Himachal Pradesh High Court
Oriental Insurance Company Ltd vs Oriental Insurance Company And ... on 7 November, 2022
Bench: Satyen Vaidya
1
.
REPORTABLE-NON-REPORTABLE
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
ON THE 7th DAY OF NOVEMBER, 2022
BEFORE
HON'BLE MR. JUSTICE SATYEN VAIDYA
Between:
r to
FIRST APPEAL AGAINST ORDER (FAO) No. 482 of 2011
ORIENTAL INSURANCE COMPANY LTD.
THROUGH ITS SR. DIVISIONAL MANAGER, DIVI-
SIONAL OFFICE, MYTHE ESTATE, KAITHU,
SHIMLA-3
..... APPELLANT
(BY MR. ASHWANI K. SHARMA, SR.
ADVOCATE WITH MR. ISHAN SHARMA,
ADVOCATE )
AND
1.SMT. LALITA KUMARI WIDOW OF]
2. NAKUL MINOR SON OF ] LATE SH. BHANU
3. VARUN MINOR SON OF ]PRATAP SINGH
( RESPONDENTS NO. 2 AND 3 BEING MI-
NORS THROUGH THEIR MOTHER AND NAT-
URAL GUARDIAN, SMT. LALITA KUMARI, RE-
SPONDENT NO.1)
4. SMT. AMARA DEVI, WIFE OF SH. KARAM
SINGH.
::: Downloaded on - 07/11/2022 20:32:16 :::CIS
2
.
ALL RESIDENTS OF VILLAGE SWAR, PO PURANA
BAZAR, TEHSIL SUNDERNAGAR, DISTT. MANDI,
H.P.
5. SH. MUNISH BHARDWAJ, SON OF SHRI.
GOPAL DASS, BHARDWAJ.
6. SH. VISHNU SAUTAL SON OF SH. ONIMESH
SAUTAL.
BOTH C/O PAYAL DHABA, NH-21, NEAR DHAN-
OTU, VPO MAHADEV, TEHSIL SUNDERNAGAR,
DISTT. MANDI, H.P.
...........RESPONDENTS
(BY MR. DIGVIJAY SINGH, ADVOCATE FOR R-1 to 4)
RESERVED ON : 31.10.2022
DECIDED ON : 07.11.2022
This appeal coming on for pronouncement of orders
this day, the Court passed the following:-
JUDGMENT
CMP No. 969 of 2011 and CMP No. 759 of 2012
The appellant/insurer has filed application (CMP
969 of 2011) under Order 41 Rule 27 of the Code of Civil
Procedure, seeking leave of the Court to place on record the
policy of insurance, on which, all the parties are otherwise
.
placing reliance. A copy of such policy has been placed on
record alongwith CMP 759 of 2012.
The prayer of the appellant/insurer deserves to be
allowed as all the parties have placed reliance on such policy of
insurance. The perusal of terms of policy will otherwise be
pronounce judgment.
r to
necessary to be examined by this Court to enable it to
Accordingly, the applications are allowed. The
insurance policy insuring respondent No. 5, Sh. Manish
Bhardwaj for the period 14.07.2004 to 13.07.2005 in respect of
the motorcycle in question is taken on record.
FAO No. 482 of 2011
This appeal has been preferred by insurer against
Award dated 19.08.2011, passed by learned Motor Accident
Claims Tribunal-cum-Presiding Officer, Fast Track Court, Mandi,
H.P. in Claim Petition No. 8/2005 (207/2005) titled Smt. Lalita
Kumari and others Vs. Oriental Insurance Company and others,
whereby liability to pay compensation to the claimants has been
fastened on the insurer.
.
2. Mr. Ashwani K. Sharma, learned Senior Advocate
representing the insurer has confined his challenge only to the
extent that the pillion rider of two-wheeler was not covered
under the policy of insurance and thus, the insurer could not be
fastened with the liability to indemnify the insurer. He has tried
to draw strength to his contention by placing reliance on
judgments passed by Hon'ble Supreme Court in United India
Insurance Co. Ltd. Vs. Tilak Singh and others (2006) III ACJ
1441, Oriental Insurance Company Vs. Sudhakaran K. V.
and others (2008) III ACJ 2045 and General Manager, United
India Insurance Co. Ltd. Vs. M. Laxmi and others (2009) I
ACJ 104.
