# Fire & General Insurance Company Defendant v. Smt. Savitri Devi and others

- **Citation:** (2007) 3 ILRA 656
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2007-08-13
- **Case number:** First Appeal From Order No. 336 of 1988
- **Bench:** Prakash Krishna
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/fire-general-insurance-company-defendant-v-smt-savitri-devi-and-others-41050
- **Pages:** 8

## Headnote

Sri Rakesh Pathak
Sri Dinesh Pathak
Sri S.D. Pathak
Sri S.K. Sharma
Sri Sameer Sharma
Sri Vinay Singh

Motor Vehicle Act 1939-Section 95 (1)
(b)-Liability
of
Insurance
Companyowner of vehicle allowed the vehicle in
question to play by the U.P.S.R.T.C.-
accident
took
place-whether
the
insurance is liable to pay whole amount
of compensation or with limited liabilityheld-Insurance Company responsible to
pay whole amount of compensation-the
insurer can not be absolved from liability
to pay compensation.

Held: Para 13

Having
considered
the
respective
submissions of the learned counsel for
the parties as also the decisions relied
upon by them, I am of the opinion that
on the facts of the present case, the
insurer cannot be absolved from its
3 All] Orintal Fire & General Ins. Co. V. Smt. Savitri Devi and others
657
liability to pay the compensation amount
to the claimants on the ground that illfated Bus at the relevant point of time
was under the control of U.P. State Road
Transport
Corporation.
The
bus
in
question was being plied, under a
contract
by
the
U.P.
State
Road
Transport
Corporation
and
a
presumption would necessarily arise that
it was being plied with the permission of
its registered owner and for his benefit.
Neither the scheme of the Motor Vehicles
Act nor the terms and conditions of the
insurance policy do lend support to the
appellants' contention. It is not a case of
breach of any condition of the insurance
policy.
Case law discussed:
1997 ACJ-1148
1999 (3) SCC-754
AIR 1996 A.P. 62 (F.B.)
2003 (3) SCC-97
2006 (4) SCC-404
1978 ACJ 169
2007 ACJ-37

## Text

656 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
the
weightage
that
was
provided
thereunder. However, the Government
clarificatory order does not say anything
to provide that it will govern the selection
made earlier or made from any particular
date in the past. There is no indication in
this subsequent circular that it is to act
retrospectively. Inasmuch as there is no
specific indication therein, as stated by
the Apex Court, assuming that two
interpretations are possible, the circular
will have to be operated as prospectively.

11. In the circumstances, the view
taken by the learned Single Judge,
namely, that the circular will apply
retrospectively is not correct.

12. We have, therefore, no option
but to allow this appeal and set-aside the
order passed by learned Single Judge. The
appellant has undoubtedly received marks
higher than the respondent No.6 even
after considering the weightage that was
given to him under the earlier circular.
That being so, the petition filed by the
appellant will have to be allowed.
Consequently the order passed by the
District Magistrate on 4th December, 2006
canceling her selection will have to be
set-aside. We allow this appeal and we
allow the writ petition as well. The
appellant will be permitted to join back at
the place where she was expected to join.

13. The appeal is allowed. No order
as to costs.
---------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 13.08.2007

BEFORE
THE HON'BLE PRAKASH KRISHNA, J.

First Appeal From Order No. 336 of 1988
Connected with
First Appeal From Order No. 337 of 1988
AND
First Appeal From Order No. 428 of 1988

Oriental
Fire
&
General
Insurance
Company
 ...Defendant-Appellant
Versus
Smt. Savitri Devi and others

 ...Opposite Parties

Counsel for the Appellant:
Sri Kuldeep Shaanker Amist

Counsel for the Opposite Parties:
Sri Rakesh Pathak
Sri Dinesh Pathak
Sri S.D. Pathak
Sri S.K. Sharma
Sri Sameer Sharma
Sri Vinay Singh

Motor Vehicle Act 1939-Section 95 (1)
(b)-Liability
of
Insurance
Companyowner of vehicle allowed the vehicle in
question to play by the U.P.S.R.T.C.-
accident
took
place-whether
the
insurance is liable to pay whole amount
of compensation or with limited liabilityheld-Insurance Company responsible to
pay whole amount of compensation-the
insurer can not be absolved from liability
to pay compensation.

