Gujarat High Court
Oriental Insurance Co vs Ramjibhai Govindbhai Patel ... on 8 July, 2022
Bench: Ashutosh J. Shastri
C/FA/5321/2006 JUDGMENT DATED: 08/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 5321 of 2006
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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ORIENTAL INSURANCE CO.
Versus
RAMJIBHAI GOVINDBHAI PATEL DECD.THR'HEIRS
==========================================================
Appearance:
MR VC THOMAS(5476) for the Appellant(s) No. 1
MR RASHESH A RINDANI(5380) for the Defendant(s) No. 1.5.2
MR SATYAM Y CHHAYA(3242) for the Defendant(s) No. 1.5.1,1.5.2
MR YOGEN N PANDYA(5766) for the Defendant(s) No. 1.1,1.2
RULE UNSERVED for the Defendant(s) No. 1.4
UNSERVED EXPIRED (R) for the Defendant(s) No. 1.3
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CORAM:HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
Date : 08/07/2022
ORAL JUDGMENT
1. Present First Appeal under Section 173 of the Motor Vehicles
Act, 1988 is directed against order dated 10.12.2004 passed by
learned Chairman, Motor Accident Claims Tribunal (Aux.) Bhavnagar
in Motor Accident Claims Petition No.97 of 1994.
2. Background of facts which has given rise to present First Appeal
is that on 12.11.1993, deceased Ramjibhai Govindbhai Patel was
siting behind Rajdoot Motorcycle bearing registration No.GJ 4B 9006
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driven by Odhabhai Hamabhai Patel. Both were going for the purpose
of purchasing to Botad. At about noon hours, when they came on the
road side, near Botad Ningala road, at about 3.30 p.m. in the noon
hours, nearby Pati village, one another Tempo was driven being GRO
4708 was driven by other driver and near said village, both
motorcycle and tempo came to be collided, as a result of that, entry
was made before Botad Police Station being entry No.226 of 1993 and
an offence was registered against Bhagwanbhai Kalyanbhai Patel
under Sections 279, 337, 338, 304A of the Indian Penal Code and
Sections 177 and 184 of the Motor Vehicles Act. Involved vehicle
tempo was belonging to opponent Nos.1 and 2 as driver and owner
respectively. Whereas, motorcycle in question was driven Odhabhai
Hamabhai Patel (opponent No.5 ) and he had insured the vehicle of
Rajdoot.
3. On account of such incident, claim petition came to be filed
claiming compensation, but then during passage of time, applicant
Ramjibhai Govindbhai Patel died on account of injuries on 7.5.2001
and as such, his wife and sons were joined as applicants for claim
which was sought for to the extent of Rs.8 lakh with 18% interest and
costs.
4. In the said claim petition, opponents have appeared, filed their
respective replies and submitted their relevant evidence and after
evaluating the same, learned Auxiliary Tribunal was pleased to pass
an order on 10.12.2004, which ultimately is made the subject of the
present First Appeal.
5. Learned advocate Mr. V.C. Thomas, appearing for the appellant
Oriental Insurance Company has submitted that impugned order is
not sustainable in view of the fact that deceased Ramjibhai
Govindbhai Pated was a pillion rider of Rajdoot motorcycle and
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Insurance Company is not covering the risk of such person and same
is also clarified from beginning at the time when insurance was taken
and as such, on this count alone, liability cannot be cropped up of
Insurance Company. Whether pillion rider is covered under policy or
not, an attention is drawn by producing copy of the Insurance policy
which is already part of the record and proceedings of the Tribunal
below and by drawing the attention to the said policy, Mr. Thomas has
contended that it was specifically conveyed that such person, i.e.
pillion rider, is not covered and this was specifically clear even at the
time when insurance was taken. Mr. Thomas has further contended
that such issue has been specifically dealt with by Coordinate Bench
of this Court in First Appeal No.225 of 2012, decided on 24.3.2021 and
as such, when pillion rider is not covered, there is hardly any scope
for order to be sustained in the eye of law. To support this submission,
learned advocate has drawn the attention to the said decision dated
24.3.2021 and has requested the Court to allow the appeal filed by
the Insurance company.
6. As against this, learned advocate Mr. Yogen Pandya has
vehemently opposed this on the ground that in any case, at the time
when the accident took place, vehicle was already insured and
therefore, simply because deceased was a pillion rider, no hyper
technical stand can be taken by the Insurance Company that policy is
not covering the risk. Person would not know about the fact that when
he/ she seats on the vehicle, whether risk is covered or not and as
such, stand taken by the Insurance Company may not be accepted. It
has further been contended that what kind of injury had taken place,
manner in which the accident had taken place and treatment which
has been meted out is elaborately discussed by the Tribunal when it
had passed order, which is impugned in the present appeal, and as
such, it is not open for appellant Insurance Company to discard the
liability. Detailed judgment which has been delivered may not be
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disturbed in the interest of justice. Hence, the order impugned may be
allowed to be sustained in the eye of law.
