MEMORIAL ON BEHALF OF THE RESPONDENT

LIST OF ABBREVATIONS

 ACJ Accident Claims Journal

 AIHCC All India High Court Cases
 AIR All India Reporter
 Anr. Another
 Bom Bombay
 Cal Calcutta
 Co. Corporation
 ed. Edition
 Guj Gujarat
 i.e. That is
 ILR Indian Law Reporter
 LJ Law Journal
 Ltd. Limited
 MP Madhya Pradesh
 Ors. Others
 para Paragraph
 pg. Page
 SC Supreme Court
 SCR Supreme Court Reporter
 U.P Uttar Pradesh
 u/s Under Section
 v. Versus
 vol Volume

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INDEX OF AUTHORITIES

1. LIST OF STATUTES

 Insurance Act, 1938

 Motor Vehicle Act, 1939
 Motor Vehicle Act, 1988

2. LIST OF CASES

 Baby v. Sona Khan, 1996 ACJ 1107 (MP).

 Bhoi Vanaji Dhulaji vs. Patel Shivabhai Kashibhai, AIR 1980 Guj 154.
 Bishan Devi and Ors. v. Sirbaksh Singh and Anr. [1980]1SCR 300.
 Deepal Girishbhai Soni v. United India Insurance Co. Ltd., 2004 ACJ 934
(SC).
 Gujarat State Road Transport Corporation, Ahmedabad v. Union of India, AIR
1988 Guj 13.
 Karnataka High Court United India Insurance Co. Ltd. v. Immam Aminasan
Nadaf and Ors., 1990 ACJ 757.
 Mangilal's case, 1988 ACJ 307 (MP).
 Minu B. Mehta v. Balkrishna, AIR 1977 SC 1248.
 National Insurance Co. Ltd v. Bommithi Subbayamma and Ors., 2005(2) ACJ
721.
 National Insurance Co. Ltd. v. Prembai Patel, 2005 AIR SCW 2254.
 National Insurance Co. v. Swaroopa and Ors., AIR 2006 SC 2472.
 New India Assurance Co. Ltd vs. Bimla And Others, 1 December, 2009.
 New India Assurance Co. Ltd. v. Asha Rani, 2003 (2) SCC 223.
 New India Assurance Co. Ltd. vs. F.A.O. No.1928 of 2008.
 Onkarlal Garg and Anr. v. New India Assurance Co. Ltd. and Ors., 1994 ACJ
352.
 Oriental Insurance Co. Ltd. v. Hansrajbhai V. Kodala, 2001 (5) SCC 175.

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 Ramashray Singh v. New India Assurance Company Limited, AIR 2003 SC

2877.
 Sanjuben Bhikhabhai v. Kali Lalji Naku, 2000 AIHC 3050 (Guj).
 Shivlal v. Rukmabai, 1987 ACJ 341 (MP).

3. LIST OF BOOKS

 Jyotsna Sethi and Nishwan Bhatia, Elements of Banking and Insurance, PHI
Learning Private Ltd., 3rd ed., 2009.
 P.K. Sarkar, The Motor Vehicles Act, 1988, Eastern Law House Private Ltd.,
2004.
 T.K. Mukherjee, Motor Vehicle Act, 1988, Premier Pub. Co., 2nd ed., 2006.

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STATEMENT OF JURISDICTION

The Claimants have approached the Motor Accidents Claims Tribunals u/s 166 of the
Motor Vehicle Act, 1988. The Respondents submits to the same.

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STATEMENT OF FACTS

1. Dharam Singh was a farmer in Sundar Village, Patiala and had farm land there.

2. In 2001 he bought a new tractor and just to utilize the old one, he converted the old
tractor into tractor- trailer for the kids. The tractor - trailer became a huge success
amongst the kids and the adults of the village.

3. Dharam Singh was himself a registered driver and he got his tractor – trailer
insured with the General Insurance Company.

4. In December 2002, the tractor – trailer was taking the rounds of the village and had
about 20 people in it. The tractor – trailer met with an accident and various occupants
including the children were seriously injured.

5. They all got together, all seven adults and three children who were seriously injured
and the rest 10 who faced minor injuries and claimed compensation from Dharam
Singh.
6. The insurance company denied the claim as they had made it a party along with
Dharam Singh saying the tractor – trailer was registered under the agricultural uses
and hence cannot be insured.

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STATEMENT OF ISSUES

1. Whether the General Insurance Company is liable to pay compensation for the
injuries sustained by the passengers in the accident?

2. Whether the owner of the vehicle Dharam Singh incurs any liability to pay
compensation?

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SUMMARY OF ARGUMENTS

1. Whether the General Insurance Company is liable to pay compensation for

the injuries sustained by the passengers in the accident?

