PETITIONER:
MINU B. MEHTA AND ANOTHER
Vs.
RESPONDENT:
BALKRISHNA RAMCHANDRA NAYAN AND ANOTHER
DATE OF JUDGMENT28/01/1977
BENCH:
KAILASAM, P.S.
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
CITATION:
1977 AIR 1248 1977 SCR (2) 886
1977 SCC (2) 441
ACT
Motor Vehicles Act, 1939--S. 95(v) (b) (i) and
(ii)--Scope of--Claim for compensation in motor vehicle
accidents Proof of negligence of driver--If necessary.
Torts--Claim for compensation in motor vehicle acci-
dents--Proof of negligence of driver--If necessary.
HEADNOTE
While the respondent was travelling in his car, the appel-
lant’s truck, driven by a driver, hit the car and caused
injuries to the respondent and damaged the car. The Claims
Tribunal awarded compensation to the respondent, and the
High Court upheld the Tribunal’s award. In the course of
the judgment the High Court, however, observed that every
person has a right to security and safety of his person
irrespective of the fault or negligence or carelessness and
that every person has a right to claim compensation, irre-
spective of proof of negligence on the part of the driver.
It further observed that the perimeters of liability in cls.
(i) and (ii) of s. 95(1)(b) must be held to be the same
because in both, the liability of the owner of the driver
exists and is made compulsorily insurable and that it could
not be said that the legislature intended absolute liability
in cases covered by cl. (ii) and not in cases covered by
cl. (i).
HELD: Proof of negligence is necessary before the owner
or the insurer could be held liable for payment of compensa-
tion in motor vehicle accident claims. The High Court’s
views are opposed to basic principles of the owner’s liabil-
ity for negligence of his servant and are based on a com-
plete misreading of the provisions of Chapter VIII of
the .Motor Vehicles Act. [900 F]
1. Before a person can be made liable to pay compensa-
tion for any injuries and damage caused by his action. it
is necessary that the person injured should be able to
establish that he has some cause of action against the
party responsible. In order to succeed in an action for
negligence the plaintiff must prove (1) that the defendant
had, in the circumstances, a duty to, take care and that
duty was owed by him to the plaintiff and (2) that
there .was a breach of that duty and that as a result of the
breach damage was suffered by the plaintiff. The master
also becomes liable for the conduct of the servant when the
servant is proved to have acted negligently in the course
of his employment. [895 C-D]
2(a) The purpose of making insurance compulsory is to
protect the interests of the successful claimant from being
defeated by the owner of the vehicle who has not enough
means to meet his liability. The safeguard is provided by
imposing certain statutory duties, namely, the duty not to.
drive or permit a car to be driven unless the car is
covered by third party insurance. 1895 F]
(b) Under s. 95(1)(b)(i) of the Act, the policy of
insurance must be a policy which insures against any liabil-
ity which may be incurred in respect of death 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. The accident to which the owner or the
person insuring is liable is to the extent of his liability
in respect of death or bodily injury and that liability is
covered by the insurance. It is, therefore, obvious that if
the owner has not incurred any liability in respect of death
or bodily injury to any person there is no liability and it
is not intended to be covered by the insurance. The liabil-
ity contemplated arises under the law of negligence and
under the principle of vicarious liability. The provisions
of the section do not make the owner or the insurance compa-
ny liable for any bodily injury caused to a third party
arising out of the use of the vehicle unless the liability
can be fastened on him. [896 D-F]
887
(c) Under sub-cl. (ii) of s. 95(1)(b) of the Act the
policy of insurance must insure a person against death 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. So far as the bodily injury caused to a
passenger is concerned it need not be due to any act
or liability incurred by the person. The expression
"liability which may be incurred by him" in sub.-cl. (i) is
meant to cover any liability arising out of the use of the
vehicle. Therefore, the person must be under a liability
and that liability alone is covered by the insurance policy.
[896 F-H]
(d) The owner’s liability arises out of his failure to
discharge a duty cast on him by law. The right to receive
compensation can only be against a person who is bound to
compensate due to the failure to perform a legal obliga-
tion. If a person is not liable legally he is under no duty
to compensate any one else. The Claims Tribunal is a tribu-
nal constituted by the State Government for expeditious
disposal of the motor vehicles claims. The general law
applicable is only common law and the law of torts. If
under the law a person becomes legally liable then the
person suffering the injuries is entitled to be compensated
and the tribunal is authorised to determine the amount of
compensation which appears to be just. The plea that the
Claims .Tribunal is entitled to award compensation which
appears to be just when it is satisfied on proof of injury
to a third party arising out of the use of a vehicle on a
public place without proof of negligence, if accepted, would
lead to strange results. [897 E-F]
3. The power to constitute one or more Motor Vehicle
Claims Tribunals under s. 110(1) is optional and the State
Government may not constitute a Claims Tribunal for certain
areas. When a claim includes a claim for compensation, the
claimant has an option to make his claim before the Civil
Court. In claims for compensation, therefore, in certain
cases, Civil Courts also have jurisdiction. If the
contention put forward is accepted so far as the Civil Court
is concerned, it would have to determine the liability of
the owner on the basis of common law or torts while the
Claims Tribunal can award compensation without reference to
common law or torts and without coming to the conclusion
that the owner is liable The concept of owner’s liability
without any negligence is opposed to the principles of law.