Held: Para 13

Having
considered
the
respective
submissions of the learned counsel for
the parties as also the decisions relied
upon by them, I am of the opinion that
on the facts of the present case, the
insurer cannot be absolved from its
3 All] Orintal Fire & General Ins. Co. V. Smt. Savitri Devi and others
657
liability to pay the compensation amount
to the claimants on the ground that illfated Bus at the relevant point of time
was under the control of U.P. State Road
Transport
Corporation.
The
bus
in
question was being plied, under a
contract
by
the
U.P.
State
Road
Transport
Corporation
and
a
presumption would necessarily arise that
it was being plied with the permission of
its registered owner and for his benefit.
Neither the scheme of the Motor Vehicles
Act nor the terms and conditions of the
insurance policy do lend support to the
appellants' contention. It is not a case of
breach of any condition of the insurance
policy.
Case law discussed:
1997 ACJ-1148
1999 (3) SCC-754
AIR 1996 A.P. 62 (F.B.)
2003 (3) SCC-97
2006 (4) SCC-404
1978 ACJ 169
2007 ACJ-37

(Delivered by Hon'ble Prakash Krishna, J.)

1. All the three appeals were heard
together and are being disposed of by a
common judgement as common questions
of law and facts are involved. These
appeals are under section 110-D of Motor
Vehicles Act 1939.

2. On 15th of March, 1984 in a
collision in between Bus No. USI 9813
and Bus No. DLP 1231, one Ajay Sharma
and his sister Smt. Madhu Shukla lost
their lives and husband of Madhu Shukla
i.e. brother in law of Ajay Sharma
received injuries. Parents of Ajay Sharma
filed claim petition No.23 of 1984 giving
rise to the First Appeal From Order
No.336 of 1998. These persons were
travelling in Bus No. USI 9813. The
claim petition was filed by the paretns of
Ajay Sharma on the pleas inter alia that
the driver of the Bus No. USI 9813 in
which Ajay Sharma was travelling from
Moradabad to Rampur side was driving it
rashly and negligently. When the Bus
reached near village Kunda about 6
Kilometres away from Rampur towards
Moradabad, the Bus No. DLP 1231 came
from Rampur side and there took place
headed on collusion between the aforesaid
two Buses. The driver of Bus No. USI
9813 lost control over the speed and it fell
into a ditch (Khad). Ajay Sharma and his
sister Madhu received fatal injuries. The
Bus No. USI 9813 was insured with the
appellant, Oriental Fire and General
Insurance Company, was being plied
under the control of U.P. State Road
Transport
Corporation.
The
Claims
Tribunal decreed the claim petition No.23
of 1984 for recovery of Rs.34,000/-
against the defendant No.3 therein namely
Oriental Fire and General Insurance
Company. The Oriental Fire and general
Insurance Company has approached this
Court by way of above First Appeal From
Order No. 336 of 1988. On similar
allegations the Claim Petition No. 12 of
1984 was filed by Shri Shreekant Shukla,
husband of Smt. Madhu Shukla claiming
compensation of the death of his wife,
before the Claims Tribunal and he has
been awarded a sum of Rs.28,600/-
against the Insurance Company, the
appellant herein by the award dated 30th
of January, 1988. Shri Shreekant Shukla
who was also a co-passenger had received
injuries, filed the Claim Petition No. 11 of
1984
for
compensation
of
injuries
received by in the aforestated accident
before the Claims Tribunal and it has
awarded a sum of Rs.24,000/- by the
award dated 3rd of January, 1988 against
which the First Appeal From Order No.
428 of 1988 has been filed.
658 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
3. It was jointly agreed by the
learned counsel for the parties that in all
these three appeals, a common question
whether award can be passed on the facts
of the present case against the Insurance
Company, is involved. These appeals
were heard together and are being
disposed off by a common judgement.
Issue No.5 was framed in Claim Petition
No.23 of 1984 to the following effect:-

"Who is liable to pay compensation",
is the point involved in these appeals.

4. It is not in dispute that the ill fated
Bus No. USI 9813 was insured with the
present appellant at the relevant point of
time when the accident took place. It is
also not in dispute that the said Bus was
being plied under the control of U.P. State
Road Transport Corporation. Shri K.S.
Amist, the learned counsel for the
appellant in all these appeals submits that
in view of the fact as the Bus in question
was under the control of U.P. State Road
Transport Corporation, the registered
owner ceases to be owner of the vehicle
and as such the insurer is not liable to
indemnify
the
insured
person. Shri
Sameer Sharma, the learned counsel for
U.P. State Road Transport Corporation,
on the other hand, submits that in view of
Section 95 and various other provisions of
Motor Vehicles Act, 1939, the insurer is
liable to pay the compensation amount to
the claimant. It has come on the record
that the Bus in question was being driven
by the driver of the insured person. But
the tickets to the passengers were issued
by the U.P. State Road Transport
Corporation. It has also been admitted
that in the fare, passenger's tax and
insurance charges were included therein.
The Tribunal under Issue No.4 reached to
the conclusion that in view of Section 95
(1) (b) of the Motor Vehicles Act, the
insurer is liable to indemnify the insured
person. The Bus being driven by the
driver of the insured person, the master
(owner) is vicariously liable for the act of
his servant.

5. Strong reliance was placed by the
learned counsel for the appellant on a
decision of the Apex Court in Rajasthan
State Road Transport Corporation Vs.
Kailash Nath Kothari and others .1997
ACJ 1148. This decision is the anchorsheet of the appellant. In the case cited
above, the ill-fated Bus was under the
control of Rajasthan State Road Transport
Corporation and was being driven by its
driver on the ill- fated day. The said Bus
met with an accident and a question arose
as to who will bear the liability to
compensate the claimants and victims.
The Insurance Company was held liable
to pay the compensation amount to the
extent of its limited statutory liability, a
total amount of Rs.75,000/- only. The
Rajasthan
State
Road
Transport
Corporation was also held liable for the
remaining
balance
amount,
a
compensation
over
and
above
the
statutory liability of the insurer. The
contention of the Rajasthan State Road
Transport Corporation that since it was
only hirer and not owner of the Bus, it
could not be fastened with any liability of
payment of compensation, was examined
and
rejected
by
the
Apex
Court.
Therefore, the learned counsel for the
appellant submits that it is for the State
Road Transport Corporation to bear the
burden of compensation in its entirety.
However, it is difficult to agree with his
submission.

6. At a first flash, the argument is
attractive but on a deeper probing it has
3 All] Orintal Fire & General Ins. Co. V. Smt. Savitri Devi and others
659
got no merit. In the decision cited above
the controversy involved therein was
totally different. Issue was with regard to
the liability of Rajasthan State Road
Transport Corporation with regard to the
payment of compensation over and above
the liability of the insurer. A close reading
of the aforesaid citation shows that in no
uncertain
terms
the
insurer
therein
accepted its liability up to the statutory
limit. The Rajasthan State Road Transport
Corporation was disowning its liability to
pay compensation over and above the
statutory liability of the insurer. The ratio
laid down in the said decision should be
read keeping in mind these essential facts.
It was not a case of total denial of liability
by the insurer. In the case on hand, the
insurer is completely disowning its
liability which is otherwise on it under the
insurance policy to pay the compensation
amount to the claimants.

7. At this juncture Shri Sameer
Sharma, the learned counsel for the U.P.
State Road Transport Corporation has
rightly placed reliance on sections 94,95,
97 and 103 - A and Motor Vehicles Act,
1939 as also on G. Govindan Vs. New
India Assurance Co. Limited (1999 ) 3
SCC 754. In this case the controversy was
whether the insurance policy lapses and
consequently the liability of insurer
ceases when the insured vehicle was
transferred and no application/intimation
as prescribed under section 103-A of the
Act was given. The Apex Court after
noticing the conflicting views of different
High Courts has affirmed the judgement
of Andhra Pradesh High Court in
Madineni Kondaiah Vs. Yaseen Fatima
AIR 1996 Andhra Pradesh 62 (F.B.).