7. Learned advocate however could not confront with the situation
about the risk of pillion rider, whether covered or not, nor has been
able to point out any other decision contrary to what has been
delivered on 24.3.2021 by the Coordinate Bench of this Court on this
very issue and as such, has candidly left to the Court to pass suitable
order in the interest of justice.
8. Having heard learned advocates appearing for the parties and
having gone through the material on record, it is not in dispute that
the accident did take place on 12.11.1993 of vehicles namely
motorcycle and tempo and it is not in dispute that deceased
Ramjibhai Govindbhai Patel was sitting behind on motorcycle No.GJ 4B
9006 and as such, the fact that he being a pillion rider is not disputed
nor controverted from the evidence on record and as such, on the
main submission of appellant, there appears to be no confrontation.
Even a specific contention has been raised by appellant before the
Tribunal as well as this Court even in appeal, as ground No.(N) and it
has been contended that pillion rider cannot be classified as third
party when risk of vehicle in which such pillion rider was driving is
subject matter. If risk of pillion rider was not required to be covered
by Insurance Company of Rajdoot motorcycle, Tribunal ought not to
have held the appellant liable to indemnify the insured for payment of
compensation.
9. At this stage, both the sides have confirmed that this very issue
is covered by the decision of the Coordinate Bench of this Court in
First Appeal No.225 of 2012 decided on 24.3.2021 and as such, as a
part of judicial discipline, Court is bound to consider such view and as
such, relevant observations contained in the said decision, the Court
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deems it proper to reproduce hereunder:-
5. Mr. Vibhuti Nanavati, learned advocate appearing for the
respondent no.8 insurance company submitted that the insurance
policy at exhibit 54 is an "act only policy" and as the risk of the
pillion rider isnot covered, the appellant insurance company would
not be liable to satisfy the award. Mr. Nanavati therefore submitted
that this Court may pass appropriate orders.
7. I have perused the original Record and Proceedings and considering
the sole contention raised by Mr. Shelat, the insurance policy at
exhibit 54 deserves to be examined. It deserves to be noted that the
Tribunal while examining the same, has noted the fact that it is "act
only policy". On bare perusal of the insurance policy at exhibit 54, it
clearly transpires that it is a liability only policy wherein the risk of
the pillion rider was not covered. The learned Single Judge of this
Court in United India Insurance Co. Ltd. (supra), after considering
catena of decisions on the aspects has categorically held that if an
"act only policy" exist, the insurance company cannot be fastened
with the liability of compensation in relation to pillion rider.
10. Yet in another decision in case of United India Insurance
Company Limited Vs. Ramdevbhai Dahyabhai Mokaria and others,
being First Appeal No.505 of 2015, decided on 4.2.2020, exactly
similar issue has been dealt with by the Coordinate Bench of this
Court and as such, since relevant observations contained therein are
attracted in the case on hand, Court deems it proper to quote the
same hereunder:
5. The only question which falls for consideration in the present
appeal is whether the appellant company was liable to pay the
compensation in respect of the injuries suffered by the
claimant who was pillion rider of the scooter, when the
covering policy was admittedly in the nature of "Act Only
policy" and not the "comprehensive policy".
5.1 Chapter III of Motor Vehicles Act, 1939 and Chapter XI of 1988
Act deal with insurance of motor vehicles against third party
risks. 'Liability' is defined in Section 145(c) thus, "Liability
wherever used in relation to the death or bodily injury to any
person, includes liability in respect thereof under Section 140
of the Act". Sections 146 of the Motor Vehicles Act, 1988 which
is as under.
"146. Necessity for insurance against third party risks.--(1) No
person shall use, except as a passenger, or cause or allow any
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other person to use, a motor vehicle in a public place, unless
there is in force, in relation to the use of the vehicle by that
person or that other person, as the case may be, a policy of
insurance complying with the requirements of this Chapter:
Provided that in the case of a vehicle carrying, or meant to
carry, dangerous or hazardous goods, there shall also be a
policy of insurance under the Public Liability Insurance Act,
1991 (6 of 1991). (2) The provisions of sub-section (1) shall not
apply to any vehicle owned by the Central Government or a
State Government and used for purposes not connected with
any commercial enterprise. (3) The appropriate Government
may, by order, exempt from the operation of sub-section (1),
any vehicle owned by any of the following authorities,
namely:-- (a) the Central Government or a State Government,
if the vehicle is used for purposes connected with any
commercial enterprise; (b) any local authority; (c) any State
Transport Undertaking: Provided that no such order shall be
made in relation to any such authority unless a fund has been
established and is maintained by that authority in such manner
as may be prescribed by appropriate Government."
5.1.1 The above Section 146 mentions the necessity for insurance
against third party risk. In terms thereof, an owner of a motor
vehicle is statutorily enjoined to have a policy of insurance
complying with the requirements of the said chapter before he
uses or causes or allows any other person to use a motor
vehicle in public.
5.2 Section 147 of the Act, 1988 (in the Motor Vehicles Act, 1939,
the corresponding provision was Section 95), which deals with
the requirement of policies and the limits of liability, is quite
relevant, therefore extracted hereinbelow.
