# The United India Insurance Co. Ltd v. Smt. Suraj Kala & Ors

- **Citation:** (2023) 8 ILRA 176
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-08-08
- **Case number:** First Appeal From Order No. 551 of 2019
- **Bench:** Jaspreet Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-united-india-insurance-co-ltd-v-smt-suraj-kala-ors-50574
- **Pages:** 21

## Headnote

A. Civil Law - Motor Vehicle Act, 1988Section 173--Challenge to-In the instant
case, it is found that the policy in
question is an Act Policy-deceased was an
employee
of
the
owner
-The
said
employee was not as if, he was a casual
employee but was a regular driver and
therefore, he would be covered in terms of
Section 147 (1) proviso (a) as mentioned
in the Act- In terms of Section 167 of the
Act option is available for a party to either
file the claim petition before the Claims
Commissioner under the Act of 1923 or
before
the
M.A.C.T.-However,
the
difference would be that if a party chooses
to file his claim before the Motor Accident
Claims Tribunal and the Tribunal awards
an amount which is higher than the
amount which is computed under the
Compensation Act of 1923, then the
liability of the insurance company would
only be to the extent of the amount which
is payable in terms of the Act of 1923 and
the excess amount would be payable by
the owner.-However, if an additional sum
or premium is paid to cover or enhance
the liability, then the entire award would
be payable by the insurance company-In
the instant case, since it was an Act policy
and the Tribunal has also awarded the
amount computing it in context with the
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
177
Compensation Act of 1923 as evident
from the award itself. Accordingly, this
liability of Rs.3,36,000/- is liable to be
indemnified by the insurance companyThus,
the
decision
rendered
by
the
Tribunal does not suffer from an error to
persuade this Court to arrive at any other
finding- accordingly, the award d is
affirmed.(Para 1 to 35)

B. The true import of Section 147 and the
proviso appended thereto is that the Act
Policy would cover third party risks, but it
would also cover the liability arising out of
death or bodily injury in respect of such
persons which have been indicated in the
proviso as (a), (b), (c) and that too, to a
limited extent as determined in terms of
the Employees Compensation Act, 1923.
Therefore, any liability relating to such
specified individuals as mentioned and
described in the proviso on account of
death or bodily injury, their claims can be
limited only to the extent which is
determined in terms of the Compensation
Act
of
1923,
but
the
moment
any
additional premium is paid towards such
category of persons then, the liability can
be
enhanced
and
would
be
made
unlimited.(Para 33)

The appeal is dismissed. (E-6)

List of Cases cited:

## Text

_Characters 0–39,406 of 72,528. This is a partial read: ask again with offset=39406 for what follows._

176 INDIAN LAW REPORTS ALLAHABAD SERIES
about the payment of the Rs.6,000/- which
had been allegedly lent by his mother-inlaw.

16. Having heard the learned counsel
for the defendant -appellant and learned
counsel for the plaintiff-respondent, this
Court is of the view that he Second Appeal
lacks merit and is liable to be dismissed.

17. The plaintiff has proved the plaint
allegation to the hilt. The receipts which
find mention in the plaint; all the money
the plaintiff had paid on 17.6.1971,
4.7.1971,
24.10.1971,
3.6.1972
and
14.6.1972 totalling Rs. 11,000/- which were
paid before the sale deed was executed and
the payment of Rs. 4,000/- on 24.6.1972
have not been denied in any manner
whatsoever by the defendant/appellant. In
fact, the First Appellate has found that
these receipts were there and the reason
given by the Trial Court to disbelieve the
payment have been disbelieved by the First
Appellate Court in toto. What goes further
in favour of the plaintiff is that the
defendant, when had replied to his notice
dated 17.6.1977 before filing of the Suit
had not mentioned about the payments
made by the defendant, as has been alleged
in the written statement, and therefore, this
Court is also of the view that the findings
as have been arrived at by the First
Appellate Court are unassailable. In fact,
the substantial question of law as was
framed on 3.8.1983 by this Court is thus
not required
 to be answered in view of the findings of
the First Appellate Court.