It was held that section 95 requires
insurance of vehicle. When the vehicle is
covered by insurance not only the owner
but any person can use the vehicle with
his permission. It has been held that
"..........S. 94 does not require that every
person that uses the vehicle shall insure in
respect of their separate use. The decided
cases now held that on transfer the policy
will lapse and a third party cannot enforce
the policy against the insurance company.
We must make it clear that there are two
third parties when such transfer took
place. One is a transferee who is a third
party to the contract and the other for
whose risk the vehicle is insured. We
have no hesitation to hold that the
transferee who is a third party to the
contract cannot secure any personal
benefit under the policy unless there is a
novation i.e. the insurance company, the
transferor
of
the
vehicle,
and
the
transferee must agree that the policy must
be assigned to the transferee so that the
benefit derivable, or derived under the
policy by the original owner of the
vehicle, the policy holder can be secured
by the transferee. Thus, it is clear under a
composite policy, covering the risk of
property, person, third party risks, the
transferee cannot enforce the policy
without the assignment in his favour so
far the policy covers the risk of the person
and property. He has no remedy against
the Insurance Company.
......................................
......................................
It is incorrect to assume that the moment
the title of the vehicle passes to the
transfree the statutory obligation under S.
94 ceases and the original owner is no
longer guilty of causing or allowing the
purchaser to use the vehicle. The question
is when does the statutory liability cease?
The mere passing of title in the vehicle to
the transferee will not but an end to this
liability."
660 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
It has been further held that ".......It is
clearly an impracticable view to take that
on passing of property in the vehicle, the
policy lapses and the obligation under S.
94 of the Act ceases. In fact as observed
by Supreme Court the policy is to the
vehicle and hence normally it should run
with the vehicle. It is just to expect a
reasonable time for the transferor to make
the necessary arrangement to notify the
transfer under S. 31 and secure the
certificate under S. 29-A within the time
mentioned in those provisions. If this is
not allowed, the moment the vendor the
money and puts the vehicle in possession
of the transferee, the latter is not in a
position to use the vehicle in view of S. 94
till a fresh policy is obtained. He cannot
take the vehicle to his house passing
through any public place. When the
transferor is liable to pay penalty under S.
31 and also liable to be prosecuted under
S. 112 for not notifying the transfer. We
are clearly of the opinion such statutory
liability makes him to retain the insurable
interest as the liability subsists till he
discharges the statutory obligations. We
disagree with the view expressed in N.
Kanakalakshimi v. R.V. Subba Rao
(1972) 1 APLJ 249."

8. The aforesaid decision has been
followed in Rikhi Ram and another Vs.
Sukhirania (Smt) and others (2003) 3
SCC 97 and has held that compulsory
insurance is for the benefit of third party.
Section 95 (5) shows that it was intended
to cover local objectives. The relevant
portion from the said judgement is
reproduced below:-

"5. The aforesaid provision shows
that it was intended to cover two legal
objectives. Firstly, that no one who was
not a party to a contract would bring an
action on a contract; and secondly, that a
person who has no interest in the subjectmatter of an insurance can claim the
benefit of an insurance. Thus, once the
vehicle is insured, the owner as well as
any other person can use the vehicle
with the consent of the owner. Section 94
does not provide that any person who will
use the vehicle shall insure the vehicle in
respect of his separate use. (Emphasis
supplied)

6. On an analysis of Ss. 94 and 95,
we further find that there are two third
parties when a vehicle is transferred by
the owner to a purchaser. The purchaser
is one of the third parties to the contract
and other third party is for whose benefit
the vehicle was insured. So far, the
transferee who is the third party in the
contract, cannot get any personal benefit
under the policy unless there is a
compliance of the provisions of the Act.
However, so far as third party injured or
victim is concerned, he can enforce
liability undertaken by the insurer."

9. Very recently the same view has
been reaffirmed by the Apex Court in
United
India
Insurance
Company
Limited Vs. Tilak Singh and others
(2006) 4 SCC 404. The relevant passage
is reproduced below:-

"13. Thus, in our view, the situation
in law which arises from the failure of the
transferor to notify the insurer of the fact
of transfer of ownership of the insured
vehicle is no different, whether under
Section 103-A of the 1939 Act or under
Section 157 of the 1988 Act in so far as
the liability towards a third party is
concerned. Thus, whether the old Act
applies to the facts before us, or the new
Act applies, as far as the deceased third
3 All] Orintal Fire & General Ins. Co. V. Smt. Savitri Devi and others
661
party was concerned, the result would not
be different. Hence, the contention of the
appellant on the second issue must fail,
either way, making a decision on the first
contention unnecessary, for deciding the
second issue. However, it may be
necessary to decide which Act applies for
deciding the third contention. In our view,
it is not the transfer of the vehicle but the
accident which furnishes the cause of
action for the application before the
tribunal. Undoubtedly, the accident took
place after the 1988 Act had come into
force. Hence it is the 1988 Act which
would govern the situation."

