Madhya Pradesh High Court
Shriram General Insurance Company Ltd. vs Butaniya Bai on 24 February, 2025
Author: Vivek Agarwal
Bench: Vivek Agarwal
NEUTRAL CITATION NO. 2025:MPHC-JBP:10027
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK AGARWAL
ON THE 24th OF FEBRUARY, 2025
MISC. APPEAL No. 2943 of 2013
SHRIRAM GENERAL INSURANCE COMPANY LTD.
Versus
BUTANIYA BAI AND OTHERS
Appearance:
Shri Aditya Narayan Sharma, learned counsel for the appellant.
None for the respondents.
ORDER
Heard on I.A. No.11069/2018, an application for recalling common
conditional order dated 28/11/2016.
On due consideration, the aforesaid IA is allowed and the order is
recalled.
Also heard on I.A. No.11967/2013, an application for condonation of
delay in filing the miscellaneous appeal.
On due consideration, the aforesaid IA is allowed and the delay is
condoned.
This appeal is filed by the insurance company being aggrieved of
award dated 18/03/2013 passed by learned Additional Motor Accident
Claims Tribunal, Maihar, Distt. Satna in Claim Case No.02/2012 whereby
learned Claims Tribunal while allowing the claim case has directed the
insurance company to pay the amount of compensation and then has given a
right of recovery from the owner of the offending vehicle.
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2. It is submitted that once learned Claims Tribunal has recorded a
finding in regard to Ex.P/2 i.e. FIR that claimants are putting forth their
claim on the strength of FIR which recorded commission of an accident, then
they cannot rely on the contents for the purpose of proving the accident, but,
denying the manner in which accident took place. It is submitted that
learned Claims Tribunal has accepted that injured were travelling as a
gratuitous passengers in the trolley of the tractor bearing registration No.MP
19 M/0258. Thus, once it has come on record that injured was travelling as
a gratuitous passengers on the trolley, then the issue is as to whether his
liability is covered under the policy or not.
3. Reliance is placed on the judgment of three Judges Bench of Hon'ble
Supreme Court in the case of New India Assurance Co. Ltd. Vs. Asha Rani
and others, AIR 2003 SC 607 wherein it is held that the law laid down by the
Supreme Court in New India Assurance Com. Vs. Satpal Singh and others,
AIR 2000 SC 235, has not laid down the law correctly and should be
overruled.
4. Reliance is also placed on the judgment of Hon'ble Supreme Court in
the case of National Insurance Co. Ltd. Vs. Baljit Kaur and others, (2004) 2
SCC 1 wherein the ratio of three Judges Bench of Hon'ble Supreme Court is
that in respect of goods vehicle, liability of insurer does not cover gratuitous
passengers carried in such vehicle, therefore, while allowing the insurer's
appeal, in the interest of justice, the insurer was directed to satisfy the
awarded amount and recover the same from the owner of the vehicle simply
by initiating a proceeding before the executing Court without filing a
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separate suit.
5. Reliance is also placed on the judgment of Hon'ble Supreme Court in
the case of National Insurance Com. Ltd. Vs. Bommithi Subbhayamma and
others, (2005) 12 SCC 243 wherein it is held that insurer's liability does not
extent to cover gratuitous passengers carried in a goods vehicle.
6. Similarly, in the case of Oriental Insurance Co. Ltd. Vs. Brij Mohan
and others, (2007) 7 SCC 56, it is held that gratuitous passenger carried in
goods vehicle is not covered. Reliance is also placed on the judgment of
Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. Vs.
Vedwati and others, (2007) 9 SCC 486.
7. Reliance is also placed on the judgment of Hon'ble Supreme Court in
the case of National Insurance Company Ltd. Vs. Kaushalaya Devi and
others, (2008) 8 SCC 246 wherein it is held that insurance company is not
liable to compensate the gratuitous passenger and owner alone will be liable
to pay compensation because deceased was not the owner of any goods
which were being carried in the truck.
8. Reliance is also placed on the judgment of Hon'ble Supreme Court in
the case of National Insurance Company Limited Vs. Rattani and others,
(2009) 2 SCC 75 wherein it is held that expression 'owner of goods' will not
cover members of the marriage party travelling in truck allegedly
transporting gifts received from bride party. It is also held that since victims
of accident were travelling in truck as gratuitous passengers, they are not
covered.
9. Thus, it is submitted that since victims were gratuitous passengers,
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therefore, they are not covered under the terms and conditions of the policy,
hence, the order of pay and recover is liable to be set aside.
10. Nobody is appearing for the respondents/claimants, therefore,
perused the record and judgments cited by learned counsel for the insurance
company.
11. In the case of Asha Rani and others (supra) , Hon'ble Supreme Court
while dealing with the matter held that owner of the goods or his authorised
representative carried in goods vehicle if died or suffered any bodily injury,
then insurer would not be liable to pay compensation.
