NATIONAL INSURANCE COMPANY LTD Vs. STATE

JUDGEMENT

(1.) In these Miscellaneous First Appeals presented under Section 110-D of the Motor Vehicles Act by the National Insurance Company Limited, a Division Bench of this Court has referred the following question of law for the opinion of the Full Bench under Section 7 of the Karnataka High Court Act. The question reads :- Whether by force of clause (ii) of the proviso to S. 95(1)(b) of the Motor Vehicles Act, 1939, the Insurance Company is liable to pay compensation in respect of death or bodily injury to any person travelling in a vehicle, though it is not a vehicle constructed and adapted and meant in law for carrying passengers for hire or reward, even to the extent of number of passengers permitted to be carried in the vehicle though not for hire or reward, even in the absence of any extra coverage secured by the owner under the policy concerned in respect of such passengers ?

(2.) Brief facts of the case, in the first batch of cases which are sufficient for answering the question referred for the opinion of the Full Bench, are as follows :- The vehicle involved in the accident is a goods vehicle bearing Registration No. MYX 6827 belonging to respondent No. 3 in M. F. A. No. 2902 /1987. On 26-2-1986, it was plying from Panditha Hally to Saligrama in Mandya district, carrying 15 passengers. The lorry met with an accident in the course of the journey. As a result of the said accident 10 persons died and 5 persons were injured. The legal representatives of the persons who died, as also the persons who were injured in the accident presented claim petitions before the Motor Accidents Claims Tribunal, Mandya, claiming compensation in respect of the death or bodily injury, as the case may be, to the passengers. The plea of the appellant-insurance company with whom the vehicle was insured, before the Tribunal was that the vehicle in question was a goods vehicle and it was not meant to carry passengers for hire or reward and therefore the risk in respect of death or injury to persons who were travelling in the goods vehicle was not covered in terms of Section 95 of the Act, as also in terms of the policy issued. It was further pleaded by the Insurance Company that even on the basis that in the lorry a few persons were permitted to be carried according to the permit, unless an extra coverage had been taken by the owner of the lorry covering the risk to the passengers to the extent permitted to be carried in the vehicle, there would be no liability on the part of the Insurance Company. The Tribunal, however, overruled the objections of the Insurance Company on the ground that persons who were travelling in the vehicle were not gratuitous passengers and made the award both against the owner of the lorry and its insurer. The relevant particulars of the cases are as follows :- <FRM> Sl No. M.F.A. No. M.V.C. No. Case of death or injury Amount Awarded Rs. 1. 2902/87 91/86 Death 26,800/- 2. 2969/87 109/86 Death 29,600/- 3. 2970/87 110/86 Injury 75,000/- 4. 2971/87 127/86 Injury 10,000/- 5. 2972/87 111/86 Death 55,120/- 6. 2973/87 99/86 Death 29,800/- 7. 2974/87 98/86 Death 39,400/- 8. 2975/87 95/86 Death 24,800/- 9. 2976/87 93/86 Death 46,600/- 10. 2977/87 107/86 Death 78,400/- 11. 2978/87 108/86 Death 38,920/- 12. 2979/87 130/86 Death 42,160/- 13. 2980/87 128/86 Injury 10,000/- 14. 2981/87 140/86 Injury 25,000/- 15. 2982/87 139/86 Injury 7,500/- </FRM> Aggrieved by the orders of the Tribunal, the appellant presented the appeals.

(3.) In the appeals, the contention of the appellant-Insurance Company again was that having regard to Section 95 of the Act, it was obligatory for the Insurance Company to cover the risk only in respect of passengers who are carried for hire or reward in a vehicle which in law is authorised to carry passengers for hire or reward and that as the vehicle in question was a goods vehicle, in law, it was not a vehicle in which passengers could be carried for hire or reward and therefore the risk was not covered by the force of Section 95 of the Act, but could have been covered only if the owner of the vehicle had chosen to pay extra premium and had taken extra coverage for passengers travelling in the lorry, that too only in respect of the number of passengers, permitted to be carried under the permit issued under the Act. It was their contention, as admittedly no specific coverage had been taken by the owner, there was no liability on the Insurance Company.