Justice P T Asha gets it Right Narasimhan Vijayaraghavan Preamble At long last, we have a judgment of clarity and correctness on an issue – which has been complexified by many an earlier decision from Madras High Court
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Justice P T Asha gets it Right
Narasimhan Vijayaraghavan
Preamble
At long last, we have a judgment of clarity and correctness on an issue – which has been complexified by many an earlier decision from Madras High Court and Supreme Court too. Justice P T Asha has got it right in Divisional Manager, Tata AIG Genl Ins Co Ltd v. A C Jagadisann dt. 04.03.2022. Understood the provisions and decisions, in proper perspective.
The learned law lord or lady ( to be politically correct) could have gone beyond and said that such a claim, if at all, may arise under the contractual ( not statutory) Sec.III (if the victim was the insured himself) as Personal Accident cover, and may belong not to Motor Accidents Claims Tribunals itself, be it under Sec.166 or 163-A.
That may have truly sent these cases packing to where they belong. Viz. Insurance Ombudsmen or Consumer Commissions. But she is not to blame as the point was not urged. ( sorry, Critics will Critique no matter what- that is their affliction). Let us explore.
Factual Matrix
Injured claimant- A C Jagadeesann was son of insured/owner of Car Lenin Sivakumar. Son was driving the car, lost control, hit a tamarind tree. Suffered injuries. Claim for compensation was filed under Sec.163-A of MV Act,1988 ( Act) . Against father as owner/insured and insurer of the Car.
Case of Insurer
Insurer disputed the maintainability of claim on the grounds that (i) victim being son and not ‘workman-driver’ under EC Act,1923 was not required to be covered under Sec.147 of the Act and be it a claim under Sec.163-A or Sec.166- the risk to the victim was not covered under the policy of insurance and (ii) the victim/driver was admittedly himself at fault and therefore the claim was not maintainable before MACT.
MACT Misled Itself
Typically, the MACT chose to ignore/misunderstand/misinterpret/misconstrue and made TAGIC liable to pay Rs.11,34,265/- with interest and costs. This tribunal was not the first.It will not be the last,despite Jagadeesann. Lawyers have to make a living, you see.
The simple/succinct point for consideration was :
Whether the petition was maintainable under Section 163(A) of the Motor Vehicles Act and whether the petitioner was entitled to compensation?”
Seemingly placing reliance on United India Insurance Company Limited v. Sunilkumar in AIR 2017 SC 5710,the tribunal held insurer was liable and fixed compensation at Rs.11,34,265/- with interest and costs.
Let us go history hunting on jurisdiction of MACT vis a vis this issue.
Precedents – On Issue of Negligence
The principle is so simple. As early as in Minu B Mehta v. Balkrishna Ramchandra Nayar in AIR 1977 SC 1248 – it was held that ‘proof of negligence was a sine qua non to sustain a claim’ . Act created only a forum in MACT. Law to sustain a claim for compensation continued to be ‘common law or torts’ .
Then on and from 01.10.1982- Sec.92-A was introduced in MV Act,1939 thanks to the repeated clarion calls from Justice V R Krishna Iyer in Bishan Devi v. Sirbaksh Singh in AIR 1979 SC 1862- for a No Fault liability dispensation towards an interim compensation for permanent disablement and death.
In J Nandakumar v. TPTC in 1996 ACJ 555 (SC) Supreme Court set aside a Division Bench ruling of Madras High Court and ruled that under Sec.92-A ( 1939 Act) interim award was payable even where the victim ‘was himself at fault or had been prosecuted, charge-sheeted and convicted on admission of guilt and paid a fine’. In effect, negligence of the victim was irrelevant.
This position of law continued and continues under Sec.140 MV Act,1988 (in pari materia to Sec. 92-A).
It is thereafter, on and from 14.11.1994 under Act 56 of 1994, Sec.163-A with Second Schedule was introduced. This change was based on recommendation of Law Commission headed by Justice Jagannatha Rao( Justice P T Asha has deep dived into this context).
The intention/purpose was to provide a shorter route to claim Just compensation – to those who were satisfied the Second Schedule Tabular compensation. Sec.163-A was permitted to be invoked ‘without need to prove negligence’, but as final award under Sec.168 and not as interim award.
There is a huge distinction between the language in Sec.140 ( No fault liability for interim award) and Sec.163-A (No fault liability for final award). Supreme Court clarified that award under Sec.163-A was final award under Sec.168 and not interim award under Sec.140, in Deepal Girishbhai Soni v. United India Insurance Co Ltd in 2004 (5) SCC 585; and Sec.163-B was also noted in this regard.
