Holding

The insurance policy does not cover loss caused by the carriage of hazardous ether solvent, as the insured violated the permit and the policy must be strictly construed.

Summary

The appellant insurer issued a policy that covered only goods permissible under the Motor Vehicles Act, 1988. The respondent was transporting 15 barrels of ether solvent, which the Court held to be synonymous with ethyl ether, a hazardous substance listed in Table III of Rule 137, Central Motor Vehicles Rules, 1989. The respondent's permit allowed only unhazardous goods, so the carriage of ether solvent violated the permit. The loss from the fire was therefore not within the scope of the insurance contract, which must be strictly construed. The Supreme Court set aside the State and National Consumer Commissions' decisions that had allowed the claim and restored the lower forum's dismissal, holding the insurer not liable.

Issues considered

Whether the insurance policy covered loss arising from the carriage of ether solvent, a hazardous substance, under the terms of the policy.
Whether ether solvent is the same as ethyl ether and thus classified as a hazardous material under Rule 137 of the Central Motor Vehicles Rules, 1989.
Whether the insured complied with the conditions of his permit which allowed only unhazardous goods.

Legislation cited

Central Motor Vehicles Rules, 1989s. Rule 129, s. Rule 137, s. Rule 9(c), s. Tables I, II, III
Motor Vehicles Act, 1988s. 2(13), s. 2(14), s. 2(31), s. 66(1) third proviso, s. 77, s. 78, s. 79(2)

Subjects

insurance contract interpretationmotor vehicle permithazardous goodsether solventethanol etherconsumer disputepolicy limitationfire loss

Judgment

A ORIENTAL INSURANCE CO. LTD.
v.
SONY CHERIA YAN

AUGUST 19, 1999

B [S. SAGHIR AHMAD AND R.P. SETHI;JJ.]

Motor Vehicles Act, 1988-Sections 2(13), 2(14), 2(31), 66(1) third
proviso, 77, 78 and 79(2)-Truck, insured only for carriage of goods within
the .meaning of the Act and eligible under the permit issued.to it to carry only
C unhazardous goods-Truck caught fire while carrying ether solvent, a highly
flammable and. hazardous substance-Claim filed against the insurer for
loss-Held, not maintainable-Central Motor Vehicles Rules, 1989, Rules
9/(c), 129, 137, and Tables/, If, and lll.

Insurance-Liability of insurer-Interpretation of insurance policy-
D Held, should be strictly construed to determine the extent of insurer's liability.
Words and Phrases-'Ethyl ether' and 'ether'-Meaning of-In the
context of Central Motor Vehicles Rules 1989.

The respondent's truck was insured with the appellant. It caught fire
E while carrying barrels of ether solvent. Respondent filed a claim before the
Distric_t Consumer Disputes Redressal Forum against the Insurance Company
for a certain sum together with interest. The complaint was dismissed.
However, the appeal filed before the State Commission was allowed in favour
of the respondent. The revision filed before the National Commission was
F also allowed in favour of the respondent. Hence this appeal.

It was contended by the appellant that Table Ill to Rule 137 of the
Central Motor Vehicle Rules contains the list of hazardous and toxic
chemicals and one of the items described in the Table was 'ethyl ether' which
was classified as flammable, and as per the 'permit' issued to the respondent,
G he could transport only non-hazardous articles, and the insurance policy
covered only those goods which were permissible under the Motor Vehicles ,
Act to be carried by the respondent.

It was contended by respondent that what was carried by the respondent
was 'ether solvent' and not 'ethyl ether' which was not specified 'in ttole III
II 622
ORIENTAL INSURANCE CO. LTD. v. SONY CHERIA YAN [S. SAGHIR AHMAD, J.) 623

:.,.
. appended to Rule 137 of the Central Motor Vehicles Rules. A
Allowing the Appeal, the Court ·

HELD: 1. The insurance policy between the insurer and the insured
.-. represents a contract between the parties. Since the insurer undertakes to
compensate the loss suffered by the insured on account of risks covered by B
the insurance policy, the terms of the agreement have to be strictly construed
to determine the extent of liability of the insurer. The insured cannot claim
anything more than what is covered by the insurance policy. [627-G-H)

