Case Note & Summary
The case involves two appeals filed by the owner of a Tempo Trax (vehicle No. MH-31/G-6545) against awards passed by the Motor Accident Claims Tribunal, Nagpur, in Claim Petition No. 281/2000 and Claim Petition No. 9/2000. The accident occurred on 05/06/1999 when the vehicle, carrying 7-8 persons, turned turtle near Bharsingi turning on Katol-Jalalkheda Road, causing injuries to several persons. The injured claimants filed petitions under Section 166 of the Motor Vehicles Act, 1988, seeking compensation. The owner and the insurance company resisted the claims, contending that the claimants were unauthorized passengers and that the vehicle was used for hire or reward, which was a fundamental breach of the policy. The Tribunal awarded compensation and directed the insurance company to pay the amount and then recover from the owner. The owner appealed, challenging the direction to pay and recover. The High Court, after hearing the parties, held that the use of the vehicle for carrying passengers for hire or reward did not constitute a fundamental breach because the vehicle was a Tempo Trax, which is a passenger vehicle, and the insurer failed to prove that it was used as a goods carriage. The court modified the award, directing the insurance company to pay the compensation and then recover the same from the owner in accordance with law. The appeals were allowed to that extent.
Headnote
A) Motor Accident Claims - Liability of Insurance Company - Fundamental Breach of Policy - Use of Private Vehicle for Hire or Reward - The court considered whether the use of a Tempo Trax, insured as a private vehicle, for carrying passengers for hire or reward amounts to a fundamental breach of the policy conditions. The court held that the breach was not fundamental as the vehicle was a passenger vehicle and the insurer had not proved that the vehicle was used as a goods carriage. The insurance company was directed to pay the compensation and then recover from the owner. (Paras 3-10)
B) Motor Vehicles Act, 1988 - Section 166 - Claim for Compensation - The claimants filed petitions under Section 166 of the Motor Vehicles Act, 1988, seeking compensation for injuries sustained in a motor accident. The Tribunal awarded compensation, but the owner appealed against the direction to pay and recover. The High Court upheld the Tribunal's finding on liability but modified the direction to pay and recover. (Paras 2-10)
Issue of Consideration
Whether the use of a private vehicle (Tempo Trax) for carrying passengers for hire or reward constitutes a fundamental breach of the insurance policy, thereby absolving the insurance company from liability to pay compensation to third-party claimants.
Final Decision
The High Court allowed the appeals in part. It held that the use of the vehicle for hire or reward did not constitute a fundamental breach as the vehicle was a Tempo Trax (passenger vehicle) and not a goods carriage. The court modified the awards, directing the insurance company to pay the compensation to the claimants and then recover the same from the owner in accordance with law.
Law Points
- Motor Vehicles Act
- 1988
- Section 166
- Section 149
- breach of policy condition
- fundamental breach
- use of private vehicle for hire or reward
- liability of insurance company
- tempo trax
- passenger vehicle
- goods carriage
Case Details
2019 LawText (BOM) (12) 98
First Appeal No. 1523 of 2008 with First Appeal No. 648 of 2009
Shri A. P. Wachasunder for appellant; Shri Shashikant Borkar for respondent No.1; Ms. M. H. Pathade h/f Shri P. S. Mirache for respondent No.2
Smt. Sheela w/o Ashok Shende
The Branch Manager, The National Insurance Co. Ltd. and Ajay s/o Bhaiyaji Bhajan (in FA 1523/2008); The Branch Manager, The National Insurance Co. Ltd. and Madhukar Champatrao Metkar (dead through L.Rs.) (in FA 648/2009)
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Nature of Litigation
Appeals by owner of offending vehicle against awards of Motor Accident Claims Tribunal directing insurance company to pay compensation and recover from owner.
Remedy Sought
Owner sought setting aside of the direction to pay and recover, contending that the insurance company should be held liable to pay compensation without right of recovery.
Filing Reason
Owner challenged the awards on the ground that the Tribunal erred in holding that the use of the vehicle for hire or reward was a fundamental breach, and that the insurance company should be directed to pay and recover.
Previous Decisions
The Motor Accident Claims Tribunal, Nagpur, passed awards dated 30/07/2008 in Claim Petition No. 281/2000 and 25/11/2008 in Claim Petition No. 9/2000, directing the insurance company to pay compensation and then recover from the owner.
Issues
Whether the use of a private vehicle (Tempo Trax) for carrying passengers for hire or reward constitutes a fundamental breach of the insurance policy, thereby absolving the insurance company from liability to pay compensation to third-party claimants.
Whether the direction to the insurance company to pay and recover from the owner is correct in law.
Submissions/Arguments
Appellant (owner) argued that the vehicle was a Tempo Trax, which is a passenger vehicle, and the use for carrying passengers did not amount to a fundamental breach; the insurance company should be liable to pay compensation without right of recovery.
Respondent No.1 (Insurance Company) argued that the vehicle was used for hire or reward, which was a fundamental breach of the policy conditions, and therefore the insurance company is not liable to pay compensation.
Ratio Decidendi
The use of a private vehicle for carrying passengers for hire or reward does not amount to a fundamental breach of the insurance policy if the vehicle is a passenger vehicle (like a Tempo Trax) and the insurer fails to prove that it was used as a goods carriage. In such cases, the insurance company is liable to pay compensation to third-party claimants but may recover the amount from the owner.
Judgment Excerpts
The learned Tribunal framed necessary issues, recorded evidence as adduced by both the parties.
The appellant – owner and respondent No.1 – Insurance Company resisted the claim on the ground that there was no reason for the claimants to sit unauthorisedly in the private car and therefore, owner and Insurance Company are not liable.
The Insurance Company has also taken the defence of fundamental breach of policy by the owner inasmuch as the offending vehicle which was for private use of the owner, was used for the purposes of ‘Hire or Reward’.
Procedural History
The claimants filed Claim Petition No. 281/2000 and Claim Petition No. 9/2000 before the Motor Accident Claims Tribunal, Nagpur, under Section 166 of the Motor Vehicles Act, 1988. The Tribunal passed awards on 30/07/2008 and 25/11/2008 respectively, directing the insurance company to pay compensation and recover from the owner. The owner filed First Appeal No. 1523 of 2008 and First Appeal No. 648 of 2009 before the High Court of Bombay at Nagpur Bench. The High Court heard the appeals and pronounced judgment on 13/12/2019.
Acts & Sections
- Motor Vehicles Act, 1988: Section 166, Section 149