The mere fact that a party received an injury arising out of
the use of a vehicle in a public place, cannot justify
fastening liability on the owner. It may be that a person
bent upon committing suicide may jump before a car in
motion and thus get himself killed. In such cases, the
owner cannot be made liable. Proof of negligence remains
the lynch pin to recover compensation. [897 H; 898 A-B]
Haji zakariaand others v. Naoshir Cama and others A.I.R.
1976 A.P.171 and New India Assurance Co Ltd. v. Sumitra Devi
and others , 1971 A.C.J. 58 not approved.
Kesavan Nair v. State Insurance Officer, 1971 A.C.J. 219
and M/s. Ruby Insurance Co. Ltd. v. V. Govindaraj and
others, A.A.O. 607 of 1973 and 296 of 1974 decided by the
Madras High Court on December 13, 1976 referred to.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1249
of 1976.
Appeal by Special Leave from the Judgment and Order dated
the 23-3-1976 of the Bombay High Court in C. No. 449/75 from
Original Decree.
F.S. Nariman, I. M. Patel and B.R. Agarwala for the Appel-
lants.
R.D. Hattangadi, George Kurien and (Mrs.) Urmila Sirur for.
Res. No. 1.
K. Singhvi and V.N. Ganpule for the applicant/Inter-
vener.
The Judgment of Court was delivered by
This appeal is by special leave under Article 136 of
the Constitution by the two appellants against the judgment
of the
888
Bombay High Court dismissing their appeal against the judg-
ment of the Additional Motor Accidents Claims Tribunal for
Greater Bombay and confirming the award passed by the tribu-
nal in favour of the respondents and directing the Tribunal
to decide the question of the liability of the Insurance
Company on its application that its liability is limited to
Rs. 20,000 under section 110E of the Motor Vehicles Act,
1939 referred to as the Act after giving opportunity to the
parties.
The applicant in Application No. 727 of 1969 before the
Motor Accidents Claims Tribunal for Greater Bombay is one
Dr. Balkrishna Ramchandra Nayan practising in Bombay and is
the respondent in this appeal. On 14th April, 1969 at
about 1.00 p.m. the respondent was driving his car No. MRC-
4450 towards Fort side on Dr. Annie Besant Road. With him
was sitting on the left side in the front seat Malati M.
Deshmukh, his nurse. The road has stone dividers in the
middle of the road. When the car approached Lotus cinema
the truck owned by the appellants and insured with the
Insurance Company who were opposite parties 1 to 3 before
the Motor Accidents Claims Tribunal came from the opposite
direction at a high speed and dashed against the right side
of the car. Due to the impact the car was damaged and the
1st respondent and Malati M. Deshmukh were injucted. Re-
spondent 1 had to undergo treatment. He was operated on
the day of the accident itself and was patient in his own
Nursing Home for a month till 15th May, 1969. According to
him his right arm was operated and kept in plaster and that
he had become permanently disabled in discharging his duties
as a surgeon and that he had incurred a loss during the
closure of the Nursing Home rind loss of income due to
permanent injury along with other claims. He claimed a sum
of Rs. 3 lakhs by way of general and special damages with
interest thereon from the date of his application. The
owners of the vehicle fried a written statement refuting the
claim of the applicant. According to them while the motor
lorry was proceeding from Haji Ali towards Worli, they had
taken all precautions to keep the lorry in road worthy
condition and that at the material time the axle brake ring
of the motor lorry came out and the driver therefore lost
control of the vehicle and because of this defect which can
develop in a running car the driver lost control of the’
steering wheel. According to them the lorry prior to the
accident was being driven at a moderate speed with due care
and caution. They contended that the accident did not
occur on account of rash and negligent driving on the part
of the driver. They also denied the claim of various items
of compensation made by the applicant.
The Motor Accidents Claims Tribunal framed four issues.
The first 2 issues were whether the applicant had proved
that the driver of the lorry was driving the vehicle in rash
and negligent manner and whether the opposite party had
proved that at the time of the accident the axle brake ring
of the motor lorry came out and the driver lost control of
the motor lorry. The other 2 issues related to the ques-
tion as to whether the applicant received the injuries as a
result of this accident and whether he was entitled to the
compensation claimed by him.
889
The applicant examined himself and Malati M. Deshmukh
who was travelling with him at the time of the accident
regarding the incident. He also examined P. Ws 2 and 3,
P.W. 2 a nurse to prove his income from his profession and
P.W. 3 a doctor who treated him. On behalf of the appellant
6 witnesses were examined in support of their case that the
accident was due to a mechanical failure and not due to any
rashness or negligence on the part of the driver.