10. No doubt in these decisions
question of transfer of insured vehicle to a
purchaser by registered owner vis -a -vis
the liability of insurer to the purchaser
was involved. But I see no reason not to
apply the above principle of law in the
case of an insured vehicle where the
registered owner permits another person
to use it. It will make no difference as to
whether the insured vehicle has been sold
or is permitted to be used by a third
person.

11. Use of vehicle by a third person
other than the registered owner with the
permission of the registered owner will
not absolve the liability of the insurer as
the insurance is of the vehicle and not of
the owner. A vehicle which is insured
continues to be insured so long it is being
driven by an authorized person competent
to drive the vehicle with the permission of
the registered owner. The word "owner" is
defined under section 2(19) of the Motor
Vehicles
Act
of
1939
and
it
is
corresponding to section 2(3) of the
Motor Vehicles Act, 1988. It has been
held above by the Apex Court that there is
no substantial difference in the definition
of word "owner" as contained in the Old
Act and the New Act.

12. Deoki Devi Tiwari and others
Vs. Raghunath Sahai Chatrath and
others 1978 ACJ 169 (DB), a decision of
this Court was heavily relied upon by the
appellant. In this case the owner of the
Jeep gave the vehicle to U.P. Congress
Committee for election purposes. The said
Jeep collided with a Petrol Tanker
resulting in death of a passenger on the
Jeep. In the said case it was found that the
owner had given the Jeep but the said
Jeep was not under the control of the
owner and the driver was not agent of the
owner. In this fact situation it was held
that the Jeep was not being driven for the
purposes of the owner and was not under
the control of the owner, consequently the
insurer of the Jeep was not liable to pay
compensation amount. On facts, the said
decision is distinguishable as the Jeep in
question was not being driven for the
purposes of the owner and the driver was
not agent of the owner. In that fact
situation this Court absolved the insurer
from its liability. Apart from the fact that
the said judgement was rendered in a
different factual setting, there is hardly
any discussion on the relevant sections of
the Motor Vehicles Act. Only a brief
reference in one sentence in para 24 of the
report has been made that a reading of
sections 94 to 96 also leads to the same
conclusion.
There
is
no
threadbare
analysis of the scheme of the Motor
Vehicles Act or of Sections 94 to 96. The
ratio laid down therein should be read and
understood in the light of subsequent
judgements of the Apex Court referred to
herein above.

13. Having considered the respective
submissions of the learned counsel for the
662 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
parties as also the decisions relied upon
by them, I am of the opinion that on the
facts of the present case, the insurer
cannot be absolved from its liability to
pay the compensation amount to the
claimants on the ground that ill-fated Bus
at the relevant point of time was under the
control of U.P. State Road Transport
Corporation. The bus in question was
being plied, under a contract by the U.P.
State Road Transport Corporation and a
presumption would necessarily arise that
it was being plied with the permission of
its registered owner and for his benefit.
Neither the scheme of the Motor Vehicles
Act nor the terms and conditions of the
insurance policy do lend support to the
appellants' contention. It is not a case of
breach of any condition of the insurance
policy.

14. Viewed as above, I find no merit
in the argument of the appellants and it is
held that the Tribunal has rightly fixed the
liability to pay the compensation on the
insurer - appellants. There is no infirmity
in the award under the appeal, on this
score.

15. So far as the question of limited
liability of the insurer is concerned,
suffice it to say that the said plea is no
longer open as the insurance policy is not
on the record of the case.

