daily Thanthi -- on or before December 15, the judge said.

Employee Not a Third Party

CASE NO.:

Appeal (civil) 5825 of 2006

PETITIONER:

THE ORIENTAL INSURANCE COMPANY LIMITED

RESPONDENT:

MEENA VARIYAL & ORS

DATE OF JUDGMENT: 02/04/2007

BENCH:

C.K. THAKKER & P.K. BALASUBRAMANYAN

JUDGMENT:

J U D G M E N T

P.K. BALASUBRAMANYAN, J.

1. One Suresh Chandra Variyal was employed as a Regional Manager in M/s Apace Savings and Mutual Benefits (India) Ltd., the owner of a motor vehicle, respondent No.3 herein. Variyal was provided with a car by the employer. The vehicle was insured with the appellant company in terms of the Motor Vehicles Act, 1988. There was no special contract. On 14.6.1999, the vehicle met with an accident. Suresh Chandra Variyal, died. The widow and daughter of Suresh Chandra Variyal, filed a claim petition under Section 166 of the Motor Vehicles Act, 1988, before the Motor Accidents Claims Tribunal, Nainital. Therein, they claimed compensation to the tune of Rs.15 lakhs. According to the claim, the deceased was driving along with his 'companion' Mahmood Hasan after completing his work for the employer. At about 11.30 pm the car collided with a tree due to the rash and negligent driving of the driver. The car was being driven by Mahmood Hasan at the time of the accident. The deceased was an occupant of the car. The car was being used for the business and for the benefit of the employer of the deceased at the time of the accident. The deceased was earning Rs. 9,000/- per month. He had a bright career ahead. Mahmood Hasan had lodged a first information report the same day (reiterated in the counter affidavit filed in this Court) giving wrong facts to escape from any prosecution. It was not specified in the application as to what was the wrong fact or what were the wrong facts mentioned in the complaint filed by Mahmood Hasan. The claimants as dependants were entitled to compensation as claimed.

2. The claim was filed against the employer, the owner of the motor vehicle and against the insurance company. Mahmood Hasan, who was allegedly driving the car and that too negligently, at the time of the accident, was not impleaded. No reason was given in the claim for his not being impleaded. The owner of the car, the company that employed the deceased, did not appear and did not file any written statement. The insurance company filed a written statement. It pleaded that the driver and the owner of the vehicle have colluded and the alleged driver of the car had not been impleaded. As a matter of fact, the deceased himself was driving the vehicle. Hence he was not entitled to claim any compensation since the accident occurred on account of his own negligence. The insurance company had no liability. The compensation claimed was exorbitant and the claim was liable to be dismissed.

3. In support of the claim, the wife of Variyal was examined as P.W.1 and another person, who was allegedly travelling in the car when it met with the accident, was examined as P.W. 2. P.W. 1 asserted that the vehicle was being driven at the time of the accident by Mahmood Hasan and her husband was travelling in the car. This was sought to be supported by P.W. 2 who claimed that he was also travelling in the same car at the time of the accident. He gave evidence that Variyal was employed as a Regional Manager with the owner of the car, M/s Apace Savings and Mutual Benefits (India) Ltd. P.W. 2 also gave evidence that sometimes Variyal himself used to drive the vehicle but Mahmood Hasan usually drove the car. Mahmood Hasan had lodged a First Information Report at 4.40 p.m. on the day of the accident. Therein, Mahmood Hasan had stated that Variyal was driving the car at the time of the accident.

4. No independent evidence was adduced to show what exactly was the salary that was being earned by Variyal from his employer. The employer was a limited liability company and in the normal course, should have been maintaining the relevant records showing the salary paid to a Regional Manager like Variyal. No attempt was made to get them produced. The widow contented herself by asserting in her oral evidence that Variyal was earning a salary of Rs. 9,000/- per month. The Motor Accident Claims Tribunal held that the evidence disclosed that Variyal was driving the vehicle since what was more acceptable was the first version regarding the accident and not the oral assertions of P.Ws. 1 and 2 in support of the claim. It also held that Variyal was not holding a valid driving licence when he drove the car. Purporting to accept the interested, unsupported version of P.W. 1 that the income of her husband was Rs. 9,000/- per month, the Tribunal calculated the dependency at Rs. 6,000/- per month and applying the multiplier of 10, arrived at the compensation payable as Rs. 7,20,000/-. The Tribunal held that the claimants were entitled to receive the amount from the owner of the vehicle, the employer, but the insurance company was not liable, since the vehicle was being driven by the deceased himself who was an employee of the owner of the car and the policy of insurance did not cover such an employee. Thus, the claim was ordered directing the owner of the car to pay the claimant a sum of Rs. 7,20,000/- with interest thereon.

5. The claimants filed an appeal before the High Court. The insurance company, which had been exonerated by the Tribunal, alone resisted the appeal. The owner of the vehicle kept away. The claimants, the appellants before the High Court, contended that the Tribunal was in error in finding that the insurance company was not liable and in not granting them a decree against the insurance company. The insurance company pointed out that the deceased was not a third party covered by the insurance policy, was an employee of the owner of the vehicle and was not covered by the policy. Even otherwise, he was driving the car himself as found by the Tribunal and since the accident was caused by his own negligence, the insurance company was not liable.

6. The only argument attempted on behalf of the claimants, the appellants in the High Court, was that in the light of the decision of this Court in National Insurance Co. Ltd. Vs. Swaran Singh & Ors. [(2004) 3 S.C.C. 297], the insurance company was liable to pay the amount awarded even if there was breach of a policy condition and if there was a dispute between the insured and the insurer, it had to be fought elsewhere and they cannot be denied the benefit of the insurance. The insurance company pointed out that the ratio in Swaran Singh (supra) had no application to the case and in the face of the finding that the deceased was himself driving the vehicle belonging to his employer, the insurance company had no liability. There was no special contract and since it was only a policy in terms of the Motor Vehicles Act, the insurance company cannot be asked to pay the amount awarded which was even otherwise not supported by any admissible or acceptable evidence. The High Court, stating that they had in so many cases held, in view of the ratio in Swaran Singh (supra), that it is not open to the insurance company to avoid liability under the Act, simply directed the insurance company to pay the amount as ordered by the Tribunal, leaving it to the insurance company to take recourse to recover the amount from the insured in accordance with the directions of this Court in Swaran Singh (supra).

7. We must say that one would have expected the High Court to apply its mind to the question arising, in a better manner and to specifically answer the question that arose for decision in the case. For instance, we may observe that it has not reversed the finding of the Tribunal that the deceased was himself driving the vehicle. Then, what was the position? The position was that a Regional Manager of the Company, which was owner of the vehicle, was himself driving the vehicle of the Company and during the course of it, he died in an accident, whether the accident occurred due to his negligence or otherwise. It appears to us that mere going by some decision or other, without appreciating the facts in a given case, in the light of the law, if any, declared by this court, does not lead a court or Tribunal to a correct conclusion in the normal course.

8. On behalf of the insurance company, the appellant, it is contended that the policy was only one in terms of the Motor Vehicles Act, 1988 and the policy did not cover the employee of the owner, the insured, who was driving the vehicle while attending to the business of the employer company. The deceased was not "a third party" in terms of the policy or in terms of the Act. The Act did not provide for statutory coverage of such a person. This would be the position even if the deceased was only travelling in the car in his capacity as a Regional Manager of the owner Company and the vehicle was being driven by Mahmood Hasan as claimed. Since the High Court has not interfered with the finding of the Tribunal that the deceased was himself driving the car at the time of the accident and that he did not have a valid licence to drive a vehicle, there was absolutely no question of the insurance company being made liable under any principle of law. It was also submitted that without impleading Mahmood Hasan who was allegedly driving the car, the claim ought not to have been entertained, especially since there was controversy as to whether the car was being driven by Mahmood Hasan or by the deceased as sought to be projected by the claimants. The claimants were obliged to prove the negligence of the driver and the principles of general law in that regard, have not been jettisoned by the Motor Vehicles Act. On the other hand, the law expounded by this Court earlier had been accepted by the Legislature by enacting Section 163A of the Act. Thus, this was a case where High Court grossly erred in directing the insurance company to pay the compensation decreed by the Tribunal, which in itself was a figure unsupported by any legal evidence and in purporting to apply the ratio of Swaran Singh (supra) to compel the insurance company to pay the amount awarded and then to have recourse to the insured. The learned counsel for the claimant - respondent on the other hand submitted that the vehicle, at the relevant time, was being driven by Mahmood Hasan and the Tribunal was wrong in entering a finding that the deceased himself was driving the vehicle in the light of the evidence of P.Ws. 1 and 2. The burden was on the insurance company, on the scheme of the Act, to show that it had no liability and in that context to show that the deceased himself was driving the vehicle and not Mahmood Hasan. Learned counsel further submitted that this Court in Swaran Singh (supra) has laid down the law and that principle applies in all cases involving an insurance company and a policy issued by the Company in terms of the Act and whenever there is an award against the insured, the insurer is obliged to satisfy the award and have recourse to the insured even if the insurance company was really not liable under the policy. He therefore submitted that the High Court was justified in directing the insurance company to pay the compensation. He urged that Chapter XI of the Act contained beneficent provisions to protect the victims and the relevant sections should not be construed restrictively.