The Tribunal after elaborately discussing the oral and
documentary evidence adduced before it found that the acci-
dent was due to the rash and negligent driving of the driver
of the lorry and the defence set up that the accident was
due to mechanical failure of the lorry was unacceptable.
The Claims Tribunal accepting the evidence of the appli-
cant and a Customs Officer, Mr. Jawakar, who was examined as
D.W.4 on the side of the appellants, came to the conclusion
that when the doctor was in the traffic lane nearer to the
road divider the lorry crossed the road divider and hit the
car. The defence witness himself stated that the lorry came
after crossing the central barricade. The lorry went off
the track and went on the wrong side and collided with the
oncoming car of the applicant who was in his car. Refer-
ring to his notes the witness stated that the right side of
the lorry went and hit the right side of the car of the
applicant. The portion of the lorry upto the driver’s seat
collided with the right side of the car. Both the wheels
of the front side of the lorry had crossed the central
reservation tract and so also the right rear wheel was on
the wrong side and only the left rear wheel was just near
the edge of the central reservation tract towards Lotus
cinema. On the face of the evi-dence of the doctor and
their own witness D.W.4 who was travelling in the lorry
there could be no denying the fact that the lorry crossed
the middle of the road.
Relying on the evidence of the two witnesses as well as
the doctrine of res ispa 1oquitur the Claims Tribunal right-
ly found that the applicant had established rash and negli-
gent driving on the part of the driver and the lorry. The
Accidents Claims Tribunal has also discussed elaborately
the defence set up on behalf of the owners of the lorry and
rejected it. The plea that was taken in the pleadings was
that at the time of the accident "Axle Brake Ring" of the
lorry came out. The expert examined on behalf of the owner,
Jimmy Dara Engineer, D.W. 6, stated that he had never heard
of any such part as axle brake ring and he has never seen
such a part. The owners subsequently explained that what
they meant by "Axle Brake Ring" was drag link on the rod
end. The Claims Tribunal also referred to the evidence of
the expert examined on behalf of the owners and remarked
that the nut on the pin could not be blown off all of a
sudden and that the driver, unless he was negligent, could
feel the change if there was anything wrong with the drag
link end and can stop the vehicle immediately. Rejecting
the evidence of the driver and relying on the evidence of
the expert on the side of the defence that even if there was
any defect the vehicle could be stopped within 4 or 5 feet
and need not cover the distance which it did, the Claim
Tribunal also found that the defect which the defence wit-
ness, Motor Vehicle Inspector Partapsingh Chavan, D.W.I.
saw when he examined the
890
lorry on 22nd April, 1969, could not be accepted as the
owners of the lorry could have played mischief and created
evidence before inspection on 22nd April, 1969. Criticising
the conduct of the owners as unworthy of their status the
Claims Tribunal totally rejected the defence.
Regarding the compensation the Claims Tribunal fixed the
amount at Rs.1,43,400 together with interest at 6 per cent.
This sum was apart from a sum of Rs.500 which was found
payable to Malati M. Deshmukh who had sustained injuries.
The Claims Tribunal directed the owners as well as the
insurers jointly to pay the amount, to the respondent Dr.
Balkrishna Ramachandra Nayan. It also directed the oppo-
site parties and insurers to pay Rs. 1000 as costs and
Rs.100 as costs of Malati M. Deshmukh.
The Claims Tribunal fixed a sum of Rs. 73,779 as the
loss sustained by the doctor for a period of 4 years from
the date of the accident. It also for a subsequent period
of 7 years fixed the future loss at Rs. 9,000 a year and a
total amount of Rs. 63,000. In addition it awarded a sum of
Rs. 5,000 for discomfort and inconvenience suffered by the
doctor. Thus the total compensation that was granted amount-
ed to Rs. 1,43,400. As already stated the interest was
awarded from the filing of the application till payment.
The insurance company as well as the owners of the
lorry preferred appeal against the award of the Tribunal in
Appeal No. 449 of 1975 before the High Court of Bombay.
Though the appeal was filed on behalf of the insurance
company and the owners of the lorry, during the hearing of
the appeal it was contended on .behalf of the insurance
company that in any event the liability of the insurance
company under the policy could not exceed Rs.20,000. The
High Court on the question of whether there was negligence
on the part of the driver of the lorry or not found itself
in complete agreement with the Claims Tribunal and observed
that it was for the lorry driver and owners to establish as
to how the lorry crossed the road dividers, went on the
wrong side and mounted on the Fiat Car coming ’from the
opposite direction. Agreeing with the Tribunal it found
that the driver was negligent. The High Court concurred with
the reasons. and findings of the Tribunal. It also held in
the Circumstances of the case that the principle res ipsa
loquitur applied. The High Court also rejected the defence
taken by the owners that the injury was due to a mechanical
defect and not due to the negligence. After referring to
the evidence and the reasoning of the Tribunal. on the
defence set up by the owners the High Court came to the
conclusion that the plea about the breaking of the tie rod
was not proved satisfactorily by the owners. The High
Court regarding the defence raised found itself .in complete
agreement with the conclusion arrived at by the Tribunal
observing that the Tribunal rightly disbelieved the defence
plea and came to the conclusion after careful consideration
of the evidence of the driver, Customs Officer and other
evidence in the case that it was the driver who was negli-
gent.
