Madras High Court
Royal Sundaram Alliance Insurance vs A. Pappathi on 30 March, 2009
Equivalent citations: AIR 2009 (NOC) 2249 (MAD)
Author: R.Sudhakar
Bench: R.Sudhakar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 30-3-2009
CORAM
THE HONOURABLE MR.JUSTICE R.SUDHAKAR
C.M.A.Nos.4203 and 4204 of 2008
and
M.P.No.1 of 2008 in both appeals
C.M.A.No.4203 of 2008:-
Royal Sundaram Alliance Insurance
Company Limited,
No.46, Whites Road,
Royapettah, Chennai.14. ... Appellant/2nd Respondent
vs.
1. A. Pappathi
2. R. Amavasai
3. Amitt Bhat
(3rd respondent ex parte in
lower court. Notice may be
dispensed with). ... Respondents/Petitioners 1 and 2
and 1st respondent
C.M.A.No.4204 of 2008:-
Royal Sundaram Alliance Insurance
Company Limited,
No.46, Whites Road,
Royapettah, Chennai.14. ... Appellant/2nd Respondent
vs.
1. Lakshmi
2. Kamraj
3. Ambedkdar
4. Kasturibai
5. Manikandan
6. Amitt Bhat
(6th respondent ex parte in
lower court. Notice may be
dispensed with) ... Respondents/Petitioners 1 to 5
and 1st respondent
Civil Miscellaneous Appeals are filed under Section 173 of Motor Vehicles Act, 1988, against the awards and decrees dated 30.6.2008 passed in M.C.O.P.Nos.315 of 2007 and 309 of 2007 on the file of the Motor Accidents Claims Tribunal ( Subordinate Court), Poonamallee.
For appellant in
both the appeals : Mr.N.Vijayaraghavan
For respondents 1 and 2
in CMA 4203 of 2008 and
respondents 1 to 5 in
CMA 4204 of 2008 : Mr.P.Selvaraj
-----
COMMON JUDGMENT
The Insurance Company has filed these two appeals challenging the awards dated 30.6.2008 passed in M.C.O.P.Nos.315 and 309 of 2007 on the file of the Motor Accidents Claims Tribunal (Subordinate Court), Poonamallee.
2. In both the appeals Mr.P.Selvaraj, counsel appears for caveators, the respondents 1 and 2 in C.M.A.No.4203 of 2008 and the respondents 1 to 5 in C.M.A.No.4204 of 2008. In view of the endorsement made by the counsel for the appellant in the appeal grounds, notice to the owner of the vehicle, viz., the respondent No.3 in C.M.A.No.4203 of 2008 and respondent No.6 in C.M.A.No.4204 of 2008 is dispensed with. By consent of both parties, main appeals are taken up for final disposal.
3. C.M.A.No.4204 of 2008 (M.C.O.P.No.309 of 2007):- It is a case of fatal accident. The motor accident in this case happened on 13.8.2006. The deceased in this case is Tamil Selvan, 28 years old, contractor and L.L.B. Final Year student. He was travelling on a Maruti Esteemed Car bearing Registration No.TN.02 V 7880 from Pondicherry to Chennai along with his friends. The car was driven by the 6th respondent herein, by name Amitt Bhatt, who is the owner of the Maruti Esteemed Car insured with the Royal Sundaram General Insurance Company. According to the claimants, the driver of the car viz., Amitt Bhatt, drove the car in a rash and negligent manner and hit the palm tree and caused grievous injuries which resulted in the death of the said Tamil Selvan. On the death of Tamil Sevan, the mother aged 52 years, three brothers aged 22 years, 21 years and 18 years and one sister aged 19 years filed the claim under Section 166 of Motor Vehicles Act, 1988 for compensation in a sum of Rs.6,00,000/- stating that the deceased was working in Ambattur Clothing Company Limited and was earning a sum of Rs.10,000/- p.m.
4. In support of the claim, the mother of the deceased was examined as P.W.1 and one Jagadesh, the eye witness to the accident, was examined as P.W.2. Documents Exs.A-1 to A-6 were marked. On behalf of the insurance company one Vankatakrishnan, senior executive officer of the insurance company was examined as R.W.1. True copy of the insurance policy issued to the Maruti Esteemed Car was marked as Ex.R-1.