"147. Requirement of policies and limits of liability. - (1) In
order to comply with the requirements of this Chapter, a policy
of insurance must be a policy which - (a) is issued by a person
who is an authorised insurer; and
(b) insurers 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;
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(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 employee 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 (8 of 1923) in respect of the death of,
or bodily injury to, any such employee -
(a) engaged in driving the vehicle, or
(b) if 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 goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability."
5.3 Before proceeding further, the distinction between "Act Only
policy" and "comprehensive policy"as was explained and
highlighted by learned advocate for the insurance company
may be considered. The example by description was given to
submit that Act Only policy may contain such words as -
"Death of or bodily injury to any person so far as it is
necessary to meet the requirements of the Motor Vehicle Act.".
In the same way, it was explained as to what could be said to
be comprehensive policy. It was stated thus, "Death of or
bodily injury to any person including occupants/pillion rider
carried on the vehicle (provided such the occupants/pillion
rider are not carried for hire and reward) but except so far as it
is necessary to meet the requirements of the Motor Vehicles
Act, the company shall not be liable where such death of
injuries arise out of and in the course of the employment of
such persona by the insured.".
5.4 The decisions dealing with the cases involving the Act Only
policy and the comprehensive policy and the corresponding
liability of the insurance company to pay the compensation
with reference to such policy, as the case may be, may now be
fruitfully visited with.
5.5 In Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing
Co. (P) Ltd. [(1977) 2 SCC 745] the Apex Court observed and
held thus,
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"(a) Section 95 of the Motor Vehicle Act, 1939, provides that a
policy of insurance must be a policy which insures the person
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 section however also provides in
it provided that it is not required that a policy of insurance
should cover the risk to passengers who are not carried for hire
or reward. Therefore, the statutory insurance does not cover
injury suffered by passengers who are not carried for hire or
reward and hence the insurer cannot be held liable under the
Act." (para 20)
"(b) The insurer can however issue policies covering such a
risk not covered by Section 95 and in the present case, the
insurer had insured against risk to passenger upto Rs. 15,000.
Therefore the liability of the insurer must be fixed only at Rs.
15,000." (para 21)
"(c) The respondent's contention that the liability of the insurer
is unlimited under the policy is misconceived. Section II(1) of
the policy provides that the insurer will indemnify the insured
against all sums. But the legal liability restricted to sub-clause
(a), which states that the indemnity is in relation to legal
liability to pay in respect of death of or bodily injury to any
person; but except so far as is necessary to meet the
requirements of Section 95, the insurer should not be liable
where such death or injury arises out of and in the course of
employment of such person by the insured. The expression
emphasized indicates that the liability is restricted to the
liability arising out of the statutory requirements under Section
95. This meaning becomes clear when the other clauses of the
policy, which provide for insurance for risks not covered under
Section 95, on the payment of extra premium, are considered."
(Paras 22 and 23)
5.6 In contra-distinction to the Act Only policy, there may be cases
where the contract of insurance may enlarge the liability of the
insurance company for coverage of risk, either because the
nature of the policy is comprehensive or because certain
additional terms and conditions are incorporated in the
contract of insurance i.e. insurance policy.
5.7 In Amrit Lal Sood and v. Kaushalya Devi Thapar [(1998) 3 SCC
744], the Supreme Court dealt with the claim of gratuitous
passenger for compensation for the injuries sustained by him.
In that case, the insurance policy was comprehensive policy. It
was observed that terms of the contract of insurance can be
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wider than prescribed by the statute. It was held that when
under the policy insurer had agreed to indemnify the insured
against the whole sums which the insured shall become legally
liable to pay in respect of death of or bodily injury to "any
person". It was held that in context of such comprehensive
policy the words "any person" would include gratuitous
passenger.
5.7.1 In that case, the Apex Court explained the concept of
comprehensive policy quoting from Black's Law Dictionary
thus,
"5. In the present case, the policy is admittedly a
'comprehensive Policy'. comprehensive insurance' has been
defined in Black's Law Dictionary 5th edition as 'All risk
insurance' which in turn is defined as follows:-
"Type of insurance policy which ordinarily covers every loss
that may happen, except by fraudulent acts of the insured.
Miller v. Boston Ins. Co. 218 A. 2d 275, 278, 420 Pa. 566. Type
of policy which protects against all risks and perils except
those specifically enumerated."
5.8 In New India Assurance Company Ltd. v. C.M. Jaya [(2002) 2
SCC 278], the case was that insurance policy did not provide
for any higher liability by accepting higher premium for
payment of compensation to the third party. The Supreme
Court held that in such a case the insurer will be held liable
only to the extent limited under Section 95(2) (pari materia
Section 147 of the Motor Vehicles Act, 1988). In that case, the
deceased was riding the pillion seat of a two wheeler when it
hit by the truck. The truck was comprehensively insured with
the appellant insurance company and in terms of the policy,
liability of insurance company was limited to Rs.50,000/-. The
appellant had not taken any additional or higher premium to
cover any unlimited or higher liability than the statutory
liability. The accident claims tribunal awarded by way of
compensation, a larger amount but limited the insurer's
liability to Rs.50,000/-. High Court however held that liability of
the insurance company was unlimited as vehicle was
comprehensively insured and awarded compensation of
Rs.03,60,000/-.