891
Regarding the quantum of damages the High Court ex-
pressed its opinion that the Tribunal had made best efforts
and tried to determine the compensation in a just manner on
the facts and circumstances of the case. It confirmed the
amount as awarded by the Tribunal and dismissed the appeal.
The High Court dismissed the appeal of the owners and the
insurance company and confirmed the award passed by the
Tribunal. But it gave liberty to the insurance company to
apply to the Claims Tribunal on depositing Rs. 20,000 with
interest from the date of the application to the date of the
deposit for determination of the question that the liability
of the insurance company is limited only to Rs. 20,000. The
High Court directed the Tribunal to decide the question of
the liability of the insurance company on its application
under section. 110E by giving opportunity to the parties to
put forward their cases.
Insurance company was directed to pay the costs of all
the parties. It also provided that the claimant was at
liberty to withdraw Rs. 20,000 with interest when deposited
by the insurance company. The order also made it clear that
the right of the applicant to recover the balance of the
awarded amount from the other party or from the insurance
company will not in any way be affected.
The appeal to this court is preferred by the owners.
The insurance company is impleaded as the second respondent
in the appeal before us.
Mr. Nariman, the learned counsel appearing for the
owners submitted that the High Court did not hear arguments
on the question whether the accident took place due to rash
and negligent driving of the lorry and therefore the ques-
tion will have to be gone into by this Court or remanded for
fresh disposal. We find that the High Court has given a
clear finding in paragraph 30 of its judgment that the
Tribunal rightly disbelieved the plea and held that it was
the. driver who was negligent and that they fully concur
with the reasons and findings of the learned Member of the
Tribunal. In the face of the clear finding we are unable
to accept the plea of the learned counsel that this question
was not gone into by the High Court. We find ourselves in
complete agreement with the finding of the Tribunal and the
High Court that it was due to rash and negligent driving of
the lorry that the car in which the applicant and Malati M.
Deshmukh were travelling was hit causing injuries to both of
them. We accept the testimony of the doctor and D.W. 4
Jawakar that the lorry crossed the road dividers, ran into
the wrong side and hit the car which was driven by the
applicant. We have no hesitation in accepting the concur-
rent findings of the High Court and the Claims Tribunal
that the accident was due to the rash and negligent driving
of the lorry driver. We have also no hesitation in reject-
ing the testimony of the defence that there was some mechan-
ical defect which resulted in the tie rod end breaking. We
find ourselves in agreement with the reasoning of the Claims
Tribunal that the evidence on the side of the owners is
contradictory and the testimony of the expert destroys the
plea of any mechanical defect set up by them. In this con-
nection we may also point out that in order to succeed in a
9--206SCI/77
892
defence that the accident was due to a mechanical defect the
owners will have to prove that they had taken all necessary
precautions and kept the lorry in a roadworthy condition.
No such attempt was made to establish that all necessary
precautions were taken-to keep the lorry in a roadworthy
condition and that the defect occurred in spite of the
reasonable care and caution taken by the owners.
In order to sustain a plea that the accident was due to
the mechanical defect the owners must raise a plea that the
defect was latent and not discoverable by the use of reason-
able care. The owner is not liable if the accident is due
to a latent defect which is not discoverable by reasonable
care. The law on this subject has been laid down in Hen-
derson v. Henry E. Jenkins & Sons.(1). In that case the
lorry driver applied the brakes of the lorry on a steep hill
but they failed to operate. As a result the lorry struck
and killed a man who was emerging from a parked vehicle.
The defence was that brake failure was due to a latent
defect not discoverable by reasonable care on driver’s
part. It was found that the lorry was five years old and
had done at least 150,000 miles. The brakes were hydrauli-
cally operated. It was also found after the accident that
the brake failure was due to a steel pipe bursting
from .7mm. to .1mm. The corrosion had occurred where it
could not be seen except by removing the pipe completely
from the vehicle and this had never been done. Expert
evidence showed’ that it was not a normal precaution to do
this if, as was the case, the visible parts of the pipe were
not corroded. The corrosion was unusual and unexplained.
An expert witness said it must have been due to chemical
action of some kind such as exposure to salt from the roads
in winter or on journeys near the sea. The House of Lords
held that the burden of proof which lay on the defendants to
show that they had taken all reasonable care had been dis-
charged. The defect remained undiscovered despite due care
As the evidence had shown that something unusual had hap-
pened to cause this corrosion it was necessary for the
defendants to show that they neither know nor ought to have
known of any unusual occurrence to cause the breakdown. (See
Bingham’s Motor Claims Cases Seventh Ed., p. 219).