5. Based on the oral and documentary evidence and considering the age, income, occupation of the deceased and the age of the claimants, the Tribunal granted the following amount as compensation with interest at the rate of 7.5% p.a.:-
Sl.No. Head Amount granted by the Tribunal 1 Loss of pecuniary benefits Rs.4,32,000/-
2 Transport expenses Rs. 1,000/- 3 Funeral expenses Rs. 2,000/- Total Rs.4,35,000/-
6. C.M.A.No.4203 of 2008 (MCOP No.315 of 2007):- In the fatal accident which happened as above, another occupant of the car, Suresh, 27 years old self-employed contractor, said to be earning Rs.10,000/- p.m., while travelling in the very same Maruti Esteemed Car, driven by the third respondent herein, viz., Amitt Bhatt, suffered grievous injuries and died. The mother aged 58 years and father aged 61 years filed a claim under Section 166 of Motor Vehicles Act, 1988 for compensation in a sum of Rs.5,00,000/-.
7. In support of the claim, the mother of the deceased Suresh was examined as P.W.1 and one Jegadeesh, the eye witness to the accident, was examined as P.W.2. Documents Exs.A-1 to A-7 were marked. On behalf of the appellant/2nd respondent before the Tribunal, one Venkatakrishnan, Senior Executive Officer was examined as R.W.1 and the copy of insurance policy issued to the Maruti Esteemed Car was marked as Ex.R-1.
8. Based on the oral and documentary evidence and considering the age, income and the occupation of the deceased and the age of the claimants, the Tribunal granted the following amounts as compensation with interest at the rate of 7.5% p.a.:-
Sl.No. Head Amount granted by the Tribunal 1 Loss of pecuniary benefits Rs.2,88,000/-2
Loss of love and affection to the parents Rs. 30,000/-
3 Transport expenses Rs. 1,000/- 4 Funeral expenses Rs. 2,000/- Total Rs.3,21,000/-
9. The owner-cum-driver of the vehicle remained ex parte before the Tribunal. In both cases, the appellant before the Tribunal contended that the victims are gratuitous passengers in a private car and therefore, there is no statutory liability on the appellant insurer to cover the risk of the occupants of private car under section 147 of the Motor Vehicles Act, 1988 as they are not third parties and further no additional premium was paid to cover the risk to occupants, gratuitous passengers, under the policy of insurance Ex.R-1.
10. The Tribunal in this case placing reliance on the decision of this court in National Insurance Company Ltd., - vs. - Komalam reported in 2008(2) MLJ 736 stated that in the insurance policy Ex.R-1 no additional premium was paid to cover the risk to occupants of the car, who are gratuitous passengers and therefore, held that the insurance company was not liable. The Tribunal, however, relying upon the Apex Court's decision in Deddappa vs. - B.M., National Insurance Co. Ltd., reported in (2008)2 MLJ 575 (SC) and various other decisions, directed the insurer appellant to pay the claimants and recover the award amount from the insured/owner of the vehicle. Hence, the appeal.
11. In both the appeals, at the out set, it was fairly conceded by the learned counsel for the appellant that the appellant is not aggrieved by the quantum of compensation awarded in both the cases and that it is just and reasonable.
12. The point that is canvassed in appeal before this Court and before the Tribunal as well, is that the insurance policy Ex.R-1 issued to the ill-fated Maruti Esteemed Car, which is a package policy for a private vehicle, covers risk only to the extent of third party claims in terms of Section 147 of the Motor Vehicles Act 1988 and does not cover the risk of the gratuitous passengers, the occupants of the car. According to the appellant, even under the package policy issued in respect of the vehicle, since no additional premium was paid to cover the occupants of the private vehicle (car) and since the deceased are gratuitous passengers, the insurance company is not liable. On this premise, these two appeals are canvassed.
13. In support of this contention counsel for appellant relied on the decision of the Apex Court in UNITED INIDA INSURANCE COMPANY Vs. - TILAK SINGH (2006 ACJ 1441 (SC) = 2006(4) SCC 404), a case relating to death of a pillion rider, a gratuitous passenger; wherein the Apex Court while dealing with the case of statutory insurance policy, held in paragraphs 1, 2 and 21 as follows:-
"1. The core issue involved in this appeal is: Whether a statutory insurance policy under the Motor Vehicles Act, 1988, intended to cover the risk to life or damage to properties of third parties would cover the risk of death or injury to a gratuitous passenger carried in a private vehicle?
2. Bal Krishan, the respondent No.5, had insured his scooter with the appellant insurance company for the period 7.3.1989 to 6.3.1990. For covering liability to pillion passengers the endorsement of I.M.T.70 pertaining to accident to unnamed hirer/driver/pillion passenger, is required on the insurance policy, which may be obtained by payment of additional premium. The insurance policy covering the scooter of respondent No.5 did not contain an endorsement of I.M.T.70."