3. Mr. Digvijay Singh, learned counsel for the
claimants, on the other hand, has contested the prayer of
insurer by placing reliance on judgment passed by Hon'ble
Supreme Court in National Insurance Co. Ltd. Vs.
Balakrishnan and another (2013) ACJ 199.
4. He has submitted that the judgments relied upon by
learned Senior Counsel representing the insurer cannot be
applied to the facts of the case as in all said cases there was
.
involvement of "Act only policy", whereas in the instant case,
the policy of insurance is a package/comprehensive policy
which covers the risk of pillion rider also.
5. I have given my thoughtful consideration to the rival
contentions and have also gone through the record.
6.
Perusal of the policy of insurance placed on record
by insurer reveals that it was a package policy wherein
respondent No. 5, Sh. Munish Bhardwaj had been insured for
the period 14.07.2004 to 13.07.2005 in respect of motorcycle
bearing registration No. HP-31-2843. The date of accident was
7.9.2004.
7. The claimants have been awarded compensation
on account of death of Sh. Uday Bhanu Pratap Singh, which
was caused as a result of involvement of motorcycle
No. HP-31-2843. The deceased Sh. Uday Bhanu Pratap Singh
was proved to be on the pillion of the motorcycle at the time of
accident.
8. The insurer, though, had taken an objection to the
claim petition on the ground that pillion rider was not covered
under the policy of insurance, but none of the parties including
.
insurer had placed and proved on record the policy of
insurance. In the given facts, learned Tribunal had rightly drawn
adverse inference against the insurer and had burdened it with
the liability to indemnify the insured.
9. Now, that the insurance policy is before this Court,
the same has been found, as noticed above, to be a package
policy. The terms package policy and comprehensive policy are
used synonymously. Once, the coverage is through a
package/comprehensive policy, it will cover the risk of pillion
rider also. In this regard, reference can be gainfully made to
the judgment passed by Hon'ble Supreme Court in National
Insurance Company Limited Vs. Balakrishnan and another
(supra), wherein after taking into consideration earlier
judgments passed in United India Insurance Co. Ltd. Vs.
Tilak Singh and others (2006) ACJ 1441 (SC) and several
other judgments on the point, it was held that all such cases
involved the Act policies which were distinguishable from the
package/comprehensive policy. By placing reliance on Bhagya
Lakshmi and others. Vs. United India Insurance Company
Limited and another (2009) 7 SCC 148, Hon'ble Supreme
.
Court in National Insurance Co. Ltd. Vs. Balakrishnan and
another, 2013 ACJ 199, held as under:-
"15. At this juncture, we may refer with profit to a two-Judge Bench
decision in Bhagyalakshmi and others v. United Insurance Company
Limited and another wherein the learned Judges took note of the
contention of the learned senior counsel for the claimant-appellant
which was to the effect that after the deletion of the second proviso
appended to Section 95(1)(b) of the Motor Vehicles Act, 1939 in the
1988 Act, the liability of a passenger in a private vehicle must also
be included in the policy in terms of the provisions of the 1988 Act.
The Bench reproduced the policy, referred to Section 64-B of the
Insurance Act, 1938, took note of the role of the Tariff Advisory
Committee and referred to the decisions in Amrit Lal Sood and
Another v. Kaushalya Devi Thapar and Others, Asha Rani (supra),
Tilak Singh (supra), Jhuma Saha (supra) and Sudhakaran K. V. and
Others (supra) and observed thus :
"Before this Court, however, the nature of policies which came
up for consideration were Act policies. This Court did not deal
with a package policy. If the Tariff Advisory Committee seeks to
enforce its decision in regard to coverage of third-party risk
which would include all persons including occupants of the
vehicle and the insurer having entered into a contract of
insurance in relation thereto, we are of the opinion that the
matter may require a deeper scrutiny."