While so, in National Insurance Co Ltd v. Sinitha in 2012 ACJ 1 (SC) and Sunil Kumar (supra) ( the mischief maker in this case) , the Supreme Court skewed the picture perfect which was emerging. It said that under Sec.163-A – a defence on negligence was permissible under Sec.163-A ( even though it was premised on No Fault liability theme). So far so good.
Regretfully, while focusing on ‘ negligence’ and ‘no fault liability’ theme- the Supreme Court ignored the core/critical issue of
Whether the victim in question was required to be covered under Sec.147 of the Act and/or was covered under the contract of insurance?
Thankfully, Justice Asha has separated the wheat from the chaff, not ever done before. That is where credit is due to her.
In effect, in Sinitha and Sunilkumar (supra) coverage for the victim under the contract of insurance was not gone into at all. The issue was confined in Sinitha/Sunilkumar to whether ‘negligence’ could be raised as a defence in a claim under Sec.163-A. Coverage under Sec.147 went for a walk or remained under the radar. That makes all the difference between chalk and cheese, as the issue in those cases and the issue rightly identified in Jagadeesann.
Insurance Coverage for Driver/Rider
Sec.147 contemplates coverage to those ‘engaged in driving’. But coverage is confined only to those who are ‘paid drivers’ or ‘workmen/drivers’ under EC Act,1923.
Not to those who happened to be ‘driving/riding’ as say a friend,relative, neighbour, whoever ( and not a workman driver).
That is where the core distinction arises- and Justice P T Asha can be said to have appreciated and understood the issue. Well done.
Important Note: Under the new dispensation vide Chapter XI of MV Act,1988 to take effect from 01.04.2022 ( prospective not retrospective) , it would be a new ball game, as definition of ‘driver’ has been introduced. Let us go there another time.
Sadanand Mukhi- Ningamma legacy
Though in New India Assurance Co Ltd v. Sadanand Mukhi in 2009 ACJ 998 (SC) and Ningamma v. United India Insurance Co Ltd in 2009 (13) SCC 710, it can be said the apex court may have laid down correct/good law, they tainted the construct by alluding to
(i) borrower stepping into the shoes of ‘owner’
(ii) and remanding to MACT to decide whether a claim under Sec.166/163-A made a difference.
On both counts the top court decisions were flawed.
It did not matter whether the driver/rider was a borrower/friend/relative or whatever capacity- so long as he was not a ‘workman-driver’. That alone clinched coverage or not. It is Sec.147 which mattered and not Sec.163-A or Sec.166. Kudos to Justice Asha for getting it right on this score.
And once it was concluded that the ‘victim was not a ‘workman-driver’’- it has to follow as night follows day- that such driver/rider was not required to be covered under Sec.147.
If so, it hardly mattered ‘whether the claim petition was filed under Sec.166 or Sec.163-A’. Either Section made no difference to
(i) coverage for the victim who was not a ‘workman-driver’.
My View
Hence the Supreme Court decisions in Sinitha,Sunil Kumar, Sadanand Mukhi and Ningamma ( all cited supra) have to be properly understood and in proper perspective, as above.
In such cases where the
1. Victim was insured/driver/rider/borrower/friend/relative or who ever it may be
2. And not ‘engaged in driving’ as a ‘workman-driver’ under EC Act,1923
the relevant issue for consideration was on
(i) coverage under Sec.147 and whether the victim was required to be covered under Sec.147
(ii) and/or whether such victim was covered under the concerned contract of insurance under Sec.III of motor insurance – a compulsory contractual Personal Accident cover for driver cum owner
(iii) and not maintainability under Secs.166 or 163-A
If the focus shifted, as it must, and as above, the answer would be simple, straight and easy.
That is where Justice Asha needs to be complimented.
Ram Khiladi case – genre
Supreme Court decision can be said to have been as in Jagadeesann . And followed by PTAJ.
But then Personal Accident Cover- under Sec.III of motor insurance policy was noted and benefit given for Rs.1 L in Ram Khiladi v. United India Insurance Co Ltd 2020 (2) SCC 550.
And that is what was done in Divisional Manager, United India Ins Co Ltd v. Rekha dt. 26.10.2017 reported 2017 (2) TN MAC 674 ( Mad) (DB) too and IRDA was asked to enhance scope of PA Cover to Rs.15 L, which it did.
And in Bharathi Axa v. R Saranya dt. 23.11.2021 a Division Bench has also done so by granting Rs. 2 L recently.
And Justice P T Asha did not go there – to Sec.III- PA Cover. May be she was not taken there. Good. Correctly so, in my view.
For Jagadeesann was not the owner/insured of the car. Registration Certificate could not have been in his name. His father Lenin Sivakumar was the owner/insured. And the injuries did not answer those under Sec.III.