9. Before we proceed to consider the main aspect arising for decision in this Appeal, we would like to make certain general observations. It may be true that the Motor Vehicles Act, insofar as it relates to claims for compensation arising out of accidents, is a beneficent piece of legislation. It may also be true that subject to the rules made in that behalf, the Tribunal may follow a summary procedure in dealing with a claim. That does not mean that a Tribunal approached with a claim for compensation under the Act should ignore all basic principles of law in determining the claim for compensation. Ordinarily, a contract of insurance is a contract of indemnity. When a car belonging to an owner is insured with the insurance company and it is being driven by a driver employed by the insured, when it meets with an accident, the primary liability under law for payment of compensation is that of the driver. Once the driver is liable, the owner of the vehicle becomes vicariously liable for payment of compensation. It is this vicarious liability of the owner that is indemnified by the insurance company. A third party for whose benefit the insurance is taken, is therefore entitled to show, when he moves under Section 166 of the Motor Vehicles Act, that the driver was negligent in driving the vehicle resulting in the accident; that the owner was vicariously liable and that the insurance company was bound to indemnify the owner and consequently, satisfy the award made. Therefore, under general principles, one would expect the driver to be impleaded before an adjudication is claimed under Section 166 of the Act as to whether a claimant before the Tribunal is entitled to compensation for an accident that has occurred due to alleged negligence of the driver. Why should not a Tribunal insist on the driver of the vehicle being impleaded when a claim is being filed? As we have noticed, the relevant provisions of the Act are not intended to jettison all principles of law relating to a claim for compensation which is still based on a tortious liability. The Tribunal ought to have, in the case on hand, directed the claimant to implead Mahmood Hasan who was allegedly driving the vehicle at the time of the accident. Here, there was also controversy whether it was Mahmood Hasan who was driving the vehicle or it was the deceased himself. Surely, such a question could have been decided only in the presence of Mahmood Hasan who would have been principally liable for any compensation that might be decreed in case he was driving the vehicle. Secondly, the deceased was employed in a limited company. It was necessary for the claimants to establish what was the monthly income and what was the dependency on the basis of which the compensation could be adjudged as payable. Should not any Tribunal trained in law ask the claimants to produce evidence in support of the monthly salary or income earned by the deceased from his employer Company? Is there anything in the Motor Vehicles Act which stands in the way of the Tribunal asking for the best evidence, acceptable evidence? We think not. Here again, the position that the Motor Vehicles Act vis-`-vis claim for compensation arising out of an accident is a beneficent piece of legislation, cannot lead a Tribunal trained in law to forget all basic principles of establishing liability and establishing the quantum of compensation payable. The Tribunal, in this case, has chosen to merely go by the oral evidence of the widow when without any difficulty the claimants could have got the employer company to produce the relevant documents to show the income that was being derived by the deceased from his employment. Of course, in this case, the above two aspects become relevant only if we find the insurance company liable. If we find that only the owner of the vehicle, the employer of the deceased was liable, there will be no occasion to further consider these aspects since the owner has acquiesced in the award passed by the Tribunal against it.

10. 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, the 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 authorised insurer; or which insures 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. With effect from 14.11.1994, injury to the owner of goods or his authorised representative carried in the vehicle was also added. The policy had to cover death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place. Then, as per the proviso, the policy shall not be required to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment, other than a liability arising under the Workmen's Compensation Act, 1923 in respect of the death of, or bodily injury to, an employee engaged in driving the vehicle, or who is a conductor, if it is a public service vehicle or an employee being carried in a goods vehicle or to cover any contractual liability. Sub-section (2) only sets down the limits of the policy. As we understand Section 147 (1) of the Act, an insurance policy thereunder need not cover the liability in respect of death or injury arising out of and in the course of the employment of an employee of the person insured by the policy, unless it be a liability arising under the Workmen's Compensation Act, 1923 in respect of a driver, also the conductor, in the case of a public service vehicle, and the one carried in the vehicle as owner of the goods or his representative, if it is a goods vehicle. It is provided that the policy also shall not be required to cover any contractual liability. Uninfluenced by authorities, we find no difficulty in understanding this provision as one providing that the policy must insure an owner against any liability to a third party caused by or arising out of the use of the vehicle in a public place, and against death or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place. The proviso clarifies that the policy shall not be required to cover an employee of the insured in respect of bodily injury or death arising out of and in the course of his employment. Then, an exception is provided to the last forgoing to the effect that the policy must cover a liability arising under the Workmen's Compensation Act, 1923 in respect of the death or bodily injury to an employee who is engaged in driving the vehicle or who serves as a conductor in a public service vehicle or an employee who travels in the vehicle of the employer carrying goods if it is a goods carriage. Section 149(1), which casts an obligation on an insurer to satisfy an award, also speaks only of award in respect of such liability as is required to be covered by a policy under clause (h) of sub-section (1) of Section 147, (being a liability covered by the terms of the policy). This provision cannot therefore be used to enlarge the liability if it does not exist in terms of Section 147 of the Act.

11. The object of the insistence on insurance under Chapter XI of the Act thus seems to be to compulsorily cover the liability relating to their person or properties of third parties and in respect of employees of the insured employer, the liability that may arise under the Workmen's Compensation Act, 1923 in respect of the driver, the conductor and the one carried in a goods vehicle carrying goods. On this plain understanding of Section 147, we find it difficulty to hold that the insurance company, in the case on hand, was liable to indemnify the owner, the employer Company, the insured, in respect of the death of one of its employees, who according to the claim, was not the driver. Be it noted that the liability is not one arising under the Workmen's Compensation Act, 1923 and it is doubtful, on the case put forward by the claimant, whether the deceased could be understood as a workman coming within the Workmen's Compensation Act, 1923. Therefore, on a plain reading of Section 147 of the Act, it appears to be clear that the insurance company is not liable to indemnify the insured in the case on hand.

12. The argument that the proviso does not keep out employees from coverage though the claims under the Workmen's Compensation Act are specified, cannot be accepted on the plain language of the proviso. The proviso enacts an exemption and carves out an exception to that exemption. The suggested interpretation would result in ignoring the effect of the language employed by the proviso, exempting the owner from covering his employees under insurance except in cases where the liability in respect of them is, one arising under the Workmen's Compensation Act. Obviously, as determined by that Tribunal.

13. We shall now examine the decision in Swaran Singh (supra) on which practically the whole of the arguments on behalf of the claimants was rested. On examining the facts, it is found that, that was a case which related to a claim by a third party. In claims by a third party, there cannot be much doubt that once the liability of the owner is found, the insurance company is liable to indemnify the owner, subject of course, to any defence that may be available to it under Section 149(2) of the Act. In a case where the liability is satisfied by the insurance company in the first instance, it may have recourse to the owner in respect of a claim available in that behalf. Swaran Singh (supra) was a case where the insurance company raised a defence that the owner had permitted the vehicle to be driven by a driver who really had no licence and the driving licence produced by him was a fake one. Their Lordships discussed the position and held ultimately that a defence under Section 149(2)(a)(ii) of the Act was available to an insurer when a claim is filed either under Section 163A or under Section 166 of the Act. The breach of a policy condition has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence of or production of fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third party. The insurance company to avoid liability, must not only establish the available defence raised in the concerned proceeding but must also establish breach on the part of the owner of the vehicle for which the burden of proof would rest with the insurance company. Whether such a burden had been discharged, would depend upon the facts and circumstances of each case. Even when the insurer, is able to prove breach on the part of the insured concerning a policy condition, the insurer would not be allowed to avoid its liability towards the insured unless the said breach of condition is so fundamental as to be found to have contributed to the cause of the accident. The question whether the owner has taken reasonable care to find out whether the driving licence produced by the driver was fake or not, will have to be determined in each case. If the vehicle at the time of the accident was driven by a person having a learner's licence, the insurance company would be liable to satisfy the award. The amount that may be awarded to the insurance company against the insurer in an appropriate case could be recovered even by way of the enforcement of the very award. The insurance company had to satisfy the claim of the insured in cases where a defence under Section 149(2) has been established by the Company in terms of a fake licence or the learner's licence. Their Lordships distinguished Malla Prakasarao Vs. Malla Janaki & Ors. [(2004) 3 S.C.C. 343] wherein it was held that the insurance company had no liability to pay any compensation where an accident resulted by a vehicle being driven by a driver without a driving licence. In other words, a distinction between a case of no licence and a case of licence which turned out to be fake or deficient was drawn and the liability was held to stand on different footings.

14. It is difficult to apply the ratio of this decision to a case not involving a third party. The whole protection provided by Chapter XI of the Act is against third party risk. Therefore, in a case where a person is not a third party within the meaning of the Act, the insurance company cannot be made automatically liable merely by resorting to the Swaran Singh (supra) ratio. This appears to be the position. This position was expounded recently by this Court in National Insurance Co. Ltd. Vs. Laxmi Narain Dhut [2007 (4) SCALE 36]. This Court after referring to Swaran Singh (supra) and discussing the law summed up the position thus:

"In view of the above analysis the following situations emerge:

1. The decision in Swaran Singh's case

(supra) has no application to cases

other than third party risks.

2. Where originally the licence was a

fake one, renewal cannot cure the

inherent fatality.

3. In case of third party risks the

insurer has to indemnify the

amount and if so advised, to recover

the same from the insured.

4. The concept of purposive

interpretation has no application to

cases relatable to Section 149 of the

Act.

The High Courts/Commissions shall now

consider the mater afresh in the light of the position in law as delineated above."

We are in respectful agreement with the above view.

15. In New India Assurance Co. Ltd. Vs. Asha Rani and others [(2003) 2 S.C.C 223) this Court had occasion to consider the scope of the expression "any person" occurring in Section 147 of the Act. This Court held:

"that the meaning of the words "any person"

must also be attributed having regard to the context in which they have been used i.e. " a third party". Keeping in view the provisions of the 1988 Act we are of the opinion that as the provisions thereof did not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be

liable therefor."

In other words, this Court clearly held that the apparently wide words "any person" are qualified by the setting in which they occur and that "any person" is to be understood as a third party.

16. In United India Insurance Co. Ltd., Shimla Vs. Tilak Singh & Ors. [(2006) 4 S.C.C. 404 ], this Court made a survey of the prior decisions and discountenanced an attempt to confine the ratio of Asha Rani (supra). This Court stated that although the observations in Asha Rani were in connection with carrying passengers in a goods vehicle, the same would apply with equal force also to gratuitous passengers in any other vehicle. This Court also noticed that the decision to the contrary in New India Assurance Co. Vs. Satpal Singh [(2000) 1 S.C.C. 237] was specifically overruled in Asha Rani's case (supra). In other words, it was re- emphasised that a policy in terms of Section 147 of the Act is not intended to cover persons other than third parties.

17. The Court of Appeal in Cooper vs. Motor Insurers' Bureau (1985 (1) Queen's Bench Division 575) considered the interpretation of Section 143 and 145 of the Road Traffic Act, 1972 corresponding to Section 146 and Section 147 of the Act. The Court of Appeal held:

"that Section 143(1) of the Act of the 1972

imposed an obligation on the owner to insure against the risk of injury or death to third parties resulting from the use by him or any other person of his vehicle on the road; that "third party risks" in section 143(1) did not include risks to the driver of the vehicle at the relevant time so that "any person" in section 145(3)(a) was therefore restricted to persons other than the driver of the vehicle and its owner; and that, accordingly, since the liability of the owner to the plaintiff was not one that was required to be covered by a policy of

insurance by the Act of 1972, the Motor

Insurers' Bureau were not liable under the

terms of the agreement to compensate the

plaintiff in the sum of the unsatisfied

judgment."

18. In Halsbury's Laws of England, Fourth Edition, in paragraph 761, the position as regards 'employees' is stated as follows:

"A policy is not required to cover liability in respect of the death of or bodily injury

sustained by a person in the employment of a person insured by the policy where the death or injury arises out of and in the course of that employment. This exclusion is framed in the language of the Workmen's Compensation Acts

and is presumably intended to reflect the well- established distinction in the insurance world between public liability risks and employers' liability risks. The distinctions which are involved are very finely drawn."