This case comes within the ambit of Clause 2 of section 149, there is a breach of
condition as Dharam Singh converted the tractor so as to carry the passengers, the
purpose for which the tractor – trailer has been insured was its agricultural use and the
very purpose for which a tractor trailer is for is defeated.

In the present case it is established from the facts that the tractor - trailer was insured
for agricultural purposes only and for this very reason that it was originally insured
for purpose of carrying out agricultural purposes and the tractor was converted into
tractor – trailer for carrying passengers but the insurance policy was not altered so as
to cover risks arising out of the vehicle being used for the commercial purposes.
The insurance company covers the risk for using the vehicle for agricultural purpose
only and the use of it for loading the passengers is in violation of the terms of the
policy. Hence the General Insurance Company cannot be held liable to pay any
compensation.

2. Whether the owner of the vehicle Dharam Singh incurs any liability to pay
compensation?

Sub-section (1) of Section 140 of Motor Vehicle Act, 1988 relates to the accident
which had resulted in death or permanent disablement. In the present case the accident
has not resulted in death or permanent disablement. Hence claimants cannot claim
compensation u/s 140 of the Motor Vehicle Act, 1988.

Under Section 163A of the Motor Vehicle Act, 1988 it is essential for the claimant to
prove that the income of the victim was below Rupees forty thousand. But in the
present case the facts are also silent on the issue of incomes of the claimants.

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In the proceedings under Section 166 of the Act, the proof of negligence of the driver
of the vehicle responsible is essential.

The law as it stands requires that the claimant should prove that the driver of the
vehicle was guilty of rash and negligent driving but rashness and negligence on the
part of Dharam Singh cannot be proved. Hence it is clear that until and unless the
negligence of the owner or driver is established, he cannot be held liable for the
payment of compensation.

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ARGUMENTS ADVANCED

1. Whether the General Insurance Company is liable to pay compensation for

the injuries sustained by the passengers in the accident?

In the present case Dharam Singh, a farmer has converted an old tractor into a tractor
- trailer for carrying the kids. The tractor - trailer became a huge success among the
kids and the adults of the village. He got the tractor - trailer insured with the General
Insurance Company for agricultural purposes.

In December 2002, the tractor – trailer was taking the rounds of the Sundar Village
and had about 20 people in it. The tractor – trailer met with an accident and various
occupants including the children were seriously injured. In the present case this fact is
clear that Dharam Singh was using his tractor - trailer for the purpose of carrying the
passengers and not for the agricultural purposes, which is in contradiction of the
actual use of the said vehicle and thus acted in contravention of the terms of the
insurance policy.

A tractor trailer is a goods carriage meant for agricultural purposes. This argument is
time to time emphasized by various courts in their decisions. Firstly we will discuss
the definition of Agricultural purpose.

"Agricultural purpose" has not been defined under the Motor Vehicles Act, 1988
except tractor and trailer. The definitions of them as given in Sub-sections (44) and
(46) of Section 2 read as under1:

2 (44) "Tractor" means a motor vehicle which is not itself constructed to carry any
load (other than equipment used for the purpose of propulsion); but excludes a road
roller.

2(46) "Trailer" means any vehicle, other than a semi-trailer and a sidecar, drawn or
intended to be drawn by a motor vehicle.

1
Section 2 of the Motor Vehicle Act, 1988.
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Therefore, necessarily, the Court has to fall back upon the general sense in which
'agricultural purpose' has been understood in common parlance.

"Agriculture" as defined under Black's Law Dictionary is "the Science or art of

cultivating the soil, harvesting crops, and raising livestock and also as the science or
art of the production of plants and animals useful to man and in varying degrees the
preparation of such products for man's use and their disposal". Webster's New
International Dictionary describing "Agriculture" as "the art of science of cultivating
the ground, including rearing and management of livestock, husbandry, farming etc.,
and also including in its good sense farming, horticulture, forestry, butter and cheese
making etc.," Murray's Oxford Dictionary describes "agriculture" as "the science and
art of cultivating the soil, including the allied pursuits of gathering in the crop and
rearing livestock, tillage, husbandry, farming in the widest sense". In Corpus Juris
Secondum, the term "agriculture' has been understood to mean, art or science of
cultivating the ground, especially in fields or large quantities, including the
preparation of soil, planting of seeds, the raising and harvesting of crops, and the
rearing, feeding and management of livestock, tillage, husbandry and farming. As per
Century Dictionary and Anderson's Dictionary of Law, the primary meaning of
'agriculture" is the cultivation of the ground, and in its general sense, it is the
cultivation of the ground for the purpose of procuring vegetables and fruits for the use
of man and beast including gardening or horticulture and the raising or feeding of
cattle and other stock.2

