Kerala High Court
Oriental Insurance Co. Ltd. vs Ajayakumar And Ors. on 21 July, 1999
Equivalent citations: I(2000)ACC507, 1999ACJ1499, [1999]98COMPCAS40(KER)
Author: K.S. Radhakrishnan
Bench: K.S. Radhakrishnan
JUDGMENT K.K. Usha, J.
1. The question that arises for consideration in this appeal is whether passengers in private vehicles carried not for hire or reward are covered by an insurance policy issued in terms of the provisions contained under Section 147 of the Motor Vehicles Act, 1988. The Motor Accidents Claims Tribunal, Perumbavoor, following a Bench decision of this court in United India Insurance Co. Ltd. v. Appukuttan [1995] 84 Comp Cas 686 ; [1995] 1 KLT 807, took the view that such a policy, which is usually referred as an "Act policy", would cover such gratuitous passengers. After admitting the appeal a Bench of this court referred the matter for consideration of a larger Bench doubting the correctness of [1995] 1 KLT 807 ; [1995] 84 Comp Cas 686.
2. In an accident which happened on February 8, 1991, by way of collision between a tempo van and a jeep the first respondent who was a passenger in the jeep sustained injuries. He filed 0. P. (MV) No. 1045 of 1991 before the Motor Accidents Claims Tribunal, Perumbavoor, claiming compensation to the extent of Rs. 50,000. The appellant who was the insurer of the jeep at the time of the accident was impleaded as the fifth respondent. The Tribunal granted an amount of Rs. 12,500 as compensation to the petitioner and the appellant was directed to pay the amount. The contention raised by the appellant that the insurance policy issued by it being an "Act policy" would not cover the passenger in the jeep, was not accepted by the Tribunal. The appellant placed reliance on a Bench decision of this court in Chacko v. Rosamma [1991] 1 KLT 711, which held that a passenger in a private vehicle is not covered by an Act policy. The Tribunal was inclined to follow the principle laid down by a later Bench decision in United India Insurance Co. Ltd. v. Appuhuttan [1995] 84 Comp Cas 686 ; [1995] 1 KLT 807 holding that a pillion rider of a two-wheeler would be covered by an "Act policy" issued under Section 147 of the Motor Vehicles Act, 1988.
3. Learned counsel, appearing on behalf of the appellant, contended that the decision in United India Insurance Co. Ltd. v. Appukuttan [1995] 84 Comp Cas 686 ; [1995] 1 KLT 807 has not laid down the correct law. In support of his contention he placed reliance on Velunni v. Vellakutty [1989] 2 KLT 227 ; Chacko v. Rosamma [1991] 1 KLT 711 ; Pushpabai Parshottam Udeshi v. Ranjit Ginning and Pressing Co. P. Ltd. [1977] AC] 343 ; AIR 1977 SC 1735 and Amrit Lal Sood v. Smt. Kaushalya Devi Thapar [19.98] 92 Comp Cas 305 ; AIR 1998 SC 1433, Before we enter upon a discussion on these decisions we would first refer to the relevant provisions under the earlier enactment and the current statute. Section 95 is the parallel provision in the Motor Vehicles Act, 1939. The relevant portion of Section 95 reads as follows :
"95. 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 (or by a cooperative society allowed under Section 108 to transact the business of an 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 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 employees 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 vehicle, being carried in the vehicle) ; or (ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of 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, or
(iii) to cover any contractual liability."
4. Before the amendment under Act 56 of 1969 Section 95(l)(b) contained only one clause. It read as follows :
"(b) insures the person or classes of person specified in the policy to the extent specified in Sub-section (2) against any liability which may be incurred by him or them 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 in India or in a reciprocating territory."
5. In Section 147 of the Motor Vehicles Act, 1988, the second proviso under Clause (b) is omitted. Otherwise Sub-section (1) of Section 147 contains the same provisions as Sub-section (1) of Section 95. The relevant portion of Section 147 is quoted below :
"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 the 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."
6. We may point out that in Sub-section (1)(b)(i) the words "including the owner of the goods or his representative carried in the vehicle" were added with effect from November 14, 1994, by the Amendment Act 54 of 1994.
7. Section 95(l)(b)(i) provides that the Act policy would 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. The contention raised on behalf of the appellant is that the term "any person" contained in Section 95(l)(b)(i) would not take in a passenger in a private vehicle. It is the case of the appellant that the only passenger who can be covered by the Act policy is a passenger of a public service vehicle coming under Section 95(l)(b)(ii). Therefore, according to the appellant, the omission of the second proviso in Section 147 is not relevant at all. The submission is that the second proviso was superfluous and its omission would not make any difference in the scheme of Sub-section (1) of Section 147 from what was available under Sub-section (1) of Section 95.
8. In Velunni v. Vellakutty [1989] 2 KLT 227 a Bench of this court considered the scope of Section 95(l)(b)(i) and (ii) in relation to the liability for the death of a pillion rider on a motorcycle. Referring to the terms of proviso (ii) it was held that since the motorcycle is not a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, proviso (ii) is not attracted and it must follow that the Act policy is not required to cover liability in respect of the pillion rider. In Chacko v. Rosamma [1991] 1 KLT 711 it was held that an Act policy will not cover gratuitous passengers in a private car. There is also an observation in the above judgment that the policy being only an Act policy, it covers only third party risk. It does not cover risk of passengers. In United India Insurance Co. Ltd. v. Appukuttan [1995] 84 Comp Cas 686 ; [1995] 1 KLT 807 a Bench of this court considered the scope of an Act policy under Section 147 of the Motor Vehicles Act, 1988. Reliance was sought to be placed on Velunni v. Vellakutty [1989] 2 KLT 227 to support the contention that an Act policy will not take in passengers in a private vehicle. This contention was repelled by the Bench pointing out to the omission to incorporate proviso (ii) of Section 95(1) in Section 147. It was observed as follows (page 687 of 84 Comp Cas) :
"In proviso (ii) to Section 95(1) of the said Act a policy of insurance was not required to cover liability in respect of death or bodily injury to persons who were carried in or upon the vehicles at the time of occurrence. It was in consideration of the said proviso that the Division Bench has held in Velunni's case [1989] 2 KLT 227 that a pillion rider of a motorcycle is not required by statute to be covered for the risk regarding bodily injuries.
But the position has completely changed when the new Motor Vehicles Act, 1988, came into force. In Section 147 of the new Act which corresponds to Section 95 of the old Act there is no limit in certain cases as contained in Clause (ii) of the old Act. The corresponding proviso in the old Act contained three clauses whereas now there are only two clauses. What was dropped in the new Act is the clause which excluded the coverage for death or bodily injury to persons carried in or upon the vehicle. That means such liability cannot now be excluded from the policy. The result is, when a policy of insurance 'is an Act policy', it does not necessarily mean that the insurance company will stand absolved from the liability in respect of the pillion rider of a motorcycle."
9. We do not find any reason to disagree with the above view taken in United India Insurance Co. Ltd. v. Appukuttan [1995] 84 Comp Cas 686 ; [1995] 1 kLT 807. According to us, the term "any person" contained in Section 95(1)(b)(i) would take in even a passenger in a private vehicle. But proviso (ii) mandates that a policy under Section 95 shall not be required 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, except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. We are unable to agree with learned counsel for the appellant that proviso (ii) is superfluous in view of the provisions contained under Section 95(1)(b)(ii) and, therefore, its omission in Section 147 of the 1988 statute would not make any difference. 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 the Workmen's Compensation Act, 1923, in respect of the 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. It excludes liability in respect of the death of or bodily injury to passengers in other vehicles.
10. Section 95(1)(b)(ii) is a special provision dealing with the liability against the death of or bodily injury to a passenger of a public service vehicle. The public service vehicle is defined under Section 2(25) of the 1939 Act and Section 2(35) of the 1989 Act as "any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage".
11. Therefore, it cannot be said that proviso (ii) is superfluous. There is a detailed discussion on the scope of different clauses under Section 95(1)(b) in a decision of the Supreme Court in Mallawwa v. Oriental Insurance Co. Ltd. [1999] 95 Comp Cas 629 ; AIR 1999 SC 589. The question that arose for consideration in the appeals which were heard together was whether the owner of the goods being carried in a goods vehicle is covered by an Act policy. Therefore, it had to be considered whether Clause (b)(i) would take in a goods vehicle and also a person carried in a goods vehicle. After referring to the provisions of Section 95, as it stood before the amendment under the Act 56 of 1969, it was observed that Clause (b) of Sub-section (1) is couched in wide terms so as to include "any person" and "every motor vehicle" within its sweep. Then exceptions are carved out by proviso (ii). The effect of provisos (i) and (ii) is explained in the following manner (page 634 of 95 Comp Cas) :
"By proviso (ii), it restricted the generality of the main provision by confining the requirement to cases where 'the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment'. In the absence of the proviso the main provision would have included all classes of vehicles including goods vehicles and all passengers whether carried for hire or reward or by reason of or in pursuance of a contract of employment or otherwise. That is the reason why there is a reference to different classes of vehicles in proviso (i). It refers to 'vehicle', 'public service vehicle' and 'goods vehicle'. The words 'any person' in the main provision would have included the employee of the person insured, and, therefore, an exception was made by enacting proviso (i) so as to restrict liability of the insurer in respect of his employees. Both those exceptions were made as the Legislature did not want to widen the liability of the insurer and the insured by making it more than what it was under the English Act, upon which Section 95 was based."
12. The Supreme Court observed that proviso (ii) in clear terms "restricted" the scope of the main provision by confining its application to that vehicle in which the passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. Thus, the confinement of the operation of the main provision was in respect of vehicles and also passengers. The amendment brought to Section 95 by the Amendment Act 56 of 1969 was then considered. As mentioned earlier, after the amendment, Clause (b) contained Sub-clauses (i) and (ii). Provisos (i) to (iii) continued as such. The effect of the amendment is explained as follows (page 637 of 95 Comp Cas):
"Though apparently, it looked as if the Legislature by introducing two sub-clauses in Clause (b) had tried to make a distinction between passengers and non-passengers, that was not really so. Though the proviso appeared after Sub-clause (ii) of Clause (b), it really remained a proviso to the earlier Clause (b) which after the amendment became Clause (b) (i). Neither the object of introducing Sub-clause (ii) in Clause (b) nor the language of the proviso indicate that the proviso was to act as a proviso to Sub-clause (ii) also. Even earlier, the passengers of a public service vehicle were required to be covered compulsorily as they answered the description of passengers carried for hire or reward. The only effect of making a special provision for passengers of a public service vehicle was that proviso (ii) thereafter remained applicable to vehicles other than public service vehicles."
13. In the above decision, the Supreme Court has taken the view that it would not be proper to consider a goods vehicle as a passenger vehicle on the basis of a single use or use on some stray occasions of that vehicle for carrying passengers for hire or reward. For the purpose of construing a provision like proviso (ii) to Section 95(1)(b), the correct test to determine whether a passenger was carried for hire or reward, would be whether there has been a systematic carrying of passengers. Only if the vehicle is so used then that vehicle can be said to be a vehicle in which passengers are carried for hire or reward. Finally it was held that it is not required that a policy of insurance cover risk to the passengers who are not carried for hire or reward. The above discussion regarding the scope of Section 95 would clearly show that proviso (ii) plays a very important role in limiting the liability cast under Section 95(l)(b)(i).
14. It is in the light of the above, we have to examine the effect of deletion of proviso (ii) while enacting Section 147 of the Motor Vehicles Act, 1988. Clause (b)(i) of Section 147 now stands limited only by proviso (i) and also the contractual liability which was incorporated originally as proviso (hi) in Section 95(l)(b), but as proviso (ii) in Section 147(l)(b). Proviso (i) deals with only the case of employees. The liability referred to in Clause (i) would apply to death of or bodily injury to "any person". Since the limitation brought under proviso (ii) that is by excluding the liability in respect of death or bodily injury to a passenger except a passenger who is carried for hire or reward or by reason of or in pursuance of contract of employment is no longer available in the statute. Therefore, it has to be taken that the term "any person" referred to in Clause (b)(i) would take in all passengers for hire or reward or otherwise. We do not find any merit in the contention raised by learned counsel for the appellant that if the term "any person" in Clause (b)(i) would take in passengers in private vehicles carried in for hire or reward then it was unnecessary for the Legislature to bring in the amendment under the Act 54 of 1994 to include the owner of the goods or his authorised representative carried in the vehicle in Clause (i). As was clearly observed by the Supreme Court in Mallawwa v. Oriental Insurance Co. Ltd. [1999] 95 Comp Cas 629 ; AIR 1999 SC 589, it would not be proper to consider a goods vehicle as a vehicle in which passengers are carried normally. It was under these circumstances, an amendment was required to include the owner of the goods or his authorised representative carried in the vehicle by specific amendment in Clause (i).
15. In Road Transport Co. v. Bhan Singh, AIR 1998 SC 2487 ; [1999] 95 Comp Cas 4, a claim put forward for compensation in respect of death of 35 passengers travelling in a bus came up for consideration. The contention raised on behalf of the appellant was that the claim in respect of the death of the passengers in the bus should be considered under Section 95(1)(b)(i) and if that be so, the limitation regarding the quantum of compensation provided under Section 95(2)(b)(ii) will not be applicable. It was submitted that the wording of Section 95(1)(b)(i) is very wide to include a passenger in a bus, since the words used are "any person". This contention was rejected by the Supreme Court. It was held that Section 95(1)(b)(ii), being a specific provision, made in respect of passengers of a public service vehicle, it is that provision which is applicable in the case and not the general provision contained in Section 95(1)(b)(i) when the insured incurs liability in respect of the passengers travelling in his public service vehicle. As mentioned earlier, it was proviso (ii) which excluded passengers in private vehicle from the net of Section 95(1)(b)(i), since that proviso is not available in Section 147 of the Motor Vehicles Act, 1988, the general provision in Clause (i) has to be taken as applicable to passengers carried in private vehicles not for hire or reward. A similar view was taken by the Madhya Pradesh High Court in Oriental Insurance Co. Ltd, v. Smt. Radharani, AIR 1999 MP 47. It was held that an Act policy under Section 147 would cover the occupant of a jeep who is carried without hire or reward.
16. We, therefore, fully agree with the view taken in United India Insurance Co. Ltd. v. Appukuttan [1995] 84 Comp Cas 686 ; [1995] 1 KLT 807 that a gratuitous passenger in a private vehicle is also covered by the Act policy under Section 147 of the Motor Vehicles Act, 1988. Therefore, according to us, the Tribunal was correct in holding the appellant liable under the Act policy to compensate the first respondent.
17. In the result, the appeal stands dismissed.