19. In New India Assurance Co. Ltd. Vs. Rula & Ors. [(2000) 3 S.C.C. 195], this Court postulated that the contract of insurance in respect of motor vehicles has to be construed in the light of Sections 146(1),147(5) and 149(1) of the Motor Vehicles Act, 1988. The manifest object of Section 146(1), which contains a prohibition on the use of motor vehicles without an insurance policy having been taken in accordance with Chapter XI of the Act is to ensure that the third party, who suffers injuries due to the use of the motor vehicle, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who had caused the injuries. Thus, any contract of insurance under Chapter XI of the Motor Vehicles Act, 1988 contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. That this was the object was reiterated in New India Assurance Co. Shimla Vs. Kamla & Ors. [(2001) 4 S.C.C. 342], wherein it was stated that the raison d'etre for the legislature making it prohibitory for motor vehicles being used in public places without covering third-party risks by a policy of insurance is to protect the members of the community who become sufferers on account of accidents arising from the use of motor vehicles. The object of Chapter XI has thus always been recognised as one intended to protect third parties as understood in the context of the Act unless of course there is a special contract in respect of protection to others.

20. We are thus satisfied that based on the ratio in Swaran Singh (supra), the insurance company cannot be made liable in the case on hand to pay the compensation first and to recover it from the insured, the owner of the vehicle. The deceased being an employee not covered by the Workmen's Compensation Act, of the insured, the owner of the vehicle, has not to be covered compulsorily under the Act and only by entering into of a special contract by the insured with the insurer could such a person be brought under coverage. There is no case that there is any special contract in that behalf in this case.

21. It was argued by learned counsel for the appellant that since on the finding that the deceased was himself driving the vehicle at the time of the accident, the accident arose due to the negligence of the deceased himself and hence the insurer is not liable for the compensation. Even if the case of the claimant that the car was driven by Mahmood Hasan was true, then also, the claimant had to establish the negligence of the driver before the insured could be asked to indemnify the insured. The decision in Minu B. Mehta & Anr. Vs. Balkrishna Ramchandra Nayan & Anr. [(1977) 2 S.C.R. 886], of a three Judge Bench of this Court was relied on in support.

22. In that decision, this Court considered the question whether in a claim for compensation under the Motor Vehicles Act, 1939, proof of negligence was essential to support a claim for compensation. On the facts in that case, their Lordships found that the appeal was liable to be dismissed subject to certain directions issued therein. But their Lordships, in the light of the fact that the High Court had discussed the law on the question and it was of some importance, felt that it was necessary to state the position in law. Noticing that the liability of the owner of the car to compensate the victim in a car accident due to negligent driving of his servant is based on the law of tort, the court discussed the scheme of the Act of 1939 and the law on the question. Regarding the view of the High Court that it was not necessary to prove negligence, the court held:

"The reasoning of the two learned judges is

unacceptable as it is opposed to basic

principles of the owner's liability for negligence of his servant and is based on a complete

misreading of the provisions of Chapter VIII of the Act. The High Court's zeal for what it

considered to be protection of public good has misled it into adopting a course which is

nothing short of legislation."

Their Lordships also noticed that proof of negligence remained the lynch pin to recover compensation. Their Lordships concluded by saying,

"We conclude by stating that the view of the learned Judges of the High Court has no

support in law and hold that proof of

negligence is necessary before the owner or the insurance company could be held to be liable for the payment of compensation in a motor

accident claim case."

23. Learned counsel for the respondent contended that there was no obligation on the claimant to prove negligence on the part of the driver. Learned counsel relied on Gujarat State Road Transport Corporation, Ahmedabad vs. Ramanbhai Prabhatbhai and another (1987 (3) SCC 234) in support. In that decision, this Court clarified that the observations in Minu B. Mehta's case (supra) are in the nature of obiter dicta. But, this Court only proceeded to notice that departures had been made from the law of strict liability and the Fatal Accidents Act by introduction of Chapter VIIA of the 1939 Act and the introduction of Section 92A providing for compensation and the expansion of the provision as to who could make a claim, noticing that the application under Section 110A of the Act had to be made on behalf of or for the benefit of all the legal representatives of the deceased. This Court has not stated that on a claim based on negligence there is no obligation to establish negligence. This Court was dealing with no-fault liability and the departure made from the Fatal Accidents Act and the theory of strict liability in the scheme of the Act of 1939 as amended. This Court did not have the occasion to construe a provision like Section 163A of the Act of 1988 providing for compensation without proof of negligence in contradistinction to Section 166 of the Act. We may notice that Minu B. Mehta's case was decided by three learned Judges and the Gujarat State Road Transport Corporation case was decided only by two learned Judges. An obiter dictum of this Court may be binding only on the High Courts in the absence of a direct pronouncement on that question elsewhere by this Court. But as far as this Court is concerned, though not binding, it does have clear persuasive authority. On a careful understanding of the decision in Gujarat State Road Transport Corporation (supra) we cannot understand it as having held that in all claims under the Act proof of negligence as the basis of a claim is jettisoned by the scheme of the Act. In the context of Sections 166 and 163A of the Act of 1988, we are persuaded to think that the so called obiter observations in Minu B. Mehta's case (supra) govern a claim under Section 166 of the Act and they are inapplicable only when a claim is made under Section 163A of the Act. Obviously, it is for the claimant to choose under which provision he should approach the Tribunal and if he chooses to approach the Tribunal under Section 166 of the Act, we cannot see why the principle stated in Minu B. Mehta's case should not apply to him. We are, therefore, not in a position to accept the argument of learned counsel for the respondents that the observations in Minu B. Mehta's case deserve to be ignored.

24. We think that the law laid down in Minu B. Mehta & Anr. Vs. Balkrishna Ramchandra Nayan & Anr. (supra) was accepted by the legislature while enacting the Motor Vehicles Act, 1988 by introducing Section 163A of the Act providing for payment of compensation notwithstanding anything contained in the Act or in any other law for the time being in force that the owner of a motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of the motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be, and in a claim made under sub-section (1) of Section 163A of the Act, the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle concerned. Therefore, the victim of an accident or his dependants have an option either to proceed under Section 166 of the Act or under Section 163A of the Act. Once they approach the Tribunal under Section 166 of the Act, they have necessarily to take upon themselves the burden of establishing the negligence of the driver or owner of the vehicle concerned. But if they proceed under Section 163A of the Act, the compensation will be awarded in terms of the Schedule without calling upon the victim or his dependants to establish any negligence or default on the part of the owner of the vehicle or the driver of the vehicle.

25. In Pushpabai Purshottam Udeshi & Ors. Vs. M/s Ranjit Ginning & Pressing Co. (P) Ltd. & Anr. [(1977) 3 S.C.R. 372], two of the learned judges who constituted the Bench in Minu B. Mehta (supra) held that when a car is driven by the owner's employee on owner's business, the normal rule was that it was for the claimant for compensation to prove negligence. When the Manager of the owner while driving the car on the business of the owner took in a passenger, it would be taken that he had the authority to do so, considering his position unless otherwise shown. If due to his negligent driving an accident occurred and the passenger died, the owner would be liable for compensation. The court noticed that the modern trend was to make the master liable for acts of his servant which may not fall within the expression "in the course of his employment" as formerly understood. With respect, we think that the extensions to the principle of liability has been rightly indicated in this decision.

26. On the facts of this case, there is no finding that Mahmood Hasan, another employee of the owner was driving the vehicle. Even if he was, there is no finding of his negligence. The victim was the Regional Manger of the Company that owned the car. He was using the car given to him by the Company for use. Whether he is treated as the owner of the vehicle or as an employee, he is not covered by the insurance policy taken in terms of the Act --- without any special contract --- since there is no award under the Workmen's Compensation Act that is required to be satisfied by the insurer. In these circumstances, we hold that the appellant Insurance Company is not liable to indemnify the insured and is also not obliged to satisfy the award of the Tribunal/Court and then have recourse to the insured, the owner of the vehicle. The High Court was in error in modifying the award of the Tribunal in that regard.

27. We therefore allow the appeal and reversing the decision of the High Court, restore the award of the Tribunal exonerating the appellant from liability. We make no order as to costs.

Son of insured is not a third party under Motor vehicle Act

IN THE SUPREME COURT OF INDIA

CIVIL APPELALTE JURISDICTION

CIVIL APPEAL NO. 7402 OF 2008

( Arising out of SLP (C) No. 23953 of 2007 ) New India Assurance Company Ltd. .... Appellant Versus

Sadanand Mukhi and others .... Respondents JUDGMENT

S.B. SINHA, J.

1. Leave granted.

2. This appeal is directed against a judgment and order dated 18th January, 2007 passed by a Division Bench of the High Court of Jharkhand at Ranchi whereby and whereunder an appeal preferred by the appellant herein under Section 173 of the Motor Vehicles Act, 1988 (for short `the Act') from a judgment and award dated 26th March, 2004 passed by the 1 District Judge-cum-Motor Vehicle Accident Claim Tribunal at Seraikella was dismissed.

3. The admitted fact of the mater is as under :- First respondent was owner of a motor cycle. He got the said vehicle insured with the appellant company; the policy being valid for the period 9.9.1999 and 8.9.2000. On 8th September, 2000 Tasu Mukhi, son of the insured, while driving the motor cycle met with an accident and died. The accident allegedly took place as a stray dog came in front of the vehicle. A First Information Report was also lodged. Respondents herein filed a claim petition. Amongst them, first respondent, who is the owner of the insured vehicle, was the applicant.

4. Appellant herein raised a specific contention that keeping in view the relationship between the deceased and the owner of the motor vehicle i.e. father and son, he was not a third party, stating :- "5. That section 165 M.V. Act clearly postulates that the insurer is liable to indemnify the risk of the Third party. During the motor vehicle accident and the policy also speaks that in the case of rash and negligent driving the insurer is liable to indemnify the owner. Here in this case 2

the driver of the vehicle is admittedly not a third party and as such the Tribunal has no jurisdiction to pass any order under the Motor Vehicle Act.

6. That so far the negligence of the driver of the Motor cycle is concerned the claimants must establish affirmatively and unless it is proved the Claim Tribunal cannot pass any order of

compensation under the Motor Vehicle Act, 1988.

7. That it is further submitted that the claimants had failed to plead in their claim petition about the negligence which resulted the accident. On the other hand, the circumstances speak that it was the deceased himself who was driving the motor vehicle in uncontrollable speed and in rash and negligent manner which cause accident as a result of which he and the pillion rider fell down and deceased died. Therefore, in absence of negligence on the part of the owner of the vehicle the Claimants cannot seek compensation on the basis of the provisions of the Act.

8. That the act suggests that the deceased not being a third party himself caused the accident and out of such act the loss allegedly occurred to him is not supposed to be a person coming within the scope, ambit and provisions of either section 165 (1) of section (1) of the Motor Vehicles Act, 1988."

5. In view of the aforementioned pleadings of the parties, issues were framed in the following terms :-

3

"1. Whether the claimants have any cause of action or right to sue and the case is

maintainable and the deceased was a third party?

2. Whether the accident took place due to rash and negligent driving of the vehicle Yamaha Motor Cycle No.BR-16B-6002 by the

driver?

3. Whether the deceased was himself rash & negligent in driving the vehicle and was responsible for the accident and whether the deceased died due to motor vehicle

accident?

4. Whether the owner have violated the terms and conditions of the vehicle for which the vehicle has been insured under the Insurer, The New India Assurance Co. Ltd. ?

5. Whether the claimants are entitled to receive the compensation amount and if so what

should be the quantum of compensation?

6. Whether the insurer of the vehicle is liable to indemnify the insured owner of the

vehicle?

7. Whether the claimants are entitled to get any relief or reliefs as claimed by them?"

6. The Tribunal did not enter into the question involved herein. 4

However, while determining issue Nos.2 and 3 it was held :- "So the evidence led on behalf of claimant is practically ex-parte in nature and it goes to show that the deceased died in connection with a vehicular accident. In other words, he died out of the use of a vehicle. Both the issues are decided in this way in favour of the claimants.

On issue Nos. 1 and 7 it was opined :-

"Issue Nos. 1 and 7 : On the basis of the discussions made above, it follows that the claimants application is maintainable and the applicants are entitled to receive compensation from the O.P. No.1 as indicated above. Both the issues are accordingly decided in favour of the applicants."

Evidently, therefore, no decision was rendered on the said issue.

7. Before the High Court appellant raised specific contentions in its Memorandum of Appeal, which are as under:- "C. For that the learned Court below ought to have considered that as in the present case the deceased was not third party rather he was the son of the insured at the relevant time of accident who was driving the

vehicle rashly and negligently, the insured 5

cannot claim compensation until and unless negligence on the part of the insured is established and proved.

D. For that the learned Court ought to have considered that Motor Vehicle Act provides provisions for compensation for the death of the third party from the insured vis-`-vis the insurance company but there is no provision in the Act wherein an insured may claim

himself compensation from himself"

8. The High Court has also not expressed its opinion on the said issue.

9. Mr. Pradeep Kumar Bakshi, learned counsel appearing on behalf of the appellant would submit that having regard to the provisions contained in Sections 146, 147 and 149 (2) of the Act, for the death of the son of the insured, it could not have been held to be liable

10. Mr. Arup Banerjee, learned counsel appearing on behalf of the respondents, on the other hand, would contend that the legislative policy underlining compulsory insurance of a motor vehicle was thought of in view of the fact that life being uncertain, the same was required to be covered. Learned counsel would contend that it cannot be held to exclude a rider, although son of the owner, and, thus, he would be a third party in relation to 6

the insurance company. According to the learned counsel, it would be wholly unfair to exclude a driver using the vehicle as on his death his family suffers.

Mr. Banerjee would contend that, indisputably, use of a motor vehicle is hazardous in nature and thus there cannot be any reason whatsoever to hold that the provisions containing compulsory insurance would be held to have excluded the driver. According to learned counsel the matter might have been different if the accident had occurred due to rash and negligent driving on the part of the driver and in a case of this nature, where the accident had occurred, which was beyond anybody's control, the High Court judgment should not be interfered with.

11. Provisions relating to grant of compensation occurring in Chapter XI and XII of the Act have been enacted by the Parliament in order to achieve the purpose and object stated therein.

12. Section 146 of the Act lays down the requirements for insurance against third party risk. Where a third party risk is involved, an insurance policy is required to be mandatorily taken out. 7

The requirements of policies and the limits of liability, however, have been stated in Section 147 of the Act. Section 147(1)(b) of the Act, reads as under:

"147. Requirements of policies and limits of liability.--(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--

* * *

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)--

(i) against any liability which may be

incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle or damage to any

property of a third party caused by or arising out of the use of the vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:

Provided that a policy shall not be required-- (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), 8

in respect of the death of, or bodily injury to, any such employee--

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

(c) if it is a goods carriage, being carried in the vehicle, or

(ii) to cover any contractual liability. Explanation.--For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place."

13. The provisions of the Act, therefore, provide for two types of insurance - one statutory in nature and the other contractual in nature. Whereas the insurance company is bound to compensate the owner or the driver of the motor vehicle in case any person dies or suffers injury as a 9

result of an accident; in case involving owner of the vehicle or others are proposed to be covered, an additional premium is required to be paid for covering their life and property.

14. It is not a case where even Section 163-A of the Act was resorted to. Respondents filed an application under Section 166 of the Act. Only an act policy was taken in respect of the motor vehicle. Submission of the learned counsel that being a two wheelers, the vehicle was more prone to accident and, therefore, whosoever becomes victim of an accident arising out of the use thereof would come within the purview of the term "a person" as provided for in Section 147 of the Act, in our opinion, is not correct.

15. Contract of insurance of a motor vehicle is governed by the provisions of the Insurance Act. The terms of the policy as also the quantum of the premium payable for insuring the vehicle in question depends not only upon the carrying capacity of the vehicle but also on the purpose for which the same was being used and the extent of the risk covered thereby. By taking an `act policy', the owner of a vehicle fulfils his statutory obligation as contained in Section 147 of the Act. The liability of the insurer is either statutory or contractual. If it is contractual its liability 10

extends to the risk covered by the policy of insurance. If additional risks are sought to be covered, additional premium has to be paid. If the contention of the learned counsel is to be accepted, then to a large extent, the provisions of the Insurance Act become otiose. By reason of such an interpretation the insurer would be liable to cover risk of not only a third party but also others who would not otherwise come within the purview thereof. It is one thing to say that the life is uncertain and the same is required to be covered, but it is another thing to say that we must read a statute so as to grant relief to a person not contemplated by the Act. It is not for the court, unless a statute is found to be unconstitutional, to consider the rationality thereof. Even otherwise the provisions of the Act read with the provisions of the Insurance Act appear to be wholly rational.

16. Only because driving of a motor vehicle may cause accident involving loss of life and property not only of a third party but also the owner of the vehicle and the insured vehicle itself, different provisions have been made in the Insurance Act as also the Act laying down different types of insurance policies. The amount of premium required to be paid for each of the policy is governed by the Insurance Act. A statutory regulatory authority fixes the norms and the guidelines. 11

17. Keeping in view the aforementioned Parliamentary object, let us consider the fact of the present case so as to consider as to whether the insurer is liable to pay the amount of compensation in relation to the accident occurred by use of the vehicle which was being driven by the son of the insured.

18. We may, for the said purpose, notice certain decisions covering different categories of the claims.

In United India Insurance Co. Ltd. v. Tilak Singh, [ (2006) 4 SCC 404 ] this Court considered the provisions of the Motor Vehicles Act, 1939 as also 1988 Act and inter alia opined that the insurance company would have no liability towards the injuries suffered by the deceased who was a pillion rider, as the insurance policy was a statutory policy which did not cover the gratuitous passenger.

In Oriental Insurance Co. Ltd. v. Jhuma Saha, [ (2007) 9 SCC 263 ], it was held :-

"10. The deceased was the owner of the vehicle. For the reasons stated in the claim petition or otherwise, he himself was to be blamed for the accident. The accident did not involve motor 12

vehicle other than the one which he was driving. The question which arises for consideration is that the deceased himself being negligent, the claim petition under Section 166 of the Motor Vehicles Act, 1988 would be maintainable.

11. Liability of the insurer Company is to the extent of indemnification of the insured against the respondent or an injured person, a third person or in respect of damages of property. Thus, if the insured cannot be fastened with any liability under the provisions of the Motor Vehicles Act, the question of the insurer being liable to indemnify the insured, therefore, does not arise." It was furthermore held :-

"13. The additional premium was not paid in respect of the entire risk of death or bodily injury of the owner of the vehicle. If that be so, Section 147(b) of the Motor Vehicles Act which in no uncertain terms covers a risk of a third party only would be attracted in the present case." The matter came up for consideration yet again in Oriental Insurance Co. Ltd. v. Meena Variyal [(2007) 5 SCC 428] wherein it was observed :- "13. As we understand Section 147(1) of the Act, an insurance policy thereunder need not cover the liability in respect of death or injury arising out of and in the course of the employment of an employee of the person insured by the policy, unless it be a liability arising under the Workmen's Compensation Act, 1923 in respect of 13

a driver, also the conductor, in the case of a public service vehicle, and the one carried in the vehicle as owner of the goods or his representative, if it is a goods vehicle. It is provided that the policy also shall not be required to cover any contractual liability. Uninfluenced by authorities, we find no difficulty in understanding this provision as one providing that the policy must insure an owner against any liability to a third party caused by or arising out of the use of the vehicle in a public place, and against death or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place. The proviso clarifies that the policy shall not be required to cover an employee of the insured in respect of bodily injury or death arising out of and in the course of his employment. Then, an exception is provided to the last foregoing to the effect that the policy must cover a liability arising under the Workmen's Compensation Act, 1923 in respect of the death or bodily injury to an employee who is engaged in driving the vehicle or who serves as a conductor in a public service vehicle or an employee who travels in the vehicle of the employer carrying goods if it is a goods carriage. Section 149(1), which casts an obligation on an insurer to satisfy an award, also speaks only of award in respect of such liability as is required to be covered by a policy under clause (b) of sub- section (1) of Section 147 (being a liability covered by the terms of the policy). This provision cannot therefore be used to enlarge the liability if it does not exist in terms of Section 147 of the Act.

14. The object of the insistence on insurance under Chapter XI of the Act thus seems to be to compulsorily cover the liability relating to their person or properties of third parties and in respect of employees of the insured employer, the liability that may arise under the Workmen's

14

Compensation Act, 1923 in respect of the driver, the conductor and the one carried in a goods vehicle carrying goods. On this plain

understanding of Section 147, we find it difficult to hold that the Insurance Company, in the case on hand, was liable to indemnify the owner, the employer Company, the insured, in respect of the death of one of its employees, who according to the claim, was not the driver. Be it noted that the liability is not one arising under the Workmen's Compensation Act, 1923 and it is doubtful, on the case put forward by the claimant, whether the deceased could be understood as a workman coming within the Workmen's Compensation Act, 1923. Therefore, on a plain reading of Section 147 of the Act, it appears to be clear that the Insurance Company is not liable to indemnify the insured in the case on hand."

The said principle was reiterated in United India Insurance Co. Ltd. v. Davinder Singh, [ (2007) 8 SCC 698 ] holding :- "10. It is, thus, axiomatic that whereas an insurance company may be held to be liable to indemnify the owner for the purpose of meeting the object and purport of the provisions of the Motor Vehicles Act, the same may not be

necessary in a case where an insurance company may refuse to compensate the owner of the vehicle towards his own loss. A distinction must be borne in mind as regards the statutory liability of the insurer vis-`-vis the purport and object sought to be achieved by a beneficent legislation before a forum constituted under the Motor Vehicles Act and enforcement of a contract qua contract before a Consumer Forum."

15

19. Learned counsel for the respondents would contend that the object and purport of the Act being to cover the risk to life of any person, the said decision should be applied in this case also. We do not think that it would be a correct reading of the said judgment as therein National Insurance Co. Ltd. v. Laxmi Narain Dhut, [ (2007) 3 SCC 700 ] has been followed. In Laxmi Narain Dhut (supra) a distinction between a statutory policy and a contractual policy has clearly been made out. These decisions, clearly, are applicable to the fact of the present case.

20. In view of the aforementioned authoritative pronouncements, we have no hesitation of hold that the insurance company was not liable. The impugned judgment, therefore, cannot be sustained. It is set aside accordingly. The appeal is allowed. No costs. ...........................J.

[ S.B. Sinha ]

16

...........................J.

[ Cyriac Joseph ]

New Delhi

December 18, 2008

Agreed procedure for Detailed Accident Reports (DAR)

IN THE HIGH COURT OF DELHI AT NEW DELHI
 FAO No.842/2003


Date of Decision: 21st December, 2009


RAJESH TYAGI & ORS. ..... Appellants
Through : None.


versus
JAIBIR SINGH & ORS. ..... Respondents
Through : Mr. Atul Nanda Standing.
Counsel for Union of India.
Mr. Vikas Pahwa, Additional
Standing Counsel for Delhi
Police.
Mr. V.P. Chaudhary, Sr. Adv.
and Mr. Anoop Bhambhani,
amicus curiae.
Mr. Arun Mohan, Sr. Adv.
and Ms.Rajdeepa Behura,
Adv. as Members of the
Committee appointed by
the Court.
Mr. Manoj Ranjan Sinha,
Adv.
for R 3.
Mr. Kanwal Chaudhary, Adv.
for New India Assurance Co.
Ltd.
Mr. Pradeep Gaur, Adv. for
National Insurance Co. Ltd.
Ms. Manjusha Wadhwa and
Ms. Harsh Lata, Advs.
for Oriental Insurance Co.
Ltd.
Mr. K.L. Nandwani, Adv. for
United India Insurance Co. Ltd.
Mr. Sameer Nandwani, Adv. for
Reliance General Insurance Co.
Ltd.
Mr. Atul Nanda, Adv. for
Bajaj Reliance General
Insurance CO. Ltd., Future
Generali India Insurance Co.
Ltd. and ICICI Lombard
General Insurance Co. Ltd.
Ms. Shantha Devi Raman,
FAO No.842/2003 Page 1 of 7 Adv. for IFFCO Tokyo
General Insurance Co. Ltd.
Ms. Anjali Bansal, Adv. for
Tata AIG General Insurance
Co. Ltd.
Mr. Pankaj Seth, Adv. for
Royal Sundaram Alliance
Insurance Co. Ltd. and
Universal Sompo General
Insurance Co. Ltd.
Mr. Sunil Kapoor and Mr.
Anurag Sharma, Advs. for
HDFC Ergo General
Insurance Co. Ltd.
Ms. Suman Bagga, Adv. for
Cholamandalam.
CORAM :-
THE HON'BLE MR. JUSTICE J.R. MIDHA


1. Whether Reporters of Local papers may YES be allowed to see the Judgment?
2. To be referred to the Reporter or not? YES
3. Whether the judgment should be YES reported in the Digest?
JUDGMENT (Oral)
1. The Claims Tribunal Agreed Procedure formulated by the
Committee of the Secretaries/nominees of the Ministries of
Road Transport and Highways; Finance (Department of
Insurance); Law, Justice and Company Affairs; and Joint
Commissioner of Police (Northern Range), to which all the
Insurance Companies have consented, has been accepted by
this Court vide order dated 16th December, 2009. The Delhi
Police has given their consent to implement the Claims
Tribunal Agreed Procedure on a trial basis as a pilot project
for a period of six months. However, certain clarifications to
the scheme have been made by this Court vide order dated
FAO No.842/2003 Page 2 of 7 16th December, 2009 which have been incorporated in the
Claims Tribunal Agreed Procedure.
2. Mr. Atul Nanda, the learned Standing Counsel for Union
of India raised two concerns with respect to the order dated
16th December, 2009 which are as under:-
(i) In para 7 of the order dated 16th December, 2009,
the learned Tribunals have been directed to
compute the compensation payable in death
cases according to the principles laid down by the
Hon'ble Supreme Court in the case of Sarla
Verma Vs. Delhi Transport Corporation, 2009
(6) Scale 129, (2009) 6 SCC 121, 2009 ACJ
1298. Mr. Atul Nanda submits that there are
other judgments in which different view has been
taken and, therefore, the learned Tribunals may
be left free to follow the law laid down in other
judgments as well.
(ii) The direction in para 5(xii) of the order dated 16th
December, 2009 to the Claim Tribunals to ensure
that the claimants are awarded just compensation
in accordance with law, be deleted.
3.With respect to the first contention, it is hereby clarified
that the order dated 16th December, 2009 is an interim order
based on the Claims Tribunal Agreed Procedure accepted by
all the seventeen Insurance Companies and Delhi Police for
expeditious settlement of accident cases for a limited period
FAO No.842/2003 Page 3 of 7 of six months from 15th January, 2010 to 14th July, 2010. This
is a pilot project on trial basis with a object that the
claimants get the compensation within a period of 120 days
from the date of the accident. Unless the scheme is clear
and definite in all respects, the settlement of death cases
within a fixed time frame may not be possible. It is noted
that on average, there are about 20 accident cases in a
month in Delhi and, therefore, this scheme would cover
approximately 120 cases over a period of six months. The
clarification given in para 7 of the order dated 16 th
December, 2009 is to make the scheme definite and clear
and not to leave any confusion in the applicability of the
scheme. It is also noted that all the nationalized Insurance
Companies had in the meeting held in May, 2009 recorded in
the Minutes of the Meeting dated 29th May, 2009 agreed to
settle all the pending death cases in Delhi according to the
principles laid down by the Hon'ble Supreme Court in the
case of Sarla Verma (supra). Similar proposal had also been
accepted by the Insurance Companies before the Hon'ble
Supreme Court in the meeting of the Arrears Committee.
Para 7 of the order dated 16th December, 2009 is in line with
the accepted stand of the Insurance Companies. However, if
still there is any difficulty for the Insurance Companies to
settle the cases in terms of the order dated 16 th December,
2009, the liberty is given to them to approach this Court in
terms of para 12 of the order dated 16 th December, 2009 for
FAO No.842/2003 Page 4 of 7 appropriate directions.
4. With respect to the second objection that the Tribunals
should not examine whether the amount offered by the
Insurance Companies is in accordance with law or not, it is
clarified that the purpose of the scheme is to expedite the
payment of compensation to the victims of the road
accidents in accordance with law without compromising the
quality of justice and, therefore, the directions given to the
learned Tribunals in this regard are necessary to uphold the
rule of law.
5. It is also to be noted that the purpose of procedure is to
help dispense justice. Considering the situation in the past
and the fair approach adopted by the parties before this
Court, the common goal being quicker adjudication, we have
to find a way forward to rid the inefficiencies of the past.
6. The orders dated 8th June, 2009 and 5th November,
2009 stand modified by the order dated 16 th December, 2009
in so far as the Insurance Companies had been directed to
deposit the admitted amount.
7. List on 8th January, 2010 for compliance of directions
given in para 18 of the order dated 16 th December, 2009 and
on 23rd March, 2010 for consideration of the first report of the
Committee.
8. The approved Claims Tribunal Agreed Procedure has
been appended to this order (which will be uploaded on the
internet) so as to enable access by all concerned.
FAO No.842/2003 Page 5 of 7
9. The copy of this order along with order dated 16 th
December, 2009 and Claims Tribunal Agreed Procedure, as
finally modified and approved be sent to all Claim Tribunals
and Delhi Legal Services Authority through the Registrar
(Vigilance) of this Court. All the Claims Tribunals shall send a
monthly report giving particulars of total number of cases
received by them in a tabular form containing the particulars
of age, occupation, income, number of dependents, amount
offered by the Insurance Company and the amount awarded
by the Claims Tribunals in death cases and relevant
particulars in injury cases. The monthly report of the Claims
Tribunals be sent to this Court through Registrar (Vigilance).
The report with respect to the period between 15 th January,
2010 to 14th February, 2010 be sent to this Court by 28th
February, 2010. The same be placed before this Court along
with the comments of Registrar (Vigilance) by 15 th March,
2010, which shall be considered on 23rd March, 2010.
10. Copy of this order along with order dated 16 th
December, 2009 and approved Claims Tribunal Agreed
Procedure be also sent to the Principal Secretary (Law),
Government of NCT of Delhi for issuing appropriate
instructions to all authorities under Government of NCT of
Delhi for compliance of the order dated 16th December, 2009.
11.The copy of this order be given Dasti to learned amicus
curiae, Committee members, Standing Counsel for Union of
FAO No.842/2003 Page 6 of 7 India, Additional Standing Counsel for Delhi Police, Delhi
Legal Services Authority and all the Insurance Companies.
12. Copy of this order along with the copy of the order
dated 16th December, 2009 and the Agreed Claims Tribunal
Procedure be also sent to Mr. S. Sundar, Chairman of the
Expert Committee constituted by the Ministry of Road
Transport and Highways.
J.R. MIDHA, J
DECEMBER 21, 2009
mk
Note : Finalized Claims Tribunal Agreed Procedure attached (11 pages).
FAO No.842/2003 Page 7 of 7 THE CLAIMS TRIBUNAL AGREED PROCEDURE
(As approved by Delhi High Court)
CHAPTER 1- SCOPE AND DEFINITIONS
1. Scope: This procedure shall be applicable for all claims filed before the Claims Tribunals in the NCT of Delhi.
2. Definitions. - (1) In this procedure, unless the context otherwise requires,-
(a) "Act" means the Motor Vehicles Act,1988 ( 59 of 1988);
(b) "accident" means an accident involving use of motor vehicle at a public place; (c) "Claims Tribunal" means a Motor Accidents Claims Tribunal constituted under section 165 of the Act;
(d) "Clause" shall refer to the Clauses of this Agreed procedure; (e) "Form" means a form appended to The Delhi Motor Accident Claims Tribunal Rules, 2008;
(e) "insurance company" means the insurance company with which a motor vehicle involved in an accident was insured on the date of the accident; (f) "investigating police officer" means the station house officer of a police station within whose jurisdiction an accident involving a motor vehicle occurs, and includes any police officer subordinate to him entrusted with the investigation of the case;
(g) "legal representative" shall have the same meaning assigned to it under clause (11) of section 2 of the Code of Civil Procedure, 1908 (5 of 1908). (h) "Rule" or "2008 Rules" shall bear reference to The Delhi Motor Accident Claims Tribunal Rules, 2008.
(2) All other words and expressions used herein but not defined and defined in Motor Vehicles Act, 1988 or The Delhi Motor Accident Claims Tribunal Rules, 2008, shall have the meanings respectively assigned to them in that Act, or the Rules as the case may be.
CHAPTER 2- RECEIPT OF INFORMATION, VERIFICATION AND THE DETAILED ACCIDENT REPORT
3. Receipt of information of an accident and duties of the investigating police officer - (1) The Investigating Police Officer may receive information from one or more source including but not limited to:
(a) The driver/owner of the vehicle involved in the accident, by way of a report as contemplated under Section 134 of the Act; (b) The Claimant;
(c) A witness to the accident or any other informant or source of information;
(d) The hospital or medical facility where the Deceased or Injured may have been taken to for medical attention.
(2) On receipt of the above information, it shall be the duty of the investigating police officer, as expeditiously as possible not later than 48 hours to
(a) Intimate the factum of the accident to the Claims Tribunal within whose territorial jurisdiction the accident has occurred, which shall be entered in a register for such purpose ;
(b) If the insurance particulars are available by that time, the Investigating Officer shall also send the intimation to the concerned Insurance Company by e-mail.
(c) The factum of the accident shall also be uploaded by Delhi Police on its website.
(d) The intimation of the accident shall contain all relevant particulars Page 1 of 11
including the date, time and place of accident, registration number of the offending vehicle, policy particulars, names and addresses of the owner and driver of the offending vehicle and the name and mobile number of the Investigating Officer.
(e) In terms of Rule 3(1)(a) have the scene of accident photographed from such angles as to clearly depict, the lay-out and width, etc. of the road(s) or place, as the case may be, the position of vehicle(s), or person(s), involved, and such other facts as may be relevant so as to preserve the evidence in this regard, inter-alia for purposes of proceedings before the Claims Tribunal; (f) Gather full particulars, and seek the following documents from the parties as under:
(A) From the owner/driver, in terms of Section 133/134 and 158 of the Act and Rule 3 of the Rules:
i. The circumstances of the occurrence, including the circumstances if any for not taking reasonable steps to secure medical attention to the injured person in terms of Section 134(a) of the Act;
ii. the date, time and place of the accident;
iii. particulars of the persons injured or deceased in the accident;
iv. name and address of the driver and the owner, and the driving license of the driver and that of the conductor in the case of a stage carriage, passenger or goods vehicle; v. the Insurance Policy or in the alternative a valid cover note provided that such cover note should not be more than sixty days old;
vi. the certificate of insurance;
vii. the certificate of registration;
viii. in the case of a transport vehicle, the fitness certificate referred to in Section 56 of the Act and the permit. (B) From the Claimant(s), victims of an accident or their legal representatives, as the case may be:
(i) In case of death;
(a) Proof of age and a photo- ID of the deceased at the time of accident;
(b) Death certificate and post mortem report;
(c) Proof of income of the deceased at the time of the accident,
a. in the form of pay slip/salary certificate in the case of a government/semi-government employee,
b. certificate of the employer and bank statements of the last six months of the deceased reflecting payment of salary in the case of a private employee,
c. I.T. returns in the case of a self-employed person; (d) Details of the dependents, i.e. their age, occupation and marital status and proof of dependency in the form of affidavits, address and other contact details;
(e) Details and copies of medical bills and expenses; (f) A brief statement of the facts surrounding and quantum of compensation intended to be claimed;
(g) Details of the claims tribunal, where the Claimants have preferred an application under Section 163A or Section 166, if any, as on the date of such verification or investigation by the investigating police officer; (ii) In case of an injury case
(a) Proof of age and a Photo- Insured, address and other contact details of the injured at the time of accident; (b) Proof of income of the Injured at the time of the accident, a. in the form of pay slip/salary certificate in the case of a government/semi-government employee,
b. certificate of the employer and bank statements of the last six months of the injured reflecting
Page 2 of 11
payment of salary in the case of a private
employee,
c. I.T. returns in the case of a self-employed person; (c) Disability certificate issued by a Government Hospital or a recognized private hospital;
(d) MLC/accident register extract of the hospital and MLR (e) Details and copies of medical bills and expenses; in case of long term treatment the Investigating Police officer shall record the details of the same and the Claimant may furnish such bills before the Claims Tribunal;
(f) Proof of absence from work [where loss of income on account of injury is being claimed] i.e. certificate from the employer and extracts from the attendance register or log record or like records;
(g) A brief statement of the facts surrounding and quantum of compensation intended to be claimed;
(h) Details of the claims tribunal, where the Claimants have preferred an application under Section 163A or Section 166, if any, as on the date of such verification or investigation by the investigating police officer; and thereupon the police investigating officer shall either to the above documents in possession against receipt, or retain the photocopies of the same, after attestation thereof by the person producing the same;
(3) The investigating police officer shall verify the genuineness of the documents mentioned in Clause 3(2) by obtaining confirmation in writing from the office or authority or person purporting to have issued the same or by such further investigation or verification as may be necessary for arriving at a conclusion of genuineness of the document or information in question, including but not limited to verifying the license of the driver and permit of the vehicle, where applicable, from the registering authority;
(4) The investigating police officer shall not release and shall impound the vehicle involved in the accident, when:
a. it is found that it is not covered by policy of insurance of third party risks, taken in the name of the registered owner, or b. when the registered owner fails to furnish copy of such insurance policy, or where the driver fails to furnish the driving license
and shall bring this to the notice of the Magistrate having jurisdiction over the area, where the accident occurred. He shall further report to the Magistrate, as to why the registered owner has not been prosecuted for offence punishable under section 196 of the Act, where such prosecution has not been preferred, despite existence of facts constituting such an offence.
(5) In all cases where no driving license has been furnished by the driver, or permit and insurance policy by the owner the investigating police officer shall take a statement in the form of an affidavit from the driver and or the owner, as the case may be as to the details of such driving license including the class and type of vehicle he is licensed to drive, permit and or Insurance Policy in case of the owner and the validity thereof as on the date of the accident. In such cases the investigating police officer shall proceed to investigate into the properties and assets of the owner of the vehicle and append the same to his report.
4 Preparation and forwarding of the Detailed Accident Report (DAR): (1) After completion of the above collection and verification of the documents and investigation as may be required, the investigating police officer shall complete the preparation of a detailed accident report [hereinafter referred to as DAR] in Form "A" not later than thirty days from the date of the accident. In terms of Rule 3 (1)(c) such DAR shall be Page 3 of 11
accompanied by requisite documents which shall include copy of the report under section 173 of the Code of Criminal Procedure, 1973(2 of 1974), medico legal certificate, post-mortem report (in case of death), first information report, photographs, site plan, mechanical inspection report, seizure memo, photocopies of documents mentioned in Clause 3(2) above, as also a report regarding confirmation of genuineness thereof, if received, or otherwise action taken.
(2) Immediately on completion of the above DAR, the investigating police officer shall forward a copy of the DAR, under its seal, duly receipted: (i) To the Claims Tribunal, under a duly attested affidavit of the investigating police officer-
-where a claim has already been preferred by the Claimant to such Claims Tribunal or
- where no such claim has been preferred, then before the Claims Tribunal in whose territorial jurisdiction the accident has occurred. (ii) To the Claimant (s) or victims of the accident or their legal representative(s), as the case may be at the address supplied by the Claimant to the investigating police officer, free of charge; (iii) To the owner/driver at the addressed supplied by the owner /driver to the police investigating officer, at a cost of Rs. Five per page; (iv) To the nodal officer of the concerned Insurance Company at a cost of Rs. ten per page.
(3) The Investigating Officer of the Police shall also furnish a copy of Detailed Accident Report along with complete documents to Secretary, Delhi Legal Services Authority, Central Office, Pre-Fab Building, Patiala House Courts, New Delhi. Delhi Legal Services Authority shall examine each case and assist the Claims Tribunal in determination of the just compensation payable to the claimants in accordance with law.
(4) Where the Investigating Officer is unable to complete the investigation of the case within 30 days for reasons beyond his control, such as cases of hit and run accidents, cases where the parties reside outside the jurisdiction of the Court cases, where the driving licence is issued outside the jurisdiction of the Court, or where the victim has suffered grievous injuries and is undergoing treatment, the Investigating Officer shall approach the Claims Tribunal for extension of time whereupon the Claims Tribunal shall suitably extend the time in the facts of each case. (5) The Investigating Officer shall produce the driver, owner, claimant and eye- witnesses before the Claims Tribunals along with the Detailed Accident Report. However, if the Police is unable to produce the owner, driver, clamant and eye- witnesses before the Claims Tribunal on the first date of hearing for the reasons beyond its control, the Claims Tribunal shall issue notice to them to be served through the Investigating Officer for a date for appearance not later than 30 days. The Investigating Officer shall give an advance notice to the concerned Insurance Company about the date of filing of the Detailed Accident Report before the Claims Tribunal so that the nominated counsel for the Insurance Company can remain present on the first date of hearing before the Claims Tribunal. (6) The duties enumerated in Clause (3) and (4) above shall, as per Rule 3(2) of the 2008 Rules be construed as if they are included in Section 60 of the Delhi Police Act 1978 (34 of 1978) and any breach thereof shall entail consequences envisaged in that law, as provided for under Rule 3(2).
5. Duties of the registering authority.- It shall be the duty of the concerned registering authority to-
(a) submit a detailed report in Form "D" to the Claims Tribunal regarding a motor vehicle involved in an accident or licence of the driver thereof within fifteen days of the receipt of direction in Form "E";
(b) furnish within fifteen days, the requisite information in Form "D" on receiving the application in Form "F", by the person who wishes to make an application for compensation or who is involved in an accident arising out of use or his next of kin, or to the legal representative of the deceased or to the insurance company, as the case may be; Provided that information shall be given to the insurance company on payment of rupees ten only per page.
Page 4 of 11
(c) assist the police in verification process set out in Procedure Clause 3 and 4 above and furnish to the investigating police officer a report in Form D within 15 days of a request from the police investigating officer regarding verification or genuineness of any document regarding a motor vehicle involved in an accident or the license of the driver thereof.
CHAPTER 3 -CLAIMS INSTITUTED ON THE BASIS OF DETAILED ACCIDENT REPORT
6. Procedure on receipt of the detailed accident report: (1) The Claims Tribunals shall examine whether the Detailed Accident Report is complete in all respects and shall pass appropriate order in this regard. If the Detailed Accident Report is not complete in any particular respect, the Claims Tribunal shall direct the Investigating Officer to complete the same and shall fix a date for the said completion.
(2) The Claims Tribunals shall treat the Detailed Accident Report filed by the Investigating Officer as a claim petition under Section 166(4) of the Motor Vehicles Act. However, where the Police is unable to produce the claimants on the first date of hearing, the Claims Tribunal shall initially register the Detailed Accident Report as a miscellaneous application which shall be registered as a main claim petition after the appearance of the claimants.
(3) The Claims Tribunal shall grant 30 days time to the Insurance Company to examine the Detailed Accident Report and to take a decision as to the quantum of compensation payable to the claimants in accordance with law. The decision shall be taken by the Designated Officer of the Insurance Company in writing and it shall be a reasoned decision. The Designated Officer of the Insurance Company shall place the written reasoned decision before the Claims Tribunal within 30 days of the date of complete Detailed Accident Report.
(4) The compensation assessed by the Designated Officer of the Insurance Company in his written reasoned decision shall constitute a legal offer to the claimants and if the claimants accept the said offer, the Claims Tribunal shall pass a consent award and shall provide 30 days time to the Insurance Company to make the payment of the award amount. However, before passing the consent award, the Claims Tribunal shall ensure that the claimants are awarded just compensation in accordance with law. The Claims Tribunal shall also pass an order with respect to the shares of the claimants and the mode of disbursement.
(5) If the claimants are not in a position to immediately respond to the offer of the Insurance Company, the Claims Tribunals shall grant them time not later than 30 days to respond to the said offer.
(6) If the offer of the Insurance Company is not acceptable to the claimants or if the Insurance Company has any defence available to it under law, the Claims Tribunal shall proceed to conduct an inquiry under Sections 168 and 169 of the Motor Vehicles Act and shall pass an award in accordance with law within a period of 30 days thereafter.
(7) Where the Claims Tribunal finds that the D.A.R. and in particular the report under Section 173, The Criminal Procedure Code, 1974 annexed to such D.A.R. has brought a charge of rash and negligent driving, or the causing of hurt or grievous hurt the Claims Tribunal shall register the claim case under Section 166 of The Motor Vehicles Act,1988. In cases where the DAR does not bring a charge of negligence or despite the charge of negligence the Claimant(s) before the court chose to claim on a no-fault basis, the Claims Tribunal shall register a claim case under Section 163A, The Motor Vehicles Act,1988;
(8) Provided that in cases where the accident in question involves more than one vehicle and persons connected to all such vehicles stake a claim for compensation, the D.A.R. shall be treated as an application for compensation claim case shall be presumed to be a claim case preferred by each of them. Page 5 of 11
CHAPTER 4- CLAIMS INSTITUTED BY WAY OF AN APPLICATION BY THE CLAIMANT
7. Applications for compensation.- (1) Every application for payment of compensation shall be made in Form "G" and shall be accompanied by as many copies, as may be required, to the Claims Tribunal having jurisdiction to adjudicate upon it, in terms of Section 165 of the Act.
(2) In terms of Rule 8, there shall be appended to every such application:-
(a) an affidavit of the applicant(s) to the effect that the statement of facts contained in the application is true to the best of his/her knowledge/belief, as the case may be, details of previous claims preferred by the applicant(s) with regard to the same cause of action, or any other accident and if so, what was the result thereof;
(b) all the documents and affidavits for the proof thereof, and affidavits in support of all facts on which the applicant relies in context of his/her claim, entered in a properly prepared list of documents and affidavits:
Provided that the Claims Tribunal may not allow the applicant to rely in support of his/her claim, on any document or affidavit not filed with the application, unless it is satisfied that for good or sufficient cause, he/she was prevented from filing such document or affidavit earlier;
(c) proof of identity of the applicant (s) to the satisfaction of the Claims Tribunal, unless exempted from doing so for reasons to be recorded in writing by it;
(C) passport size photograph(s) of the applicant(s) duly attested; (D) reports obtained in Form "C" and Form "D" from investigating police officer, and registering authority; and if no such report(s) have been obtained, the reasons thereof;
(E) medical certificate of injuries, or the effect thereof, other than those included in Form "C".
(3) The Claims Tribunal may also require the applicant to furnish the following information to satisfy itself that spurious or a collusive claim has not been preferred:-
(a) full particulars of all earlier accidents in which the applicant or the person deceased, as the case may be, has been involved;
(b) nature of injuries suffered and treatment taken;
(c) the amount of compensation paid in such earlier accidents, name and particulars of the victim, and of the person who paid the damages; and
(d) Relationship of the applicant(s), if any, with the persons mentioned in clause (b), and the owner and the driver of the vehicle.
(4) Any application which is found defective on scrutiny may be returned by the Claims Tribunal for being re-submitted after removing the defects within a specified period not exceeding two weeks. Every application for compensation shall be registered separately in appropriate register prescribed as per rule 36.
8. Examination of applicant.- On receipt of an application under Rule8, the Claims Tribunal may examine the applicant on oath, and the substance of such examination, if any, shall be reduced to writing.
9. Summary disposal of application.- The Claims Tribunal may, after consideration of the application and statement, if any, of the applicant recorded under Rule 10, dismiss the application summarily, if for reasons to be recorded, it is of the opinion that there are no sufficient grounds for proceeding therewith.
10. Notice to parties involved- If the application for claim is found admissible in terms of Clause 6(4) and Clause 9 above , the Claims Tribunal shall send to the opposite parties accompanied by a copy of the application along with all the documents and affidavits filed by applicant under Rule 8 together, with a notice in Form "I" of the Page 6 of 11
date on which it will hear the application, and may call them upon to file on that date a written statement as per Rule 14 in answer to the application.
CHAPTER 5- DUTY OF THE INSURANCE COMPANY ON RECEIPT OF NOTICE AND PRE-TRIAL SETTLEMENT PROCESS AND COSTS
11. Duties of the insurance company: (1) Immediately upon receipt of intimation, the Insurance Company shall appoint a Designated Officer for each case. The Designated Officer shall be responsible for dealing/processing of that case and for taking decision for the amount of compensation payable in accordance with law after the Detailed Accident Report by the police.
(2) Without prejudice to its rights and contentions, where in the opinion of the Insurance Company, a claim is payable it shall confirm the same to the Claims Tribunal within thirty days of the receipt of complete Detailed Accident Report, by way of an offer of settlement of claim, with a supporting computation/calculation, under a duly attested affidavit of the Divisional Officer/ Officer appointed for such purpose. (3) When on the date of hearing of such application and on receipt of such offer from the Insurance Company, the Claimant(s) agree to the offer of settlement of the Insurance Company, the Claims Tribunal shall record such settlement by way of a consent decree and payment shall be made by the Insurance Company within a maximum period of thirty days from the date of receipt of a copy of the consent decree which shall be made available to the parties by the Claims Tribunal within a maximum period of seven working days from the passing of such decree. (4) The Insurance Company shall be at liberty to file an application under Section 170, The Motor Vehicles Act,1988 at any stage of the proceedings and shall be considered and adjudicated upon by the Claims Tribunal on its own merits. CHAPTER 6- APPLICATIONS UNDER SECTION 140 OF THE MOTOR VEHICLES ACT,1988
12. Application for claim on principle of no fault liability:- (1) Every application in case of claim under Chapter X of the Act, shall be made in part II of Form "G". The Claims Tribunal shall, for the purpose of adjudication of the application mentioned in this rule shall follow such summary procedure as it thinks fit.
(2) The Claims Tribunal shall not reject any application made as per the provisions of Chapter X of the Act on ground of any technical flaw, but shall give notice to the applicant and get the defect rectified.
(3) Where the application is not accompanied by reports in From "A" and Form "D", the Claims Tribunal shall obtain whatever information is necessary from the police, medical and other authorities and proceed to adjudicate upon the claim whether the parties who were given notice appear or not on the appointed date.
(4) Subject to the rights of the Insurance Company to prove breach of the Insurance Policy in terms of Section 149, The Motor Vehicles Act,1988 the Claims Tribunal shall expeditiously proceed to award the claims on the basis of reports in Form "A" and Form "D" and further documents relating to injuries or treatment, if any filed with affidavit, and report or certificate, if any, issued in compliance with directions under rule 18 The Claims Tribunal in passing an award on such application, shall also issue directions for apportionment, if required and for securing the interests of the claimants, following the provisions of rules 26 and 27.