12. In the case of Baljit Kaur and others (supra), Hon'ble Supreme Court
in paras-19 and 20 has held as under :
"19. In Asha Rani (supra), it has been noticed that sub-clause
(i) of clause (b) of sub-section (1) of Section 147 of the 1988 Act
speaks of liability which may be incurred by the owner of a vehicle in
respect of death of 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. Furthermore, an owner of a passenger-
carrying vehicle must pay premium for covering the risks of the
passengers travelling in the vehicle. The premium in view of the 1994
Amendment would only cover a third party as also the owner of the
goods or his authorised representative and not any passenger carried in
a goods vehicle whether for hire or reward or otherwise.
20. It is therefore, manifest that in spite of the amendment of 1994,
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the effect of the provision contained in Section 147 with respect to
persons other than the owner of the goods or his authorized
representative remains the same. Although the owner of the goods or
his authorized representative would now be covered by the policy of
insurance in respect of a goods vehicle, it was not the intention of the
legislature to provide for the liability of the insurer with respect to
passengers, especially gratuitous passengers, who were neither
contemplated at the time the contract of insurance was entered into, nor
was any premium paid to the extent of the benefit of insurance to such
category of people."
Thus, it is evident that even in terms of the judgment in Baljit Kaur
and others (supra), a gratuitous passenger travelling in a goods vehicle is not
covered. Same is the ratio of Bommithi Subbhayamma and others (supra),
Brij Mohan and others (supra)Vedwati and others (supra), Kaushalaya Devi
and others (supra) and Rattani and others (supra).
13. Law laid down by Hon'ble Apex Court in the case of Asha Rani and
others (supra), though held that the gratuitous passengers are third parties
which are not statutorily mandated to be covered in the policy and, thus,
when the policy does not cover them, the insurers are not liable to pay
compensation for them. But, this matter remained in limbo till 2018 when
the Hon'ble Supreme Court dealt with it in National Insurance Company
Limited Vs. Parvathneni and another, (2018) 9 SCC 657 where the Coram of
the Judges was three and Hon'ble Apex Court while dismissing the appeal
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held that it is upon the discretion of the Court to apply the doctrine or not.
14. It is also true that two Judges Bench of Hon'ble Apex Court in the
case of National Insurance Co. Ltd. Vs. Saju P. Paul, (2013) 2 SCC 41, Anu
Bhanvara and others Vs. IFFCO TOKIO General Insurance Company Ltd.
and toehrs, (2020) 20 SCC 632 relied the judgment of Amrit Lal Sood Vs.
Kaushalya Devi Thapar,(1998) 3 SCC 744 (Three Judges Bench) , where the
Hon'ble Apex Court was interpreting Section 95 of the Motor Vehicles Act,
1939, held that gratuitous passengers are not statutorily covered but a policy
can be more comprehensive and since the policy in question contained a
comprehensive package, thus, made insurer liable to satisfy the award.
15. In the case of Pramod Kumar Agarwal and another Vs. Mushtari
Begum (Smt.) and others, (2004) 8 SCC 667, though the Tribunal had
recorded a finding that passengers who were travelling sitting on sand loaded
in the truck, had not forcibly climbed the truck and had paid fare of Rs.25/-
per passenger, but, Hon'ble Apex Court has held that after 1994 Amendment
to Section 147 of the Motor Vehicles Act, 1988, the insurer is not liable to
pay compensation for gratuitous passengers carried in a goods vehicle.
Hon'ble Apex Court observed that the insurer would not be liable for
passengers who were neither contemplated at the time of the contract of
insurance was entered into, nor was any premium paid to the extent of the
benefit of insurance to such category of people.
16. In the case of National Insurance Co. Ltd. Vs. Prema Devi and
others, (2008) 5 SCC 403, Hon'ble Apex Court held that Motor Vehicles Act,
1988 does not impose any statutory liability on vehicle owners to insure
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goods vehicles for passengers travelling in them, consequently, insurers have
no liability to pay compensation in such cases. In this case the Court
analysed the legislative intent behind Section 147, nothing that the definition
of "goods carriage" is specifically for the "carriage of goods" and carrying
passengers in goods carriages was deliberately not contemplated in the Act.
The Court observed that unlike the old Act of 1939, the 1988 Act omitted a
provision that had mandated insurance coverage for passengers in certain
vehicles. Additionally, while Section 147 mandates compulsory coverage for
passengers in "public service vehicles," it explicitly limits liability for
employees in goods vehicles to the Workmen's Compensation Act, with no
reference to passengers. The judgment concluded that the High Court's order
making both insurers and vehicle owners liable was unsustainable.
However, the Court preserved the claimant's right to recover compensation
from the vehicle owner, stating that- it is open to the claimant to recover the
amount awarded from the owners of the offending vehicles. This maintained
the established principle that while insurers are not liable for gratuitous
passengers in goods vehicles, vehicle owners remained responsible for
compensation.
