Insurance Co. Ltd Vs. Cholleti Bharatamma & Ors  Insc 1066 (12 October 2007)
Sinha & Harjit Singh Bedi
out of SLP (C) Nos.7237-7239 of 2003) [With CA Nos. 4848-4850, 4852-4854 of
2007 arising out of SLP (C) Nos.7241-7243, 7248 and 7288-7290 of 2003] S.B. Sinha,
Leave granted in all the Special Leave Petitions.
question involved in these appeals centres around the liability of the
insurance company to indemnity the owner of the vehicle in respect of death of
passengers travelling in goods carriage. The dates of accident being different,
different provisions would apply. We would notice the law operating in the
field at the outset and apply the same in each case separately.
relevant portion of Section 147 of the Motor Vehicles Act (for short the
Act), prior to its amendment, reads as under :
of policies and limits of liability.-
order to comply with the requirements of this Chapter, a policy of insurance
may be a policy which- (a) *** (b) insures the person or classes of persons
specified in the policy to the extent specified in Sub-section
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 a or arising out of the use of the vehicle in a public place;
*** Provided that a policy shall not be required-
cover liability in respect of the death, arising out of and in the course of
his employment, of the employees 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, in respect of the death of, or bodily injury to, any such employee- (a)
*** (b) *** (c) if it is a goods vehicle, being carried in the vehicle; or
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
said provision underwent an amendment in the year 1994 by Motor Vehicles
Amendment Act, 1994 which reads as under :
- 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) *** (b) insurer 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;
New India Insurance Co. v. Satpal Singh & Ors. [(2000) 1 SCC 237], this
Court proceeded on an assumption that the provisions of 1939 Act and the
provisions of 1988 Act are in pari materia.
6. In Satpal
Singh (supra), interpreting the provisions contained in Sections 147 and 149 of
the Motor Vehicles Act, this Court held:
under sub-section (2), there is no upper limitation for the insurer regarding
the amount of compensation awarded in respect of death or bodily injury of a
victim of the accident. It is, therefore, apparent that the limit contained in
the old Act has been removed and the policy should insure the liability
incurred and cover injury to any person including owner of the goods or his authorised
representative carried in the vehicle .
legislature has also taken care of even the policies which were in force on the
date of commencement of the Act by specifically providing that any policy of
insurance containing any limit regarding the insurers liability shall
continue to be effective for a period of four months from commencement of the Act
or till the date of expiry of such policy, whichever is earlier. This means,
after the said period of four months, a new insurance policy consistent with
the new Act is required to be obtained .
The result is that under the new Act an insurance policy covering third-party
risk is not required to exclude gratuitous passengers in a vehicle, no matter
that the vehicle is of any type or class. Hence the decisions rendered under
the old Act vis-a-vis gratuitous passengers are of no avail while considering
the liability of the insurance company in respect of any accident which
occurred or would occur after the new Act came into force.
7. In Ramesh
Kumar v. National Insurance Co. Ltd. & Anr. [(2001) 6 SCC 713], this Court
categorized the cases arise out of the Motor Vehicles Act, 1939, stating :
first category of cases arise out of the Motor Vehicles Act, 1939 (hereinafter
referred to as the old Act). The question raised for this category
the insurance company is liable to pay the compensation on account of the death
or bodily injury of the gratuitous passengers including the owner of the goods
or his representative, travelling in a goods vehicle under Section 95 of the
said Act? The second category of cases arise out of the Motor Vehciles
Act, 1988 (hereinafter referred to as the new Act) prior to its
amendment in 1994.
this category also a similar question is raised.
third category of cases also arises under the new Act but after its amendment
by Act 54 of 1994. In this category also the same question is raised.
Act does not contemplate that a goods carriage shall carry a large number of
passengers with small percentage of goods as considerably the insurance policy
covers the death or injuries either of the owner of the goods or his authorized
Correctness of the decision in Satpal Singh (supra) came up for consideration
before a three Judge Bench of this Court in New India Assurance Co. Ltd. v. Asha
Rani and Others [(2003) 2 SCC 223].
Rani (supra), having regard to various definitions involving the legal
question, it was held :
The applicability of the decision of this Court in Mallawwa v. Oriental
Insurance Co. Ltd. in this case must be considered keeping that aspect in view.