Now according to section 149 of Motor Vehicle Act, 1988:

(1) If, after a certificate of insurance has been issued under sub- section (3) of section
147 in favour of the person by whom a policy has been effected, judgment or award in
respect of any such liability as is required to be covered by a policy under clause (b)
of sub- section (1) of section 147 (being a liability covered by the terms of the policy)
is obtained against any person insured by the policy, then, notwithstanding that the
insurer may be entitled to avoid or cancel or may have avoided or cancelled the
policy, the insurer shall, subject to the provisions of this section, pay to the person
entitled to the benefit of the decree any sum not exceeding the sum assured payable
there under, as if he were the judgment debtor, in respect of the liability, together with
2
Ramashray Singh v. New India Assurance Company Limited, AIR 2003 SC 2877.
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any amount payable in respect of costs and any sum payable in respect of interest on
that sum by virtue of any enactment relating to interest on judgments.

(2) No sum shall be payable by an insurer under sub- section (1) in respect of any
judgment or award unless, before the commencement of the proceedings in which the
judgment or award is given the insurer had notice through the Court or, as the case
may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such
judgment or award so long as execution is stayed thereon pending an appeal; and an
insurer to whom notice of the bringing of any such proceedings is so given shall be
entitled to be made a party thereto and to defend the action on any of the following
grounds, namely:

(a) that there has been a breach of a specified condition of the policy, being one of the
following conditions, namely:

(i) a condition excluding the use of the vehicle:

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a
vehicle not covered by a permit to ply for hire or reward, or

(b) for organized racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the
vehicle is a transport vehicle, or

(d) without side- car being attached where the vehicle is a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who
is not duly licensed, or by any person who has been disqualified for holding or
obtaining a driving license during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of

war, civil war, riot or civil commotion; or

(b) that the policy is void on the ground that it was obtained by the non- disclosure of
a material fact or by a representation of fact which was false in some material
particular.

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As the present case comes within the ambit of Clause 2 of section 149, there is a
breach of condition as Dharam Singh converted the tractor so as to carry the
passengers, the purpose for which the tractor – trailer has been insured was its
Agricultural use and hence the very purpose for which a tractor trailer is for is
defeated. In the landmark judgment delivered by the Apex Court in the case of New
India Assurance Co. Ltd. vs. F.A.O.3 wherein it was held that a tractor trailer is a
goods carriage vehicle and not a transport vehicle. The same could be used only for
the agricultural purpose and not to carry the passengers including the laborer. If the
tractor is plied for other than agricultural purpose, in that event, the claimant, injured
or the deceased could be termed as gratuitous passengers and thus, their claim is not
maintainable under the Motor Vehicles Act, 1988. It was also contended that in the
instant case since the tractor having not been used for agricultural purpose and it was
only for loading the passengers in that situation there was violation of the condition of
the contract of insurance.

In the present case it is clear from the facts that the tractor - trailer was insured for
agricultural purposes only and for this very reason that it was originally insured for
purpose of carrying out agricultural purposes and the tractor was converted into
tractor - trailer but the insurance policy was not altered so as to cover risks arising out
of the vehicle being used for the commercial purposes. It was being used at the time
of accident for commercial purposes, i.e., for carrying passengers. The policy shows
that it covered liability against risks on account of accidents in the course of
agricultural operations only and the accident did not take place in the course of
agricultural operation.

This argument clarifies the position of a tractor trailer that it being a goods carriage
meant only for agricultural purposes and any contradictory use of the said vehicle will
defeat its very purpose. Further the vehicle is registered only for agricultural purposes
and not for carrying passengers and yet passengers are allowed to travel in such
vehicle, the insurance company can avoid liability. 4 Hence the insurance company is
not liable to pay compensation.

3
No.1928 of 2008.
4
Sanjuben Bhikhabhai v. Kali Lalji Naku 2000 AIHC 3050 (Guj).
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Considering another important decision of Karnataka High Court United India

Insurance Co. Ltd. v. Immam Aminasan Nadaf and Ors. 5 it was held that in order
to decide as to whether the vehicle involved in the accident was covered by an
Insurance Policy, has to decide as to whether prima facie the risk was covered by the
Insurance Policy. If having regard to the facts stated in the claim petition itself and the
contents of an Insurance Policy, a finding could be arrived at that the policy did not
cover the risk, in such a case there is no reason as to why the Insurance Company
should be compelled to pay the amount solely on the ground that the policy of
insurance existed and compel the Insurance Company to collect later the money paid
from the owner of the vehicle which would throw the Insurance Companies to
innumerable litigations.