2. The respondent was carrying ether solvent in his truck, which has
been described in Table III to Rule 137 of the Central Motor Vehicles Rules, C
1989 as a hazardous and highly flammable article. Since under the "permit"
granted.to the respondent he could transport only non-hazardous articles,
and the insurance policy covered only those goods which were permissible
under the Motor Vehicles Act to be carried by the respondent, the judgments
passed by the State and National Commissions are incorrect. [627-E-F) D
3. Ether solvent is only a descriptive name for ether, which is widely
used as a solvent not only in the industry, but also in chemical manufacture
and in research laboratories. Ether and ethyl ether are the same substance
..., and the term "ether" is used synonymously with "ethyl ether".
(628-G-H; 629-A) E
Hawely's Condensed Chemical Dictionary, 11th Edn., McGraw-Hill
Encyclopedia of Chemistry, 2nd Edition, referred to. (628-E)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4913of1997.
F
From the Judgment and Order dated 10.2.97 of the National Consumers
Disputes Redressal Commission, New Delhi in R.P. No. 580of1996.

T.L.V. Iyer, and M.J. Paul for the Appellant.

Subramonium Prasad for the Respondent. G
The Judgment of the Court was delivered by

S. SAGHIR AHMAD, J. Respondent's truck was insured with the
appellant. On 19.4.1994, while the truck was on its way from Bombay to
Allapuzha carrying 15 barre.ls of Ether Solvent, it caught fire at Bisalkoppa H
,. 624 SUPREME COURT REPORTS (1999) SUPP. I S.C.R.

A near Hubli, which gave rise to a Claim Petition being filed by the respondent ..:

before the District Consumer Disputes Redressal Forum, Allapuzha, in the
sum of Rs. 2,75,000, along with interest @ 18 per cent per annum from
19.4.1994, but the Complaint was dismissed on 30.9.1995. An appeal, which
was thereafter filed by the respondent before the Kerala State Consumer ...
Disputes Redressal Commission, was allowed on 24.4.1996 directing the
B appellant to pay a sum of Rs.l,93,500 together with interest@ 12 per cent
from 19.4.1994 to the respondent. A Revision filed by the appellant before the
National Consumer Disputes Redressal Commission was dismissed on 10.2.1997
and now the matter is in appeal before this Court.
'ii
c The claim of the respondent was resisted by the appellant before the
District Consumer Disputes Redressal Forum on the ground, inter alia, that
the claim was not covered by the terms of the insurance policy as the
respondent, in his vehicle, was carrying Ethyl Ether, a hazardous and highly
inflammable substance,. which could not be legally carried by the respondent
in his truck in terms of the permit granted to him under the Motor Vehicles
-
D Act, 1988. It was precisely on this ground that the District Forum had rejected
the claim which, as mentioned above, was allowed by the State Commission.
The National Commission before which it was argued that the Ether Solvent
and Ethyl Ether were the same substance, dismissed the Revision on the ·.
ground that what was prohibited under the Central Motor Vehicle Rules was ,....
E Ethyl Ether and that there was no material on record to indicate that Ethyl
Ether was the same substance as Ether Solvent.

The insurance policy issued to the respondent in respect of his Mahindra
Alwin Nisan Truck No. KL-04 A 4683, which was registered as a public carrier,
clearly stipulated under the heading "LIMITATION AS TO USE'; as under:
F
"Only for carriage of goods within the meaning of the Motor Vehicles
Act, 1988."

Section 2 (13) of the Motor Vehicles Act, 1988 (the 'Act' for short)
defines "goods" as under :
G
"Goods' includes live-stock, and anything, (other than equipment ~

ordinarily used with the vehicle) carried by a vehicle except living ""'"'
persons, but does not include luggage or personal effects carried in
a motor car or in a trailer attached to a motor car or the J)ersonal
H luggage of passengers travelling in the vehicle."
ORIENTAL INSURANCE CO. LTD. v. SONY CHERIA YAN [S. SAGHIR AHMAD, J.J 625

Section 2 (14) defines "goods carriage" as under : A
" 'Goods carriage' means any motor vehicle constructed or adapted
tlh- use solely for the carriage of goods, or any motor vehicle not so
constructed or adapted when used for the carriage of goods."

