New India Assurance Company Ltd. v. O.S. Varghese and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **THURSDAY, THE 06TH DAY OF AUGUST 2020 / 15TH SRAVANA, 1942** **M.A.C.A.No.903 OF 2017(A)** **AGAINST THE AWARD IN OP(MV) NO.248/2013 DATED 25.11.2016 OF ADDITIONAL MOTOR ACCIDENTS CLAIMS TRIBUNAL-I, KOTTAYAM** ## **APPELLANT/ 3RD RESPONDENT:** **NEW INDIA ASSURANCE COMPANY LTD., DIVISIONAL OFFICE, KOTTAYAM-1, REP. BY THE MANAGER, REGIONAL OFFICE, KOCHI-682011.** **BY ADV. SRI.RAJAN P.KALIYATH** ## **RESPONDENTS/ CLAIMANT & RESPONDENTS 1 & 2:** **1 O.S. VARGHESE, S/O.P.S.SAMUEL, AGED 56 YEARS, OOLACKAMATTATHIL HOUSE, PUTHUPPALLY (VIA), THOTTACKAD POST, KOTTAYAM, PIN-686539.** **2 SAJAN C.THARAKAN @ RAJAN, S/O.MANI THARAKAN, AGED 33 YEARS, VALIYAMANNIL HOUSE, ILLAMTHIRA BHAGOM, PUTHUPPALLY VILLAGE, THOTTACKAD POST, KOTTAYAM, PIN-686539.** **3 BABU SAMUAL @ O.S.BABU S/O.P.S.SAMUEL, AGED 59 YEARS, OOLACKAMATTATHIL HOUSE, PUTHUPPALLY VILLAGE, THOTTACKAD POST, KOTTAYAM, PIN-686539.** **R1 BY ADV. SRI.G.SREEKUMAR CHELUR R1 BY ADV. SRI.NANDAGOPAL S.KURUP R2-R3 BY ADV. SRI.TOM JOSE PADINJAREKARA R2-R3 BY ADV. SRI.SHIBU JOSEPH** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 06.08.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **- 2 -** **MACA.903 of 2017** **==> picture [55 x 13] intentionally omitted <==** **==> picture [299 x 71] intentionally omitted <==** ## **JUDGMENT** **Whether compensation is payable under Section 166 of the Motor Vehicles Act, 1988 ['MV Act' for brevity] for the loss suffered on account of death of an elephant in a motor accident, caused by the negligence of the driver of the lorry in which it was carried, is the question raised in this appeal by the Company which insured the offending vehicle. The question of law would be whether claims for compensation of damage to property, not of a third party, can be filed before a Tribunal constituted under Section 165 of the Motor Vehicles Act, 1988. The owner of the elephant was the claimant before the tribunal who is the 1[st] respondent in the appeal. The negligent driver and owner of the vehicle are the 2[nd] & 3[rd] respondents.** **2. The Tribunal found negligence on the basis of the crime registered by the Forest Department against the driver, which cannot be faulted. The Tribunal held that the definition of 'goods' under the MV Act includes 'livestock'** **- 3 -** **MACA.903 of 2017** **and, hence, an elephant comes within the definition of 'goods'. This Court has its own doubts as to whether an elephant will come under the definition of 'livestock', since it generally refers to farm animals reared for transport, carriage of goods or to generate a profit by sale of their products like milk, meat, wool etc:. 'Livestock' is generally distinguished from poultry and pets. An elephant, though essentially a wild animal, is often regarded as a pet, which also generate profit by its commercial use of hiring for pageants and earlier for moving timber, which now is prohibited. Be that as it may, there is no doubt that elephant kept in captivity for commercial use is the property of its owner and we are here concerned with compensation for, damage to or loss occasioned of property.** **3. The Tribunal was of the opinion that the crucial question to be considered is the actual loss suffered by the claimant on account of the death of the elephant, the ownership of which is proved by Exhibit A2 certificate. The Tribunal misdirected itself insofar as the crucial question was as to whether the property/goods, being the elephant, carried in the vehicle and the damage or loss caused was covered by the insurance policy issued** **- 4 -** **MACA.903 of 2017** **as against the vehicle in which the elephant was carried. There was also the larger question of whether the goods carried in the vehicle can be said to be goods belonging to a third party. It is admitted that the policy was an 'Act only policy' covered under Section 147 of the MV Act. Section 147 of the MV Act, as it now stands, covers the liability as against a third party including the owner of the goods or his authorized 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. The proviso also enables the coverage in case of a goods vehicle; of the driver and an employee of the owner of the vehicle carried in the vehicle, often described as a cleaner. The proviso also makes it clear that there can be no coverage of any contractual liability.