"21. In our view, although the observations made in Asha Ranis case, 2003 ACJ 1 (SC), were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also. Thus, we must uphold the contention of the appellant insurance company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was statutory policy and hence it did not cover the risk of death of or bodily injury to gratuitous passenger."
14. The learned counsel for the appellant referred to Section 147(1) of the Motor Vehicles Act, 1988 and stated that the claim in both the cases is not covered by statutory prescription. Sec.147(1) and 147(5) of the Motor Vehicles Act, 1988, which is relevant for the issue, reads as follows:-
"147. Requirements of policies and limits of liability. (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)--
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including, owner of the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:
Provided that a policy shall not be required--
(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923, (8 of 1923) in respect of the death of, or bodily injury to, any such employee--
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation.--For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.
(2) x x x (3) x x x (4) x x x (5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."
15. Learned counsel for the appellant placed reliance on the Full Bench decision of the Kerala High Court in Mathew Joseph vs. - Janaki reported in 2007 ACJ 912. It is a case of death of a gratuitous passenger in a private jeep. The policy is a comprehensive policy. Relying upon the Apex Court's decision in New India Assurance Co. Ltd., - vs. - Asha Rani reported in (2003)2 SCC 223 : 2003 SCC (Cri) 493, and UNITED INIDA INSURANCE COMPANY Vs. - TILAK SINGH (2006 ACJ 1441 (SC) = 2006(4) SCC 404), it has been held thus:-
Gratuitous passengers in transport vehicles, including a motor cycle, can have coverage only when a comprehensive policy or extended policy as might be possible to be issued has been availed of by the owner of the vehicle. Only in such cases the insurance company is required to compensate. We hold that the guidelines set by the Supreme Court are unambiguous, viz., that payment of premium alone can cast a corresponding duty on the insurer for rendering coverage on any such group, when they are not required to be mandatorily brought under insurance protection.
16. Learned counsel for the appellant also placed reliance on the decision in Amit Bar vs. - National Insurance Co. Ltd., reported in 2008(1) T.A.C. 51 (Cal.). It is a case of death of a gratuitous passenger, pillion rider in a two wheeler. The policy is a package policy. The Court held that no additional premium was paid to cover the risk of a pillion rider. In this factual background, the Calcutta High Court in para 21 held as follows:-
"21. Thus, after considering submissions of the learned Advocate of both the sides and on careful consideration of the insurance policy and fact and evidence of the present case, we find that the victim woman as a pillion-rider met the accident, the insurance policy of the motorcycle was valid on the date of accident, the insurance policy did not cover the risk of the pillion-rider since there were no terms and conditions on payment of additional premium to cover the risk of the pillion-rider and in such a situation having regard to the provision of Section 147 of the Motor Vehicles Act and the ratio of decision rendered in the case of United India Insurance Co. Ltd. (supra), we are of the considered view that the Insurance Company as per terms of the insurance policy is not liable to pay any compensation and the claimants are to realise the compensation amount from the owner of the offending motorcycle."
17. On this premise, it was submitted by the appellant that the insurance policy which is the subject matter of the present appeals though termed as a package policy, since no additional premium was paid in respect of the occupants of the Car involved in the accident, the insurance company is not liable in respect of the claims consequent to the death of the two persons, who are the occupants of the ill-fated private vehicle, Maruti Esteemed Car.
18. The undisputed facts in this case are:-
(i) the policy of insurance Ex.R-1 is a package policy and
(ii) the victims of the accident are gratuitous passengers, the occupants in a private car, In this case, the finding of the Tribunal is that no additional premium was paid to cover gratuitous passengers in a private car. Before proceeding further in this matter, the nature of insurance policy issued by the appellant needs to be considered. The policy issued to the private vehicle (car) MP 1 0082955 is a package policy for private vehicle issued at 10.52 a.m., on 27th December 2005. The policy reads as follows:-
"ROYAL SUNDARAM ROYAL SUNDARAM ALLIANCE INSURANCE COMPANY LTD.
Sundaram Towers, 46 Whites Road, Royapettah, Chennai-600 014.