5.8.1 In the appeal of the insurance company before the Apex Court,
the Court discussed relevant aspects including the clauses of
the policy and earlier decisions thus,
"The relevant clauses of the policy are reproduced in
paragraph 6 of the said judgment. Clause 1(a) under Section II
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relating to liability of third party reads:-
1. The Company will indemnify the insured in the event of
accident caused by or arising out of the use of the motorcar
against all sums including claimant's cost and expenses which
the insured shall become legally liable to pay in respect of (a)
death of or bodily injury to any person but except so far as is
necessary to meet the requirements of Section 95 of the Motor
Vehicles Act, 1939 the Company shall not be liable where such
death or injury arises out of and in the course of the
employment of such person by the insured.
Looking to this clause the Court in paragraph 8 has held:
"Thus under Section 1l(1)(a) of the policy the insurer has
agreed to indemnify the insured against all sums which the
insured shall become legally label to pay in respect of death of
or bodily injury to "any person". The expression "any person"
would undoubtedly include an occupant of the car who is
gratuitously travelling in the car. The remaining part of clause
(a) relates to cases of death or injury arising out of and in the
course of employment of such person by the insured. In such
cases the liability of the insurer is only to the extent necessary
to meet the requirements of Section 95of the Act. Insofar as
gratuitous passengers are concerned there is no limitation in
the policy as such. Hence under the terms of the policy, the
insurer is liable to satisfy the Award passed in favour of the
claimant. We are unable to agree with the view expressed by
the High Court in this case as the terms of the policy are
unambiguous."
Distinguishing the Judgment in Pushpabai Purshottam Udeshi
and others V/s. Ranjit Ginning and Pressing Co. (P)Ltd. and
another ((1977 2 SCC 745), the Court observed that the said
Judgment was based upon the relevant clause in the insurance
policy, which restricted the legal liability of the insurer to the
statutory requirements under Section 95 of the Act and so that
decision had no application to the case as the terms of the
policy stated in paragraph 6 of the Judgment were wide
enough to cover a gratuitous occupant of the vehicle. The
Court also referred to the case of Jugal Kishore (supra) in which
it is held that though it is not permissible to use a vehicle
unless it is covered at least under "act only" policy, it is not
obligatory for the owner to get a comprehensive policy but it is
open to the insurer to take a policy covering a higher risk."
(Para 7)
5.8.2 The Court thereafter concluded,
"Thus, a careful reading of these decisions clearly shows that
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the liability of the Insurer is limited, as indicated in Section 95
of the Act, but it is open to the insured to make payment of
additional higher premium and get higher risk covered in
respect of third party also. But in the absence of any such
clause in the insurance policy the liability of the insurer cannot
be unlimited in respect of third party and it is limited only to
the statutory liability. This view has been consistently taken in
the other decisions of this Court."
(Para 8)
5.9 In other words, the law settled was that the liability of the
insurance company to compensate the victim of the accident
under the provisions of the Act shall be limited to the nature of
the policy and the terms and conditions of the contract of
insurance.
6. In New India Assurance Company Ltd. v. Asha Rani [(2003) 2
SCC 223], the controversy centered round the changes
effected in the Motor Vehicles Act, 1988 vis-à-vis the Motor
Vehicles Act, 1939. The goods vehicle was required to be
compulsorily covered by insurance policy in terms of the 1939
Act but such was not the requirement in the provisions of the
1988 Act. The question, therefore, arose in the appeals before
the Apex Court was whether under Section 147 of the Motor
Vehicles Act, 1988 as it stood prior to the 1994 Amendment,
the insurer was liable to pay compensation to the owner of the
goods or he is unauthorized representative on being carried in
goods vehicle and the owner of the goods or representative of
the owner dies or suffers any bodily injury when vehicle meets
with an accident.
6.1 After rendering discussion on the scope of provisions of the Act
of 1939 and the Act of 1988, the Court held as to what
meaning to be attached to the words "any person" stating that
"any person" must be construed in the context in which they
have used, that is a third party.
"In view of the changes in the relevant provisions in 1988 Act
vis-a-vis 1939 Act, we are of the opinion that the meaning of
the words 'any person" must also be attributed having regard
to the context in which they have been used i.e. a third party.
Keeping in view the provisions of 1988 Act, we are of the
opinion that as the provisions thereof do not enjoin any
statutory liability on the owner of a vehicle to get his vehicle
insured for any passenger travelling in a goods vehicle, the
insurers would not be liable there for."
(Para 27)
6.1.1 It was further held,
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"An owner of a passenger carrying vehicle must pay premium
for covering the risks of the passengers. If a liability other than
the limited liability provided for under the Act is to be
enhanced under an insurance policy, additional premium is
required to be paid. But if the ratio of this Court's decision in
New India Assurance Company V/s. Satpal Singh &Ors. is taken
to its logical conclusion, although for such passengers, the
owner of a goods carriage need not take out an insurance
policy, they would be deemed to have been covered under the
policy where for even no premium is required to be paid."