18. The Second Appeal is concluded
by findings of fact. No interference is
warranted and thus the appeal is dismissed.
----------
(2023) 8 ILRA 176
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 08.08.2023

BEFORE

THE HON'BLE JASPREET SINGH, J.

First Appeal From Order No. 551 of 2019

The United India Insurance Co. Ltd.
 ...Appellant
Versus
Smt. Suraj Kala & Ors. ...Respondents

Counsel for the Appellant:
Anil Kumar Srivastava

Counsel for the Respondents:
Ravindra Pratap Singh

A. Civil Law - Motor Vehicle Act, 1988Section 173--Challenge to-In the instant
case, it is found that the policy in
question is an Act Policy-deceased was an
employee
of
the
owner
-The
said
employee was not as if, he was a casual
employee but was a regular driver and
therefore, he would be covered in terms of
Section 147 (1) proviso (a) as mentioned
in the Act- In terms of Section 167 of the
Act option is available for a party to either
file the claim petition before the Claims
Commissioner under the Act of 1923 or
before
the
M.A.C.T.-However,
the
difference would be that if a party chooses
to file his claim before the Motor Accident
Claims Tribunal and the Tribunal awards
an amount which is higher than the
amount which is computed under the
Compensation Act of 1923, then the
liability of the insurance company would
only be to the extent of the amount which
is payable in terms of the Act of 1923 and
the excess amount would be payable by
the owner.-However, if an additional sum
or premium is paid to cover or enhance
the liability, then the entire award would
be payable by the insurance company-In
the instant case, since it was an Act policy
and the Tribunal has also awarded the
amount computing it in context with the
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
177
Compensation Act of 1923 as evident
from the award itself. Accordingly, this
liability of Rs.3,36,000/- is liable to be
indemnified by the insurance companyThus,
the
decision
rendered
by
the
Tribunal does not suffer from an error to
persuade this Court to arrive at any other
finding- accordingly, the award d is
affirmed.(Para 1 to 35)

B. The true import of Section 147 and the
proviso appended thereto is that the Act
Policy would cover third party risks, but it
would also cover the liability arising out of
death or bodily injury in respect of such
persons which have been indicated in the
proviso as (a), (b), (c) and that too, to a
limited extent as determined in terms of
the Employees Compensation Act, 1923.
Therefore, any liability relating to such
specified individuals as mentioned and
described in the proviso on account of
death or bodily injury, their claims can be
limited only to the extent which is
determined in terms of the Compensation
Act
of
1923,
but
the
moment
any
additional premium is paid towards such
category of persons then, the liability can
be
enhanced
and
would
be
made
unlimited.(Para 33)

The appeal is dismissed. (E-6)

List of Cases cited:

1. Oriental Ins. Co. Ltd. Vs Devireddy Konda
Reddy (2003) 2 SCC 339: 2003 SCC (Cri) 540

2. National Ins. Co. Ltd. Vs Prembai Patel
(2005) 6 SCC 172 : 2005 SCC (L&S) 819

3. National Ins. Co. Ltd. Vs Cholleti Bharatamma
(2008) 1 SCC 423 : (2008) 1 SCC (Cri) 224 :
(2008) 1 SCC (Civ) 280

4. New India Assr. Co. Ltd. Vs Vedwati (2007) 9
SCC 486] , (SCC p. 490

5. New India Assr. Co. Ltd. Vs Asha Rani (2003)
2 SCC 223 : 2003 SCC (Cri) 493

6. New India Assr. Co. Vs Satpal Singh (2000) 1
SCC 237 : 2000 SCC (Cri) 130

(Delivered by Hon'ble Jaspreet Singh, J.)

1. The instant appeal has been
preferred by the Insurance
company
assailing the award dated 10.07.2019
passed in C.P. No.646 of 2013 whereby in a
death case, the Tribunal has awarded a sum
of Rs.3,36,000/- along with 7% interest in
favour of the claimants-respondents.

