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CASE NO.: Appeal (civil)  4845-4847 of 2007

PETITIONER: National Insurance Co. Ltd

RESPONDENT: Cholleti Bharatamma & Ors

DATE OF JUDGMENT: 12/10/2007

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T (Arising 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, J.

1.      Leave granted in all the Special Leave Petitions. 2.      The 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.   

3.      The relevant portion of Section 147 of the Motor Vehicles Act (for  short \023the Act\024), prior to its amendment, reads as under : \023Requirements of policies and limits of liability.- (1) In 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 (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 a or arising out of the use of the  vehicle in a public place; (ii) *** 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 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 (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

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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\005\024

4.      The said provision underwent an amendment in the year 1994 by  Motor Vehicles Amendment Act, 1994 which reads as under : \023147 - 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; (ii) ***

5.      In 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:

\023\005Hence, 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 .  The 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 insurer\022s 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 .  11. 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.\024

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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 : \023The first category of cases arise out of the Motor  Vehicles Act, 1939 (hereinafter referred to as \023the  old Act\024).  The question raised for this category is: \021Whether 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?\022 The second category of cases arise out of the  Motor Vehciles Act, 1988 (hereinafter referred to  as \023the new Act\024) prior to its amendment in 1994.   In this category also a similar question is raised.   The 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.\024

8.      The 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 representative.   

9.      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].   

       In Asha Rani (supra), having regard to various definitions involving  the legal question, it was held : \02323. 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.  The difference in the definitions of \023goods  vehicle\024 in the 1939 Act and \023goods carriage\024 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 \023in addition to  passengers\024 occurring in the definition of goods  vehicle in the 1939 Act were omitted.  Furthermore, it categorically states that \023goods  carriage\024 would mean a motor vehicle constructed  or adapted for use \023 solely for the carriage of  goods\024. Carrying of passengers in a \023goods  carriage\024, thus, is not contemplated under the 1988  Act.    24. We 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.

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 25. Section 147 of the 1988 Act, inter alia,  prescribes compulsory coverage against the death  of or bodily injury to any passenger of \023public  service vehicle\024. 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  Workmen\022s Compensation Act. It does not speak  of any passenger in a \023goods carriage\024.    26. In 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 \023any person\024 must also be attributed having  regard to the context in which they have been used  i.e. \023a third party\024. 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.    27. 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.    28. An 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 Court\022s 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.\024

10.     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 \023injury to any  person\024 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.   11.     Yet again in New India Assurance Co. Ltd. v. Vedwati & Ors. [(2007)  3 SCALE 397] this Court held : \02313. 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

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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.  There 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").  There is no reference to any passenger in "goods  carriage". 14. 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.\024         [See also Oriental Insurance Co. Ltd. v. Brij Mohan & Ors. 2007 (7)  SCALE 753] CA @ SLP (C) Nos.7237-7239 of 2003 12.     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.           The 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.   13.     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 : \023The 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.         In view of the proposition of law down by  the Supreme Court in the decision stated supra,  these appeals are dismissed.  No costs.\024

14.    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

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15.     In the aforementioned case, accident took place on 24.12.1993.   Respondents 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 : \023In 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.   It 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.\024

16.     The High Court, however, relying upon Satpal Singh (supra) opined : \023This 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.   Following the same, the appeal is dismissed.  No  order as to costs.\024

17.     It is now well settled that the owner of the goods means only the  person who travels in the cabin of the vehicle.   

18.     In 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.   Travelling with the goods itself does not entitle anyone to protection under  Section 147 of the Motor Vehicles Act.

19.     For the reasons aforementioned, this appeal is dismissed.   CA @ SLP (C) No.7248/03 20.     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 : \023On 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 insurance companies.

21.     The learned Tribunal, however, noticed : \023\005Thus, the claim form corroborate the testimony

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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 \0213\022 including driver  and cleaner which would go to show that only one  passenger can travel in it...\024

22.     Upon considering the evidences on record, it was held :

\023As the permitted seating capacity of the lorry is  only \0213\022 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.  As per  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  \0213\022 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 compensation.\024

23.     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

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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 person. 24.     In 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 (C) Nos.7288-7290/03 25.     In 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 \026 driver of lorry AEW 5199, held : \023\005The 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...\024

26.     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 : \023I 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.\024

27.     The Tribunal, therefore, correctly recorded that according to PW-2, he  was travelling with his goods as owner thereof and not the deceased.

28.     Shaik 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 claim.   Tribunal awarded compensation to the legal heirs of the deceased.   29.     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 Singh\022s case (supra) being referred to a Larger Bench in  Asha Rani\022s case (supra), the same was not a binding authority. 30.     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). 31.     In 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.