The Apex Court in the case of
National Insurance Vs. Jugal Kishore
(supra) has held that,

"In all cases where the Insurance
Company concerned wishes to take a
defence in a claim petition that its liability
is not in excess of statutory liability, it
should file a copy of the Insurance Policy
along with its defence."
Further it has been observed that
filing of the policy, therefore, not only
cuts short avoidable litigation but also
helps the court in doing justice between
the parties. Obligation on the part of the
State or its instrumentalities to act fairly
can never be over emphasized.

16. Very recently, the Apex Court in
Tejinder Singh Gujral Vs. Inderjit Singh
and another 2007 ACJ 37 has approved
the decision of High Court where a
presumption was drawn in absence of
insurance policy that liability of insurer
was unlimited. The relevant paragraph is
reproduced below:-

"13. The learned Tribunal, however,
committed an error in opining that the
insurance policy was not required to be
proved. Learned Single Judge of the High
Court, in our opinion, rightly held that the
insurance policy having not brought on
record, a presumption would arise that
the liability of the insurer was unlimited.
The learned single Judge adopted a
rather liberal approach. He took into
consideration the entire evidence on
record including the extent of disability
allegedly suffered by appellant."

17. Thus, it follows that in absence
of insurance policy the plea of limited
liability cannot be pressed into service by
the appellant.

18. Lastly, a feeble attempt was
made that the accident was the result of
contributory negligence of both the
vehicles, the compensation amount should
be appropriated between the appellant and
the
U.P.
State
Road
Transport
Corporation. Indisputably, no permission
was granted by the tribunal or by Court as
required under section 110 C (2-A) of the
3 All] Employees State Ins. Corp. V. Kamal Ahmad
663
Motor Vehicles Act, 1939 to take such
defences as were available to insured
person. The said plea, therefore, also fails.

19. In the result, there is no merit in
the appeal. All the appeals are hereby
dismissed with no order as to costs.
---------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 31.08.2007

BEFORE
THE HON'BLE PANKAJ MITHAL, J.

First Appeal From Order No. 426 of 2001

Employees State Insurance Corporation

...Appellant
Versus
Kamal Ahamad

 ...Respondent

Counsel for the Appellant:
Sri Saral Srivastava

Counsel for the Respondent:
Sri I.M. Tripathi

Employees State Insurance (Central)
Rules 1950-Section 20-B-Limitation for
Appeal-three months-runs from the date
of communication and not from the date
of order by medical Board-this question
nor raised before Employees Insurance
Court-can not be allowed in Appeal.

Held: Para 5

The limitation for filing the appeal before
the Employees Insurance Court runs
from the date of communication of the
decision of the Medical Board and not
from the actual date of the order of the
Medical Board. Therefore, the submission
that the appeal before the Employees
Insurance
Court
was
beyond
the
limitation
is
without
substance.
Moreover, it appears that no such issue
of limitation was raised by the appellant
before the Employees Insurance Court.
The Employees Insurance Court has
considered the appeal on merits. Once
the appeal was considered and decided
on
merits
without
going
into
the
question of limitation, the presumption
is that no such point was raised by the
appellant and had been abandoned and
given up by the appellant.

(Delivered by Hon'ble Pankaj Mithal, J.)

1. Heard Shri Saral Srivastava,
learned counsel for the appellant and Shri
I.M. Tripathi, learned counsel for the
respondent and perused the record.

2. Employees State Insurance
Corporation has challenged the order
dated 27.1.2001 passed by the Employees
Insurance Court, Kanpur Nagar in appeal
no. 244 of 1993 (Kamal Ahamad Vs.
Employees State Insurance Corporation)
whereby the Employee Insurance Court
has determined the permanent partial
disability of the respondent to the extent
of 10%.

3. The respondent was an employee
of the Elgin Mill and was insured with the
Employees State Insurance Corporation.
He suffered injury in his left eye while on
duty on 6.1.1990. The Medical Board
rejected the claim of the respondent on
25.7.1991 whereupon the respondent
preferred an appeal before the Employees
Insurance Court, which has been partly
allowed by the impugned order.

4. The first submission of the
learned counsel for the appellant is that
the appeal of the respondent before the
Employees Insurance Court was barred by
time. The order of the Medical Board was
passed on 25.7.1991 whereas the appeal
was
preferred
on
25.5.1993.
The
limitation for filing the appeal is only