2. Shri Anil Kumar Srivastava,
learned counsel for the appellant submits
that the Tribunal has erred in fastening the
liability on the insurance company for the
reason that in terms of Section 147 of the
Motor Vehicles Act, 1988, the deceased was
not covered as the policy in question was
merely an 'Act Policy' and in terms whereof
only third party claims could have been
indemnified. Since in the instant case, the
driver was not covered and he caused the
accident by his own negligence, therefore,
not being a third party, the insurance
company was not liable for the award. It is
only the owner of the vehicle who could be
made responsible and this aspect has not
been appropriately considered by the
Tribunal who has fixed the liability on the
insurance Company.

3. It has further been urged that the
Tribunal has misconstrued the decision
of the Apex Court in the case of
National
Insurance
Co.
Ltd.
vs.
Prembai Patel and others AIR 2005 SC
2337
and
without
considering
the
contention of the insurance company
that under the 'Act Policy', it was only a
third party claim which could be covered
and not the claim of the driver, hence,
the award is bad.
178 INDIAN LAW REPORTS ALLAHABAD SERIES

4.

Further
elaborating
his
submissions, it is also urged that in the
policy it was clearly mentioned that no
premium had been taken for the driver.
Accordingly, the liability of the insurance
company was limited and it could not be
extended to cover such risks which were
not covered by the policy and ignoring this
aspect, the award has been delivered,
fastening the liability on the appellantcompany, which is not in consonance with
law, accordingly, the award deserves to be
set aside.

5. The learned counsel for the
appellant in support of his submissions has
relied upon the decision of the Apex Court
in Oriental Insurance Co. Ltd. vs. Meena
Variyal and others (2007) 5 SCC 428 and
National
Insurance
Co.
Ltd.
vs.
Balakrishnan and another (2013) 1 SCC
731.

6. Per contra, Shri Ravindra Pratap
Singh, learned counsel for the claimantsrespondents while defending the award
submits that in the instant case, the claim
petition was filed under Section 163-A of
the Motor Vehicles Act, 1988.

7. It is further urged that Section 167
of the Motor Vehicles Act permits a person
to opt for the forum to file a claim petition
either under the Workmen's Compensation
Act, 1923 or under the Motor Vehicles Act,
1988, but not both.

8. It is further submitted that in the
instant case, the claimants chose to file the
claim petition under the Motor Vehicles Act
and since, the deceased was the driver of
the owner of the vehicle and he sustained
injuries which led to his death and being a
petition under Section 163-A of the Motor
Vehicles Act, it was not incumbent on the
claimants to establish the negligence and
once, it was proved that the accident
occurred on account of use of a motor
vehicle, then in terms of Section 163-A of
the Act of 1988, the claimants were entitled
to the compensation.

9. It is further urged by the counsel
for the claimants-respondents that in terms
of Section 147 of the Act, the insurance
company is liable under the 'Act Policy' to
cover the driver and in the instant case, it is
not disputed that the deceased was a driver,
therefore, the claimants were entitled to
compensation and the insurance company
was duty bound to indemnify the award in
terms of Section 149 of the Motor Vehicles
Act.

10. It is further pointed out that this
aspect of the matter was considered by the
Apex Court in Prembai Patel (supra) and
the same has rightly been relied by the
Tribunal and as such it cannot be said that
the award passed by the Tribunal is
erroneous.

11. It is also submitted that the
decisions which have been cited by the
learned counsel for the appellant in Meena
Variyal (supra) and Balakrishanan (supra),
they were considered by the Apex court in
various other decisions including the full
Bench decision of the Gujarat High Court
in Valiben Laxmanbhai Thakore (Koli)
and others vs. Kandla Dock Labour Board
and others 2021 ACJ 2262 and the
aforesaid decision also clearly establishes
that it is the liability of the insurance
company to satisfy the award. It is thus
urged that the issue No.6 was correctly
decided by the Tribunal and the award is
liable to be indemnified by the insurance
company. Accordingly, the appeal lacks
merit and deserves to be dismissed.
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
179

12. The Court has heard the learned
counsel for the parties and also perused the
material on record.

13. Before adverting to the respective
submissions of the counsel for the parties,
it will be appropriate to take a glance at the
events giving rise to the instant appeal.