The burden of proving that the accident was due to a
mechanical defect is on the owners and it is their duty to
show that they had taken all reasonable care and that de-
spite such care the defect remained hidden. In this case
in the written statement all that is pleaded is that the
axle brake ring of the lorry came out and the driver lost
control of the motor lorry and that the defect can develop
in a running vehicle resulting in the driver’s losing
control of the steering wheel. Though it was stated that
all precautions were taken-to keep the lorry in a road
worthy condition it was not specifically pleaded that the
defect i.e. the axle brake ring coming out, is a latent
pleaded and could not have been discovered by the use of
reasonable care. This lack of plea is in addition to the
lack of evidence and the fact that the defence set up has
been rightly rejected by the Tribunal.
(1) [1970] A.C.282[1969] 3 All E.R. 756
893
Mr. Nariman then submitted that the quantum of compensa-
tion awarded was very high. He submitted that even accord-
ing to the figures relied on by the High Court it was in
error in coming to the conclusion that for a period of 4
years from the date of the accident the claimant has suf-
fered a damage of Rs. 73,779. The learned counsel submit-
ted that though during the first year there was a loss of
Rs. 3,530 in subsequent years he earned various amounts and
in one year he earned Rs. 7,981 which would mean that during
subsequent years his loss would not have been. more than
Rs.10,000 and as admittedly the Nursing Home was kept as a
going concern the award of Rs. 10,000 per year for the four
years would be very high. We have considered this conten-
tion carefully but taking all the circumstances into account
we do not feel called upon to interfere with the quantum
arrived at by the Tribunal and confirmed by the High Court.
The learned Counsel also submitted that the provision
for Rs. 63,000 for the 7 years as the likely loss due to the
doctor’s disability is also very high. In this case also
we do not feel called upon to interfere with the quantum
arrived at by the Tribunal as well as the High Court. Last-
ly, the learned counsel submitted that in any event the
interest awarded from the date of the application is not
justified. We do not think we will be justified in interfer-
ing with the amount of interest awarded by the High Court
from the date of the filing of the application.
On the above findings we confirm the award passed by the
Claims Tribunal in favour of the applicant/respondent No. 1
for Rs. 1,43,400 with interest at 6% per annum from the date
of the filing of the application and also a sum of Rs.500
granted to Malati M. Deshmukh and the costs awarded. The
liability of the owners and the insurance company will be
joint and several and the respondent would be at liberty to
proceed against either or both of them to realise the amount
awarded in his favour.
We have now to consider the direction given by the High
Court regarding the determination of the liability as be-
tween the insurance company and the owners. The owners and
the insurance company were represented by the same counsel
before the Tribunal and before the High Court the learned
counsel on behalf of the insurance company pleaded that its
liability is limited to Rs. 20,000 only. The High Court
has given liberty to the insurance company to apply on
depositing Rs. 20,000 with interest as directed for determi-
nation of the question that the liability of the insurance
company is limited to Rs. 20,000. The High Court also
directed the Tribunal to decide the liability of the insur-
ance company on the insurance company filing such an appli-
cation after giving notice to all the parties. The insur-
ance company has not appealed against the judgment and
decree of the High Court and we see no reason for interfer-
ing with the order. On the insurance company complying with
the directions of the High Court by depositing Rs. 20,000
with interest as specified the matter will be remitted to
the Tribunal for determination of the question whether the
liability of the insurance company is limited to
Rs.20,000 only. It is made clear that so far as the award
made
in
894
favour of the applicant/respondent is concerned he will be
at liberty to proceed against the owners as well as the
insurance company jointly and severally. With these direc-
tions the appeal is dismissed with the cost of the first
respondent.
This should normally conclude the judgment but we feel
it desirable that we must deal with the question of law that
has been dealt with at considerable length by the High Court
as to whether it is incumbent on the claimant to prove
negligence before he would become entitled to compensation.
The High Court after concurring with the findings of the
Tribunal and holding that the driver was negligent proceeded
to state that it would not have been necessary for them to
say anything more but for the fact that taking into account
the importance of matter and in public interest it would be
appropriate to express its view that it is not necessary to
prove negligence on the part of a driver before claiming
compensation.
Both the learned Judges have written lengthy judgments
fully discussing the matter and have come to the conclusion
that the fact of an injury resulting from the accident
involving the use of a car on the public road is the basis
of a liability and that it is not necessary to prove any
negligence on the part of the driver. We find that a Bench
of the Andhra Pradesh High Court has held in Haji Zakaria
and Others v. Naoshir Cama and others (1) that the liability
of the insured and consequently of the insurer to compensate
a third party dying or being injured on account of the use
of the insured vehicle is irrespective of whether the death,
injury etc. has been caused by rash and negligent driving.