(Para 29)
6.2 Thus, the position in respect of Sections 146 and 147 of the Act
of 1988 is that third party would be read in the context of the
words "any person" as defined in Section 147 of the Act. There
is no statutory risk available for the occupants in a private
vehicle. Such risk is also not contractually available under the
contract of insurance unless additional premium is received by
the insurance company for the said charges.
6.3 The Apex Court again considered the extent of liability of
insurer to pay compensation under Section 147 of the 1988
Act for the third party risk, in United India Insurance Company
Ltd. v. Tilak Sing [(2006) 4 SCC 404]. It was held that risk of
death or injury to gratuitous passenger carried in a private
vehicle would not stand covered in an insurance policy under
Section 147 of the Act. After referring to Pushpabai Purshottam
Udeshi (supra) and Amrit Lal Sood (supra), the Apex Court
observed,
"... even under the 1939 Act the established legal position was
that unless there was a specific coverage of the risk pertaining
to a gratutious passengers in the policy, the insurer was not
liable. We find that clause (ii) of the proviso to Section 95(1)
has been eliminated while drafting section 147 of the 1988
Act. Under sub-section (1)(b) under the 1988 Act, compulsory
policy of insurance required under the statute must now
provide against any liability which may be incurred by the
owner of the vehicle
"in respect of the death of or bodily injury to any person
including owner of the goods or 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 vehicles in a
public place"."
(Para 18)
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6.4. In Tilak Singh (supra), the Apex Court referred to its earlier
decision in New India Assurance Company v. Satpal Singh
[(2000) 1 SCC 237] to proceed to observe and state that view
expressed in Satpal Singh (supra) was specifically overruled in
Ashra Rani (supra). It was stated,
"The argument that the risk pertaining to a third party would
extend to a person other than the parties to the insurance
contract was raised in New India Assurance Company v. Satpal
Singh and Ors., [2000] 1 SCC 237 where after contrasting the
language of section 95 (1) of the 1939 Act with the provisions
of section 147 (1) of the 1988 Act this Court held:
"The result is that under the new Act an insurance policy
covering third party risk is not required to exclude gratutious
passengers in a vehicles, 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"."
(Para 19)
6.4.1 The Supreme Court further observed, "The view expressed in
Satpal Singh's case (supra) however, has been specifically
overruled in the subsequent judgment of a Bench of three
judges in New India Assurance Company v. Asha Rani and Ors.,
[2003] 2 SCC 223. In that case the discussion arose in
connection with carrying passengers in a goods vehicle. This
Court after referring to the terms of section 147 of the 1988
Act, as contrasted with section 95 of the 1939 Act, held that
the judgment in Satpal Singh's case (supra) had been
incorrectly decided and that the insurer will not be liable to
pay compensation. In the concurring judgment of Sinha, J. after
contrasting the language used in the 1939 Act with that of the
1988 Act, it has been observed (vide paras 25 and 27):
"25. Section 147 of 1988 Act, inter alia, prescribes
compulsory coverage against the death of or bodily injury to
any passenger of "public service vehicle". Proviso appended
thereto categorically states that compulsory coverage in
respect of drivers and conductors of public service vehicle and
employees carried in a goods vehicle would be limited to the
liability under the Workmen's Compensation Act. It does not
speak of any passenger in a `good carriage'.
27. Furthermore, sub-clauses (i) of Clause (b) of sub-section (1) of
Section 147 speaks of liability which may be incurred by the
owner of a vehicle in respect of death of or bodily injury to any
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person or damage to any property of a third caused by or
arising out of the use of the vehicle in a public place. Whereas
sub-clause (ii) thereof deals with liability which may be
incurred by the owner of a vehicle against the death of or
bodily injury to any passenger of a public service caused by or
arising out of the use of the vehicle in a public place"."
(Para 20)
6.4.2 It was finally held in Tilak Singh (supra),
"In our view, although the observation made in Asha Rani's
case (supra) were in connection with carrying passengers in a
goods vehicle, the same would apply with equal force to
gratuitous passengers in any other vehicle also. Thus, we must
uphold the contention of the appellant insurance company that
it owed no liability toward the injuries suffered by the
deceased Rajinder Singh who was a pillion rider, as the
insurance policy was a statutory policy, and hence it did not
cover the risk of death of or bodily injury to gratuitous
passenger."
(Para 21)
6.5. Again in Oriental Insurance Company Ltd. v. Sudhakaran K.V.
[(2008) 7 SCC 428] the deceased was travelling as a pillion
rider on scooter. Before the claims tribunal, a contention was
raised by the insurance company that she being a pillion rider,
was a gratuitous person and the insurance company did not
cover the risk. The Tribunal as well as the High Court both held
against the insurance company, which went before the
Supreme Court by special leave petition. The question which
arose before the Supreme Court was whether a pillion rider
would be a "third party" within the meaning of Section 147 of
the Motor Vehicles Act, 1988. The Supreme Court held,
"A distinction has to be made between a contract of insurance
in regard to a third party and the owner or driver of the
vehicle. In terms of Section 147 of the Act a contract of
insurance must be taken by the owner of the vehicle only in
regard to reimbursement of the claim to a third party. Section
147 is imperative in nature. When, however, an owner of a
vehicle intends to cover himself from other risks, it is
permissible to enter into a contract of insurance in which event
the insurer would be bound to reimburse the owner of the
vehicle strictly in terms that contract. The liability of the
insurer to reimburse the owner in respect of a claim made by
the third party, thus, is statutory whereas other claims are
not."