14. The claimants-respondents No.1
and 2 instituted a claim petition under
Section 163-A of the Motor Vehicles Act,
1988 before M.A.C.T./A.D.J., Court No.6,
Barabanki registered as C.P. No. 646 of
2013.

15. It was pleaded that the deceased-
Luv Kush Kumar was working as a driver
with the respondent No.3. On the fateful
day i.e. 28.11.2013, he was driving a mini
truck belonging to the respondent No.3
bearing No. U.P. 41 T 9561 and around
11.30 AM, when he had reached the cold
storage, Pratapganj under P.S.- Safdarganj,
District- Barabanki, a truck which was
moving ahead of the mini truck being
driven by Luv Kush suddenly slammed its
brakes and as a result, the mini truck being
driven by Luv Kush dashed and its front
portion was badly damaged and on account
of the said accident, the deceased sustained
injuries and later succumbed to his injuries.

16. It is in respect of the aforesaid
accident that the claim petition was filed
which was contested both by the owner as
well as the insurance company. The owner
while filing his written statement admitted
that the vehicle in question was a new vehicle
which was duly insured with the United India
Insurance Company Ltd. It was also admitted
that the truck in question had all valid
documents and its driver Luv Kush also
possessed the valid driving license with the
endorsement to drive a transport vehicle. The
mini truck in question had the requisite
permit, fitness certificate and as such in case,
if any liability is assessed, it was to be
indemnified by the insurance company.

17. The insurance company while
contesting the claim petition raised the plea
that the policy in question was merely an
'Act Policy'. Since the driver was not
covered and no extra premium was paid for
the aforesaid purpose, hence, only third party
claims could be covered. Since, the driver
cannot be treated as a third party and he was
responsible
for
the
accident
himself,
accordingly, the insurance company was not
liable.

18. The Tribunal considering the
respective contentions framed seven issues
and after permitting the parties to lead
oral as well as documentary evidence, it
recorded its finding and concluded that
Luv Kush died on account of an accident
while driving the truck bearing No. U.P.
41 T 9561. It also concluded that the
driver had a valid and subsisting license
and the truck was duly insured with the
insurance company. While dealing with
the issue regarding liability of the
insurance company, it considered Section
147 of the Motor Vehicles Act and relying
upon the decisions of the Apex Court in
case
of
Prembai
Patel
(supra),
it
computed
the
compensation
of
Rs.3,36,000/- and awarded the same
along with 7% interest per annum by
means of its award dated 10.07.2019.

19. This award is under challenge on
the ground raised by the insurance
company
and
as
already
noticed
hereinabove.

20. In order to appreciate the
contentions of the respective parties, it will
180 INDIAN LAW REPORTS ALLAHABAD SERIES
be first relevant to notice the statutory
provisions with the aid of relevant cases of
the Apex Court on the aforesaid subject.

21. Section 145 which is contained in
Chapter 11 of the Motor Vehicles Act, 1988
relates to definitions and certain relevant
words/terms which have been defined are
being noticed hereinafter:-
Chapter XI
Insurance of Motor Vehicles against third
party risks

"145.
Definitions.-In
this
Chapter,-

(a) ...............

(b) "certificate of insurance"
means a certificate issued by an authorised
insurer in pursuance of sub-section (3) of
section 147 and includes a cover note
complying with such requirements as may
be prescribed, and where more than one
certificate has been issued in connection
with a policy, or where a copy of a
certificate has been issued, all those
certificates or that copy, as the case may
be;

(c) "liability", wherever used in
relation to the death of or bodily injury to
any person, includes liability in respect
thereof under section 140;

(d)
"policy
of
insurance"
includes "certificate of insurance";

(e) ...............

(f)
...............

(g) "third party" includes the
Government."

22. Section 146 of the Act, 1988
clearly prohibits any person to 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 this chapter. This clearly
indicates that the effort is to ensure that no
vehicle is plied on the road without an
effective insurance policy.