Though this question does not arise in this appeal as the
two High Courts have expressed an opinion which in our view
has no basis either in the Legislative history or on a
construction of the relevent provisions of the Motor Vehi-
cles Act we feel it necessary to state the position of law.
The liability of the owner of the car to compensate the
victim in a car accident due to the negligent driving of his
servant is based on the law of tort. Regarding the negli-
gence of the servant the owner is made liable on the basis
of vicarious liability. Before the master could be made
liable it is necessary to prove that the servant was acting
during the course of his employment and that he. was negli-
gent. The number of the vehicles on the road increased
phenomenally leading to increase in road accidents. To
remedy the defect various steps were taken. In England the
owners of the vehicle voluntarily insured against the risk
of injury to other road users. With ’ the increase of
traffic and accidents it was found that in a number of cases
hardship was caused where the person inflicting the injury
was devoid of sufficient means to compensate the person
afflicted. In order to meet this contingency the Road
Traffic Act, 1930, The Third Parties (Rights against Insur-
ers) Act, 1930 and the Road Traffic Act, 1934 were enacted
in England. A system of compulsory insurance was enacted by
the Road Traffic Act, 1930. Its object was to reduce the
number of cases where judgment for personal injuries
(1) A.I.R.. 1976 A.P. 171.
895
obtained against a motorist was not met owing to the lack of
means of the defendant in the running-down action and his
failure to insure against such a liability. It is suffi-
cient to state that compulsory insurance was introduced to
cover the liability which the owner of the vehicle may
incur.
The Indian law introduced provisions relating to
compulsory insurance in respect of third party insurance by
introducing Chapter VIII of the Act. These provisions
almost wholly adopted the provisions of the English law.
The relevant sections found in the three English Acts, Road
Traffic Act, 1940, the Third Parties (Right against Insur-
ers) Act, 1930 and the Road Traffic Act, 1934 were incorpo-
rated in Chapter VIII. Before a person can be made liable
to pay compensation for any injuries and damage which
have been caused by his action it is necessary that the.
person damaged or injured should be able to establish that
he has some cause of action against the party responsible.
Causes of action may arise out of actions for wrongs under
the common law or for breaches of duties laid down by stat-
utes. In order to succeed in an action for negligence the
plaintiff must prove (1) that the defendant had in the
circumstances a duty to take care and that duty was owed by
him to the plaintiff, and that (2) there was a breach of
that duty and that as a result of the breach damage was
suffered by the plaintiff. The master also becomes liable
for the conduct of the servant when the servant is proved to
have acted negligently in the course of his employment.
Apart from it in common law the master is not liable for as
it is often said that owner of a motor car does not become
liable because of his owning a motor car.
The purpose of enactment of Road Traffic Acts and making
insurance compulsory is to protect the interests of the
successful claimant from being defeated by the owner of the
vehicle who has not enough means to meet his liability. The
safeguard is provided by imposing certain statutory duties
namely the duty not to drive or permit a car to be driven
unless the car is covered by the requisite form of third
party insurance. Section 94 of the Act, provides that no
person shall 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 the
Chapter. Section 95 of the Act is very important and that
specifies the requirements of policies and limits of liabil-
ity. Section 95(1)(a) and (b) of the Act are extracted.
They run as follows:
"95. (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 or by a co-operative socie-
ty allowed under section 108 to transact the
business of an insurer, and
896
(b) insures the person or classes of persons
specified in the policy to the extent speci-
fied in sub-section (2)--
(i) against any liability which may be
incurred by him in respect of the death or of
bodily injury to any person or damage to any
property of a third party caused by or aris-
ing 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:
* * * * *"
Under section 95(1)(b)(i) of the Act it is required that
policy of insurance must be a policy which insures the
person, against any liability which may be incurred by him
in respect of death 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. It may be noted
that what is intended by the policy of insurance is insuring
a person against any liability which may be incurred by him.
The insurance policy is only to cover the liability of a
person which he might have incurred in respect of death or
bodily injury. The accident to which the owner or the person
insuring is liable to the extent of his liability in
respect of death or bodily injury and that liability is
covered by the insurance. It is therefore obvious that if
the owner has not incurred any liability in respect of death
or bodily injury to any person there is no liability and it
is not intended to. be covered by the insurance. The li-
ability contemplated arises under the law of negligence and
under the principle of vicarious liability. The provisions
as they stand do not make the owner or the insurance company
liable for any bodily injury caused to a third party arising
out of use of the vehicle unless the liability can be fas-
tened on him. It is significant to note that under sub-
clause (ii) of section 95(1)(b) of the Act the policy of
insurance must insure a person against the death 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. Under section 95 (1)(b) clause (ii) of the Act the
liability of the person arises when bodily injury to any
passenger is caused by or use of the vehicle in a public
place. So far as the bodily injury caused to a passenger is
concerned it need not be due to any act or liability in-
curred by the person. It may be noted that the provisions
of section 95 are similar to section 36(1) of the English
Road Traffic Act. 1930, the relevant portion of which is to
the effect that a policy of insurance must be policy which
insures a person in respect of any liability which may be
incurred by him in respect of death or bodily injury to any
person caused by or arising out of the use of the vehicle on
road. The expression "liability" which may be incurred by
him" is meant as covering any liability arising out of the
use of the vehicle. It will thus be seen that the person
must be under a liability and that liability alone is cov-
ered by the insurance policy.