(Paras 16, 13 and 14)
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6.5.1 A contract of insurance which is not statutory in nature should
be construed lie any other contract. It was then stated and
held,
"In the present case the contract of insurance was entered into
for the purpose of covering the third-party risk and not the risk
of the owner or a pillion-rider. An exception in the contract of
insurance has been made i.e. by covering the risk of vehicle.
The deceased was, indisputably, not the driver of the vehicle.
The contract of insurance did not cover the owner of the
vehicle, certainly not the pillion-rider. The deceased was
travelling as a passenger, stricto sensu may not be as a
gratuitous passenger as in a give case she may not (sic) be a
member of the family, a friend or other relative. In the sense of
the term which is used in common parlance, she might not be
even a passenger. In view of the terms of the contract of
insurance, however, she would not be covered thereby."
(Paras 21 and 22)
6.6 Once again, in Oriental Insurance Company Ltd. v. Meena
Variyal [(2007) 5 SCC 428], the Supreme Court considered the
coverage of persons under third party insurance in the context
of Sections 147 and 149 of the Motor Vehicles Act, 1988. The
question was whether the employee of the insured person
could be considered covered within the meaning of words "any
person" in Section 147(1)(b). It was held that the insurance
policy in terms of Section 147 is not intended to cover persons
other than third party. The employees of insured were held not
normally covered under the statutory insurance except in
cases of liability arising under the Workmen's Compensation
Act, 1923. It was held that Section 149(1) cannot be used to
enlarge the liability if it does not exist in terms of Section 147
of the Act.
6.6.1 The case in Meena Variyal (supra) was that the Regional
Manager of the company owned the car and was using the
same as given by the company. It was held that whether he is
treated as owner of the vehicle or as an employee, he is not
covered by the insurance policy in terms of the Act. The
Supreme Court stated,
"In claims by a third party, there cannot be much doubt that
once the liability of the owner is found, the insurance company
is liable to indemnify the owner, subject of course, to any
defence that may be available to it under Section 149(2) of the
Act. In a case where the liability is satisfied by the insurance
company in the first instance, it may have recourse to the
owner in respect of a claim available in that behalf. However,
the whole protection provided by Chapter XI of the Act is
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against third-party risk. Therefore, in a case where a person is
not a third party within the meaning of the Act, the insurance
company cannot be made automatically liable merely by
resorting to the ratio of Swarna Singh [(2004) 3 SCC 297]."
(Paras 16 and 17)
6.6.2 The working of the provisions came to be explained by the
Supreme Court in Meena Variyal (supra) in the following words,
"The definition of "third party" is an inclusive one since Section
145(g) only indicates that "third party" includes the
Government. It is Section 146 that makes it obligatory for an
insurance to be taken out before a motor vehicle could be used
on the road. The heading of that Section itself is "Necessity for
insurance against third party risk". No doubt, the marginal
heading may not be conclusive. It is Section 147 that sets out
the requirement of policies and limits of liability. It is provided
therein that in order to comply with the requirements of
Chapter XI of the Act, a policy of insurance must be a policy
which is issued by an authorised insurer; or which insures the
person or classes of persons specified in the policy to the
extent specified in sub-section (2) against any liability which
may be incurred by the owner in respect of the death of or
bodily injury or damage to any property of a third party caused
by or arising out of the use of the vehicle in a public place.
With effect from 14.11.1994, injury to the owner of goods or
his authorised representative carried in the vehicle was also
added. The policy had to cover 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. Then, as per the
proviso, the policy shall not be required to cover liability in
respect of the death, arising out of and in the course of his
employment, of the employee 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, an
employee engaged in driving the vehicle, or who is a
conductor, if it is a public service vehicle or an employee being
carried in a goods vehicle or to cover any contractual liability.
Sub-section (2) only sets down the limits of the policy."
(Para 12)
6.6.3 The Court then observed and held, "Section 149(1), which
casts an obligation on an insurer to satisfy an award, also
speaks only of award in respect of such liability as is required
to be covered by a policy under clause (h) of sub-section (1) of
Section 147, (being a liability covered by the terms of the
policy). This provision cannot therefore be used to enlarge the
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liability if it does not exist in terms of Section 147 of the Act."
(Para 13)
6.7 In National Insurance Company v. Balakrishnan [(2013) 1 SCC
731], the respondent No.1 before the Supreme Court was the
Managing Director of respondent No.2 company who met with
an accident while travelling in a motor vehicle belonging to the
company. The Tribunal allowed the claim and the High Court
treated the company to be the owner of respondent No.1 as a
passenger. Insurance company went before the Supreme Court
and contended that even assuming respondent No.1 not to be
the owner, he was nonfare passenger and would not be
covered under the policy. Thus, the issue before the Supreme
Court whether the claim of respondent No.1-Managing Director
against the appellant-insurance company was maintainable.
