NEW INDIA ASSURANCE COMPANY LIMITED Vs. NATHIBEN CHATRABHUJ SMT
HIGH COURT OF GUJARAT
NEW INDIA ASSURANCE COMPANY LIMITED
Nathiben Chatrabhuj Smt
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(1.)The following question is referred to the Full Bench by the Division Bench consisting of N. H. Bhatt and S. L. Talati JJ. as the said Division Bench was of the view that it was necessary to resolve the conflict arising out of the two inconsistent Division Bench decisions one in State Road Transport v. Malubai reported in 21 G.L.R. 400 deci- ded by B. K. Mehta and S. B. Majmudar JJ. and another in Vanaji v. Shivabhai Kashibhai reported in AIR 1980 Gujarat 154 = 1979(2)-XX(2) G.L.R. 342 decided by M. K. Shah and D. H. Shukla JJ. :
"Where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward whether a passenger on payment will get the benefit of the statutory insurance" ?
(2.)In order to appreciate the controversy in its proper perspective it requires to be mentioned that the occasion to make the reference arose in the course of proceedings in which the Insurance Company which had insured a public carrier (Leyland Goods Truck) disclaimed its liability to satisfy the awards made in three different but connected motor accident claim cases on the ground that the vehicle in question was on the date of the contract of insurance a vehicle not covered by a permit to carry passengers for hire or reward and that it was at the time of the accident stated to have been actually used to carry three passengers for hire or reward and that therefore the Insurance Company was not liable to satisfy the awards made in favour of one of such passengers who was injured and the dependents of the other two of such passengers who met with their death in the course of the accident.
(3.)It would be convenient to refer to the relevant statutory provi- sions at the outset. Chapter VIII of the Motor Vehicles Act 1939 (hereinafter be referred to as the Act) which consists of secs. 93 to 111 makes detailed provisions with regard to the insurance of motor vehicles against third party risks. Sec. 94 in so far as it is relevant for the present purposes provides that no person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle by that person or that other person as the case may be a policy of insurance complying with the requirements of the said Chapter. Sec. 95 deals with the requirements of policies and limits of liability. In 80 far as it is relevant for the present purposes the said section reads as under:
"95 (1) In order to comply with the requirements of this Chapter a policy of insurance must be a policy which
(a) xxx xxx xxx xxx
(c) insures the person or classes of persons specified in the policy to the extent specified in sub-sec. (2)
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(iii) 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 Workmens Act 1923 in respect of the death of or bodily injury to 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
(d) if it is a goods vehicle being carried in the vehicle or
(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment to cover liability in respect of the death of or bodily injury to persons being carried in or upon ar entering or mounting or alighting from the vehicle at the time of occurrence of the event out of which a claim arises or
(iv) 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.
(2) xxx xxx xxx
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms particulars and matters may be prescribed in different cases.
(3-A) xxx xxx xxx
(4) Notwithstanding anything elsewhere contained in any law a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person sPecified in the policy in respect of any liability which the policy purports to cover in the case of that person or those clauses of person.
Sec. 96 makes provision in regard to the duty of insurers to satisfy judg- ments against persons insured in respect of third party risks and to the extent relevant it is in the following terms :
"96 (1) If after a certificate of insurance has been issued under sub-sec. (4) of sec. 95 in favour of the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by a policy under clause (b) of sub-sec. (1) of sec. 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy then notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy the insurer shall subject to the provisions of this section pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder as if he were the judgment debtor in respect of the liability together with any amount payable in respect of costs and any sum payable in res- pect of interest on that sum by virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-sec. (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds namely :
(a) xxxx xxxx xxxx
(b) that there has been a breach of a specified condition of the policy being one of the following conditions namely :
(i) a condition excluding the use of the vehicle
(a) for hire or reward where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward or
(b) xxx xxx xxx
(c) for a purpose not allowed by the permit under which the vehicle is used where the vehicle is a transport vehicle or
(d) xxxx xxxx xxx
(ii) xxx xxx xxxx
(iii)xxx xxx xxxx
(e) xxx xxx xxxx
(3) Where a certificate of insurance has been issued under sub-sec. (4) of sec. 95 to the person by whom a policy has been effected so much of the policy as purports to restrict the insurance of the persons insured thereby in reference to any conditions other than those in clause (b) of sub-sec. (2) shall. as respects such liabilities as are required to be covered by a policy under clause (b) of sub-sec (1) of sec. 95 be of no effect:
Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub- section shall be recoverable by the insurer from that person.
(4) xxx xxx xxx
(5) xxx xxx xxx
(6) No insurer to whom the notice referred to in sub-sec. (2) or sub-sec. (2A) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in sub-sec. (1) or sub-sec. (2A) otherwise than in the manner provided for in sub-sec. (2) or in the corresponding law of the reciprocating country as the case may be.
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