Tel:044-28517387 (Hunting Lines), Fax; 044-28585912, 28517376, e-mail customer, services @ in.royalsun.com Service Tax Registration No. Insurance/Chennai-II/2/STC Certificate Cum Policy Schedule Insurance Policy No:
MP10082955 Package policy(Private vehicle) (Issued at 10:52:58 AM on 27-Dec.2005) THE INSURED:
Name:
Address:
Business Mr.AMIT BHATT NO:162/2, GOLDEN, UBLEE FLATS, PADI KUPPAM ROAD, THIRUMANGALAM, ANNA NAGAR EXTN, CHENNAI-600040, Tamil Nadu Business Period of insurance:
From 10:52:33 AM on 27 Dec.2005 to midnight on 26 Dec. 2006 The vehicle:
Maruti/Esteem Vxi/MARUTI ESTEEM MPI VXI BS III (WITH HLL) Date and Proposal No: 27-Dec.2005/ P00210402. Geographical Area Engine-Chassis No. Type of body CC Mfg. Year Seating capacity Registration Mark & Place of Registration INDIA 252662-448327 SALOON 1298 2005 5 CHENNAI INSURED'S DECLARED VALUE Vehicle Non Elec. accessories Elec. accessories CNG/LPG kit Total Value (IDV) 463472 0 0 0 463472 Schedule of premium A. OWN DAMAGE B. LIABILITY Vehicle & Accessories: 15215 Vehicle 600 Total 15215 Total 600 Add 15215 Add 600 b) Geographical Area Extn. NA a) Compulsory PA Cover Premium 100 Sub-Total Additions a) b) Additional PA Cover Premium (0 per person) (IMT-16) NA c) 5% Extra premium towards inbuilt CNG NA Less d) Legal Liability(WC) to Driver (IMT-28) 25 i) Auto Association membership NA Sub Total Additions 125 Sub Total (deductions) Total(A) 15215 Total (B) 725 Note:
1. If the premium is paid by Cheque, the issue of Policy is subject to the realisation of Cheque.
2. Consolidated Stamp duty paid.
Grand Total Service Tax @ 10.2% Total Premium 15941 1626 17567 Compulsory deductibles 500
19. The Insurance Act, provides for establishment of a Tariff Advisory Committee otherwise known as TAC which lays down the Rules, Regulations, Rates, Advantages, Terms and Conditions, for transaction of motor insurance business in India. For this purpose, the India Motor Tariff, hereinafter referred to as "IMT" and it contains Section 1 to Section 8 and General Regulations G.R.1 to G.R.48 and it is issued from time to time. As far as the present case is concerned, the India Motor Tariff (IMT) 2002 supersedes the provisions of the India Motor Tariff (IMT) in existence upto 30th June, 2002. It is also stated that it is binding on all concerned and any breach of the Tariff will be a breach of the provisions of the Insurance Act, 1938.
20. Under the Indian Motor Tariff (IMT) different types of policies are issued and they are contained in IMT Section 6(page 107 of IMT). They are:-
(a)Standard form for liability only policy,
(b)Standard form for private car package policy,
(c)Standard form for two wheeler package policy,
(d)Standard form for commercial vehicles package policy,
(e)Standard form for motor trade package policy and the like. Each policy is split into different sections to deal with different contingencies and the parties bind themselves to the terms of the clause contained in each section of the policy. For example, the package policy for a private car which is applicable to the present case contains:-
Section I Loss of or damage to the vehicle insured, Section II Liability to third parties, Section III Personal accident cover for owner-driver There are other conditions and limits.
In this appeal we are concerned with the liability of the insurance company in respect of a gratuitous passengers/occupants in a private vehicle (car).
21. The first policy in Section 6 of IMT is liability only policy or act only policy. In that the liability to third parties is set out as hereunder:-
"LIABILITY TO THIRD PARTIES:
1. Subject to the Limit of liability as laid down in the schedule hereto, the Company will indemnify the insured in the event of accident caused by or arising out of the use of the Motor Vehicle anywhere in India against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of i. death of or bodily injury to any person so far as it is necessary to meet the requirements of the Motor Vehicles Act.
ii. damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured up to the limit specified in the schedule."
(emphasis supplied)
22. The next policy in Section 6 of IMT that is relevant to this case is a private car package policy in which Section II (page 119 of IMT) deals with liability to third parties, which reads as follows:-
"Standard Form for private car package policy Whereas the insured by a proposal and declaration dated as stated in the Schedule which shall be the basis of this contract and is deemed to be incorporated herein has applied to the Company for the insurance hereinafter contained and has paid the premium mentioned in the schedule as consideration for such insurance in respect of accidental loss or damage occurring during the period of insurance.