6.7.1 It was stated by the Apex Court thus, "In view of the aforesaid
factual position, there is no scintilla of doubt that a
"comprehensive/package policy" would cover the liability of
the insurer for payment of compensation for the occupant in a
car. There is no cavil that an "Act Policy" stands on a different
footing from a "Comprehensive/Package Policy". As the
circulars have made the position very clear and the IRDA,
which is presently the statutory authority, has commanded the
insurance companies stating that a "Comprehensive/Package
Policy" covers the liability, there cannot be any dispute in that
regard. We may hasten to clarify that the earlier
pronouncements were rendered in respect of the "Act Policy"
which admittedly cannot cover a third party risk of an
occupant in a car. But, if the policy is a "Comprehensive/
Package Policy", the liability would be covered. These aspects
were not noticed in the case of Bhagyalakshmi (supra) and,
therefore, the matter was referred to a larger Bench. We are
disposed to think that there is no necessity to refer the present
matter to a larger Bench as the IRDA, which is presently the
statutory authority, has clarified the position by issuing
circulars which have been reproduced in the judgment by the
Delhi High Court and we have also reproduced the same."
(Para 26)
6.7.2 The Supreme Court observed that whether the policy in that
case was Act-Policy or comprehensive/ package policy would
depend upon the terms incorporated in the policy. It observed
that neither the Tribunal nor the High Court had adverted to
any discussion in that regard. The Supreme Court viewed that
scanning of the terms of the insurance policy to arrive at a
conclusion whether it is really a package policy to cover
liability of an occupant in the car. Consequentially, the
Supreme Court remitted the matter to the Tribunal to
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scrutinize the policy. In the case on hand, the policy is
admittedly a "Act-Policy" and would not cover the risk except
of the third party as per the operation of Section 147 of the
Act.
6.8 In General Manager, United India Insurance Company Ltd. v.
Hem Lakshmi [(2009) 17 SCC 301] the accident had occurred
as the scooter had hit the bullock cart and the pillion rider
succumbed to injuries, who was a gratuitous passenger. The
Apex Court held that the deceased pillion rider was not a third
party, therefore cannot claim from the insurance company.
Reversing the decision of the High Court, the Supreme Court
stated that compensation would be payable to the pillion rider
only in case of comprehensive policy whereas the policy in that
case was an Act Only policy.
6.8.1 The above statement of law was followed by this Court in
United India Insurance Company v. Jyotibala Ghanshyam Joshi
[2012 (1) GLH 733]. A Division Bench decision of this Court in
Dilipsinh Jhala v. Driver: Juma Ali Sumra being First Appeal
No.1324 of 2010 with First Appeal No.5006 of 2010 had also an
occasion to deal with and decide the very point. The claimant
was travelling in a Jeep which met with a vehicular accident
with a truck. The jeep was insured with respondent No.3
insurance company in that case and the risk was covered by
Act Only Policy. The decision in Balakrishnan (supra) was relied
on to submit before the Court that the limits of liability as
provided under the Motor Vehicles Act was considered
referring to the statutory provisions and IRDA guidelines and in
that view the insurance company would not be liable in respect
of the risk of the applicant-claimant who was travelling in the
jeep car.
6.8.2 The Division Bench observed that the submission of learned
advocate for the insurance company was acceptable in view of
the decision in Balakrishnan (supra) as therein the issue with
regard to the aspect of liability of such passengers is squarely
answered. It was observed, "It is not in dispute that it was 'an
Act Policy', meaning thereby it would cover only a statutory
liability as provided in the statute (Motor Vehicles Act).
Therefore, Respondent No.5 - Insurance Company would not
be liable as there was no comprehensive policy, but only an
Act Policy by Respondent No.4. The said policy therefore had
not covered the risk of other passengers on the Jeep like the
claimant in MACP 763/1992 who was travelling in the Jeep at
the time of accident and therefore Respondent No.4 as the
owner of the Jeep would be liable.".
6.9 As against the catena of decisions as above dealing with and
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deciding the nature of Act Only Policy and the extent of risk
coverage thereunder and the consequential liability of the
insurer, learned advocate for the claimants tried to take
shelter of decision of this Court in Hamendrasinh Mansinh
Jadav v. Sanjaybhai Govindbhai Dabhi [2019 (2) GLR 983] and
supported the impugned judgment and award on that score. In
Hamendrasinh Mansinh Jadav (supra), it was submitted, that
the Court negatived the contention of the insurance company
to hold that statutory policy of Act Only Policy which is
compulsory under Section 147 of the Act covers the risk also of
gratuitous passenger in a private car. The Court took view that
the occupant or passenger in the private car was included
within the expression "third party" insurance cover or Act Only
Policy and insurance company would be liable to indemnify.