17. In the case of New India Insurance Co. Ltd. Vs. Darshana Devi
and others, (2008) 7 SCC 416, Hon'ble Supreme Court further developed the
principles of liability and recovery in cases involving gratuitous passengers
and goods vehicles. The case involved a labourer who died while travelling
on the mudguard of a tractor loaded with wood. The Court reiterated that
insurance companies are not liable for gratuitous passengers in goods
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vehicles, as Section 147 of the Motor Vehicles Act does not impose any
statutory liability on vehicle owners to obtain insurance coverage for such
passengers. The Court referenced previous judgments including Asha Rani,
Oriental Insurance Vs. Devireddy Konda Reddy, and Baljit Kaur to establish
that the 1994 amendment to the Act only extended coverage to "the owner of
goods or his authorised representative" and not to general passengers.
However, the Court invoked Article 142 of the Constitution of India to direct
that the insurance company should pay the compensation (Rs.2,04,000/-) to
the claimants, but, would be entitled to recover the amount from the vehicle
owner. Significantly, the Court established a streamlined procedure for this
recovery that - for the purpose of realisation of dues, the insurance company
need not file a separate execution petition against the owner. If an
application is filed for realisation or recovery of dues before the Tribunal, the
Tribunal shall take appropriate steps in this behalf.
18. Thus, the highlights of this case is that the Hon'ble Supreme Court
while reiterating the principles laid down in Asha Rani and others (supra)
etc. invoked Article 142 of the Constitution of India to direct the insurance
company to pay the compensation to the claimants with a recovery right.
Similar principle was followed by Hon'ble Supreme Court in the case
o f Kaushalaya Devi and others (supra) where Hon'ble Supreme Court
overturned the decision of the High Court and held that insurance company
is not liable to pay the compensation in the case of gratuitous passengers in
goods vehicles, but, maintained the principles of "pay and recover"
mechanism.
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19. In the case of Sanjeev Kumar Samrat Vs. National Insurance
Com. Ltd. (2014) 14 SCC 243, the Hon'ble Court interpreted the meaning of
"employee" mentioned in Section 147 holding that only specific categories
of employees are covered i.e. drivers, conductors of public service vehicles
and employees carried in goods vehicles who fall under the Workmen's
Compensation Act, 1923. Hon'ble Supreme maintained that insurers are not
liable for gratuitous passengers in goods vehicles, but, yet reinforced the
established principles of "pay and recover" allowing insurers to satisfy the
awards and recovered from the vehicle owners through the Motor Accident
Claims Tribunal rather than filing separate suits.
20. In the case of United India Insurance Co. Ltd. Vs. K.M. Poonam
and others, (2015) 15 SCC 297, Hon'ble Supreme Court addressed the crucial
question of insurer's liability for passengers in excess of policy limits,
establishing a refined approach to the "pay and recover" mechanism.
21. In the case of Manuara Khatun and others Vs. Rajesh Kumar Singh
land others (2017) 4 SCC 796, Hon'ble Supreme Court reaffirmed and
applied the "pay and recover" principle for gratuitous passengers. In the
case of Shivraj Vs. Rajendra and another, (2018) 10 SCC 432 , principle of
"pay and recover" was again reiterated.
22. Thus, there is a dilemma. On the one hand, Hon'ble Supreme Court
in the case of Asha Rani and others (supra) , has categorically held that since
policy does not cover gratuitous passengers and there being no coverage,
insurance company is not liable to pay compensation in the case of gratuitous
passengers.
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23. In the case of Parvathneni and another (supra) , Three Judges Bench
of Hon'ble Supreme Court had an occasion to deal with the issue, but, it
observed that -keeping in view the smallness of the amount involved, we are
not inclined to entertain this petition under Article 136 of the Constitution of
India. The Special Leave Petition is dismissed accordingly. The
questions of law raised in this petition are kept open to be decided in an
appropriate case. Thus, it is evident that since the law laid down by Hon'ble
Supreme Court in the case of Asha Rani and others (supra) , still holds the
field and the basic principle as has been reiterated thereafter is the same that
gratuitous passengers travelling in a goods vehicles are not covered under the
terms and conditions of the policy, therefore, there cannot be any coverage
for them.
24. Learned counsel for the appellant/insurance company has also relied
upon the judgment of this Court passed on 31st October, 2023 in M.A.
No.5896/2022 (Colamandalam MS General Insurance Com. Ltd. Vs. Abdul
Karim Khan and others). Since this Court has already discussed the
judgments of three Judges Bench of Hon'ble Supreme Court, therefore, there
is no need to go through the said judgment of this Court separately.
25. Accordingly, being conscious of this fact that authority exercised by
Hon'ble Supreme Court under Article 142 of the Constitution of India is not
available to this Court, then three Judges Bench strength judgment in Asha
Rani and others (supra) is a binding precedent. This miscellaneous appeal is
required to be allowed and the same is hereby allowed. It is directed as
under :-
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"(i) The principle of "pay and recover" is not available in case
of gratuitous passengers in a goods vehicles;
(ii) In case Insurance Company has already paid compensation,
it will be entitled to recover it from the owner of the offending
vehicles."
(VIVEK AGARWAL)
JUDGE
ts