** **4. Sri.Rajan P.Kaliyath, learned Counsel appearing for the appellant-Insurance Company submits that first of all the carriage of an elephant in a goods vehicle, is a contractual liability, which is not covered under Section 147 of the MV Act; the contract, being carriage of goods, between the claimant and the 3[rd] respondent-owner of the vehicle. It is also submitted that the damage occasioned to the goods, even if caused by reason of the negligence of** **MACA.903 of 2017 - 5 -** **the driver, the policy issued under Section 147 does not indemnify the owner of the vehicle against such damages occasioned. The learned Counsel relies on a Full Bench decision of Himachal Pradesh High Court in** _**Jagdish Chand Sharma v. Bachan Singh**_ **[** _**2010 KHC 6593 = AIR 2010 HP 49**_ **]. It is argued that there could have been a suit filed by the owner of the elephant as against the owner of the vehicle, under the Carriers Act but no claim subsists under the MV Act especially when the offending vehicle is covered by an 'Act only policy'. It is also submitted that from the cause title of the award it is clear that the petitioner, owner of the elephant, is the brother of the owner of the vehicle. Even if there was no contract for carriage of elephant, the policy issued, as produced and marked before this Court as 'Court Exhibit C1', has a specific condition that no damage to property belonging to a member of the insured's household shall be covered by the policy. The learned Counsel would submit that the owner of the elephant had taken out a policy for the elephant, in which the total declared value was Rupees Five Lakhs and the assured coverage for Rupees Two Lakhs. There could be nothing claimed over and above that. When such assured amounts are received under that other policy, there could be no further** **- 6 -** **MACA.903 of 2017** **damage assessed or loss directed to be paid up by the Company. The assessment of loss as endeavoured by the Tribunal is challenged in** _**toto**_ **and the adoption of a multiplicand is assailed also on the ground that an elephant as per The Kerala Captive Elephants (Management and Maintenance) Rules, 2003 is to be retired at the age of 65 years. Immediately this Court has to notice that the Rules of 2003 is brought out under the Wildlife (Protection) Act of 1972; further validating the reasoning that an elephant is essentially an animal of the wild and not livestock.** **5. The learned Counsel appearing for the claimant, 1[st] respondent in the appeal, would argue for sustaining the order of the Tribunal. It is submitted that the insurance policy taken out does not interfere with the right of the owner of the elephant to claim for damages that was occasioned by reason of the death of the elephant caused by an accident. It is the negligence of the driver of the vehicle which caused the accident leading to the elephant's death. This has caused damage to the claimant, the owner of the elephant, for reason of he having been deprived of the income from such elephant which, under normal circumstances, would have continued for very many years.** **- 7 -** **MACA.903 of 2017** **6. According to this Court, the Tribunal has completely misdirected itself. The Tribunal has adopted an income of Rs.15,000/- per month from the use of the elephant on festival seasons and adopted a multiplicand of 14 to arrive at the loss of income. This is with respect to the accepted computation of loss of future income on the basis of a notional annual income fixed multiplied with the normal expectation of years of continued life as adopted only in the event of death of a human being or computed on the percentage of permanent disability assessed in the case of serious injuries, as per the binding precedents under the MV Act. This cannot apply in the case of property, in the form of an animal which generates some profit, even belonging to a third party; let alone that carried in the vehicle pursuant to an express or implied contract.** **7. The Hon'ble Supreme Court in** _**New India Assurance Co. v. Satpal Singh**_ **[** _**(2000) 1 SCC 237**_ **] interpreted Section 147(1)(b)(i) of the MV Act as it stood before the 1994 amendment [Act 54 of 1994] to hold that 'Act only policy' does not exclude coverage to a gratuitous passenger. The said proposition was reversed in** _**New India Assurance Co. Ltd. v. Asha Rani**_ **[** _**(2003) 2 SCC 223**_ **]. The position hence is that as per the Act of 1939 and Act of** **- 8 -** **MACA.903 of 2017** **1988 before and after amendment in 1994, no gratuitous passenger is entitled to coverage under an 'Act only policy'. The decision of the Larger Bench in** _**Asha Rani**_ **is discussed here to throw light on the meaning of the words 'any person' as available in the 1988 Act prior to its amendment in 1994; which meaning applies even after amendment. Section 147(1)(b)(i) as it stood prior to the 1994 amendment provided coverage for 'death or bodily injury to any person or damage to any property of a third party'.