On a perusal of the aforesaid paragraph, it is clear as crystal that
the decisions that have been referred to in Bhagyalakshmi (supra)
involved only "Act Policies". The Bench felt that the matter would
.
be different if the Tariff Advisory Committee seeks to enforce its
decision in regard to coverage of third party risk which would
include an occupant in a vehicle. It is worth noting that the Bench
referred to certain decisions of Delhi High Court and Madras High
Court and thought it appropriate to refer the matter to a larger
Bench. Be it noted, in the said case, the Court was dealing with
comprehensive policy which is also called a package policy. In that
context, in the earlier part of the judgment, the Bench had stated
thus:- r
"The policy in question is a package policy. The contract of
insurance if given its face value covers the risk not only of a
third party but also of persons travelling in the car including
the owner thereof. The question is as to whether the policy in
question is a comprehensive policy or only an Act policy."
16. Thus, it is quite vivid that the Bench had made a distinction
between the "Act policy" and "comprehensive policy/package
policy". We respectfully concur with the said distinction. The crux of
the matter is what would be the liability of the insurer if the policy is
a "comprehensive/package policy". We are absolutely conscious that
the matter has been referred to a larger Bench, but, as is evident, the
Bench has also observed that it would depend upon the view of the
Tariff Advisory Committee pertaining to enforcement of its decision
to cover the liability of an occupant in a vehicle in a
"comprehensive/package policy" regard being had to the contract of
insurance.
17. At this stage, it is apposite to note that when the decision in
Bhagyalakshmi (supra) was rendered, a decision of High Court of
Delhi dealing with the view of the Tariff Advisory Committee in
.
respect of "comprehensive/package policy" had not come into the
field. We think it apt to refer to the same as it deals with certain
factual position which can be of assistance. The High Court of Delhi
in Yashpal Luthra and Anr. V. United India Insurance Co. Ltd. and
Another, after recording the evidence of the competent authority of
Tariff Advisory Committee (TAC) and Insurance Regulatory and
Development Authority (IRDA), reproduced a circular dated
16.11.2009 issued by IRDA to CEOs of all the Insurance Companies
restating the factual position relating to the liability of Insurance
companies in respect of a pillion rider on a two-wheeler and
occupants in a private car under the comprehensive/package policy.
The relevant portion of the circular which has been reproduced by
the High Court is as follows:-
"IRDA
Ref: IRDA/NL/CIR/F&U/073/11/2009
16.11.2009
To
CEOs of all general insurance companies
Re: Liability of insurance companies in respect of occupants of a Pri-
vate car and pillion rider on a two-wheeler under Standard Motor
Package Policy (also called Comprehensive Policy).
Insurers' attention is drawn to wordings of Section (II) 1 (ii) of Stan-
dard Motor Package Policy (also called Comprehensive Policy) for
private car and two-wheeler under the (erstwhile) India Motor Tar-
iff. For convenience the relevant provisions are reproduced here un-
der:-
'Section II - Liability to Third Parties
.
1. Subject to the limits of liabilities as laid down in the Schedule
hereto the company will indemnify the insured in the event of an
accident caused by or arising out of the use of the insured vehicle
against all sums which the insured shall become legally liable to pay
in respect of -
(i) death or bodily injury to any person including occupants carried
in the vehicle (provided such occupants are not carried for hire or
reward) but except so far as it is necessary to meet the requirements
of Motor Vehicles Act, the Company shall not be liable where such
death or injury arises out of and in the course of employment of such
person by the insured.'
It is further brought to the attention of insurers that the above
provisions are in line with the following circulars earlier issued by
the TAC on the subject:
(i) Circular M.V. No. l of 1978 - dated 18th March, 1978 (regarding
occupants carried in Private Car) effective from 25th March, 1977.
(ii) MOT/GEN/10 dated 2nd June, 1986 (regarding pillion riders in
a two-wheeler) effective from the date of the circular.
The above circulars make it clear that the insured liability in
respect of occupant(s) carried in a private car and pillion
rider carried on two-wheeler is covered under the Standard
Motor Package Policy. A copy each of the above circulars is
enclosed for ready reference.