"Permit" is defined in Section 2(31) as under:
B
~
"Permit' means a permit issued by a State or Regional Transport
' Authority or an authority prescribed in this behalf under this Act
authorising the use of a motor vehicle as a transport vehicle."
This definition stipulates that a motor vehicle cannot be used as a
transport vehicle unless a permit is issued either by the State Transport C
Authority or the Regional Transport Authority or any other Authority
prescribed in that behalf under the Act.

Chapter 5 of the Act deals with control of transport vehicles. Section
66 (1), together with the third proviso which is relevant for this case, lays
down as under : D
"66. Necessity for permit - ( 1) No owner of a motor vehicle shall use
or permit the use of the vehicle as a transport vehicle in any public
place whether or not such vehicle is actually carrying any passengers
or goods save in accordance with the conditions of a permit granted
or countersigned by a Regional or State Transport Authority or any E
prescribed authority authorising him the use of the vehicle in that
place in the manner in which the vehicle is being used:
Provided that... ............... .
Provided further that... ....... .
F
Provided also that a goods carriage permit shall, subject to any
conditions that may be specified in the permit, authorise the holder
to use the vehicle ·for the carriage of goods for or in connection with
a trade or business carried on by him."

Section 77 contemplates that an application for a 'permit' to use a motor G
vehicle for the carriage of goods shall contain, amongst other particular, the
nature of goods it is proposed to carry.

Section 78 provides that a Regional Transport Authority, while
considering an application for a 'goods carrier permit', shall have regard to
the matters, namely: H
626
A
SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

"(a) the nature of the goods to be carried with special reference to
·-
their dangerous or hazardous nature to human life;

(b) the nature of the chemicals or explosives to be carried wflh special
reference to the safety to human life."

B Section 79 provides that a Regional Transport Authority may grant a
'goods carrier permit' and may attach to the 'permit' any one or more of the
conditions specified in sub-section (2) thereof. The relevant portion of sub-
section (2) is reproduced below:

"(2) The Regional Transport Authority, if it decides to grant a goods
c carriage permit, may grant the permit and may, subject to any rules
that may be made under this Act, attach to the permit any one or more
of the following conditions, namely :

(i) ...................... .

D (ii) ..................... ..

(iii) that goods of a specified nature shall not be carried.

(iv) ...................... .

(v) ...................... .
E
(vi) ...................... .

(vii) ...................... .

(viii)...................... .
F (ix) ......................."
.·
The respondent, under the 'permit' granted to him could, admittedly,
carry "All kinds of unhazardous goods, including fish, except those prohibited."

G Chapter V of Central Motor Vehicles Rules, 1989 deals with construction,
equipment and maintenance of motor vehicles. Rule 9l(c) defines "dangerous
or hazardous goods" as under :

"dangerous or hazardous goods' means the goods of dangerous or
hazardous nature to human life specified in Tables I, II and Ill to Rule
H 137."
\
ORIENTAL INSURANCE CO. LTD. v. SONY CHERI A YAN [S. SAGHIR AHMAD, J.J 627

Rule 129 deals with transportation of goods of dangerous· or hazardous A
nature to human life.

Table I to Rule 137 contains the labels which have to be displayed on
the vehicle in relation to the dangerous or hazardous goods carried by them.
Table II describes indicative criteria in respect of flammable chemicals. The
following is the criteria: B
"(b) Flammable chemicals :

(i) flammable gases: chemicals which in the gaseous state at normal
pressure and mixed with air become flammable and the boiling
point of which at normal pressure is 20 Degree C or below; C
(ii) highly flammable liquids: chemicals which have a flash point
lower than 21 Degree C and the boiling point of which at normal
pressure is above 20 Degree C;
(iii) flammable liquids: chemicals which have a flash point lower than
55 Degree C and which remain liquids under pressure, where D.
particular processing conditions, such as high pressure and
high temperature, may create major accident hazards.

Table III contains the list of hazardous and toxic chemicals. One of the items
described in this Table is 'Ethyl Ether' which is classified as flammable in the E
same Table.

Admittedly, respondent was carrying Ether Solvent which has been
described as a hazardous and highly flammable article. Since under the 'permit'
granted to the respondent he could transport only non-hazardous articles,
and the insurance policy covered only those goods which were permissible F
under the Motor Vehicles Act to be carried by the respondent, the judgments
dated 24.4.1996 and 10.2.1997 passed by the State and National Commissions
respectively, are incorrect.

The insurance policy between the insurer and the insured represents a G
contract between the parties. Since the insurer undertakes to compensate the
loss suffered by the insured on account of risks covered by the insurance
policy, the terms of the agreement have to be strictly construed to determine
the extent of liability of the insurer. The insured cannot claim anything more
than what is covered by the insurance policy. That being so, the insured has
also to act strictly in accordance with the statutory limitations or terms of the H
628 SUPREME COURT REPORTS [1999] SUPP. I S.C.R.

A policy expressly set out therein.
In the instant case, while specifying the "LIMITATIONS AS TO USE",
it was clearly mentioned that the policy was meant to cover only carriage of
goods as defined within the meaning of Motor Vehicles Act, 1988. The
'permit' granted to the respondent under the Act specifies the nature of
B goods which he could carry on the vehicle. It was provided in the 'permit'
itself that the respondent could carry "all kinds ofunhazardous goods including
fish except those prohibited." It is obvious that the 'permit' was not granted
for carrying hazardous goods. It has already been specified above that Ether
which was being transported by the respondent in his vehicle is hazardous
C substance indicated in Table III under Rule 137. There was, therefore, a
specific prohibition operating against the respondent from carrying a hazardous,
and that too, flammable substance in his vehicle which, under the 'permit'
granted to him, could be utilised only for carrying unhazardous goods under
the Motor Vehicles Act.

D Mr. T.L. Vishwanatha Iyer, learned Senior Counsel appearing on behalf
of the respondent has contended that what was being carried by the respondent
was ETHER SOLVENT which is not specified in Table III appended to Rule
137 and what is specified therein is ETHYL ETHER which is a different
substance altogether and, therefore, carrying of ETHER SOLVENT was not
E prohibited and it could not be treated to be a hazardous substance as it was
not specified as such in Table III.

We are not prepared to accept this contention. Ether is a chemical
substance. In Hawley's Condensed Chemical Dictionary, Eleventh Editio~,
'Ether' is described as under :
F "ether - A class of organic compounds in which an oxygen atom is
interposed between two carbon atoms (organic groups) in the molecular
structure giving•the generic formula ROR. They may be derived from
alcohols by elimination of water, but the major method is catalytic
hydration of olefins. Only the lowest member of the series, methyl
G ether, is gaseous; most are liquid and the highest members are solid
(cellulose ethers). The term "ether'" is often used synonymously with
"ethyl ether" and is the legal label name for it."

In Mcgraw-Hill Encyclopedia of Chemistry, Second Edition, it is described
that "Ethers" are used widely as solvents, both in chemical manufacture and
H in the research laboratory. It is also mentioned therein that the most important
ORIENTAL INSURANCE CO. LTD. v. SONY CHERIA YAN [S. SAGHIR AHMAD, J.] 629

Ether is Ethyl Ether. While describing Ethyl Ether, it is mentioned in this A
Encylopedia as under :

"The best known of the ethers is ethyl ether, sometimes, called diethyl
ether or simply ether, CH3 CH2 OCH2 CH3. It is used in industry as
a solvent and in medicine as an anesthetic."
B
In view of the above, it is apparent that Ether Solvent is only a
descriptive name for Ether which is widely used as a solvent not only in the
industry, but also in chemical manufacture and in research laboratories. Ether
and Ethyl Ether are the same substance and the term "Ether" is us~d
synonymously with the "Ethyl Ether".
c
In view of the above, the appeal is allowed. The judgment and orders
dated 24.4.1996 and l 0.2.1997 passed by the State and National Commissions
respectively are set aside, while the judgment dated 30.9.1995 passed by the
District Consumer Disputes Redressal Forum, Alappuzha, is restored by which
the Complaint (the Claim Petition of the respondent) was rightly dismissed. D
There wi1l be no order as to costs.

R.K.S. Appeal allowed.