** _**Asha Rani**_ **found the meaning attributable, to the words 'any person' has to be with regard to the context in which they have been used, i.e., which is of a third party. On the said finding, it was held that prior to 1994 the owner of the goods or his authorized representative carried in a goods vehicle would not be covered by the 'Act only policy'. Only by the 1994 amendment the words 'injury to any person' was substituted with 'injury to any person, including owner of the goods or his authorised representative carried in the vehicle'. Hence, the owner of the goods is not a third party as contemplated under the MV Act and the damage to the property of a third party found in Section 147(1)(b)(i) does not take in the goods carried in the vehicle. Further, as pointed out by the Learned** **- 9 -** **MACA.903 of 2017** **Standing Counsel, the policy shall not be required to cover any contractual liability.** **8. Identical was the reasoning of their Lordships of the Full Bench of the Himachal Pradesh High Court in** _**Jagdish Chand Sharma**_ **, the conclusion of which we extract hereunder and respectfully follow.** **"38. The position which emerges is that the Apex Court has consistently held that the phrase 'any person' in S.147(1) (b) is restricted to third parties. When we come to damage to property both in S.147(b)(i) as well as S.165, the legislature in its wisdom has specifically used the phrase 'property of a third party'. If a gratuitous passenger in a vehicle is not a third party, it is obvious that the goods being carried in a vehicle cannot be said to be the goods of a third party. Some Courts had earlier taken the view that other than the insurer and the insured, all other persons are third parties. This has not been accepted to be the correct position of law and, therefore, the Apex Court has held that the Insurance Company is not liable in respect of death of gratuitous or unauthorized passengers. In fact, till the amendment of S.147 of the Act was carried out by the amendment Act 54 of 1994 w.e.f. 14-11-1994, the Apex Court had held that even the risk to the owner of the goods or his authorized representative was not covered. They were not treated as third parties. If all these authorities of the Apex Court** **- 10 -** **MACA.903 of 2017** **were taken into consideration. It is obvious that gratuitous passengers, unauthorized passengers, even employees not covered under the Workmen's Compensation Act and pillion riders who were all travelling in a vehicle have not been considered to be third parties. It is, therefore, obvious that the Apex Court has not upheld the view expressed by certain Courts including the view expressed by a learned single Judge in Noor Dass' case supra that other than the insurer and insured, all other persons are third parties. Therefore, this plea of the claimants cannot be accepted. It is, therefore, obvious that the word 'third party' cannot include such persons.** **39. When a person sends his goods by a goods vehicle, he enters into a contract with the owner of the goods vehicle and, therefore, the owner of the goods vehicle becomes contractually liable to transport the goods in a safe condition. This is a contractual liability covered under the Carriers Act and not a tortious liability covered under the Motor Vehicles Act. The owner of the goods cannot by any stretch of imagination be said to be a third party vis - a - vis, the insured. It is a contracting party with the insured and in our view, the risk cannot be said to be that of a third party.** **40. In view of the above discussion, we answer both the questions posed to us in the following terms:-** **- 11 -** **MACA.903 of 2017** **1. The phrase "Any property of a third party" occurring in S.147 and S.165 of the Motor Vehicles Act will mean property which is outside the goods vehicle and not being carried in the goods vehicle.** **2. The second question is answered by holding that the goods of a consignor / consignee being carried in a goods vehicle cannot be termed to be property of a third party".