But there are many decisions tapping into Sec.III of motor insurance – PA cover- on the premise driver/neighbour/relative/borrower ‘stepped into the shoes of the owner’ theme in Sadanand Mukhi ( supra) and even where there was death and injuries were not as mandated in Sec.III.
The ‘contractual’ nature of Sec.III- PA cover- was taken to the cleaners in those verdicts. Thank heavens my friend Justice Asha did not fall into this enticing trap a.k..a. welfare jurisdiction.
Correct Legal Position
Let us note and accept that the coverage towards
(i) PA cover to driver cum owner as compulsory coverage vide Sec.III of motor insurance policy
is a “ CONTRACTUAL LIABILITY” in nature and scope.
(ii) And not a ‘STATUTORY COVERAGE” under Sec.147.
Contractual Liability is de hors the statutory coverage.
If so, it legitimately belongs to Consumer Commission jurisdiction. Not MACT.
And negligence is irrelevant. Claim under Sec.163-A or 166 is immaterial.
Scope of Coverage to the victim or not, alone matters. And Sec.147 is clear. It does not require coverage to persons ‘engaged in driving’ except those who are paid drivers or ‘workman-drivers’ under EC Act 1923.
Summation
In my not so respectful and humble submission
(i) such ‘contractual coverage’ falling outside mandated statutory coverage under Sec.147 would fall outside the scope of MACT itself
(ii) it being ‘Contractual Liability’ would belong to Consumer Commission jurisdiction for the victim as a ‘consumer/beneficiary’
(iii) such contractual liability is being honoured-awarded even by High Courts as in Rekha ( Mad) as in Ram Khiladi ( SC) ( both cited supra) et al, as part of the precept and practice of ‘sympathetic’ welfare jurisdiction, not wanting to drive the victim to Consumer Commission- and awarding what Consumer Commission would/could have awarded anyway, if admissible as a claim under Sec.III – PA cover.
(iv) Courts have wrongly inferred in such decisions as Ram Khiladi/Rekha ( cited supra) vis a vis ‘contractual liability’ as being within the province of MACT, and awarding limited/agreed sums, ignoring the scope of coverage under Sec.III – for Personal Accident.
(v) And in the bargain, ignoring the language of Sec. III – PA Cover- that driver/insured must have Registration Certificate in his name and a valid Driving Licence
(vi) And forgetting that under Sec.III- PA Cover was available only for specific injuries as amputation of a limb or privation of eye and/or death and not for mere fractures/permanent disablement as is construed and awarded by Courts.
Am I being heartless? Law is an Ass. And I may be worse?
Final Summation
1. In effect, the ‘contractual’ nature of the liability under Sec.III has thankfully been omitted in Jagadeesann verdict dt.04.03.2022. One can quote the late lamented Justice Jayasimha Babu , “Counsel, at times sympathy may and shall end where Law begins”. One is not urging end of ‘sympathy’ regime but only embrace of ‘legal’ regime as in Justice P T Asha’s Jagadeesann.
2. What the Consumer Commission may yet give, let MACT give is a misplaced garden path turned a mine field.,The problem will be that a legal and binding ‘contract’ goes for a toss.
3. To illustrate : in Act/Liability Only insurance policies for say a private car- gratuitous occupants carried are not covered viz. IRDA circular dt.16.11.2009 read with National Insurance Vo Ltd v. Dr. Balakrishnan 2013 (1) SCC 731 and Royal Sundaram Alliance Insurance Co Ltd v. Meenakshi 2009 (1) TN MAC 249 (Mad) (DB).
4. Yet, there could be a ‘contractual’ cover for ‘unnamed passengers’ for limited/specific sums in specific contingencies as per the contracted language . It may have to be understood that such add on covers under the motor insurance policies are not ‘statute’ mandated ; but pure and simple ‘contractual’, and therefore courts would do well to bear that in mind and not make mincemeat of contract law, in the name of welfare jurisdiction.
5. Law is not heartless. Law does not lack sympathy. ‘Ironing out the creases in the statute’ happens all the time as in Jadavji.. But ‘ironing out absent creases in a contract’ may be neither law nor legal, you see.
In the meanwhile, Justice P T Asha deserves our commendation, for catching the bull by the horns ( which most and many were unwilling to or …) and forcefully concluding that ‘Jagadeesan was not required to be ‘covered’ under Sec.147 and not covered under the motor insurance policy. And as to whether the claim was one under Sec.166 or 163-A or whether ‘negligence’ was and could be a valid ‘defence’ in a claim under Sec.163-A- Justice P T Asha has critically clinched the issue.
Let us hope it stays there.
(Author is practising advocate in the Madras High Court)
