1999 JTR(SC) 1413
2000 ACJ 1 ; 2000 AIR(SC) 235 ; 1999 AIR(SCW) 4337 ; 2000 1 ALD(SC) 50 ; 2000 1 AllCJ 640 ; 2000 1 AllMR(SC) 346 ; 2000 1 AWC 454 ; 2000 1 BBCJ(SC) 55 ; 2000 1 BLJR 1 ; 2000 99 CompCas 258 ; 2000 1 CTC 370 ; 2000 DNJ 62 ; 2000 ILR(Kar) 391 ; 1999 9 JT 416 ; 2000 1 KLT 95 ; 2000 1 MhLJ(SC) 740 ; 2000 1 MLJ 115 ; 2000 2 MPHT 340 ; 2000 1 MPLJ 339 ; 2000 2 PLJR(SC) 42 ; 2000 1 PLR(SC) 464 ; 2000 1 RCR(Civ) 274 ; 2000 1 RLW(Raj) 98 ; 1999 7 Scale 300 ; 2000 1 SCC 237 ; 2000 SCC(Cri) 130 ; 1999 SCR 149 ; 2000 WBLR 70 ; 2000 WLC 40 ; AIR 2000 SC 235 ; 2000 1 LRI 443 ; 2000 1 MahLJ 740 ; 2000 1 TAC 403 ; 1999 AIRSCW 4337 ; 2000 KHC 21 ; 1999 10 Supreme 87
1999(10) Supreme 87
SUPREME COURT OF INDIA
(From Himachal Pradesh High Court)
K.T. Thomas & M.B. Shah, JJ.
New India Assurance Company -Appellant
versus
Shri Satpal Singh & Ors. -Respondents
Civil Appeal Nos. 6926-27 of 1999
(Arising out of SLP (C) Nos. 16039-16040 of 1999)
Decided on 2-12-1999
Counsel for the Parties :
For the Appellant : S.L. Gupta, J.S. Attari and Alok Kr. Sharma, Advocates.
VERY IMPORTANT POINT
Under the 1988 Motor Vehicles Act, Insurance Company is liable to pay compensation to gratuitous passenger.
Act Referred :MOTOR VEHICLES ACT : S.147(1), S.95
(A) The Motor Vehicles Act, 1988, Section 147(1) read with its proviso governs motor insurance policy requirements, replacing the Motor Vehicles Act, 1939, Section 95, which contained a clause excluding coverage for gratuitous passengers; the new provision removes that exclusion, making policies covering third party liability not required to exclude passengers irrespective of vehicle type or hire status, and policies in force at the commencement remained valid for a transitional period.
(B) Key principles include that third party insurance under the new Act covers liability for death or bodily injury to any person, including passengers, without excluding gratuitous passengers, and prior decisions under the old Act relying on such exclusion are no longer applicable.
Facts of the case:
A ten-year-old girl died in a truck accident; the owner was held liable, and the insurer was directed to pay compensation. The insurer challenged the award, arguing the deceased was a gratuitous passenger, but the contention was repelled by the High Court, which doubled the compensation, leading to this appeal.
Findings of Court:
The Division Bench correctly repelled the insurer's contention, and the exclusion for gratuitous passengers under the old Act does not apply under the new Act.
Issues:
Whether an insurance policy under the new Act is required to exclude coverage for gratuitous passengers and whether prior decisions on such exclusion remain valid.
Ratio Decidendi:
Since the new Act's Section 147(1) and sub-section (2) do not contain any exclusion for gratuitous passengers, such decisions are inapplicable, and the insurer remains liable for compensation for any passenger.
Result:
The appeals are dismissed.
(A) The Motor Vehicles Act, 1988, Section 147(1) read with its proviso governs motor insurance policy requirements, replacing the Motor Vehicles Act, 1939, Section 95, which contained a clause excluding coverage for gratuitous passengers; the new provision removes that exclusion, making policies covering third party liability not required to exclude passengers irrespective of vehicle type or hire status, and policies in force at the commencement remained valid for a transitional period.
(B) Key principles include that third party insurance under the new Act covers liability for death or bodily injury to any person, including passengers, without excluding gratuitous passengers, and prior decisions under the old Act relying on such exclusion are no longer applicable.
Facts of the case:
A ten-year-old girl died in a truck accident; the owner was held liable, and the insurer was directed to pay compensation. The insurer challenged the award, arguing the deceased was a gratuitous passenger, but the contention was repelled by the High Court, which doubled the compensation, leading to this appeal.
Findings of Court:
The Division Bench correctly repelled the insurer's contention, and the exclusion for gratuitous passengers under the old Act does not apply under the new Act.
Issues:
Whether an insurance policy under the new Act is required to exclude coverage for gratuitous passengers and whether prior decisions on such exclusion remain valid.
Ratio Decidendi:
Since the new Act's Section 147(1) and sub-section (2) do not contain any exclusion for gratuitous passengers, such decisions are inapplicable, and the insurer remains liable for compensation for any passenger.
Result:
The appeals are dismissed.
JUDGMENT
Thomas, J.-Leave granted.
2. A 10 year old girl met with her death in a truck accident. Her name was Dupinder Kaur. The accident occurred while she was travelling in the truck on 11.3.1990. She died on the spot. Her father, brother and sister made a joint claim for compensation under the Motor Vehicles Act, 1988 (for short the new Act ). The Motor Accident Claims Tribunal before which the claim was made passed an award in a sum of Rs. 25,000/- to the claimants. The owner of the truck was found liable to pay the compensation amount. M/s. New India Assurance Company, the insurer had been directed to make the amount good with interest, as the vehicle was then covered by an insurance policy issued by that company.
