UNITED INDIA INSURANCE CO LTD Vs. CELINAMMA

JUDGEMENT

(1.) In all these appeals, the main question for consideration is whether passengers of private vehicles carried not for hire or reward (gratuitous passengers) are covered by insurance policies called 'Act policies' which are taken only to meet the minimum requirements of the provisions of the Motor Vehicles Act, 1939 (hereinafter Referred to as 'the old Act'). Facts are not disputed. In all these appeals, the accidents took place during the period 17.1.1980 to 10.3.1988, that is, during the period when old Act was in force as the Motor Vehicles Act, 1988 (hereinafter Referred to as 'the new Act') came into force only with effect from 1.7.1989. All these appeals except M.F.A. No. 1158 of 1994 were filed by the insurance, companies as the Motor Accidents Claims Tribunals fastened the liability on the insurance company. In M.F.A. No. 1158 of 1994 arising out of O.P. (M.V.) No. 116 of 1991, the Tribunal held that under 'Act policy', the insurer is not liable to indemnify the owner of the vehicle for compensation payable on account of the injuries suffered to gratuitous passengers. Claimants are questioning the above finding. The quantum of compensation is also questioned in that appeal. In all these cases, victims of the accidents who were gratuitous passengers were travelling in private jeeps at the time of the accidents. Minimum requirement and risk compulsorily coverable under the insurance are mentioned in section 95 of the old Act.

(2.) The relevant portion of section 95 of the old Act reads as follows:

(3.) Section 95 (1) (b) (i) provided that to meet the requirement of the statute, insurance company must indemnify the insured against any liability which may be incurred by him in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place. It also covers liability in respect of damage to any property of a third party. Section 95 (1) (b) (ii) is a special provision dealing with the liability against the death of or bodily injury to any passenger of a public service vehicle. Passenger of a public service vehicle is also compulsorily insurable and public service vehicle is defined under section 2 (25) of the old Act as 'any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward' and it includes a motor cab, contract carriage and stage carriage. But, here, we are concerned with the coverage of passengers in private vehicles. The term 'any person' contained in section 95 (1) (b) (i) is very wide and would take in even a passenger in a private vehicle. Clause (b) (i) refers to death of or bodily injury to any person arising out of the use of the vehicle in a public place. Proviso (i) makes special provision in respect of employees who are carried in the vehicle limiting the liability to that arising under Workmen's Compensation Act, 1923 in respect of death of or bodily injury to such employee. Proviso (ii) limits the application of clause (b) (i) to a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. A plain reading of the proviso would show that it excludes the liability in respect of death of or bodily injury to passengers in vehicles unless they are carried for hire or reward or they are carried to cover contractual liability. The provisions are discussed in detail by the Supreme Court in Mallawwa v. Oriental Insurance Co. Ltd., 1999 ACJ 1 (SC). In that case, the Supreme Court was considering the question whether owner of the goods being carried in a goods vehicle is covered by an 'Act policy'. A three-member Bench of the Supreme Court after quoting section 95 of the old Act as amended by Act 56 of 1969 held as follows: