Kerala High Court Reverses Tribunal’s Exoneration of Insurance Company; Holds Insurer Liable for Spare Driver’s Compensation Due to Additional Premium and Statutory Requirement for Two Drivers Under National Permit

Court’s Decision:

The Kerala High Court, presided by Justice Johnson John, reversed the Tribunal’s decision that exonerated the insurance company from liability. The Court held that the insurance policy covered the deceased, a spare driver employed by the vehicle’s owner, as the policy collected an additional premium for the risk associated with drivers, conductors, and cleaners. The Court ordered the insurance company to pay the enhanced compensation amounting to Rs.18,04,660 with 9% interest per annum from the claim petition date until realization.

Facts:

1. The appellants, legal heirs of the deceased, filed a motor accident claim after the deceased sustained fatal injuries while traveling as a spare driver in a goods vehicle.
2. The accident occurred due to the rash and negligent driving of the vehicle, which collided with another lorry in Karnataka.
3. The Motor Accident Claims Tribunal awarded Rs.14,97,960 as compensation but exonerated the insurance company, citing lack of coverage for a spare driver.

Issues:

1. Whether the insurance policy covers the liability for a spare driver, allowing for compensation to the deceased’s legal heirs.
2. Whether the Tribunal’s assessment of the deceased’s income and subsequent compensation was appropriate.

Petitioner’s Arguments:

The petitioners argued that the deceased, employed as a spare driver, was entitled to coverage under the insurance policy. They contended that an additional premium was collected, covering the driver, conductor, and cleaner, which should extend to the deceased. They also argued that the Tribunal’s notional income assessment was incorrect and did not reflect the deceased’s professional status as a driver.

Respondent’s Arguments:

The insurance company claimed that its policy did not cover a spare driver or gratuitous passengers, asserting that the deceased’s presence in the vehicle was not covered under the terms. They argued that the liability extended only to a single driver under the policy and that the additional premium did not apply to the deceased.

Analysis of the Law:

1. The Court examined Section 90 of the Central Motor Vehicles Rules, 1989, which requires vehicles operating under a national permit to have a minimum of two drivers.
2. It highlighted precedents that mandate insurance contracts to comply with the Motor Vehicles Act’s social objectives and protect accident victims.
3. The Court emphasized the interpretation of beneficial legislation, favoring coverage for employees involved in vehicle operations.

Precedent Analysis:

1. N.K.V Bros. (P) Ltd. v. M. Karumal Ammal & Ors. – The Supreme Court ruled that accident victims should not suffer due to technicalities and that insurance liability should extend to protect victims.
2. Pranay Sethi’s Case – Established guidelines on compensation for conventional heads and future prospects, which informed the Court’s calculation of income and compensation.
3. Ramachandrappa and Syed Sadiq Cases – Provided benchmarks for fixing notional income for unskilled labor, guiding the Court’s assessment of the deceased’s income.

Court’s Reasoning:

The Court reasoned that the insurance company, having collected an additional premium covering the driver, conductor, and cleaner, was obligated to compensate the spare driver as an employee of the vehicle owner. The Court found no evidence of policy exclusion for a spare driver and cited Section 90 of the Central Motor Vehicles Rules, which prescribes the requirement for two drivers in goods vehicles under national permits.

The Court rejected the Tribunal’s restrictive interpretation of the policy terms, asserting that it contravened the social objective of the Motor Vehicles Act to protect accident victims.

Conclusion:

The High Court set aside the Tribunal’s decision, holding the insurance company liable to compensate the appellants. The enhanced compensation was calculated based on the revised income of Rs.10,000, future prospects, and adjustments for conventional heads.

Implications:

The judgment reinforces the interpretation of insurance policies to favor accident victims, especially employees like spare drivers required by statutory rules. It underscores the Court’s stance that additional premiums collected by insurers create an obligation to cover associated risks, aligning with the protective intent of motor vehicle insurance laws. This decision may influence similar cases involving insurance liability for spare drivers and the application of beneficial legislation principles in accident compensation cases.