Section 2(35) of the 1988 Act does not include passengers in goods carriage
whereas Section 2(25) of the 1939 Act did as even passengers could be carried
in a goods vehicle.
difference in the definitions of goods vehicle in the 1939 Act and
goods carriage in the 1988 Act is significant. By reason of the
change in the definitions of the terminology, the legislature intended that a
goods vehicle could not carry any passenger, as the words in addition to
passengers occurring in the definition of goods vehicle in the 1939 Act
it categorically states that goods carriage would mean a motor
vehicle constructed or adapted for use solely for the carriage of
goods. Carrying of passengers in a goods carriage, thus, is not
contemplated under the 1988 Act.
have further noticed that Section 147 of the 1988 Act prescribing the
requirements of an insurance policy does not contain a provision similar to
clause ( ii ) of the proviso appended to Section 95 of the 1939 Act. The decision
of this Court in Mallawwa case must be held to have been rendered having regard
to the aforementioned provisions.
Section 147 of the 1988 Act, inter alia, prescribes compulsory coverage against
the death of or bodily injury to any passenger of public service
vehicle. Proviso appended thereto categorically states that compulsory
coverage in respect of drivers and conductors of public service vehicle and
employees carried in a goods vehicle would be limited to the liability under
the Workmens Compensation Act. It does not speak of any passenger in a
view of the changes in the relevant provisions in the 1988 Act vis-a-vis the
1939 Act, we are of the opinion that the meaning of the words any
person must also be attributed having regard to the context in which they
have been used i.e. a third party. Keeping in view the provisions of
the 1988 Act, we are of the opinion that as the provisions thereof do not
enjoin any statutory liability on the owner of a vehicle to get his vehicle
insured for any passenger travelling in a goods vehicle, the insurers would not
be liable therefor.
Furthermore, sub-clause (i) of clause (b) of sub-section (1) of Section 147
speaks of liability which may be incurred by the owner of a vehicle in respect
of 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,
whereas sub-clause (ii) thereof deals with liability which may be incurred by
the owner of a vehicle 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.
owner of a passenger-carrying vehicle must pay premium for covering the risks of
the passengers. If a liability other than the limited liability provided for
under the Act is to be enhanced under an insurance policy, additional premium
is required to be paid. But if the ratio of this Courts decision in New
India Assurance Co. v. Satpal Singh is taken to its logical conclusion,
although for such passengers, the owner of a goods carriage need not take out
an insurance policy, they would be deemed to have been covered under the policy
wherefor even no premium is required to be paid.
The effect of 1994 amendment came up for consideration in National Insurance
Co. Ltd. v. Baljit Kaur & Ors. [(2004) 2 SCC 1], wherein this court
following Asha Rani (supra) opined that the words injury to any
person would only mean a third party and not a passenger travelling on a
goods carriage whether gratuitous or otherwise. The question came up for
consideration again in National Insurance Co. Ltd. v. Bommithi Subbhayamma
& Ors. [(2005) 12 SCC 243] wherein upon taking into consideration a large
number of decisions, the said view was reiterated.
Yet again in New India Assurance Co. Ltd. v. Vedwati & Ors. [(2007) 3 SCALE
397] this Court held :
The difference in the language of "goods vehicle" as appear in the
old Act and "goods carriage" in the Act is of significance. A bare
reading of the provisions makes it clear that the legislative intent was to
prohibit goods vehicle from carrying any passenger. This is clear from the
expression "in addition to passengers" as contained in definition of
"good vehicle" in the old Act. The position becomes further clear
because the expression used is "good carriage" is solely for the
carriage of goods. Carrying of passengers in a goods carriage is not
contemplated in the Act.
is no provision similar to Clause (ii) of the proviso appended to Section 95 of
the old Act prescribing requirement of insurance policy. Even Section 147 of
the Act mandates compulsory coverage against death of or bodily injury to any
passenger of "public service vehicle". The proviso makes it further
clear that compulsory coverage in respect of drivers and conductors of public
service vehicle and employees carried in goods vehicle would be limited to
liability under the Workmen's Compensation Act, 1923 (in short 'WC Act").
is no reference to any passenger in "goods carriage".
The inevitable conclusion, therefore, is that provisions of the Act do not
enjoin any statutory liability on the owner of a vehicle to get his vehicle
insured for any passenger travelling in a goods carriage and the insurer would
have no liability therefor. [See also Oriental Insurance Co. Ltd. v. Brij
Mohan & Ors. 2007 (7) SCALE 753] CA @ SLP (C) Nos.7237-7239 of 2003
The claimants were traveling in a lorry. It was a goods carriage carrying goods
like rice, tent hours articles, chairs, utensils and vegetables required on the
occasions of marriage. The marriage of one D. Bhaskar was to take place. When
the lorry reached Ali Nagar cross road at about 8.30 a.m., as a result of rash and negligent driving of the driver,
the accident took place as the lorry struck to a stationary truck. Several
people suffered injuries. Two of them died. Several claim applications were
filed on behalf of the injured as also the dependents of the deceased.
date of accident being 16.12.1993, the amendment carried out in the year 1994
in Section 147 of the Motor Vehicles Act would not be applicable.