3. The claimants as well as the Insurance Company challenged the said award. The former was dissatisfied with the quantum of compensation awarded. The Insurance Company was aggrieved as the liability was imposed on them. The Insurance Company put forward a contention that the deceased Dupinder Kaur was a gratuitous passenger in the truck and hence no liability can be fastened with the insurer, but that contention was repelled.
4. A Division Bench of the High Court dismissed the appeal filed by the Insurance Company but allowed the other appeal by doubling the compensation amount. Hence this appeal by special leave at the instance of the Insurance Company. After hearing learned counsel for the appellant as felt that it is not necessary to send notice to the respondents to contest the appeal as there is no scope for absolving the Insurance Company from liability.
5. Learned counsel for the appellant banked on the decision of a three Judge Bench this Court in Mallawwa & Ors. v. Oriental Insurance Co. Ltd. & Ors.1, to disclaim liability on the premise that the victim of the accident was gratuitous passenger in the vehicle covered by the insurance policy. But the said decision was rendered under Section 95 of the Motor Vehicles Act, 1939 (which can be referred to as the old Act ). The aforesaid provision contained a rider in clause (ii) of the proviso to sub-section (1) which is absent in the corresponding provision in the New Act. To pinpoint the said distinction we extract Section 95(1) of the old Act as under:
"95. Requirements of policies and limits of liability.-(1) In order to comply with the requirements of this Chapter, a policy of insurance may be a policy which-
(a) is issued by a person who is an authorised insurer or by a co-operative society allowed under Section 108 to transact the business of an insurer, and
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)-
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by a or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place;
Provided that a policy shall not be required-
(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employees of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen s Compensation Act, 1923, in respect of the death of, or bodily injury to, any such employee-
(a) engaged in driving the vehicle, or
(b) it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a good vehicle, being carried in the vehicle; or
(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of contract of employment, to cover liability in respect of the death or or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, or
(iii) to cover any contractual liability."
6. As per the proviso when read with its clause (ii) it is clear that the policy of insurance shall not be required to cover liability in respect of the death of or bodily injury to persons who were gratuitous passengers of that vehicle. This Court has held in Pushpabai Parshottam Udeshi & Ors. v. M/s. Ranjit Ginning & Pressing Co. Pvt. Ltd. & Anr.2 as under:
"Sections 95(a) and 95(b)(I) of the Motor Vehicles Act adopted the provisions of the English Road Traffic Act, 1960, and excluded the liability of the insurance company regarding the risk to the passengers. Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death or bodily injury to any person 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 plea that the words `third party are wide enough to cover all persons except the person and the insurer is negatived the insurance cover is not available to the passengers made clear by the proviso to sub-section which provides that a policy shall not be required....... Therefore it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire or reward. As under Section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured the plea of the counsel for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act."
7. In fact the said ratio has been approved by the three Judge Bench in Mallava v. Oriental Insurance Co. Ltd. (supra). At the same time learned Judges pointed out that the old Act is now repealed by the new Act and Section 147 of the new Act corresponding to Section 95 of the old Act has been substantially altered and hence the above interpretation of Section 95 of the old Act will govern the cases which have arisen under the old Act.
8. Proviso to Section 147(1) of the new Act shows that it is a recast provision by placing the erstwhile clause (iii) as the present clause (ii). In other words, clause (ii) of the proviso in Section 95(1) of the old Act is totally non-existent in the proviso to Section 147(1) of the new Act.
9. Under Section 147 of the new Act, the policy must be a policy which insures the person or classes of persons specified in the policy to the extent specified in sub-section (2),-
(i) against any liability which may be incurred by him in respect of the death of or bodily (injury to any person, including owner of the goods or his authorised 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:
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place.
10. The proviso to the said sub-section is not relevant here as it pertains to death or bodily injury to the employee mentioned therein. Sub-section (2) provides that a policy of insurance shall cover any liability incurred in respect of any accident, up to the following limits, namely:-
(i) save as provided in clause (b) the amount of liability incurred;
(ii) in respect of damage to any property of a third party, a limit of rupees six thousand:
Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.
Hence, under sub-section (2), there is no upper limitation for the insurer regarding the amount of compensation awarded in respect of death or bodily injury of a victim of the accident. It is, therefore, apparent that the limit contained in the old Act has been removed and the policy should insure the liability incurred and cover injury to any person including owner of the goods or his authorised representative carried in the vehicle. The Legislature has also taken care even the policies which were in force on the date of commencement of the Act by specifically providing that any policy of insurance containing any limit regarding insurer s liability shall continue to be effective for a period of four months from commencement of the Act or till the date of expiry of such policy, whichever is earlier. This means, after the said period of four months a new insurance policy consistent with the new Act is required to be obtained.
11. The result is that under the new Act an insurance policy covering third party risk is not required to exclude gratuitous passengers in a vehicle, no matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act vis-a-vis gratuitous passengers are of no avail while considering the liability of the insurance company in respect of any accident which occurred or would occur after the new Act came into force.
12. The Division Bench of the High Court has rightly repelled the contention of the appellant-insurance company on the aforesaid score. We therefore, dismiss these appeals.
(C.R.) Appeals dismissed.
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Parallel Citations of other Journals :
New India Assurance Company v. Shri Satpal Singh & Ors., 1999(10) Supreme 87
00056