23. The requirements of a policy and
the limits of liability is contained in Section
147 of the Act of 1988, which is relevant
for
the
adjudication
of
the
instant
controversy
and
as
such
is
being
reproduced hereinafter:-

"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-

(a) is issued by a person who is
an authorized insurer; and

(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 27 [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) in respect of the
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
181
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 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."

(2) Subject to the proviso to subsection (1), a policy of insurance referred
to in sub-section (1), shall cover any
liability incurred in respect of any accident,
up to the following limits, namely:-

(a) save as provided in clause (b),
the amount of liability incurred;

b) in respect of damage to any
property of a third party, a limit of rupees
six thousand:

Provided that any policy of
insurance issued with any limited liability
and in force, immediately before the
commencement of this Act, shall continue
to be effective for a period of four months
after such commencement or till the date of
expiry of such policy whichever is earlier.

(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 condition 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.

(4) Where a cover note issued by
the insurer under the provisions of this
Chapter or the rules made thereunder is
not followed by a policy of insurance within
the prescribed time, the insurer shall,
within seven days of the expiry of the
period of the validity of the cover note,
notify the fact to the registering authority in
whose records the vehicle to which the
cover note relates has been registered or to
such
other
authority
as
the
State
Government may prescribe.

(5)
Notwithstanding
anything
contained in any law for the time being in
force, an insurer issuing a policy of
insurance under this section shall be liable
to indemnify the person or classes of
persons specified in the policy in respect of
any liability which the policy purports to
cover in the case of that person or those
classes of persons."

(Note:- The underlining in the
aforesaid provision has been done by this
Court to emphasize certain aspects which
shall be dealt with in the body of this
judgment.)

24. Section 149 casts a duty on the
insurer to satisfy the judgment and award
against persons insured in respect of third
party risks. From the perusal of the
aforesaid Sections, it would indicate that it
is mandatory for every vehicle owner to get
his vehicle insured before plying it on the
road.

25. Section 147 clearly provides the
minimum requirements of an insurance
policy. The policy which is issued by an
182 INDIAN LAW REPORTS ALLAHABAD SERIES
authorized insurer must comply with the
minimum standards which is called an 'Act
Policy'. However, since a contract of
insurance is like any other contract, the
parties are free to pay a higher premium
and get the limits enhanced. It is in the
aforesaid backdrop, it is always open for a
party to pay higher premium and get
various other risks covered. Generally,
when various other risks are covered and
the liability is unlimited of the insurance
company, such policies are termed as
'comprehensive' or 'package policies'.

26. In the aforesaid backdrop, the
controversy which emerges in the instant
case is whether the 'Act Policy' would
cover the driver or not? It is in this context
that Section 147 of the Act assumes
significance and in order to understand the
said provision better, the Court has
underlined the proviso and the explanation
which has been appended to the said
section.

27. At this stage, it will also be
relevant to notice the decisions of the Apex
Court and in Meena Variyal (supra), a
claim petition was preferred under Section
166 of the Act of 1988 and the deceased in
question had died in a car accident and was
an occupant of the said car. The car was
being driven by its driver Mahmood Hasan.
The car was being used for the benefit of its
employee. The stand of the insurance
company was that since the deceased
himself was driving the vehicle, he was not
entitled to any claim on account of his own
negligence. The Tribunal had awarded a
sum of Rs.7,20,000/- and held that since
the vehicle was being driven by the
deceased himself and was an employee of
the owner of the car and the insurance did
not cover such an employee, thus, he was
made to pay the amount. The claimants
have preferred an appeal before the High
Court where the High Court directed the
insurance company to pay the amount as
awarded by the Tribunal and leaving it
open for the insurance company to recover
the aforesaid amount from the owner. This
matter went up to the Apex Court wherein
the Apex Court considering the decisions
found that there was no finding that
Mahmood Hasan, another employee of the
owner was driving the vehicle. It further
held that the victim was the regional
manager of the company that owned the car
and since he was using the car given for his
own use by the company, hence, the
insurance policy in question which did not
cover any special risk including to satisfy
the
award
under
the
Workmen's
Compensation Act, hence, the insurance
company was not held liable. Relevant
paragraphs of the aforesaid decision are
being reproduced hereinafter for ready
reference:-

"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 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
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
183
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 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.

