REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   3634            OF 2008 (Arising out of S.L.P. (C) No.19562/2006)

Oriental Insurance Co. Ltd.  ....Appellant

Versus

Sudhakaran K.V. & Ors.    ...Respondent

JUDGMENT

S.B.SINHA.J

Leave granted.

1. This  appeal  is  directed  against  a  judgment  and  order  dated

22.3.2006 passed by the High Court of Kerala at Ernakulam in M.F.A. No.

536  of  1999  whereby  and  whereunder  the  appeal  preferred  by  the

appellant herein from the judgment and award dated 31.10.1998 passed by

the  Motor  Accident  Claims Tribunal,  Perumbavoor  awarding  a  sum of

Rs.1,18,900/-(Rupees One lakh eighteen thousand and nine hundred only)

together with interest thereon at the rate of 12% p.a. from the date of the

filing of the claim petition till date of realization of the amount against the

appellant  as also against the owners of the vehicle was dismissed.

2. The  basic  fact  of  the  matter  is  not  in  dispute.  Thankamani

(hereinafter referred to as the deceased) was travelling as a pillion rider on

a scooter on 20.10.1993. She fell down from the scooter and succumbed to

the  injuries  sustained  by  her.  In  regard  to  the  said  accident,  a  claim

petition was filed.  

Appellant  having  been  served  with  a  notice,  in  its  written

statement, inter alia, raised a contention that she being a pillion rider and,

thus, a gratuitous passenger, the insurance policy did not cover the risk of

injury or death of such a passenger and, thus, it was not liable to reimburse

the owner of the scooter therefor.  

 It was, furthermore, contended that the accident had taken place

at a private place.  

By reason of the impugned award, the tribunal, however, opined:

(i) The accident had taken place due to rash and negligent riding

of  the  scooter  by   Sebastian  P.V.-  respondent  No.1  to  the

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claim petition;

(ii) Keeping in view the monthly income of the deceased which

was  estimated  at  Rs.  1200/-  per  month  as  also  age  of  the

deceased  assessed  at  50  years;  claimants  were  entitled  to

compensation  for  a  sum  of  Rs.1,05,600/-.  A  sum  of

Rs.5,000/-  was allowed towards compensation for  pain  and

suffering; a sum of Rs.100/- was allowed towards damage of

clothing  and  articles,  a  sum  of  Rs.5,000/-  was  allowed

towards loss of love and affection and  a sum of Rs.1,000/-

was allowed towards mental shock and agony.

3. As regards liability of the appellant it was held as the existence

of the insurance policy in respect of the offending scooter is admitted, it

was also liable.  

4. Aggrieved  by  the  said  award,  the  appellant  filed  an  appeal

before the High Court of Kerala under Section 173 of the Motor Vehicles

Act,  1988  (for  short  “the  Act”).  On  the  question  as  to  whether  the

Insurance Company would be liable in a case of this nature, the Division

Bench opined as under:

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"1. The appellant is the third respondent in  O.P.(MV)  119/94  on  the  file  of  the  motor Accident  Claims  Tribunal,  Perumbavoor. Appellant  was  directed  to  pay  compensation  for the death of the pillion rider of a motor cycle. The vehicle was insured with the appellant.

2.It was contended that the pillion rider would  not  come within  the  coverage  of  the  Act policy.  The  Tribunal  repelled  that  contention. Hence this appeal.

3. The question whether the pillion rider is covered by an Act policy stands settled by the decision  of  the  Full  Bench  of  this  Court  in Oriental Insurance Co.Ltd. Vs. Ajay Kumar(1999 (2)  KLT  886.  Hence  the  appellant  cannot successfully take up a contention contrary to the above proposition in this appeal…”

5. Ms. Aanchal  Jain,  learned counsel  appearing on behalf  of  the

appellant,  submits that as the deceased was in a vehicle which was not

covered  by  the  contract  of  insurance  must  be  held  to  be  a  gratuitous

passenger and as such the impugned judgment cannot be sustained.  

Strong reliance, in this behalf, has been placed on United India

Insurance Co. Ltd.,Shimla v. Tilak Singh and Ors. [(2006) 4 SCC 404].