The Authority vide circular No. 066/IRDA/F&U/Mar-08 dated
March 26, 2008 issued under File & Use Guidelines has reiterated
that pending further orders the insurers shall not vary the coverage,
terms and conditions wording, warranties, clauses and endorse-
.
ments in respect of covers that were under the erstwhile tariffs. Fur-
ther the Authority, vide circular No. 019/IRDA/NL/F&U/Oct-08
dated November 6, 2008 has mandated that insurers are not permit-
ted to abridge the scope of standard covers available under the
erstwhile tariffs beyond the options permitted in the erstwhile tar-
iffs. All general insurers are advised to adhere to the afore-men-
tioned circulars and any non- compliance of the same would be
viewed seriously by the Authority. This is issued with the approval
of competent authority.
Sd/-
(Prabodh Chander)
Executive Director"
[emphasis supplied)
18. The High Court has also reproduced a circular issued by IRD
dated 3.12.2009. It is instructive to quote the same:-
"IRDA
IRDA/NL/CIR/F&U/078/12/2009
3.12.2009.
To
All CEOs of All general insurance companies (except ECGC, AIC,
Staff Health, Apollo)
Re: Liability of insurance companies in respect of occupant of a
private car and pillion rider in a two-wheeler under Standard Motor
Package Policy (also called Comprehensive Policy).
Pursuant to the Order of the Delhi High Court dated 23.11.2009 in
MAC APP No. 176/2009 in the case of Yashpal Luthra v. United India
and Ors., the Authority convened a meeting on November 26, 2009 of
the CEOs of all the general insurance companies doing motor
.
insurance business in the presence of the counsel appearing on behalf
of the Authority and the leaned amicus curie.
Based on the unanimous decision taken in the meeting by the
representatives of the general insurance companies to comply with the
IRDA circular dated 16th November, 2009 restating the position relating
to the liability of all the general insurance companies doing motor
insurance business in respect of the occupants in a private car and
pillion rider on a two wheeler under the comprehensive/package
policies which was communicated to the court on the same day i.e.
November 26, 2009 and the court was pleased to pass the order (dt.
26.11.2009) received from the Court Master, Delhi High Court, is
enclosed for your ready reference and adherence. In terms of the said
order and the admitted liability of all the general insurance companies
doing motor insurance business in respect of the occupants in a private
car and pillion rider on a two-wheeler under the
comprehensive/package policies, you are advised to confirm to the
Authority, strict compliance of the circular dated 16th November, 2009
and orders dt. 26.11.2009 of the High Court. Such compliance on your
part would also involve:
i) withdrawing the plea against such a contest wher-
ever taken in the cases pending before the MACT, and is-
sue appropriate instructions to their respective lawyers
and the operating officers within 7 days;
ii) with respect to all appeals pending before the
High Courts on this point, issuing instructions within 7
days to the respective operating officers and the counsel
to withdraw the contest on this ground which would re-
quire identification of the number of appeals pending
.
before the High Courts (whether filed by the claimants
or the insurers) on this issue within a period of 2 weeks
and the contest on this ground being withdrawn within a
period of four weeks thereafter;
iii) With respect to the appeals pending before the
Hon'ble Apex Court, informing, within a period of 7 days,
their respective advocates on record about the IRDA Cir-
culars, for appropriate advice and action. Your attention
is also drawn to the discussions in the CEOs meeting on
26.11.2009, when it was reiterated that insurers must
take immediate steps to collect statistics about accident
claims on the above subject through a central point of
reference decided by them as the same has to be com-
municated in due course to the Honourable High Court.
You are therefore advised to take up the exercise of col-
lecting and collating the information within a period of
two months to ensure necessary & effective compliance
of the order of the Court. The information may be cen-
tralized with the Secretariat of the General Insurance
Council and also furnished to us.
IRDA requires a written confirmation from you on the action taken
by you in this regard.
This has the approval of the Competent Authority.