Now this policy witnesseth:
That subject to the Terms Exceptions and Conditions contained herein or endorsed or expressed hereon;
Section I xxx Section II Liability to third parties
1. Subject to the limits of liability as laid down in the Schedule hereto the Company will indemnify the insured in the event of an accident caused by or arising out of the use of the vehicle against all sums which the insured shall become legally liable to pay in respect of:-
(i) death of or bodily injury to any person including occupants carried in the vehicle (provided such occupants are not carried for hire or reward) but except so far as it is necessary to meet the requirements of Motor Vehicles Act, the Company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured.
(ii) damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured."
(emphasis supplied) The specific terms of the Section II of the package policy casts a liability on the insurance company to compensate the death or bodily injury to any person including occupants carried in the vehicle (provided such occupants are not carried for hire or reward). There is, therefore, a clear distinction in Section II of Act Policy (i.e.) liability only policy and Section II of package policy.
23. Further, Section 1 (Page 1 of IMT) contains General Regulations, in that the provision is made for various types of personal accidents covers. To name a few, the following covers which are available are extracted:-
"Cover is available only in respect of the following persons:-
1. Private Cars including three wheelers rated as Private cars and motorised two wheelers with or without side car (not for hire or reward): For insured or any named person other than the paid driver and cleaner.
Endorsement IMT 15 is to be used.
2. Private Cars, three wheelers rated as Private cars and Motorised Two Wheelers (not used for hire or reward) with or without side car: For unnamed passengers limited to the registered carrying capacity of the vehicle other than the insured, his paid driver and cleaner.
Endorsement IMT 16 is to be used.
3. In respect of all classes of vehicles: For paid drivers, cleaners and conductors.
Endorsement IMT 17 is to be used.
4................. etc.,"
The various types of endorsements ranging from IMT1 to IMT-65 are contained in Section-7. IMT Endorsements are made in appropriate Section of the policy. Based on the need of the insured, the type of policy with necessary endorsements are made. In the present case, which is a package policy, in addition to third party liability in terms of Section-II as has been extracted in para 22 above, the insured has also taken further endorsement under Section-III, under the head personal accident cover. A premium of Rs.65/- has been paid under IMT-20 and no premium was paid under IMT-16. In the present package policy, in addition to liability cover in respect of occupants of the vehicle, the insured has also made further payment under IMT-28. It is in this background, that the claim of the legal heirs of the deceased has to be considered. If under Section-II of the package policy the claim of passengers, occupants of the car is covered, the question that has to be decided is as to whether any additional premium is required to be paid to cover a claim in respect of risk of occupants of the car and what will be the consequence of such further payment.
24. At the first instance, the liability of the insurance company insofar as the claim for compensation in respect of the passengers of a private vehicle came for consideration before the Supreme Court in Pushpabai Purshottam Udeshi and Others Vs. - M/s. Ranjit Ginning and Pressing Co. and another reported in 1977 A.C.J. 343. The policy issued in that case was a comprehensive policy and the terms of the policy which has been extracted in the above cited decision of the Apex Court reads as follows:-
" In consideration of the payment of an additional premium, it is hereby understood and agreed that the company undertakes to pay, compensation on the scale provided below for bodily injury as hereinafter defined sustained by any passenger......"
In that case, under the policy, the compensation to any passengers for bodily injury was restricted by the contract clause to a sum of Rs.15,000/- only. The Apex Court in that decision held that the act does not enjoin the insurance company to cover the risk of passengers, who are not carried for hire or reward. In 1977 ACJ 343 Pushpabhai Purshottam Udeshi - vs - Ranjit Ginning & Pressing Co., the Apex Court in paras 21 to 26 held as follows:-
"21. Section 95(a) and 95 (b)(i) of the Motor Vehicles Act adopted the provisions of the English Road Traffic Act, 1960 and excluded the liability of the insurance company regarding the risk to the passengers. Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death 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. The plea that the words "third party" are wide enough to cover all persons except the person and the insurer is negatived as the insurance cover is not available to the passengers is made clear by the proviso to sub-section which provides that a policy shall not be required:
"(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by a reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises."
22. Therefore it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire or reward. As under section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured the plea of the counsel for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act.
23. The insurer can always take policies covering risks which are not covered by the requirements of Section 95. In this case the insurer had insured with the insurance company the risk to the passengers. By an endorsement to the policy the insurance company had insured the liability regarding the accidents to passengers in the following terms:
In consideration of the payment of an additional premium it is hereby understood and agreed that the Company undertakes to pay compensation on the scale provided below for bodily injury as hereinafter defined sustained by any passenger........