** **9. The Tribunal constituted under the MV Act, hence, would not have any jurisdiction to entertain claims regarding damage to goods/property consigned in a goods vehicle as per a contract of carriage or otherwise. Under Section 165, claims for compensation for damage to property is restricted only to the property belonging to a third party. That would also not fall for coverage under an 'Act only policy' as issued under Section 147. We also specifically notice Section II Clause 1(d) of the policy, marked as Court Exhibit C1:** - **(d) The Company shall not be liable in respect of damage to property belonging to or held in trust by or in the custody of the insured or a member of the insured's household or being conveyed by the insured vehicle”.** **- 12 -** **MACA.903 of 2017** **This further buttress the argument of the insurance Company against the indemnification sought; which even otherwise is statutorily excluded in case of contractual liabilities by Section 147.** **10. Before we leave the matter, we have to notice one other aspect where the Tribunal erred substantially. As we noticed, the Tribunal computed the loss of income on the basis of the table applicable to human beings and that too without any evidence for the income asserted and added the cost of treatment and medicine, incidental expenses, post-mortem, cremation, etc. The Tribunal reduced the insurance received of Rupees Two Lakhs for the loss of elephant relying on the decision in** _**United India Insurance Co. Ltd. v. Sekhara Marar**_ **[** _**2012 4) KLT 332**_ **]. The Tribunal also relied on the aforesaid decision to find the claimant entitled to the damages caused to property, suffered by the owner of that property, on account of the road accident. However the Tribunal failed to notice that there the issue was not of an elephant carried in a vehicle, being injured due to an accident caused by the driver of the vehicle in which it was carried. There the claim was one raised by a third party whose risk is covered by the policy issued for the vehicle. I have verified the Judges Papers in that case** **- 13 -** **MACA.903 of 2017** **and there the elephant was proceeding by road, when a lorry hit the animal, resulting in injuries. Hence, the compensation claimed therein, was for damaged caused to the property of a third party.** **11. This Court also cannot but observe with a bit of anguish that the Tribunal has relied on only one part of the judgment; totally ignoring the other portion of the judgment which too has the effect of a binding precedent. The Division Bench in the cited decision was concerned with two appeals, one by the insurer and the other by the claimant. Two questions were raised, one by the claimant as to whether the Tribunal was right in having deducted the amount awarded on the strength of an insurance taken out as 'Elephant Insurance Policy', from the compensation awarded; which the Division Bench answered in the affirmative and the Tribunal in this case followed. The Insurance Company's appeal raised the question as to whether the alleged loss of income from the elephant could be assessed in addition to the loss caused due to its death; which was found in the negative by the Division Bench; which in this case the Tribunal failed to notice or chose to ignore. In** _**Sekhara Marar**_ **too the Tribunal had adopted an amount of Rs.1,20,000/- as loss of income, fixing a notional income** **- 14 -** **MACA.903 of 2017** **of Rs.12,000/- per year and determining the loss of future income with a multiplier of 10. The Division Bench specifically set aside the loss of income awarded by the Tribunal, which the Tribunal in the present case failed to notice.** **12. On the above reasoning, this Court is of the opinion that the award passed by the Tribunal has to be set aside. With respect to the question of the proper remedy, this Court has merely noticed the arguments of both sides and it does not lie in the mouth of this Court to answer that issue. This Court has also not made any observation with respect to relationship between the owner of the vehicle and that of the elephant.** **The appeal is allowed, setting aside the order of the Tribunal and rejecting the claim application as not maintainable. Parties are left to suffer their respective costs.** **Sd/K.VINOD CHANDRAN JUDGE** **Vku/-** **- 15 -** **MACA.903 of 2017** ## **APPENDIX** **DOCUMENT PRODUCED ALONG WITH I.A.NO.1120 OF 2017** **COURT EXHIBIT C1 – TERMS AND CONDITIONS OF POLICY NO.7601013112020000035 ALONG WITH POLICY SCHEDULE CUM CERTIFICATE OF INSURANCE.** **[ TRUE COPY ]**