897
Section 96 of the Act also makes the position Clear. It
provides that when a judgment in respect of such a liability
as is required to be covered by a policy is obtained against
any person insured by the policy, then the insurer shall pay
to the person entitled the benefit of the decree as if he
were a judgment-debtor. The liability is thus limited to the
liability as is covered by the policy.
The main contention of Mr. Hattangodi, who supported the
view of the High Court that negligence need not be proved is
that Chapter VIII of the Act is a consolidating and amending
Act relating to motor vehicles and their use on a public
place and as such it contains the entire law, procedural as
well as substantive, and that the common law or law of torts
is no more applicable and if death or bodily injury arises
out of the use of motor vehicles in a public place a liabil-
ity arises. Strong reliance was placed by him on section
110A of the Act which provides for application for compensa-
tion arising out of an accident to the Claims Tribunal. The
learned counsel would submit that under section 110B the
Claims Tribunal, after holding an inquiry, may make an award
determining the amount of compensation which appears to it
to be just and specifying the person or persons to whom the
compensation shall’ be paid. According to counsel when an
injury is caused by the use of the vehicle in a public place
the Claims Tribunal is at liberty to award an amount of
compensation which appears to it to be just.
This plea ignores the basic requirements of the owner’s
liability and the claimant’s right to receive compensation.
The owner’s liability arises out of his failure to discharge
a duty cast on him by law. The right to receive compensation
can only be against a person who is bound to compensate due
to the failure to perform a legal obligation. If a person
is not liable legally he is under no duty to. compensate any
one else. The Claims Tribunal is a tribunal constituted by
the State Government for expeditious disposal of the motor
claims. The general law applicable is only common law and
the law of torts. If under the law a person becomes legally
liable then the person suffering the injuries is entitled to
be compensated and the Tribunal is authorised to determine
the amount of compensation which appears to be just. The
plea that the Claims Tribunal is entitled to award compensa-
tion which appears to be just when it is satisfied on proof
of injury to a third party arising out of the use of a
vehicle on a public place without proof of negligence if
accepted would lead to strange results.
Section 110(1) of the Act empowers the State Government
to constitute, one or more Motor Accidents Claims Tribunals
for such area as may be specified for the purpose of adjudi-
cating upon claims for compensation in respect of accidents
involving the death or bodily injury to persons. The power
is optional and the State Government may not constitute a
Claims Tribunal for certain areas. When a claim includes a
claim for compensation the claimant has an option to make
his claim before the Civil Court. Regarding claims for
compensation therefore in certain eases Civil Courts also
have jurisdiction. If the contention put forward is accept-
ed so far as the Civil
898
Court is concerned it would have to determine the liability
of the owner on the basis of common law or torts while the
Claims Tribunal can award compensation without reference to
common law or torts and without coming to the conclusion
that the owner is liable. The concept of owner’s liability
without any negligence is opposed to the basic principles of
law. The mere fact that a party received an injury arising
out of the use of a vehicle in a public place, cannot justi-
fy fastening liability on the owner. It may be that a
person bent upon committing suicide may jump before a car in
motion and thus get himself killed. We cannot perceive by
what reasoning the owner of the car could be made liable.
The proof of negligence remains the lynch pin to recover
compensation. The various enactments have attempted to
mitigate a possible injury to the claimant by providing for
payment of the claims by insurance.
In Halsbury’s Laws of England, 3rd Ed., Vol. 32, at
paragraph 751 at p. 366 the nature of insurance required is
stated as follows :-
"The conditions to be fulfilled in order
to render the use of a motor vehicle lawful
are (1) that there must be a policy of insur-
ance. in force in relation to the use of the
vehicle on a road, and (2) that it must be a
policy complying with the relevant statutory
requirements."
At paragraph 752 at page 366 the general nature of liabili-
ties required to be covered are stated as under:
"In order to comply with the statutory
requirements, a policy must provide insurance
cover in respect of any liability which may be
incurred by such person, persons or classes
of persons as are specified in the policy, in
respect of the death of, or bodily injury to,
any person (subject to specific exceptions)
caused by, or arising out of the use of
the vehicle on a road."
The authorised insurers issuing a policy pursuant to the
statutory requirements are obliged to indemnify the person
specified in the policy in respect of any liability which
the policy purports to cover in the case of that person or
classes of persons.***" (Paragraph 758 at p. 369). These
passages clearly indicate that the nature of the liability
required to be covered is the liability which may be in-
curred by or arising out of the use of a vehicle on a road
by the person.