15. 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.

23. We are thus satisfied that
based on the ratio in National Insurance
Co. Ltd. v. Swaran Singh and others
[(2004) 3 SCC 297 : 2004 SCC (Cri) 733]
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 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.

24. It was argued by learned
counsel for the appellant that since on the
184 INDIAN LAW REPORTS ALLAHABAD SERIES
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 (sic insurer)
could be asked to indemnify the insured.
The decision in Minu B. Mehta v.
Balkrishna Ramchandra Nayan [(1977) 2
SCC 441 : (1977) 2 SCR 886] of a threeJudge Bench of this Court was relied on in
support.

25. 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 : (Minu B. Mehta case
[(1977) 2 SCC 441 : (1977) 2 SCR 886] ,
SCC pp. 455-56, para 33)

"33. 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 lynchpin
to recover compensation. Their Lordships
concluded by saying : (Minu B. Mehta case
[(1977) 2 SCC 441 : (1977) 2 SCR 886] ,
SCC pp. 456-57, para 37)

"37. 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."

29. 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 Manager 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 Actwithout 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."

28. The learned counsel for the
appellant has also relied upon the decision
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
185
of BalaKrishanan (supra) wherein the issue
of an 'Act Policy' and the requirements in
terms of Section 147 has been considered
including the earlier decision of Meena
Variyal (supra). The Apex Court after
noticing the various earlier decisions of the
Apex
Court
on
the
aforesaid
point
including certain tariff circulars held as
under:-

"26. In view of the aforesaid
factual position, there is no scintilla of
doubt
that a
"comprehensive/package
policy" would cover the liability of the
insurer for payment of compensation for
the occupant in a car. There is no cavil that
an "Act policy" stands on a different
footing from a "comprehensive/package
policy". As the circulars have made the
position very clear and IRDA, which is
presently the statutory authority, has
commanded
the
insurance
companies
stating that a "comprehensive/package
policy" covers the liability, there cannot be
any dispute in that regard. We may hasten
to clarify that the earlier pronouncements
were rendered in respect of the "Act
policy" which admittedly cannot cover a
third-party risk of an occupant in a car.
But,
if
the
policy
is
a
"comprehensive/package
policy",
the
liability would be covered. These aspects
were not noticed in Bhagyalakshmi
[(2009) 7 SCC 148 : (2009) 3 SCC (Civ)
87 : (2009) 3 SCC (Cri) 321] and,
therefore, the matter was referred to a
larger Bench. We are disposed to think
that there is no necessity to refer the
present matter to a larger Bench as
IRDA, which is presently the statutory
authority, has clarified the position by
issuing
circulars
which
have
been
reproduced in the judgment by the Delhi
High Court and we have also reproduced
the same."

Since the issue whether the policy in
question was an 'Act Policy' or a
comprehensive policy was not considered
by the Tribunal and the High Court, the
Apex Court further remanded the matter as
shall be evident from para 27 and 28 of the
aforesaid decision which reads as under:-

"27. In view of the aforesaid
legal position, the question that emerges
for consideration is: whether in the case at
hand, the policy is an "Act policy" or
"comprehensive/package policy"? There
has been no discussion either by the
Tribunal or the High Court in this regard.
True it is, before us, Annexure P-1 has been
filed which is a policy issued by the insurer.
It only mentions the policy to be a
"comprehensive
policy"
but
we
are
inclined to think that there has to be a
scanning of the terms of the entire policy to
arrive at the conclusion whether it is really
a "package policy" to cover the liability of
an occupant in a car.

28. In view of the aforesaid
analysis, we think it apposite to set aside
the finding of the High Court and the
Tribunal as regards the liability of the
insurer and remit the matter to the Tribunal
to scrutinise the policy in a proper
perspective and, if necessary, by taking
additional evidence and if the conclusion is
arrived at that the policy in question is a
"comprehensive/package
policy",
the
liability would be fastened on the insurer.
As far as other findings recorded by the
Tribunal and affirmed by the High Court
are concerned, they remain undisturbed."