6. Mrs.  Purnima Bhat  and  Mrs.  K.Sarada  Devi,  learned  counsel

appearing on behalf of the respondents, on the other hand, would urge:

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(i) the  principles  of  law  deduced  by  this  Court  as  regards

gratuitous passenger should not apply in a case of this nature;

(ii) in any event this Court should exercise its jurisdiction under

Article  142  of  the  Constitution  of  India  directing  the

appellant  to  pay the  claimed  amount  to  the  claimants  and

recover the same from the owner of the scooter.

7. Before embarking on the rival  contentions,  we may notice the

insurance policy. The contract of insurance was entered into on or about

2.12.1992. It was 'A policy for act liability' meaning thereby a  third party

liability.  

The  relevant  clauses  of  the  said  contract  of  insurance  are  as

under:

"1.  Subject  to  the  Limit  of  liability  as laid down in the Motor Vehicles Act the Company will indemnify the insured in the event of accident caused  by  or  arising  out  of  the  use  of  Motor Vehicle  any  where  in  India  against  all  sums including claimant's costs and expenses which the insured  shall  become  legally  liable  to  pay  in respect  of  death  or  bodily  injury  to  any  person and/or damage to any property of Third Party.

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Exception

Except  so  far  as  necessary to  meet  the requirements of the Motor Vehicles Act  the Company shall  not  be  liable  in  respect  of  death arising out of and in the course of employment of person in the employment of the insured or in the employment  of  any  person  who  is  indemnified under  this  Policy  or  bodily  injury  sustained  by such  person  arising  out  of  and  in  the  course  of such employment."

8. In  terms  of  Section  147  of  the  Act  only  in  regard  to

reimbursement of the claim to a third party, a contract of insurance must

be taken by the owners of the vehicle.  It is imperative in nature. When,

however, an owner of a vehicle intends to cover himself from other risks;

it is permissible to enter into a contract of insurance in which event the

insurer would be bound to reimburse the owner of the vehicle strictly in

terms thereof.

9. The liability of the insurer to reimburse the owner in respect of a

claim made by the third party, thus, is statutory whereas other claims are

not.

10. The only question which, therefore, arises for our consideration

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is as to whether the pillion rider on a scooter would be a third party within

the meaning of Section 147 of the Act.  

Indisputably, a distinction has to be made between a contract of

insurance  in  regard to  a third party and the owner or  the  driver  of  the

vehicle.

11. This Court in a catena of decisions has categorically held that a

gratuitous  passenger  in  a  goods  carriage  would  not  be  covered  by  a

contract  of  insurance  entered  into  by  and  between  the  insurer  and  the

owner of the vehicle in terms of Section 147 of the Act. [See New India

Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223]

12. A Division Bench of this Court in  United India Insurance Co.

Ltd., Shimla v. Tilak Singh and Ors. [(2006) 4 SCC 404] extended the said

principle to all other categories of vehicles also, stating as under:

"In our  view, although the observations made in Asha Rani case 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

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a  pillion  rider,  as  the  insurance  policy  was  a statutory policy, and hence it did not cover the risk of  death  of  or  bodily  injury  to  a  gratuitous passenger."

13. The submission of Mrs. Bhat, learned  counsel, however, is that

this Court should not extend the said principle to the vehicles other than

the goods carriage. As at  present  advised, we may not  go into the said

question  in  view of some recent  decisions  of  this  Court,  viz.,  National

Insurance Co. Ltd. v.  Laxmi Narain Dhut [(2007) 3 SCC 700],  Oriental

Insurance Co. Ltd. v. Meena Variyal [(2007) 5 SCC 428] and New India

Assurance Co. Ltd. v. Ved Wati [(2007) 9 SCC 486].

14. The provisions of the Act and, in particular, Section 147 of the

Act  were enacted  for  the  purpose  of  enforcing  the  principles  of  social

justice. It, however, must be kept confined to a third party risk. A contract

of insurance which is not statutory in nature should be construed like any

other contract.  

15. We have noticed the terms of the contract of insurance. It was

entered into for the purpose of covering the third party risk and not the

risk  of  the  owner  or  a  pillion  rider.   An  exception  in  the  contract  of

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insurance has been made, i.e.,  by covering the risk of the driver of the

vehicle.  The deceased was, indisputably, not the driver of the vehicle.

