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Expert
30-03-2009, 08:02 AM
Goods carried in the transport vehicle destroyed – transporter compensated the owner of goods – sought reimbursement from insurer – goods not included in third party property – no claim

M.NAGESWAR RAO & ANR. VS. NATIONAL INS. CO. LTD.

The brief facts of the case are that the owner of the goods vehicle had got the vehicle insured with the above insurer for a sum of Rs.325000/- covering third party claim as well. A transporter appellant no.2 in the present case hired the above goods vehicle for transporting the goods worth Rs.7, 42,000/- appx. The vehicle was set on fire on way to deliver the goods and was totally reduced to ashes. The owner of the vehicle lodged a claim with the insurer for Rs.3.2 lakhs as comprehensive insurance cover and Rs.7, 42,000/- for loss of goods loaded on the vehicle. The insurer allowed the claim to the extent of Rs.2, 86,000/- for loss of vehicle and the same was duly accepted by the owner. The transporter had to pay Rs.6, 58,000/- appx. To the party whose goods were destroyed in the incident. The insurer repudiated the claim for the loss of goods on the ground that the goods carried in the vehicle did not fall under the category of third party property and risk for the value of goods was therefore not covered by the terms of the policy. The state commission dismissed the complaint of the transporter for deficiency in service. In appeal before the national commission the issue was discussed at length. The contention of the transporter/appellant was that under section 95 of the Motor Vehicles Act a policy was required to be taken covering damage to the property of a third party caused by or arising out of the use of a vehicle in a public place and as goods in the damaged vehicle were properties of third party hence insurer was liable. On the other hand the contention of the insurer was that goods carried in the said vehicle could be termed as properties of third parties and policy in question did not cover the risk of loss to the goods. Reference was made to section-II of the conditions of the policy and section 95 of the Motor Vehicles Act. The proviso (d) in section-II made it clear that the insurance company shall not be liable in respect of damage to property belonging to or held in trust or in custody or control of the insured or a member of insured’s household or being conveyed by the motor vehicle. Therefore in view of the court the words “property of a third party” occurring in section-II of the insurance policy in question refers to the property not inside (carried) but outside the vehicle and this conclusion was supported through an earlier landmark decision of Madhya Pradesh High Court. Also the liability for damage to the goods was to be determined with reference to terms and conditions of the policy in question. The aforesaid proviso (d) in section-II of the policy clearly exonerated the insurer of the liability in respect of damage to the goods being conveyed in the vehicle at the time of the incident.

Held: Appeal of transporter dismissed and Insurer Company not liable.