Sd/-
(Prabodh Chander)
Executive Director"
[emphasis added]
19. It is extremely important to note here that till 31st December,
2006 the Tariff Advisory Committee and, thereafter, from 1st January,
2007, IRDA functioned as the statutory regulatory authorities and they
.
are entitled to fix the tariff as well as the terms and conditions of the
policies by all insurance companies. The High Court had issued notice
to the Tariff Advisory Committee and the IRDA to explain the factual
position as regards the liability of the insurance companies in respect
of an occupant in a private car under the "comprehensive/ package
policy". Before the High Court, the Competent Authority of IRDA had
stated that on 2nd June, 1986, the Tariff Advisory Committee had
issued instructions to all the insurance companies to cover the pillion
rider of a scooter/motorcycle under the "comprehensive policy" and
the said position continues to be in vogue till date. It had also admitted
that the "comprehensive policy" is presently called a "package
policy". It is the admitted position, as the decision would show, the
earlier circulars dated 18th March, 1978 and 2nd June, 1986 continue
to be valid and effective and all insurance companies are bound to pay
the compensation in respect of the liability towards an occupant in a
car under the "comprehensive/package policy" irrespective of the
terms and conditions contained in the policy. The competent authority
of the IRDA was also examined before the High Court who stated that
the circulars dated 18th March, 1978 and 2nd June, 1986 of the Tariff
Advisory Committee were incorporated in the Indian Motor Tariff
effective from 1st July, 2002 and they continue to be operative and
binding on the insurance companies. Because of the aforesaid factual
position, the circulars dated 16th November 2009 and 3rd December,
2009, that have been reproduced hereinabove, were issued.
20. It is also worthy to note that the High Court, after referring to
individual circulars issued by various insurance companies, eventually
stated thus:-
.
"In view of the aforesaid, it is clear that the comprehensive/package
policy of a two wheeler covers a pillion rider and
comprehensive/package policy of a private car covers the occupants
and where the vehicle is covered under a comprehensive/package pol-
icy, there is no need for Motor Accident Claims Tribunal to go into the
question whether the Insurance Company is liable to compensate for
the death or injury of a pillion rider on a two-wheeler or the occu-
pants in a private car. In fact, in view of the TAC's directives and those
of the IRDA, such a plea was not permissible and ought not to have
been raised as, for instance, it was done in the present case."
21. In view of the aforesaid factual position, there is no scintilla of
doubt that a "comprehensive/package policy" would cover the liabil-
ity 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 foot-
ing 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 lia-
bility 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 re-
fer 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.
.
10. Thus, the reliance placed by learned Senior
Counsel for the insurer on United India Insurance Co. Ltd.
Vs. Tilak Singh and others (2006) III ACJ 1441, Oriental
Insurance Company Vs. Sudhakaran K. V. and others
(2008) III ACJ 2045 and General Manager, United India
Insurance Co. Ltd. Vs. M. Laxmi and others (2009) I ACJ
104 will not be of any help to the case of insurer as the policies
involved in all such cases were Act policies.
11. Additionally, provisions of Section-II of the
Insurance Policy in question, under the head "LIABILITY TO
THIRD PARTIES" also need notice to defuse the contention of
insurer. Section II of the policy reads as under: -
SECTION II LIABILITY TO THIRD PARTIES
1. Subject to the limits of liability as laid down in the
Schedule hereto the Company will indemnify the insured
in the event of an accident cost (sic.) by or arising out of
the use of the insured vehicle against all sums which the
insured shall become legally liable to pay in respect of
i. death of or bodily injury to any person including
occupants carried in the insured vehicle (provide such
occupants are not carried for hire or reward) but
expect(sic.) so far as it is necessary to meet
requirements of Motor Vehicles Act, 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...."
12. Adverting to the facts of the case, the insurer has
not been able to prove any violation of the policy of insurance. It
is not the case where the deceased was proved to have ridden
the pillion of the motorcycle for hire or reward, nor has any
ground to such effect been pressed in instant appeal. Thus, it is
held that the risk of deceased pillion rider, in the case in hand,
was covered by the policy of insurance purchased by
respondent No.5 herein (insured) and the appellant/insurer was
liable to pay the compensation to the claimants.
13. In result, the appeal fails and the same is
dismissed.
(Satyen Vaidya)
Judge
7th November, 2022
(sushma)