CHAPTER 7- TRIAL AND AWARD
13. Framing of issues.- After considering the application, the written statements, the examination of the parties, if any, and the result of any local inspection, if made, the Claims Tribunal shall proceed to frame and record the issues upon which the decision of the case appears to it to depend.
Page 7 of 11
14. Determination of issues.-(1) After framing the issues the Claims Tribunal shall proceed to decide them after allowing both parties to cross examine each other and the deponents, whose affidavits have been filed by the parties, on such affidavits filed with the application and the written statement and in doing so, it shall follow provision of Order XIX of the Code of Civil Procedure, 1908 (5 of 1908). (2) The Claims Tribunal may, if it appears to it to be necessary for just decision of the case, allow the parties to adduce such further evidence as each of them may desire to produce:
Provided that no such further opportunity shall be permitted unless it is shown that the affidavit of the witness sought to be examined at such stage could not be obtained and filed earlier, despite exercise of due diligence by, or that such evidence was not within the knowledge of the party relying on it.
15. Summoning of witnesses.- Subject to the provisions of rule 22, if an application is presented by any party to the proceeding for the summoning of witnesses, the Claims Tribunal shall, on payment of the expenses involved, if any, issue summons for the appearance of such witness unless it considers that their appearance is not necessary for a just decision of the case:
Provided that if, in the opinion of the Claims Tribunals, the party is financially poor, it may not insist on the payment of the expenses involved and the same shall be borne by the Government:
Provided further that in case where the party succeeds in whole or in part, the expenses so incurred by the Government shall be directed to be paid to the Government by the judgment debtor and so directed at time of passing of the final award..
16. Method of recording evidence.- The Claims Tribunals shall, as examination of witnesses proceeds, make brief memorandum of the substance of the evidence of each witness and such memorandum shall be written and signed by the Presiding Judge of the Claims Tribunal andshall form part of the evidence. Provided that evidence of any expert witness shall be taken down, as nearly as may be, word for word.
17. Obtaining of supplementary information and documents.- The Claims Tribunal shall obtain whatever supplementary information and documents, which may be found necessary from the police, medical and other authorities and proceed to adjudicate upon the claim whether the parties who were given notice appear or not on the appointed date.
18. Judgment and award of compensation.- (1) The Claims Tribunal in passing orders shall record concisely in a judgment, the findings on each of the issues framed and the reasons for such findings and make an award specifying the amount of compensation to be paid by the opposite party or parties and also the person or persons to whom compensation shall be paid.
(2) The procedure of adjudicating the liability and award of compensation may be set apart from the procedure of disbursement of compensation to the legal heirs in a case of death, and where the Claims Tribunal feels that the actual payment to the claimant is likely to take some time because of the identification and determination of legal heirs of the deceased, the Claims Tribunal may call for the amount of compensation awarded to be deposited with it, and, then, proceed with the identification of the legal heirs for disbursing payment of compensation to each of the legal heirs equitably. (3) Where the Claims Tribunal finds that false or fabricated documents have been filed by or relied upon by the Claimant(s) to support its claim for compensation, the Claims Tribunal shall award costs of Rs.10,000 for every such false or fraudulent document filed and further direct the police to launch a prosecution against such Claimant(s) in accordance with the provisions of law.
CHAPTER 8- OTHER PROVISIONS
19. Prohibition against release of motor vehicle involved in accident.-(1) No court shall release a motor vehicle involved in an accident resulting in death or bodily injury or damage to property, when such vehicle is not covered by the policy of insurance against third party risks taken in the name of registered owner or when the registered owner fails to furnish copy of such insurance policy, at the time of seizure, despite demand by investigating police officer, unless and until the registered owner furnishes sufficient security to the satisfaction of the court to pay compensation that may be awarded in a Page 8 of 11
claim case arising out of such accident. Where the owner does not furnish such a copy of the Insurance Policy at the time of seizure, but agrees to furnish it or so furnishes it at a reasonable time thereafter, the release of the vehicle shall be subject to and only after due verification of the said Insurance Policy/cover note by the Insurance Company
(2) Where the motor vehicle is not covered by a policy of insurance against third party risks, or when registered owner of the motor vehicle fails to furnish copy of such policy in circumstance mentioned in sub-rule (1), the motor vehicle shall be sold off in public auction by the magistrate having jurisdiction over the area where accident occurred, on expiry of three months of the vehicle being taken in possession by the investigating police officer, and proceeds thereof shall be deposited with the Claims Tribunal having jurisdiction over the area in question, within fifteen days for purpose of satisfying the compensation that may have been awarded, or may be awarded in a claim case arising out of such accident.
20. Presumption about reports.- The contents of reports submitted to the Claims Tribunal in Form "A" and Form "D" by investigating police officer and concerned registering authority respectively, and confirmation under clause (b) of rule 5 by the insurance company shall be presumed to be correct, and shall be read in evidence without formal proof, till proved to the contrary.
21. Transfer of claim cases.- (1) Where two or more claims, arising out of the same cause of action, fall within the jurisdiction of the District Judge, he shall have the power to transfer an application for claim from the file of one Claims Tribunal, before whom the application is pending, to any other Claims Tribunal, if- (a) the Claims Tribunal before whom the application is pending makes such a request on grounds, personal or otherwise; or (b) upon consideration of the application for transfer by any party to the application, the District Judge is satisfied, for reasons to be recorded in writing, that there are sufficient grounds to do so.
(2) Where two or more claims arising out of the same cause of action, are pending before different Claims Tribunal in the same State, the High Court of such State may transfer the application from the file of one Claims Tribunal to the other Claims Tribunal for any sufficient reasons, on the application of any party to such proceedings.. (3) Where two or more claims arise before different Claims Tribunals in different States then an application will lie to either of the High Courts of the two states and such High Court may transfer the application from the file of one Claims Tribunal to the other Claims Tribunal for any sufficient reasons.
(4) While considering an application for transfer of a claim, the Claims Tribunal which has first issued notice in point of time shall be deemed to be the appropriate Claims Tribunal for the purpose of such transfer. .
22. Inspection of the vehicle.- The Claims Tribunal may, if it thinks fit, require the motor vehicle involved in the accident to be produced by the owner for inspection at a particular time and place to be mentioned by it, in consultation with the owner.
23. Power of summary examination.- The Claims Tribunal during the local inspection or at any other time at a formal hearing of a case pending before, it may, examine summarily any person likely to be able to give information relating to such case, whether such person has been or is to be called as a witness in the case or not and whether any or all of the parties are present or not.
24. Power to direct medical examination.- The Claims Tribunal may, if it considers necessary, direct, in Form "J", any medical officer or any board of medical officers in a government or municipal hospital to examine the injured and issue certificate indicating the degree and extent of the disability, if any, suffered as a result of the accident, and it shall be the duty of such medical officer or board to submit the report within fifteen days of receipt of direction.
25. Securing the interest of claimants.- (1) Where any lump-sum amount deposited with the Claims Tribunal is payable to a woman or a person under legal disability, such sum may be invested, applied or otherwise dealt with for the benefit of the woman or such person during this disability in such manner as the Claims Tribunal may direct to be Page 9 of 11
paid to any dependent of the injured or heirs of the deceased or to any other person whom the Claims Tribunal thinks best fitted to provide for the welfare of the injured or the heir of the deceased.
(2) Where on application made to the Claims Tribunal in this behalf or otherwise, the Claims Tribunal is satisfied that on account of neglect of the children on the part of the parents, or on account of the variation of the circumstances of any dependent, or for any other sufficient cause, an order of the Claims Tribunal as to the distribution of any sum paid as compensation or as to the manner in which any sum payable to any such dependent is to be invested applied or otherwise dealt with, ought to be varied, the Claims Tribunal may make such further orders for the variation of the former order as it thinks just in the circumstances of the case.
(3) The Claims Tribunal shall, in the case of minor, order that amount of compensation awarded to such minor be invested in fixed deposits till such minor attains majority. The expenses incurred by the guardian or the next friend may be allowed to be withdrawn by such guardian or the next friend from such deposits before it is deposited. (4)The Claims Tribunal shall, in the case of illiterate claimants, order that the amount of compensation awarded be invested in fixed deposits for a minimum period of three years, but if any amount is required for effecting purchase of any moveable or immoveable property for improving the income of the claimant, the Claims Tribunal may consider such a request after being satisfied that the amount would be actually spent for the purpose and the demand is not a ruse to withdraw money. (5)The Claims Tribunal shall, in the case of semi-literate person resort to the procedure for the deposit of award amounts set out in sub-rule(4) unless it is satisfied, for reasons to be recorded in writing that the whole or part of the amount is required for the expansion of any existing business or for the purchase of some property as specified and mentioned, in sub-rule (4) in which case the Claims Tribunal shall ensure that the amount is invested for the purpose for which it is prayed for and paid. (6) The Claims Tribunal may in the case of literate persons also resort to the procedure for deposit of awarded amount specified in sub-rule (4) and (5) if having regard to the age, fiscal background and state of society to which the claimant belongs and such other consideration, the Claims Tribunal in the larger interest of the claimant and with a view to ensuring the safety of the compensation awarded, thinks it necessary to order. (7)The Claims Tribunal, may in personal injury cases, if further treatment is necessary, on being satisfied which shall be recorded in writing, permit the withdrawal of such amount as is necessary for the expenses of such treatment. (8)The Claims Tribunal shall, in the matter of investment of money, have regard to a maximum return by ways of periodical income to the claimant and make it deposited with public sector undertakings of the State or Central Government which offers higher rate of interest. (9) The Claims Tribunal shall, in investing money, direct that the interest on the deposits be paid directly to the claimants or the guardian of the minor claimants by the institutions holding the deposits under intimation to the Claims Tribunal.
26. Adjournment of hearing.- If the Claims Tribunal finds that an application cannot be disposed of at one hearing, it shall record the reasons which necessitate the adjournment and also inform the parties present of the date of adjourned hearing.
27. Enforcement of award of the Claims Tribunal.- Subject to the provisions of section 174 of the Act, the Claims Tribunal shall, for the purpose of enforcement of its award, have all the powers of a Civil Court in the execution of a decree under the Code of Civil Procedure, 1908(5 of 1908), as if the award where a decree for the payment of money passed by such court in a civil suit.
28. Vesting of powers of Civil Court in the Claims Tribunal.- Without prejudice to the provisions of section 169 of the Act every Claims Tribunal shall exercise all the powers of a Civil Court, and in doing so for discharging its functions it shall follow the procedure laid down in the Code of Civil Procedure, 1908(5 of 1908).
29. Receipt of compensation paid upon payment.- The Claims Tribunal shall, obtain a receipt from the claimant in duplicate, one copy to be issued to the person who makes the payment and the other to be retained on the record while handing over the payment.
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30. Registers.- (1) The Claims Tribunal shall maintain in addition to all registers required to be maintained by a court of Additional District Judge in Delhi, the following registers:- (i) Register of intimation of factum of accident (ii) Register for applications for interim award on principle of no fault liability; (iii) Register for deposit of payments in the Tribunal through cheques, etc.
(2) Claim petitions on the ground of death, permanent disability, injury and damage to property shall be entered in a separate register.
31. Custody and preservation of the records.- The necessary documents and records relating to the cases shall be preserved in the record room for a period of six years of the satisfaction of the award, if any granted, or for a period of twelve years after the judgment and award become final, whichever is earlier.
CHAPTER 9 APPEAL
32. Appeal against the judgment of the Claims Tribunal.-(1) Subject to the provisions of Section 173, every appeal against the judgment of the Claims Tribunal shall be preferred in the form of a memorandum signed by the applicant or the advocate duly empowered by him in this behalf, and presented to the High Court and shall be accompanied by a copy of the judgment.
(2) The memorandum shall set forth concisely and under distinct heads, the grounds of objections to the judgment appealed from without any argument or narrative, and such grounds shall be numbered consecutively.
(3) Save as provided in sub-rules (1) and (2) , the provisions of Order XLI XXI in the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908) shall mutatis mutandis apply to appeals preferred to High Court under section 173 of the Act.
33. Certified copies.- The rules relating to the issue of certified copy as in force in Delhi for the courts subordinate to the High court shall mutatis mutandis apply in the case of the Claims Tribunal.
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