In another case of Shivlal v. Rukmabai,6 wherein it is held that the insurance

company is not liable to pay the compensation for the passenger travelling in a tractor
and no person can be carried as a passenger in a tractor or trailer attached to it. This
decision is very relevant in the present case as the insurance company incurs no
liability for the very reason that the sole purpose of the tractor or trailer attached to it
is to carry out agricultural purposes rather than loading the passengers, as such, the
same could not be insured for carrying any passengers. Therefore, the act of Dharam
Singh being in contravention of the terms of the policy, the insurance company is not
liable to pay any compensation for the persons who had received injuries while
travelling in the goods vehicle. A tractor is specially designed motor vehicle not
constructed to carry any load but the same could be used for the purpose of
propulsion. It is light motor vehicle; it could be used on or off the road especially for
agricultural purposes but if the same is used for carrying the passengers then it would
defeat the purpose for which it is meant and could not be termed as agricultural
purpose.7

There is no dispute that the vehicle was insured but it was being used for purpose
other than agriculture and as such insurance company is not liable to make good the
loss.

5
1990 ACJ 757.
6
1987 ACJ 341 (MP).
7
New India Assurance Co. Ltd vs. Bimla And Others, 1 December, 2009.
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It has to be seen as to what the terms of the insurance policy were and whether there
was any violation of the terms as such. Where policy limits the use of tractor for
agricultural purpose did not meant to carry any passenger, so that Insurance Company
was not held liable. It was a case where there was a gratuitous passenger and in that
view the Court held that the Insurance Company is not liable to pay compensation. 8
In present case also the tractor – trailer was not meant to carry any passenger and the
owner also allowed gratuitous passengers.

In the case of Bhoi Vanaji Dhulaji vs. Patel Shivabhai Kashibhai, 9 the appellant
imposed a restriction for user of the vehicle. It restricted the user for agricultural
purpose only. The tractor driver permitted persons to travel in the trailer of the tractor.
The Gujarat High Court held in para 11 as follows:

" In the case at hand, the question which directly arises is as to whether, by virtue of a
specific condition in the policy laying down that the user was restricted for
agricultural and forestry purposes and that the policy did not cover use of carriage for
passengers. If the vehicle at the time of the accident, was used for carriage of
passengers for hire or reward, in breach of a specific condition to that effect in the
policy, then, the insurance company would not be bound to satisfy the award".

In the case of New India Assurance Co. Ltd. v. Asha Rani, 10 the court held that the
owner of the vehicle carrying passenger must pay premium for covering risk of
passengers. If a liability other than limited liability is to be enhanced under an
insurance policy, additional premium is required to be paid. Court further held that in
the insurance policy tractor is insured for the use of agriculture and no additional
premium has been paid towards the use of vehicle for carrying passengers.

In the decision of National Insurance Co. Ltd v. Bommithi Subbayamma and

Ors.11 the Apex Court held that although the owner of the goods or his authorized
representative would now be covered by the policy of insurance in respect of goods
vehicle, it was not the intention of the legislature to provide for the liability of the
insurer with respect to passengers, especially gratuitous passengers, who were neither
8
Onkarlal Garg and Anr. v. New India Assurance Co. Ltd. and Ors. 1994 ACJ 352.
9
AIR 1980 Guj 154.
10
2003 (2) SCC 223
11
2005(2) ACJ 721
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contemplated at the time the contract of insurance was entered into, nor any premium
was paid to the extent of the benefit of insurance to such category of people.

The Insurance Company is not liable to pay compensation in respect of gratuitous

passenger being carried in a goods vehicle which met with accident.12

According to the arguments and decisions cited above we can conclude by saying that
the insurance company covers the risk for using the vehicle for agricultural purpose
only and the use of it for loading the passengers is in violation of the terms of the
policy. Hence the General Insurance Company cannot be held liable to pay any
compensation.

2. Whether the owner of the vehicle Dharam Singh incurs any liability to pay
compensation?
12
National Insurance Co. v. Swaroopa and Ors. AIR 2006 SC 2472
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Sub-section (1) of Section 140 provides that where death or permanent disablement of
any person has resulted from an accident arising out of the use of motor vehicle, the
owner of the vehicle will be liable to pay compensation in accordance with the
provisions of the Section. Therefore, the right or the liability relates to the date of the
accident which had resulted in death or permanent disablement. In the present case the
accident has not resulted in death or permanent disablement. Hence claimants cannot
claim compensation u/s 140 of the Motor Vehicle Act, 1988.13

Under Section 163A of the Motor Vehicle Act, 1988 it is essential for the claimant to
prove that the income of the victim was below Rupees forty thousand. 14 But in the
present case the facts are also silent on the issue of incomes of the claimants.

In the proceedings under Section 166 of the Act, the tribunal is required to assess the
"just" compensation for the injury or the death of a person, as the case may be,
involved in an accident where the negligence of the driver of any offending motor
vehicle is the cause. Under Section 166 of the Act, the proof of negligence of the
driver of the vehicle responsible is essential. 15 According to the facts it is not clear
whether the accident occurred due to the rashness or the negligence on the part of the
driver or not.

It is the duty of the people to ascertain whether the vehicle they are boarding is meant
to carry passengers or not. Further this fact cannot be denied that the claimants
boarded such vehicle knowing the fact that the vehicle is not adapted to such use and
the roads in the village are not so tedious so as to carry out such a purpose. The
claimants have therefore travelled at their own risk and failed to establish that there
was any rash or negligent driving on the part of the driver. In the absence of any
evidence establishing rashness or negligence on the part of the driver, no liability can
be fastened on Dharam Singh for payment of compensation and consequently the
question indemnifying the claimants does not arise. This fact will become clear from
various judicial pronouncements which are described as under.

13
Section 140 of the motor Vehicle Act, 1988.
14
Section 163 A of the motor Vehicle Act, 1988.
15
Section 166 of the motor Vehicle Act, 1988.
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In the case of Minu B. Mehta v. Balkrishna,16 it was held that 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 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. 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". Finally, their Lordships summed up the law
thus in paragraph 36 of the judgment: "We conclude by stating that the proof of
negligence is necessary before the owner or the insurance company could be held to
be liable for the payment of compensation in a motor accident claim case."

In another case of Gujarat State Road Transport Corporation, Ahmedabad v.

Union of India,17 it was held that the Claims Tribunal for adjudicating upon the
claims for compensation in respect of accidents involving injuries to persons arising
out of use of motor vehicles must necessarily be treated to mean that the Claims
Tribunal will be entitled to adjudicate upon the claims for compensation in respect of
accidents arising out of negligent use of the motor vehicles and not any innocuous use
or in other words, it should be misuse of the motor vehicle or rash and negligent use
of the motor vehicle which must have contributed to or must have caused the accident
in question. In the present case facts are silent on the question of negligence and
hence Dharam Singh cannot be held liable to pay any compensation.

The proof of negligence is necessary in order to hold the owner or the insurance
company liable for the payment of compensation in a motor accident claim case. This
principle has also been reiterated in the other decisions of the Apex Court.18

It is well settled that to succeed in a claim for compensation for the injury suffered or
for the death caused in accident by the use of motor vehicle, for holding the owner,

16
AIR 1977 SC 1248.
17
AIR 1988 Guj 13.
18
Minu B. Mehta v. Balkrishna Ramchandra Nayan 1977 ACJ 118 (SC); National Insurance Co. Ltd.
v. Prembai Patel 2005 AIR SCW 2254 ; Oriental Insurance Co. Ltd. v. Hansrajbhai V. Kodala, 2001
(5) SCC 175 and Deepal Girishbhai Soni v. United India Insurance Co. Ltd. 2004 ACJ 934 (SC).
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driver and the insurer liable to pay compensation proof of negligence is necessary.
Therefore, where a workman or the legal representatives of the deceased workman in
order to claim compensation for the injuries suffered or for the death of a workman in
a motor accident, they undertake the burden of proving the negligence of owner/
driver so as to make them liable to pay compensation. 19 "The law as it stands requires
that the claimant should prove that the driver of the vehicle was guilty of rash and
negligent driving."20

From the above arguments it is clear that until and unless the negligence of the owner
or driver is established, he cannot be held liable for the payment of compensation.
Therefore the owner of the vehicle Dharam Singh cannot be held liable to pay any
compensation.

PRAYER
Wherefore in the light of the issues raised, arguments advanced and authorities cited,
the defendant most humbly prays before the Hon’ble Tribunal to dismiss the claim of
the Claimants.

Pass any such orders as it may deem fit in the interests of justice.

19
Mangilal's case 1988 ACJ 307 (MP); and Baby v. Sona Khan 1996 ACJ 1107 (MP).
20
Bishan Devi and Ors. v. Sirbaksh Singh and Anr. [1980]1SCR 300.
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All of which is respectfully submitted

Counsel for the Defendant

Prashant Agrawal

RAJIV GANDHI NATIONAL UNIVERSITY OF LAW, PATIALA (PUNJAB)

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