Madhya Pradesh High Court

Shriram General Insurance Co.Ltd. vs Arman Khan on 24 February, 2025

Author: Vivek Agarwal

Bench: Vivek Agarwal

1 MA-606-2013
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. 602 of 2013
SHRIRAM GENERAL INSURANCE COMPANY LTD
Versus
HABIB KHAN AND OTHERS
Appearance:
Shri Aditya Narayan Sharma, learned counsel for the appellant.
None for the respondents.
WITH
MISC. APPEAL No. 604 of 2013
SHRIRAM GENERAL INSURANCE COMPANY LTD
Versus
SAIED KHAN AND OTHERS
Appearance:
Shri Aditya Narayan Sharma, learned counsel for the appellnat.
None for the respondents.

MISC. APPEAL No. 605 of 2013
SHRIRAM GENERAL INSURANCE COMPANY LTD
Versus
TAUFIQ KHAN AND OTHERS
Appearance:
Shri Aditya Narayan Sharma, learned counsel for the appellant.
None for the respondents.

MISC. APPEAL No. 606 of 2013
SHRIRAM GENERAL INSURANCE CO.LTD.
Versus
ARMAN KHAN AND OTHERS

Signature Not Verified
Signed by: TULSA SINGH
Signing time: 3/17/2025
3:52:00 PM
2 MA-606-2013
Appearance:
Shri Aditya Narayan Sharma, learned counsel for the appellant.
None for the respondents.

ORDER

These miscellaneous appeals are filed by the Insurance Company being aggrieved of the award dated 08/11/2012 passed by learned 14th Additional Motor Accident Claims tribunal, Bhopal in Claim Cases Nos. 1225/2010, 1223/2010, 1224/2010 and 1278/2010 on a singular ground that since the wards of the claimants/claimant either died when the truck on the roof of which they were travelling came in contact with a high tension line or sustained grievous injuries, but, overlooking the fact that victims were travelling as a gratuitous passengers, therefore, there was violation of the

terms and conditions of the policy, hence, there could not have been an order of pay and recover, however, arbitrarily learned Claims Tribunal has directed that the compensation amount be paid by the insurance company and thereafter they will be entitled to recover it jointly and severally from the owner and driver of the offending vehicle.

2. Reliance is place 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.

3. 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

3 MA-606-2013 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 separate suit.

4. 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.

5. 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.

6. 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.

7. Reliance is also placed on the judgment of Hon'ble Supreme Court in

the case of National Insurance Company Limited Vs. Rattani and others,

4 MA-606-2013 (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.

8. Thus, it is submitted that since victims were gratuitous passengers, 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.

9. Nobody is appearing for the respondents/claimants, therefore, perused the record and the judgments cited by learned counsel for the insurance company.

10. 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.

11. 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

5 MA-606-2013 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, 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).

12. 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

6 MA-606-2013 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 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 held that it is upon the discretion of the Court to apply the doctrine or not.

13. It is also true that two Judges Bench 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 and 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.

14. 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

7 MA-606-2013 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.

15. 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 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, holding 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 remain responsible for compensation.

8 MA-606-2013

16. 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 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.

17. 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.

9 MA-606-2013 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.

18. In the case of Sanjeev Kumar Samrat Vs. National Insurance Com. Ltd. (2014) 14 SCC 243, the Hon'ble Supreme 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.

19. 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.

20. 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

10 MA-606-2013 "pay and recover" was again reiterated.

21. 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.

22. 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.

23. 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.

11 MA-606-2013

24. 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. These miscellaneous appeals are required to be allowed and the same are hereby allowed. It is directed as under :-