The Motor Accident Claims Tribunal, Nalgonda, by a judgment and award dated
13.11.1997 awarded various sums overruling the defence of the appellant herein
that they were unauthorized passengers. The High Court, however, by reason of
the impugned judgment, relying on or on the basis of a decision of this Court
in Satpal Singh (supra) directed as under :
learned counsel for the Insurance Company submitted that the issue involved in
these appeals is squarely covered by the decision of the Supreme Court in the
case reported in New Indian Assurance Company Ltd. v. Satpal Singh, 2000 ACJ. 1
wherein their Lordships held that under the Motor Vehicles Act 1988 all
insurance Policies covering third party risks are not required to exclude
gratuitous passengers in the Vehicle though Vehicle is of any type or class.
view of the proposition of law down by the Supreme Court in the decision stated
supra, these appeals are dismissed. No costs.
Following the aforementioned principles, the impugned judgment cannot be
sustained which is set aside. The appeals are allowed accordingly. CA @ SLP (C)
No.7241-7243/03 15. In the aforementioned case, accident took place on
herein filed a claim petition claiming compensation for the death of one Kota Venkatarao
who had allegedly paid a sum of Rs.20/- for travelling in the lorry. The
Tribunal held :
the absence of rebuttal evidence from the deceased and some others travelled in
the said vehicle in the capacity of owner of the luggage which was carried by
them at the time of accident.
cannot be said that it is a violation of the policy, since it is not
fundamental breach so as to afford to the insurer to eschew the liability
altogether as per the decision reported in AIR 1996 Supreme Court 2054.
16. The High Court, however, relying upon Satpal Singh (supra) opined :
issue raised in this appeal is covered by the decision of the Supreme Court in
New India Assustance Co. Ltd. v. Satpal Singh[(2000) 1 SCC 237] wherein their
Lordships held that under the Motor Vehicles Act, 1988 all Insurance policies
covering third party risks are not required to exclude gratuitous passengers in
the vehicles though the vehicle is of any type or class.
the same, the appeal is dismissed. No order as to costs.
is now well settled that the owner of the goods means only the person who
travels in the cabin of the vehicle.
this case, the High Court had proceeded on the basis that they were gratuitous
passengers. The admitted plea of the respondents themselves was that the
deceased had boarded the lorry and paid an amount of Rs.20/- as transport charges.
It has not been proved that the deceased was travelling in the lorry along with
the driver or the cleaner as the owner of the goods.
with the goods itself does not entitle anyone to protection under Section 147
of the Motor Vehicles Act.
For the reasons aforementioned, this appeal is dismissed. CA @ SLP (C)
The accident in this case took place on 3.1.1991. Twenty persons were travelling
in the truck. The policy covered the risk only of the owner of the goods.
Before the learned Tribunal, it was contended that the risk of the owners of
the goods is covered by the policy. It was held :
a careful consideration of the various authorities cited by the learned
counsels for both the parties, Section 147, 149 Rule 277(3) and 252 of Rules
framed under M.V. Act I have no hesitation to conclude that the risk of the
owner of the goods is also covered by the policy issued by the insurance
companies, from the evidence of R.W.1 who is no other than the employee of R-2
as well as terms of Ex.B-2 Policy, it is obvious that the risk of the owner of
the goods is covered, but it is restricted only to one person as owner of the
goods. Thus, there can be no doubt that the owner of the goods can travel in
the goods vehicle and if they are involved in the accident, their risk is
covered subject to the terms and conditions of the policy issued by the
The learned Tribunal, however, noticed :
the claim form corroborate the testimony of the petitioners that deceased or
the injured as the case may be travelled in the vehicle as owner of goods. But
it is mentioned in Ex.B-3 claim form as well as in Ex.B1 permit that the
seating capacity of the lorry is only 3 including driver and cleaner
which would go to show that only one passenger can travel in it... 22.
