Indian Kanoon - Search engine for Indian Law

Section 95 of the Motor Vehicles Act, 1939 provides for requirements of the policy of the Insurance, which must be complied with by the owner' of the motor vehicle, and the limits of the liabilities thereunder. At present, we would deal with Clause (b) of Sub-section (2) of Section 95. It deals with a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, for which, the limit of insurance coverage is provided in two-fold manner. Sub-clause (i) of Clause (b) provides a limit of fifty thousand rupees in all in respect of persons other than passengers carried for hire or reward. Sub-clause (ii) is further divided into four parts. It deals with the liability in respect of death of or bodily injury to the passengers travelling by vehicles having different registered capacity to carry passengers. The first limit is Rs. 50,000/- in all where the vehicle is registered to carry not more than 30 passengers; secondly Rs. 75,000/-in all where the vehicle is registered to carry more than 30 but not more than 50; and, thirdly, Rs. 1,00,000/- in all where the vehicle is registered to carry more than 60 passengers. After laying down the aforesaid limits for insurance coverage of vehicles, further limit is provided by Sub-clause (4) of Clause (ii) in respect of each passenger by providing that, subject to the limits aforesaid. Rs. I0,000/-for each individual passenger where the vehicle is a motor cab and in any other case the liability is extended to Rs. 6,000/- for each individual passenger. Therefore, there is no substance in the contention of learned advocate Mr. Mehta that Sub-clause (4) of Clause (b)(ii) would govern a situation where the passenger is travelling in a goods vehicle by paying fare. The said sub-clause only provides an outer limit of liability with regard to each passenger in a case where the vehicle is registered to carry passengers as provided in Sub-clauses (1) to (4). Sub-clauses (1), (2) and (3) provide aggregate liability of insurance coverage for a vehicle. Sub-clause (4) provides second outer limit of Rs. 10,000/-for each individual passenger where the vehicle is a motor cab and Rs. 5,000/- for each individual passenger in the case of any other vehicle. Sub-clause (4) is interconnected with the provisions of Sub-clauses (1), (2) and (3) and it is not a residuary sub-clause. As stated earlier, it provides second outer limit of insurance coverage for the passengers carried in a vehicle registered to carry a particular number of passengers.

Submissions of learned Advocates:

18. In spite of the aforesaid decisions, the learned Advocates for the Insurance, Companies contended that the Insurance Companies are not liable to satisfy the claim of victims who are travelling by paying fare in a goods vehicle.

19. Mr. Shan, learned Advocate appearing on behalf of the Insurance Company, submitted that insurance coverage is a matter of contract. Still, however, by statutory, provision minimum coverage is prescribed under Section 95 and that a third party to the contract, i.e., victim or his dependants can enforce it. It is his submission that considering Section 95(2) insurance coverage is provided under the nature of vehicle, i.e., (a) goods vehicle, (b) passengers vehicle and (c) and remaining vehicles such as tractors, motorcycles and other vehicles. It is his contention that, at the time of entering into a contract for giving of insurance coverage, classes of vehicles are required to be taken into consideration and not their use. He emphatically submitted that goods vehicle would not cease to be a goods vehicle for the purpose of insurance simply because on occasions it is used as passenger vehicle, and for contract of insurance it remains to be a goods vehicle. It is his contention that S. 95(2) requires that there should be insurance coverage on the basis of class of vehicle and, therefore, it should be the only factor which should be taken into consideration for making insurer liable for satisfying the claim of the victims as required by Section 95 read with Section 96 of the Motor Vehicles Act. He further submits as under:

After discussing other decisions cited at Bar, the Court further observed in paragraph 14 as under:

"Before, we conclude, we would like to point out that the recent trend in law is to make the matter liable for acts which do not strictly fall within the term -in the course of the employment' as ordinarily understood."

C. RE: Whether The Risk Of The Passengers Travelling By A Goods Vehicle By Paying Fare Is Covered Under Section 95(2)(a) Or 95(2){c).

32. The next question would be whether the liability of the Insurance Company would be as provided in Section 95(2)(c), as if the vehicle is a vehicle other than a goods vehicle. We have reproduced Section 95(2) earlier. Reading Section 95(2)(a), (b), (c) and (d) together, we agree with the contention of learned advocate Mr. B. R. Shah for the Insurance Company that the insurance coverage is on the classification of the vehicles, that is, (a) goods vehicles, (b) vehicles in which passengers are carried and (c) vehicles other than goods vehicles or passenger vehicles. Sub-section (2) of Section 95, inter alia, provides that the policy of insurance shall cover any liability incurred, where the vehicle is a 'goods vehicle', upto Rs. 50,000/- in all in respect of any one accident. The insurance coverage is qua vehicle. Under Sub-section (2) of Section 95, the insurance coverage is not on the basis of use of the vehicle. For the extent of liability of the Insurance Company or insurance coverage by the Act policy, the vehicles are classified as

With respect, it is difficult for us to agree with the reasons given by the Court that Clause (a) will not ex facie apply because it is confined to persons other than passengers carried for hire or reward. As stated earlier, Section 95(2) provides for extent of coverage of insurance and Clause (a) of Section 95(2) provides for extent of coverage of insurance for goods vehicle. The limit of insurance coverage is given on the basis of classification of vehicles. The insurance coverage is qua vehicles based on classification of vehicles in three different categories. With regards to 'goods vehicles', the limit of liability of insurance coverage is as provided in Clause (a). As stated earlier, the insurance covered by an Act policy is to be determined on the basis of classification of the vehicles, namely, 'goods vehicles', 'passenger vehicles' and 'other vehicles and not on the basis of their use. Therefore, plause (a) would be applicable and not Clause (c), Which is a residuary clause for the vehicles other than 'goods vehicles' and 'passenger vehicles'. The truck, in which passengers were carried for hire or reward, was admittedly a 'goods vehicle'.