Case Note & Summary
The New India Assurance Company Limited appealed against the judgment and award of the Motor Accidents Claims Tribunal, Dhule, in M.A.C.P. No. 873 of 1998. The appellant, original respondent No. 3 (Insurance Company), contended that the insurance policy was issued for a Jeep registered as a private vehicle. Despite this, the driver of the Jeep was carrying passengers on hire and reward basis, which constituted a breach of the terms of the insurance policy. The appellant argued that this fact was mentioned in the FIR but was not considered by the Tribunal. The appellant examined an officer of the insurance company to prove the policy and its terms, but this evidence was also ignored. The appellant relied on the Supreme Court judgment in Oriental Insurance Company Limited vs. Premlata Shukla and others, (2007) 13 SCC 476, and the Bombay High Court judgment in The New India Assurance Company Ltd. vs. Balu @ Balasaheb Sitaram Berad and others, 2019 (5) ALL MR 360. The respondents, including the claimant Motilal Ramdas Chaudhari, argued that the FIR was lodged by a third party (Police Constable) and not by an eye witness. They also pointed out that the insurance policy covered 5+1 persons. However, the court found that the vehicle was used for hire without a permit, which was a fundamental breach of policy conditions. The court allowed the appeal, setting aside the Tribunal's award and exonerating the insurance company from liability.
Headnote
A) Motor Accident Claims - Breach of Insurance Policy - Private Vehicle Used for Hire - The insurance policy was issued for a private vehicle, but the driver was carrying passengers on hire and reward basis, which is a breach of policy terms. The Tribunal failed to consider this breach and awarded compensation. Held that the insurance company is not liable to pay compensation due to breach of policy conditions. (Paras 2-3)
Issue of Consideration
Whether the insurance company is liable to pay compensation when the insured vehicle, registered as a private vehicle, was used for carrying passengers on hire and reward basis, constituting a breach of policy terms.
Final Decision
The appeal is allowed. The judgment and award passed by the Motor Accidents Claims Tribunal, Dhule, in M.A.C.P. No. 873 of 1998 is set aside. The appellant (Insurance Company) is exonerated from liability to pay compensation.
Law Points
- Breach of insurance policy terms
- Private vehicle used for hire
- Liability of insurance company
- Motor accident compensation
Case Details
2022 LawText (BOM) (09) 21
First Appeal No. 1187 of 2004
Mr. S. G. Chapalgaonkar for appellant, Mr. M. H. Patil for respondent No.1, Mr. M. G. Kochar for respondent Nos. 2 and 3
The New India Assurance Company Limited
Motilal Ramdas Chaudhari, Shabbirkha Dilawarkha Pathan, Salimkha Dilaarkha Pathan
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Nature of Litigation
Appeal against judgment and award of Motor Accidents Claims Tribunal in a claim petition for compensation arising out of a motor vehicle accident.
Remedy Sought
The appellant (Insurance Company) sought to set aside the Tribunal's award and be exonerated from liability to pay compensation.
Filing Reason
The appellant contended that the insured vehicle, a Jeep registered as a private vehicle, was used for carrying passengers on hire and reward basis, which was a breach of the terms of the insurance policy, and the Tribunal failed to consider this.
Previous Decisions
The Motor Accidents Claims Tribunal, Dhule, in M.A.C.P. No. 873 of 1998, awarded compensation against the insurance company.
Issues
Whether the use of a private vehicle for carrying passengers on hire and reward basis constitutes a breach of insurance policy terms.
Whether the insurance company is liable to pay compensation in case of such breach.
Submissions/Arguments
Appellant: The insurance policy was for a private vehicle, but the driver was carrying passengers on hire and reward, which is a breach of policy terms. The FIR mentions that passengers were travelling by paying fare. The Tribunal ignored this evidence.
Respondents: The FIR was lodged by a third party, not an eye witness. The insurance policy covered 5+1 persons. No witness was examined to prove that passengers were carried on hire.
Ratio Decidendi
When a vehicle registered as a private vehicle is used for carrying passengers on hire and reward basis, it constitutes a fundamental breach of the terms of the insurance policy, and the insurance company is not liable to pay compensation for accidents arising from such use.
Judgment Excerpts
It is the contention of learned counsel for the appellant that the insurance policy was issued to the Jeep, it was registered as a private vehicle. Inspite of that, the driver of the said Jeep was carrying passengers by accepting fare from them. It is the breach of terms of insurance policy.
Learned counsel for the appellant relied on the judgment of Supreme court in the case of Oriental Insurance Company Limited vs. Premlata Shukla and others, reported (2007) 13 SCC 476 and the judgment of this Court in the case of The New India Assurance Company Ltd. vs. Balu @ Balasaheb Sitaram Berad and others, reported in 2019 (5) ALL MR 360 and requested to allow the appeal.
Procedural History
The Motor Accidents Claims Tribunal, Dhule, passed an award in M.A.C.P. No. 873 of 1998. Being aggrieved, the appellant (Insurance Company) filed the present First Appeal No. 1187 of 2004 before the Bombay High Court, Bench at Aurangabad.
Acts & Sections
- Motor Vehicles Act, 1988:
