REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   6659     OF 2008 (Arising out of SLP (C) No. 20608 of 2004)

The General Manager, United  Insurance Co. Ltd.  ….Appellant  

Versus

M. Laxmi and Ors. ….Respondents

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in this appeal is to the judgment of a learned Single

Judge  of  the  Andhra  Pradesh  High  Court  allowing  the  appeal  filed  by

respondent Nos. 1 to 3.

1

3. Background facts in a nutshell are as follows:

One Ramulu (hereinafter referred to as the ‘deceased’) died in a

vehicular accident on 8.10.1996.   Respondents  1 to 3 are his widow, son

and father respectively.  A claim petition was filed under Section 166 of the

Motor  Vehicles Act,  1988  (in  short  ‘the Act’)  claiming compensation  of

Rs.3,00,000/-.  The claimants averred in the claim petition that the deceased

and one Mohd. Mohsin were going on a scooter belonging to M. Yadireddy,

respondent  no.4  in the present  appeal.   The scooter was  being driven by

Mohd. Mohsin.  At about 7.00 p.m. the scooter hit a bullock cart which was

going in the same direction because of rash  and  negligent  driving of the

scooter, the deceased fell down and sustained fatal injuries.  At the time of

his death,  he was 29 years  of age.  Compensation was  claimed from the

owner of the scooter.  Present appellant was the insurer which had insured

the  vehicle  in  question.   The  insured  remained  ex-parte.   The  present

appellant filed its counter-affidavit denying all the material allegations.  It

was pointed out that admittedly, the policy of insurance was an Act policy

and  the  deceased  was  a  pillion  rider  and  also  gratuitous  passenger  and

hence,  not  a  third  party,  and  he  cannot  claim  compensation  from  the

2

insurance  company  which  insured  the  vehicle.   The  learned  Additional

Special Judge for SPE and ACB Cases-cum-V Additional Chief Judge, City

Civil Court, Hyderabad (hereinafter referred to as ‘MACT’) who adjudicated

the claim petition, held that the policy was an Act policy in respect of the

Scooter on the date of accident, therefore, the insurer had no liability.  It was

categorically held that unless the policy in question covers even a gratuitous

passenger, such person, who met with an accident while going in the vehicle

in question  and  received injuries  or  his  legal  heirs,  in  case of his  death

following such  accident,  cannot  proceed against  the  concerned  insurance

company for any compensation.   The compensation payable was  fixed at

Rs.1,07,436/- with 12% interest per annum.  It was held that the sum was to

be realized from the insured and not from the present appellant.           

An appeal was preferred by the claimants before the High Court,

which,  by  the  impugned  judgment  relying  on  a  Circular  of  the  Tariff

Advisory Committee held that  the liability of the insurer  was  there.   The

appeal was, accordingly, allowed.  

4. Learned counsel for the appellant submitted that the High Court

3

has misread the Circular of the Tariff Advisory Committee dated 2.6.1986.

The  same  referred  to  compensation  payable  to  pillion  riders  in  case  of

comprehensive policy.  The Clarification/Circular has no relevance so far as

Act Policy Cases are concerned and it related to only Comprehensive Policy.

5. Learned counsel for respondent Nos. 1 to 3, on the other hand,

supported the judgment of the High Court.  

6. There is  no  dispute  that  the  Circular  dated  2.6.1986  refers  to

Comprehensive  Policy.   It  categorically  states  that  standard  form  for

motorcycle  should  cover  liability  to  pillion  passengers  in  case  of

Comprehensive Policy.  As noted by the MACT, the policy in the instant

case was an Act Policy.

7. In  New India Assurance Co. Ltd. v. Asha Rani and Ors. (2003

(2) SCC 223), it has been noted as follows:

“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 ap- pended thereto categorically states that compulsory cover- age 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 Workmen’s Compensa-

4

tion Act. It does not speak of any passenger in a “goods carriage”.

In view of the changes in the relevant provisions in the 1988 Act vis-à-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 provi- sions 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-sec- tion (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 vehi- cle in a public place, whereas sub-clause (ii) thereof deals with liability which may be incurred by the owner of a ve- hicle 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.”

8. In  United India Assurance Co. Ltd.,  Shimla v.  Tilak Singh and

Ors. (2006 (4) SCC 404), it has been noted as follows:

“In  our  view,  although  the  observations  made  in Asha Rani case (supra)  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 appel- lant 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 a statutory policy, and hence it did not cover the risk of death of or bodily injury to a gratuitous passenger.”

5

9. In view of what has been stated by this Court in Asha Rani and

Tilak  Singh cases  (supra),  the  order  of  the  High  Court  is  clearly

unsustainable and is set aside and that of the MACT is restored.

10. The appeal is disposed of accordingly.  

 ………………………………….J. (Dr. ARIJIT PASAYAT)

………………………………….J. (Dr. MUKUNDAKAM SHARMA)

New Delhi, November 14, 2008   

6