6.9.1 What is held in Hamendrasinh Mansinh Jadav (supra) stands
quite contrary to the law laid down in the Supreme Court
decision in Balakrishnan (supra) and the ratio decidendi of the
other decisions referred to above, as well as against the
decision of the Division Bench of this Court in Dilipsinh Jhala
(supra). Therefore, the law laid down in Hamendrasinh Mansinh
Jadav (supra) does not stand as good law, liable to be ignored
and not required to be followed.
6.9.2 It is trite principle in the law of precedent that decision of co-
ordinate Bench would not bind if it lays down a proposition
which stands contrary to the law laid down by the Supreme
Court or the Division Bench of the same court. The Bench of
equal strength in such circumstances, shall follow the decision
of the Apex Court of that of a Bench of the same court with
higher strength.
7. In view of the above discussion highlighting the position of law,
in the present case, appellant insurance company could not
have been fastened with the liability to pay compensation to
the pillion rider claimant for the injuries he suffered inasmuch
as he could not be categorized as a third party and whose risk
could not be said to have been statutorily covered under the
insurance policy which was the 'Act Only policy'.
11. Next issue which has been tried to be agitated by learned
advocate for the original claimants is that at least, if Insurance
company is not liable, then in that eventuality, by applying principle
of Pay and Recover, amount which has been deposited may be paid to
the claimants reserving liberty to the Insurance Company to recover
the same from owner of the vehicle. But, at this stage, Court is of the
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view that the principle which is tried to be pressed into service by the
Insurance Company, appears to be not possible to be considered in
view of the fact that judgment which has been relied upon is in the
context of exercise of jurisdiction under Article 142 of the Constitution
of India by Hon'ble Apex Court, whereas this Court is exercising first
appellant jurisdiction and as such, said principle is not possible to be
accepted by the Court and on this similar issue, Coordinate Bench
while dealing with this issue in case of First Appeal No.543 of 1992,
decided on 20.1.2012 has in terms after examining the decision
delivered by Hon'ble the Apex Court has stated that said principle
cannot be applied while exercising appellate jurisdiction by this Court.
Relevant observations contained in the aforesaid decision Court
deems if proper to quote hereunder:-
"Going through those two decisions, I find that the Supreme Court,
in those two cases, passed the direction for payment in exercise of
powers conferred on it under Article 142 of the Constitution of India.
Therefore, in my opinion, the discretion exercised by the Supreme
Court by taking aid of Article 142 of the Constitution of India not
being available to this Court, the learned Single Judge was not
justified in passing such direction and the said decision of the
learned Single Judge cannot be held to be a good law."
12. Here on record, from evidence, it appears that no-doubt, both
the vehicles came to be collided, which has resulted into serious
accident, but then on evaluation of the material on record, it has been
found that it is the Rajdoot motorcycle which is responsible to cause
accident and said conclusion on Issue No.1 is on account of the
panchnama at Exh.69, which is the panchnama of the place of
occurrence of accident and critical analysis of said panchnama has led
the Tribunal to come to a specific conclusion that it is on account of
the negligent driving of driver of Rajdoot motorcycle No.GJ 4B 9006,
accident had occurred and this finding appears and reported to the
Court is not challenged by the claimants by way of any separate
appeal and as such, resultantly, when deceased being pillion rider, is
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not covered under the risk on the basis of judgment of the Coordinate
Bench of this Court that point canvassed by the appellant Insurance
Company deserves to be accepted. Insurance policy which is also part
of the record has indicated such risk of pillion rider appears to be not
covered and there is no other distinguishable material placed before
the Court to take a different view than what has been taken by the
Coordinate Bench of this Court. As a result of this, a case is made by
the Insurance Company to call for interference.
13. At this stage, one another circumstance has also been brought
to the notice of the Court in which the Bench of Karnataka High Court
while dealing with MFA No.200966 of 2014 (MV) has also on the basis
of the pleadings dealt with issue. However, learned advocate Mr.
Yogen Pandya has fairly stated before the Court that said judgment
dated 16.4.2019 of the Bench of Karnataka High Court is the subject
matter of SLP No.27706 of 2019 and same is pending and as such as
on date, binding effect of the order of Coordinate Bench, as referred
to herein-above dated 24.3.2021 cannot be given a go-bye by this
Court and as such, in view of the aforesaid proposition of law and in
view of the circumstances visible on record, the Court is of the view
that appeal deserves to be allowed on this short ground.
14. Accordingly, appeal filed by the Insurance Company deserves to
be accepted. As a result of this, on consideration of overall material,
Court deems it proper to modify impugned award dated 10.12.2004
passed in MACP No.97 of 1994 only to the extent that amount should
be recovered from owner or driver of vehicle in question and not from
Insurance Company. Court makes it clear that rest of the order is
unaltered in respect of other opponents and by leaving it open for the
opponents- original claimants to recover the same from other
opponents, present appeal stands DISPOSED OF.
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15. It goes without saying that amount which has been deposited
by the Insurance Company, which is kept in Fixed Deposit, shall be
released with accrued interest in favour of appellant Insurance
Company within a period of THREE MONTHS from today and the
amount already disbursed in respect of interest shall not be recovered
from claimants.
Sd/-
(ASHUTOSH J. SHASTRI, J)
OMKAR