16. The contract of insurance did not cover the owner of the vehicle,

certainly not the pillion rider. The deceased was travelling as a passenger,

stricto sensu may not be as a gratuitous passenger as in a given case she

may not be a member of the family, a friend or other relative. In the sense

of the term which is used in common parlance, she might not be even a

passenger.  

In view of the terms of the contract of insurance, however, she

would not be covered thereby.

It is not necessary for us to deal with large number of precedents

operating in this  behalf as the question appears to be covered by a few

recent decisions of this Court.

17. In  United  India  Insurance  Company  Ltd.  v.  Serjerao  &  Ors.

[2007 (13) SCALE 80], it was held as under:

"7....When a statutory liability has been imposed upon the owner, in our opinion, the same cannot  extend  the  liability  of  an  insurer  to

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indemnify  the  owner,  although  in  terms  of  the insurance policy or under the Act, it would not be liable therefor.

   17.  In  a  given  case,  the  statutory liability of an insurance company, therefore,either may  be  nil  or  a  sum  lower  than  the  amount specified under Section 140 of the Act. Thus,when a separate application is filed in terms of Section 140 of the Act, in terms of Section 168 thereof, an insurer has to be given a notice in which event, it goes  without  saying,  it  would  be  open  to  the insurance company to plead and prove that it is not liable at all.

  18.  Furthermore,  it  is  not  in  dispute that there can be more than one award particularly when a sum paid may have to be adjusted from the final  award.  Keeping  in  view  the  provisions  of Section 168 of the Act, there cannot be any doubt whatsoever that  an award for enforcing the right under Section 140 of the Act is also required to be passed  under  Section  168  only  after  the  parties concerned  have  filed  their  pleadings  and  have been  given  a  reasonable  opportunity  of  being heard. A  Claims Tribunal, thus, must be satisfied that the conditions precedent specified in Section 140 of the Act have been substantiated, which is the basis for making an award.

  19. Furthermore, evidently, the amount directed to be paid even in terms of Chapter-X of the Act must as of necessity, in the event of non- compliance  of  directions  has  to  be  recovered  in terms of Section 174 of the Act. There is no other provision  in  the Act  which  takes  care  of  such a situation.  We,  therefore,  are  of  the  opinion  that even when objections are raised by the insurance company in  regard to  it  liability,  the Tribunal  is required to render a decision upon the issue, which would attain finality and, thus, the same would be any award within the meaning of Section 173 of

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the Act."

It was furthermore held as under:

"8.  So  far  as  the  question  of  liability regarding  labourers  travelling  in  trollies  is concerned,  the  matter  was  considered  by  this Court in Oriental Insurance Company Ltd. Vs. Brij Mohan and Ors. (2007) 7 SCALE 753 and it was held  that  the  Insurance  Company  has  no liability...""

18. Yet again in Ghulam Mohammad Dar v. State of J&K and Ors.

[(2008)  1  SCC  422],  this  Court  opined  that  the  words  "injury  to  any

person" as inserted by reason of the 1994 Amendment would only mean a

third  party and not  a passenger  travelling  on a  goods  carriage whether

gratuitous or otherwise. [See also  The New India Insurance Company v.

Darshana Devi & Ors. 2008 (2) SCALE 432]

19. The  law  which  emerges  from  the  said  decisions,  is:  (i)  the

liability of the insurance company in a case of this nature is not extended

to  a  pillion  rider  of  the  motor  vehicle  unless  the  requisite  amount  of

premium is paid for covering his/her risk (ii) the legal obligation arising

under Section 147 of the Act cannot be extended to an injury or death of

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the owner of vehicle or the pillion rider;  (iii)  the pillion rider in a two

wheeler was not to be treated as a third party when the accident has taken

place owing to rash and negligent riding of the scooter and not on the part

of the driver of another vehicle.

20. For the views we have taken,  it  is  not  necessary to refer  to  a

large number of decisions cited at the Bar as they are not applicable in a

case of this nature.

21. For the reasons aforementioned, the impugned judgment cannot

be sustained. It is set aside accordingly. The appeal is allowed. No costs  

………………………….J. [S.B. Sinha]

..…………………………J.     [Lokeshwar Singh Panta]

New Delhi; May 16, 2008

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