29. The Tribunal as well as the
counsel for the claimants-respondents has
placed reliance upon the decision of the
Apex Court in Prembai Patel (supra),
wherein a truck was being driven by one
Sundar Singh. This truck was insured with
186 INDIAN LAW REPORTS ALLAHABAD SERIES
the National Insurance Company and since
the truck had overturned which resulted in
the death of its driver, a claim petition came
to be filed. The same was contested mainly
on the ground that the accident took place
on account of the fault of the driver, hence,
the liability was denied. The Claims
Tribunal considering the evidence, awarded
a sum of Rs.2,10,000/- along with 12%
interest directing the insurance company to
satisfy the award. The High Court also
affirmed the judgment of the Tribunal. The
judgment of the High Court was assailed
before the Apex Court only on the ground
that since the insurance policy was
restricted one, therefore, the entire liability
could not be satisfied by the insurance
company but its liability was restricted only
to cover the liability under the Workmen's
Compensation Act. The issue before the
Apex Court was crystallized in paragraph 8
and thereafter considering the provisions of
Section 147, the effect of the proviso has
been noticed in the subsequent paragraphs
and noticing the difference in the liability
relating to an 'Act Policy' and to what
extent the insurance company would be
liable has been dealt with in the subsequent
paragraphs which have been reproduced
hereinafter:

"8. The main question which
requires consideration in this appeal is,
whether
the
appellant
Insurance
Company is liable to pay the entire
amount of compensation awarded to the
claimants or its liability is restricted to
that which is prescribed under the
Workmen's
Act.
In
this
connection
learned counsel for the appellant has
drawn our attention to the insurance
policy, which had been taken by the
owner for the vehicle concerned, and,
especially to the following endorsements
made therein:

1. Policy No. 320801/31/-9293/21/01753 a policy for act liability

2.
Premium
(Act
Liability)
Rs.1245/-

3. Limitation as to use For Act
only cover

At the end of the policy the
following is written:

"IMPORTANT NOTICE

The insured is not indemnified if
the vehicle is used or driven otherwise than
in accordance with this Schedule. Any
payment made by the Company by reason
of wider terms appearing in the certificate
in order to comply with the Motor Vehicles
Act, 1988 is recoverable from the insured.
See the clause headed AVOIDANCE OF
CERTAIN
TERMS
AND
RIGHT
OF
RECOVERY in the policy.

NOTE :- This Schedule, the
attached policy and the endorsements
mentioned here above shall be read
together and any word or expression to
which a specific meaning has been
attached in any part of this policy or the
Schedule shall bear the same meaning
wherever it may appear."

9. The learned counsel for the
appellant has submitted that the owner of
the truck had got his vehicle insured by
paying only that much amount of premium
which, so far as his employees were
concerned, covered the liability to the
extent it is provided under the Workmen's
Act. It has been submitted that the words
"a policy for Act Liability" or "Act
Liability" clearly indicate that the liability
of the Insurance Company was not an
unlimited
one
but
that
which
was
mandatorily required under the Act so as to
cover the liability under the Workmen's Act
and no further. Learned counsel has further
submitted that in order to cover unlimited
liability the owner has to pay higher
amount of premium and in such a case the
8 All. The United India Insurance Co. Ltd. Vs. Smt. Suraj Kala & Ors.
187
words "a policy for Act Liability" or "Act
Liability" are not written. The insurance
policy being in the nature of a contract, the
parties are bound by it and, therefore, the
appellant cannot be saddled with any extra
liability to pay the entire amount of
compensation, which has been awarded to
the claimants.

11. The contentions raised turn
on the interpretation of sub-section (1) of
Sections 147 and 149 of the Act and the
same are being reproduced below:-

"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-

(a) is issued by a person who is
an authorised insurer; and

(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 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), 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.-*** (omitted as
not relevant)

149.