A person is not liable unless he contravenes any of the
duties imposed on him by common law or by the statute. In
the case of a motor accident the owner is only liable for
negligence and on proof of vicarious liability for the acts
of his servant. The necessity to provide effective means
for compensating the victims in motor accidents should not
blind us in determining the state of law as it exists today.
Justice Vaidya in this judgment under appeal after
referring various decisions expressed his view as follows
:--
"It is not necessary to discuss all
these cases because, in any view, in none of
those cases was the question agitated
899
as to what exactly was meant by tort in the
context of automobile accidents and injuries
resulting. therefrom, for which more often
than not human minds, hands or legs are not
always accountable, in the later half of
the twentieth century. The question has
engaged the minds of jurists all over the
common law world .... "
The learned Judge proceeded further to observe that whether
we apply the test of torts or not the liability to pay
compensation arises when the injuries are caused by the use
of the motor vehicle and the Tribunal can adjudicate upon
the liability and determine just compensation. The learned
Judge further observed: "In my opinion, public good re-
quires that everyone injured, viz., by the use of motor
vehicle, must immediately get compensation for the injury.
Every person has a right to safety and security of his
person irrespective of fault or negligence or carelessness
or efficient functioning of the motor vehicle. Every person
has a right to claim compensation so that is the only way of
remedying the injury caused to him in a modern urbanised,
industrialised and automobile ridden life."
In a separate judgment Justice Mridul has expressed
himself in the same tenor. The learned Judge after referring
to section 95(1)(b) (i) and (1)(b)(ii) of the Act observed
that perimeters of liability in clauses (i) and (ii) must be
held to be the same because to both the liability of the
owner or the driver exists and is made compulsorily insura-
ble. The learned Judge while noting the difference in the
wording of the two, clauses observed that it is inconceiva-
ble that the legislature would intend absolute liability in
cases covered by clause (ii) and not in cases covered by
clause (i).
The reasoning of the two learned Judges is unacceptable
as it is opposed to basic principles of the owner’s liabili-
ty 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.
Equally unacceptable is the view of the Bench of the
Andhra Pradesh High Court in Haji Zakaria and others
v. Nashir Cama and others(1), wherein the court concluded
without any hesitation that the liability to compensate
arises when death or bodily injury to any person or damage
to any property of a third party is caused by or arising out
of the use of the vehicle in a public place and to infer the
qualifications or limitations that such death or bodily
injury should have been caused before such liability arises
only on account of rash and negligent driving would amount
to introducing something which is not there and would be
violating and transgressing the Clear provisions of the
statute and intention of the legislature.
(1) A.I.R. 1975 A.P. 171.
900
The Patna High Court in New India Assurance Co. Ltd.
v. Sumant Devi and Others(1) held that the liability of the
insurance company is absolute but is only limited to the
extent provided by the insurance policy. As against this
view all the other High Courts have held that the liability
to compensate arises only on a finding of negligence. It
may not be out of place to mention that those automobile
accidents are subject to the law of negligence. Modern
proposals consistently favour the Social Insurance model
under which benefits are payable directly by the fund with-
out any reference at all to the injurer while retaining an
option for the victim to claim either limited benefits on a
nonfault basis or full damages for negligence.
Consistent with this line of thinking is the judgment
of the Kerala High Court in Kesavan Nair v. State Insurance
Officer(2), where Justice Krishna Iyer expressed himself
thus: "Out of a sense of humanity and having due regard
to the handicap of the innocent victim in establishing the
negligence of the operator of the vehicle a blanket liabili-
ty must be cast on the insurers." Modern legislation has
also provided insurance cover for all air and rail passen-
gers and recently by amendment of section 95 of the Act
against death or bodily injury to passengers of a public
service vehicle caused by or arising out of the use of a
vehicle in a public place.
In a recent judgment of Madras High Court a Division
Bench is A.A.O. Nos. 607 of 1973 and 296 of 1974 M/s. Ruby
Insurance Co. Ltd. v. V. Govindaraj and others, delivered on
13th December, 1976, has suggested the necessity of having
social insurance to provide cover for the claimants irre-
spective of proof of negligence to a limited extent say
Rs.250 to Rs. 300 a month. It has also suggested that
instead of a lump sum payment which does not often reach the
claimants a regular monthly payment to the dependants by
the nationalised insurance company or bank would be desira-
ble. Unless these ideas are accepted by the legislature and
embodied in appropriate enactments Courts are bound to
administer and give effect to the law as it exists today.
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 of the insurance
company could be held to be liable for the payment compensa-
tion in a motor accident claim case.
But as we have found that the vehicle owner was liable
for negligence of the driver and have upheld the amount of
damages awarded, we dismiss this appeal with cost to the
first respondent.
P.B.R. Appeal dismissed.
(1) 1971 A.C.J. 58. (2) 1971 A.C.J. 219.
901