24. The scale of compensation is fixed at Rs.15,000/-. The insurance company is ready and willing to pay compensation to the extent of Rs.15,000/- according to this endorsement but the learned Counsel for the insured submitted that the liability of the insurance company is unlimited with regard to risk to the passengers. The counsel relied on Section II of the Policy which relates to liability to third parties. The clause relied on is extracted in full:
Section II - Liability to Third Parties:
1. The Company will indemnify the insured in the event of accident caused by or arising out of the use of the Motor Car against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of
(a) death of or bodily injury to any person but except so far as is necessary to meet the requirements of Section 95 of the Motor Vehicles Act, 1939, the Company shall not be liable where such death or injury arises out of and in the course of the employment of such persons by the insured.
25. It was submitted that the wording of clause 1 is wide enough to cover all risks including injuries to passengers. The clause provides that the Company will indemnify the insured against all sums including claimant's costs and expenses which the insured shall become legally liable. This according to the learned counsel would include legal liability to pay for risk to passengers. The legal liability is restricted to clause 1(a) which states that the indemnity is in relation to the legal liability to pay in respect of death of or bodily injury to any person but except so far as is necessary to meet the requirements of Section 95 of the Motor Vehicles Act, the Company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured. Clause 1 and 1(a) is not very clearly worded but the words "except so far as is necessary to meet the requirements of Section 95 of the Motor Vehicles Act, 1939", would indicate that the liability is restricted to the liability arising out of the statutory requirements under Section 95. The second part of clause 1(a) refers to the non-liability for injuries arising in the course of employment of such person. The meaning of this sub-clause becomes clear when we look to the other clauses of the insurance policy. The policy also provides for insurance of risk which are not covered under Section 95 of the Act by stipulating payment of extra premium. These clauses would themselves indicate that what was intended to be covered under clause 1 and 1(a) is the risk required to be covered under Section 95 of the Motor Vehicles Act.
26. On a construction of the insurance policy we accept the plea of the insurance company that the policy had insured the owner only to the extent of Rs.15,000/- regarding the injury to the passengers. In the result we hold that the liability of the insurance company is restricted to Rs.15,000/-. There shall be a decree in favour of the claimants/appellants to the extent of Rs.27,500/- against the respondents out of which the liability of the insurance company will be restricted to Rs.15,000/-. The appeal is allowed with the costs of the appellant which will be paid by the respondents in equal share."
25. The Apex Court in Tilak Singh's case (cited supra) considered the decisions in Pushpabai Purshottam Udeshi vs. - Ranjit Ginning and Pressing Co., reported in 1977 ACJ 343, with regard to the provisions of Section 95(1)(a) read with Section 95(1)(b)(i) of the Motor Vehicles Act, 1939 and the Section 147(1) of the Motor Vehicle's Act, 1988. In paragraph 18 of the decision in Tilak Singh's case, the scope of Section 147 of Motor Vehicles Act 1988 was considered consequent to the elimination of Section 95(1) of Motor Vehicles Act 1939. It was specifically held by the Apex Court that unless there is a specific coverage of a risk pertaining to gratuitous passenger, the insurer was not liable. Paragraph 18 is extracted hereunder:-
18. Thus, even under the 1939 Act the established legal position was that unless there was a specific coverage of the risk pertaining to a gratuitous passenger in the policy, the insurer was not liable. We find that clause (ii) of the proviso to Section 95(1) has been eliminated while drafting Section 147 of the 1988 Act. Under sub-section (1)(b) under the 1988 Act, compulsory policy of insurance required under the statute must now provide against any liability which may be incurred by the owner of the vehicle "in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place".
In Tilak Singh's case, the Apex Court also considered the decisions of Amrit Lal Sood vs. - Kaushalya Devi Thapar reported in (1998)3 SCC 744 : 1999 SCC (Cri) 158 and T.V.Jose(Dr.) - vs. - Chacko P.M., reported in (2001)8 SCC 748 : 2002 SCC (Cri) 94. However, following the decision of New India Assurance Co. Ltd., - vs. - Asha Rani reported in (2003)2 SCC 223 : 2003 SCC (Cri) 493, the Apex Court in Tilak Singh's case held in paragraph 21 that the ratio of Asha Rani's case though relating to carrying passengers in goods vehicle, would apply in equal force to gratuitous passengers in any other vehicle. I, however, hasten to add that the Apex Court in paragraph 21 clearly stated that the deceased was a pillion rider and the insurance policy was a statutory policy and it did not cover the risk of death of or bodily injury to the gratuitous passenger. Asha Rani's case decided by the Apex Court also related to the case of passengers travelling in a goods vehicle, whereas the facts in the present case is different and cannot be applied as such.
26. Having considered the Apex Court's decision in Tilak Singh's case and Asha Rani's case in relation to the policy issued, this court has to consider the present case on its own facts. If there is a ruling it has to be considered as to how it will be applicable to the facts of the case on hand. In Amrit Lal Sood's case (cited supra), the Apex Court, while dealing with the claim under the 1939 Act, observed that the liability of the insurer depends on the terms of the contract between the insured and the insurer as contained in the policy. This will become relevant in view of Section 147(5) of the Motor Vehicles Act, 1988, which has already been set out. It will be appropriate to extract the relevant portion as the ruling in that case will be more appropriate and relevant to the facts of the present case. Paragraph 4 of the said decision reads as follows:-
"4. The liability of the insurer in this case depends on the terms of the contract between the insured and the insurer as evident from the policy. Section 94 of the Motor Vehicles Act, 1939 compels the owner of a motor vehicle to insure the vehicle in compliance with the requirements of Chapter VIII of the Act. Section 95 of the Act provides that a policy of insurance must be one which insures the person against any liability which may be incurred by him in respect of death or bodily injury to any person or damage to any property of third party caused by or arising out of the use of the vehicle in a public place. The section does not however require a policy to cover the risk to passengers who are not carried for hire or reward. The statutory insurance does not cover injury suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. But that does not prevent an insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby the risk to gratuitous passengers could also be covered. In such cases where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer."
(emphasis supplied) In Amrit Lal Sood"s case, the decision in Pushpabai Purshottam Udeshi vs. - Ranjit Ginning and Pressing Co. (P) Ltd., reported in (1977)2 SCC 745 was distinguished and held in paragraph 10 as follows:-
"10. The High Court has placed reliance on the judgment of this Court in Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co. (P) Ltd. That judgment was based upon the relevant clause in the insurance policy in that case which restricted the legal liability of the insurer to the statutory requirement under Section 95 of the Motor Vehicles Act. That decision will have no bearing in the present case inasmuch as the terms of the policy here are wide enough to cover a gratuitous occupant of the vehicle."
The Apex Court in Amrit Lal sood's case (cited supra) held that the comprehensive policy issued covers the risk of gratuitous passengers, the occupants of the car.
27. Consequent to the decision of the Apex Court in Pushpabai Purshottam Udeshi vs. - Ranjit Ginning and Pressing Co. reported in 1977 ACJ 343, the Insurance Company issued a circular with regard to the liability of the insurance company in relation to private vehicle and which is extracted in 1981 ACJ 277 (Gujarat) reads as follows:-
"TARIFF ADVISORY COMMITTEE BOMBAY REGIONAL COMMITTEE Circular M.V.No.1 of 1978 Bombay 17th March 1978 Insurance Companys Liability in Respect of Gratuitous Passengers conveyed in a Private Car-Standard Form for Private Car Comprehensive Policy Section II Liability to Third-Parties.
I am directed to inform Insurers that advices have been received from the Tariff Advisory Committee to the effect that since the industry had all these years holding the view on liability the same practice should continue.
In order to make this intention clear, Insurers are requested to amend clause 1(a) of Section II of the Standard Private Car Policy by incorporating the following words after the words death of or bodily injury to any person appearing therein:
Including occupants carried in the motor car provided that such occupants are not carried for hire or reward I am accordingly to request Insurers to make the necessary amendment on sheet 38 of the Indian Motor Tariff pending reprinting of the relevant sheet.
All existing policies may be deemed to incorporate the above amendment as the above decision is being brought into force with effect from 25th March, 1977. This Circular, it is fairly conceded by the learned counsel for the appellant, was followed by other circulars issued from time to time. However, the situation as it stands today is that the India Motor Tariff 2002 holds the field and the relevant portions have been extracted earlier. Therefore, under the package policy which is issued in this case, the risk coves occupants carried in the motor car except occupants carried for hire or reward.
28. Since the policy in this case is a package policy and Section II (page 119 to IMT) third party liability clearly covers occupants in a private car which is the case on hand, the appellant insurance company cannot avoid their liability merely on the ground that no additional premium was paid. As can be seen from the endorsement which is made in Section III of the policy (page 120 of IMT), it relates to personal accident cover. It is in addition to the cover under Section II of the policy. Nowhere in the tariff it has been stated that unless additional premium is paid by way of IMT endorsements under Section II, the claim of occupants of the private car will not be considered. On the contrary, on going through the Section-7, which relates to IMT Endorsement, it is evident that it covers various aspects like IMT-4 change of vehicle, IMT-5 hire purchase agreement, IMT-6 lease agreement, IMT-13 use of vehicle within insured's own premises, IMT-14 use of vehicle confined to sites and IMT-15 personal accident cover to the insured or any named person other than paid driver or cleaner and IMT16 personal accident to unnamed passengers other than insured and the paid driver and cleaner. It may be relevant to consider IMT-15 and IMT-16 as it relates to passenger in private car. The said endorsement if made restricts the liability to a fixed sum. However, as stated earlier, there is no IMT 16 endorsement in this case. In this policy the P.A. cover under Section-III for owner driver is Rs.2 Lakhs. Any one of the endorsements can be sought for by the insured by paying a specific premium. This can also apply to a statutory policy. There appears to be no restriction with regard to the cover under IMT Endorsement as long as the insured is willing to pay the additional premium. But the fact remains that Section II liability specifically covers occupants, passengers of a private car and its limit will be governed by the terms contained therein. The difference between Section II and Section III has to be properly resolved by reading the terms of the policy. In Tilak Singh's case which is a case of act only policy, the Apex Court clearly held that the IMT-70 endorsement covering the liability to pillion passengers was not made. Therefore, under the act only policy, the gratuitous passengers, pillion riders does not get any cover. The same is the case in Oriental Insurance Co. Ltd. - vs. Sudhakaran K.V. & others reported in 2008(6) MLJ 149(SC) and in The General Manager, United Insurance Company. Ltd., v. M.Laxmi and others reported in 2008(8) Supreme 276 = 2008 AIR SCW 7786. Therefore, in the present case, which is the case of package policy and on the terms contained therein, the ratio of the decisions of the Apex Court may not apply as contended by the appellant.
29. The decisions of the Karnataka High Court and Calcutta High Court relied on by the counsel for the appellant will not be binding on this court as there is a recent decision by the Division Bench of this Court in Royal Sundaram Alliance Insurance Co. Ltd., - vs. - A.Meenakshi and others decided on 4.3.2009 in C.M.A.No.312 of 2009 reported in 2009(2) M.L.J. 963 wherein the similar issue was decided holding that under the comprehensive package policy which clearly contains a clause with regard to liability and risk to cover the case of occupants/passengers in a private vehicle, the question of payment of additional premium was held to be not required. This court in paragraph 29 of the judgment held as follows:-
"29. Therefore, it is clear from the Act itself, the words of the policy and the decision in Amritlal Sood's case (supra) that a Comprehensive Policy covers the risk of a gratuitous passenger to the extent of the liability incurred. We may imagine what will happen in a case where the owner is driving his car covered by a Comprehensive Policy. He is accompanied by with his wife and children. There is an accident as in this case. The wife and children are permanently disabled by the injuries. If we agree with the appellant Insurance Company, those pathetic claimants will not get any compensation. The law never intended this to happen. That is why the TAC explicitly came out with the clarificatory Circular in 1978. We cannot forget that the words used are "third party" and "Comprehensive", so we cannot deny this relief to the third party occupant in a car covered by a Comprehensive Policy."
30. In view of the above discussion, the contention of the learned counsel for the appellant on the above stated issue stands rejected. The package policy issued in this case clearly covers the liability in respect of death of or bodily injury to any persons including occupants carried in the vehicle, the ill fated Maruthi Car.
31. The question of paying the claimants and recovering from the owner of the vehicle will not arise in the present case. The appellant cannot rescind from its liability to the claimants as the terms of the policy are very clear. The terms of the contract is very specific. The non-obstante clause provided under Section 147(5) of the Motor Vehicles Act 1988 covers the case of contract of insurance in all respects between parties on mutual agreed terms. The policy under Section II covers the case of the claimants in this case. The Tribunal was, therefore, not justified in granting the partial relief of pay and recover to the present appellant. The contention of the appellant on this issue cannot be accepted. In other respects, the common award of the Tribunal is confirmed. Since, at the instance of the appellant, notice was dispensed with to the owner of the vehicle, no order can be passed against the owner of the vehicle. Accordingly, both the Civil Miscellaneous Appeals are disposed off. Counsel for the appellant prays for eight weeks' time to deposit the award amount and is granted. On such deposit, the claimants are permitted to withdraw the award amount as ordered by the Tribunal. No costs. Consequently, connected miscellaneous petitions are closed.
ts To The Subordinate Judge, (Motor Accidents Claims Tribunal), Poonamallee