Upon considering the evidences on record, it was held :
the permitted seating capacity of the lorry is only 3 including the
driver and cleaner and as only one non-fare paying passenger as owner of goods
can travel in the cabin and as the deceased has admittedly travelled in the
cabin beyond seating capacity and contrary to the terms of the permit as well
as Rule 252(2) of the Motor Vehicles Act. I am of the view that R-2 cannot be
fastened with the liability to pay compensation along with R-1 to all the
injured and legal representatives of deceased. At best it is liable to pay
compensation jointly and severally along with R-1 only in respect of one
non-fare paying passengers, who is the owner of the goods.
the endorsement I.M.T. 14(b) unless additional premium is paid for the number
of persons who travelled in the lorry, as owners. I am of the view that R-2
cannot be fastened with liability. Further all the petitioners and deceased
cannot be deemed to have travelled as owners of the paddy as the paddy is said
to be in bags and orally kept in loose in the lorry and it is enough if any one
of them have travelled in the lorry on behalf of all, as owner of the lorry
Rule 277(3) of A.P. Motor Vehicles Rules, clearly shows that no person shall be
carried in the goods vehicle except as provided in the Rule under the statute
and as the only person, who are permitted to carry in goods vehicles are the
owner of hirer or bona fide employee of owner of hirer and total number of such
persons, who could be carried in goods vehicles is not more than seven
including the driver. As per Rule 252(2) person shall be carried in the cab of
the vehicle beyond the seating capacity as per clause (2). No person shall be carried
on the load or otherwise. Rule 4 empowers the R.T.A. to allow large number of
persons to be carried. As the seating capacity of the lorry is only 3
as per Ex.B1 and B3 and as the risk of only owner of goods is covered by Ex.B2
policy, whereas about 40 to 42 persons travelled in the lorry by sitting on the
load, which is not permitted and as there is no material to show that R.T.A.
permitted carriage of more than seating capacity but on the other hand the
permit is cancelled. I am in agreement with the contention of the learned
counsel for the respondent that it cannot be fastened with the liability for
The High Court, however, dismissed the appeals preferred by the respondents
relying upon Satpal Singh (supra). Submission of the learned counsel appearing
on behalf of the respondent is that within the aforementioned twenty persons,
it is the respondents having preferred an appeal, this Court should hold that
at least the claimants-respondents are entitled to compensation as the deceased
was travelling as owner of the goods. The learned Tribunal discussed the matter
in great details. It is not in dispute that premium has been paid only for one
the facts and circumstances of this case, we are of the opinion that the contention
of the respondent should be accepted. This appeal is, thus, dismissed. CA @ SLP
this case, the accident took place on 1.5.1997. Indisputably, the respondent
was travelling as a passenger. The Tribunal, while determining the issue as to
whether the accident took place due to rash and negligent driving of the first
respondent driver of lorry AEW 5199, held :
lorry was overturned and caused the instantaneous death of four passengers. He
received small injuries. He also deposed that the accident took place due to
the negligence of the driver of the said lorry. On perusing his evidence I am
satisfied that he is a truthful witness. He was travelling in the crime vehicle
along with deceased along with his goods as per his evidence...
The learned counsel appearing for the respondent, submitted that from the
aforementioned finding, it is evident that the respondent was travelling as the
owner of the goods. We do not think that the said submission is correct. PW-2,
in his evidence, stated :
am doing Tamarind business. I witnessed the accident which took place about 3
years back at about 6
A.M. at Borrampalem
junction beyond Talluru. At the time of the accident I was in the crime lorry
by the side of the driver. Myself and 6 others were carrying tamarind in that
lorry belonging to us. We boarded the lorry along with our load of tamarind at Dharamavaram
to go to Rajanagaram. We were selling the Tamarind at Rajanagaram in retail by
taking the tamarind there in our lorry from our village of Dharmavaram.
The Tribunal, therefore, correctly recorded that according to PW-2, he was travelling
with his goods as owner thereof and not the deceased.
Shabbeer Pasha and Shaik Nazeer Pasha are the Driver andowner respectively of
the lorry which was travelling to Rajahmundry from Visakhapatnam. At Borrampalem, while trying to
overtake another speeding lorry, the same turned turtle. Three persons who were
travelling in the vehicle had been killed. Claim for compensation were filed
before the Motor Accidents Claim Tribunal. The appellants therein opposed the
awarded compensation to the legal heirs of the deceased.
Challenging the legality of the award of the Tribunal, learned counsel for the
appellant contended that the deceased were gratuitous passengers and the policy
did not cover their lives. Learned counsel also submitted that the decision in Satpal
Singhs case (supra) being referred to a Larger Bench in Asha Ranis
case (supra), the same was not a binding authority.
While stating that the submissions of learned counsel for insurance company
could not be sustained, the High Court dismissed the appeal of the insurance
company following Satpal Singh (supra).
view of the nature of evidence available before us, we have no other option but
to set aside the judgment. These appeals are, therefore, allowed accordingly.
There shall be no order as to costs in each case.