Kerala High Court
National Insurance Company Limited vs Safeena on 8 July, 2025
2025:KER:49630
MACA No.1472/2014
..1..
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
MACA NO. 1472 OF 2014
OPMV NO.176 OF 2011 OF II ADDITIONAL MACT, KASARAGODE
APPELLANT/4TH RESPONDENT:
NATIONAL INSURANCE COMPANY LIMITED
KASARAGOD NOW REPRESENTED BY ITS MANAGER, KOCHI
REGIONAL OFFICE, OMANA BUILDING, M.G.ROAD, KOCHI-35.
BY ADVS.
SRI.MATHEWS JACOB (SR.)
SHRI.P.JACOB MATHEW
RESPONDENTS/RESPONDENTS:
1 SAFEENA
D/O. MOOSAKUNHI, CHERANGAI KADAPPURAM, KUDLU P.O.,
KASARAGOD TALUK, PIN-671124.
2 SHAFIQUE M.
S/O. MOOSAKUNHI, CHERANGAI KADAPPURAM, ADKATHBAIL,
KUDLU P.O., KASARAGOD TALUK, PIN-671124.
3 SEENATH
W/O. USMAN, KODIBAL HOUSE, KONGAI, MANGALORE P.O., PIN-
575001.
BY ADV SHRI.JAWAHAR JOSE
THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING COME UP FOR HEARING
ON 04.06.2025, THE COURT ON 08.07.2025 DELIVERED THE FOLLOWING:
2025:KER:49630
MACA No.1472/2014
..2..
JUDGMENT
This appeal has been filed by the fourth respondent insurer in
OP(MV) No.176 of 2011 on the file of the Second Additional Motor
Accidents Claims Tribunal, Kasaragod, challenging the liability to pay
compensation awarded to the claimant. The first respondent herein was
the claimant; and respondents 2 & 3 herein were respondents 1 & 3,
who are the driver and owner respectively of the offending vehicle,
before the tribunal.
2. The case of the claimant was that on 03.08.2010, while
the claimant along with her parents was travelling in a Maruti car
bearing Reg.No.KA-19M-3047 driven by the first respondent in a rash
and negligent manner, lost control over the car and hit on the rear side
of a truck bearing Reg.No.HR-38I-5947, whereby the claimant sustained
grievous injuries. The claimant approached the tribunal claiming a total
compensation of ₹2,00,000/-.
3. Respondents 1 and 2, who are the driver and previous
owner of the offending vehicle respectively, filed separate written
statements before the tribunal. The third respondent, who is the
2025:KER:49630
..3..
owner/insured of the offending vehicle, remained ex parte before the
tribunal. The fourth respondent insurer filed a written statement,
admitting the policy coverage for the offending vehicle, but disputing
the liability and quantum of compensation claimed. Before the tribunal,
Exts.A1 to A5 were marked on the side of the claimant, and Ext.B1 & B2
on the side of the fourth respondent insurer. The tribunal, after
analysing the pleadings and materials on record, held that the accident
took place on account of the negligence of the driver of the offending
vehicle and awarded a sum of ₹75,285/- as compensation under different
heads with interest @ 7.5% per annum from the date of petition till
realization against the fourth respondent being the insurer, with right of
recovery against the third respondent owner. The respondent insurer
has come up in appeal, challenging its liability to pay compensation.
4. Heard the learned Standing Counsel for the
appellant/insurer and the learned counsel for the first
respondent/claimant.
5. The learned Standing Counsel for the insurer
submitted that the policy was an "act only" policy and the claimant,
being a gratuitous passenger in the car, was not covered by the policy
and the insurer is not liable to indemnify the insured. It is further
submitted that the driver of the offending vehicle was not having a valid
2025:KER:49630
..4..
driving licence at the time of the accident. The learned Standing
Counsel for the insurer relied on a catena of decisions such as, United
India Insurance Co. Ltd. v. Tilak Singh [2006 (2) KLT 884 (SC)], National
Insurance Co. Ltd. v. Balakrishnan & Another [(2013) 1 SCC 731],
National Insurance Co. Ltd. v. Parvathneni & Another [(2009) 8 SCC
785], Oriental Insurance Co. Ltd. v. Sudhakaran K.V [2008 (2) KLT 936
(SC)] and New India Assurance Co. Ltd. v. Daisy Paul & Another [2021
(2) KHC 449], and argued that since the policy is "act only" policy, there
is no liability for the insurer to indemnify the insured and to pay
compensation to the claimant; and the tribunal ought to have
exonerated the insurer from paying compensation.
6. Per contra, the learned counsel for the claimant
submitted that since there was a valid policy in respect of the offending
vehicle, the insurer is liable to pay compensation and then to recover
the same from the owner of the offending vehicle. To substantiate the
said contention, the learned counsel relied on the judgments of the apex
court in National Insurance Co. Ltd. v. Saju P. Paul & Another [2013 KHC
4013] and Manuara Khatun and others v. Rajesh Kr. Singh and others
[2017 KHC 6151].
7. The question to be considered is whether any liability
can be thrust upon the insurer to pay compensation to gratuitous
2025:KER:49630
..5..
passengers in a private car if the policy issued is an "act only" policy.
8. A perusal of Ext.B1 policy shows that it is an "act only"
policy. Admittedly, the claimant was a passenger in the offending car. It
is a settled position that an "act only" policy does not cover gratuitous
passengers in a vehicle, if no additional premium is paid. In Daisy Paul
(supra), this Court elaborately considered the judgments of the apex
court in New India Assurance Co. Ltd. v. Asha Rani [2003 KHC 22],
Jagdev Singh v. Sanjeev Kumar & others [2018 KHC 7138], Tilak Singh
(supra) and Saju P. Paul (supra), and found that if the policy is "act only"
policy and no additional premium is paid to cover the passengers of the
vehicle, the policy will not cover the gratuitous passengers in the said
vehicle and the insurer is not liable to pay compensation.
9. In Balu Krishna Chavan v. Reliance General Insurance
Co. Ltd. [2023 KHC 5347], the apex court settled the legal position that
if the insurer is not liable to pay compensation, then, there shall not be
a direction to 'pay and recover'. It was further held that on the legal
aspect, it is clear that in all cases, such order of 'pay and recover' would
not arise when the insurance company is not liable but would, in the
facts and circumstances, be considered by this Court to meet the ends
of justice. Thus, the legal principle has been settled by the apex court
that when the insurer is not liable, the order of 'pay and recover' does
2025:KER:49630
..6..
not arise. However, in Balu Krishna Chavan (supra), the apex court has
directed the insurer to pay the amount and then recover the same from
the insured, making it clear as follows:
"Therefore, keeping all aspects in view, and not making this case a
precedent, but only to serve the ends of justice in the facts of this
case..."
10. Therefore, it is clear that in an "act only" policy, the
insurer is liable to pay compensation only to third parties and not to
gratuitous passengers in a vehicle. Hence, I find that the policy being an
"act only" policy, the insurer is not liable to pay the amount awarded.
Therefore, the direction of the tribunal to the insurer to pay
compensation is legally unsustainable and is liable to be set aside.
Accordingly, the appeal is allowed. The impugned order of the
tribunal, directing the insurer to pay compensation to the claimant is set
aside.
Sd/-
SHOBA ANNAMMA EAPEN
JUDGE
bka/-
