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PETITIONER: NEW INDIA ASSURANCE COMPAFIY

       Vs.

RESPONDENT: SHRI SATPAL SINGH AND ORS.

DATE OF JUDGMENT:       02/12/1999

BENCH: K.T.Thomas, M.B.Shah

JUDGMENT:

THOMAS, J.

Leave granted.

     A  10  year  old girl met with her death  in  a  truck accident.   Her  name  was   Dupinder  Kaur.   The  accident occurred while she was travelling in the truck on 11.3.1990. She died on the spot.  Her father, brother and sister made a joint  claim for compensation under the Motor Vehicles  Act, 1988  (for  short the ’new Act).  The Motor Accident  Claims Tribunal  before which the claim was made passed an award in a sum of Rs.25,000/˜    to  the claimants.  The owner of the truck was found liable to

     pay   the  compensation  amount.    M/s.   New   India Assurance Company, the insurer had been directed to make the amount  good with interest, as the vehicle was then  covered by an insurance policy issued by that company.

     The  claimants  as  well  as  the  Insurance   Company challenged the said award.  The farmer was dissatisfied with the  quantum of compensation awarded.  The Insurance Company was  aggrieved  as the liability was imposed on  them.   The Insurance Company put forward a contention that the deceased Dupinder  Kaur  was a gratuitous passenger in the truck  and hence  no  liability can be fastened with the  insurer,  but that contention was repelled.

     A  Division  Bench  of the High  Court  dismissed  the appeal  filed by the Insurance Company but allowed the other appeal  by  doubling  the compensation amount.   Hence  this appeal  by  special leave at the instance of  the  Insurance Company.  After hearing learned counsel for the appellant we felt  that  it  is  not  necessary to  send  notice  to  the respondents  to contest the appeal as there is no scope  for absolving the Insurance Company from liability.

     Learned  counsel  for  the appellant ’ banked  on  the decision  of a three Judge Bench this Court in Mallawwa  and ors.   Vs.  Oriental Insurance Co.  Ltd and ors.  [1999  (1) SCC  403}  to  disclaim liability on the  premise  that  the victim  of  the  accident was gratuitous  passenger  in  the vehicle  covered  by  the insurance policy.   But  the  said decision was rendered under Section 95 of the Motor Vehicles Act, 1939 (which can be referred to as ’the old Act’ ).  The aforesaid  provision contained a rider in clause (ii) of the

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proviso   to  sub-section  (1)  which   is  abgent  in   the corresponding  provision  in the New Act.  To  pinpoint  the said  distinction we extract Section 95(1) of the old Act as under:

     "95.    Requirements  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) is issued by a person who is an authorised insurer or  by  a co-operative society allowed under section 108  to transact the business of an insurer, and

     (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 3 or arising out of the use of the vehicle in a public place;

     (ii)  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;

     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 of a person 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) engaged in driving the vehicle, or

     (b)  it  is  a public service vehicle,  engaged  as  a conductor  of  the  vehicle or in examining tickets  on  the vehicle, or

     (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 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, or

     (iii) to cover any contractual liability."

     As  per ".the proviso when read .with its clause  (ii) It  is  clear  that  the policy of insurance  shall  not  be required  to  cover liability in respect of the death of  or bodily  injury to persons who wore gratuitous passengers  of that vehicle.  This Court, has’ held in Pushpabai Parshottam Udeshi  and others vs.  M/s.  Ranjit Ginning & Pressing  Co. pvt.   Ltd.  and anr.  [AIR 1977 sc 1735 » 1977 (2) SCC 745)

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as under:

     "Sections 95(a) and 95(b)(l) of the Motor Vehicles Act adopted  the  provisions of the .English Road  Traffic  Act, 1960,  and  excluded the liability or the insurance  company regarding  the risk to the passengers.  Section 95  provides that  a  policy of insurance must be a policy which  insures the  persons against any liability which may be incurred  by him  in  respect of death or bodily injury bo 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. The  plea  that the words ’third party",are wide  enough  to cover  all  persons  except the person and  the  insurer  is negatived as the insurance cover is not available

     to  the  passengers  made  clear  by  the  proviso  to sub-section  which  provides  that  a policy  shall  not  be required.  ............  Therefore it is not required that a policy  of insurance should cover risk to the passengers who are nob carried for hire or reward.  As under Section 95 the risk to a passenger in a vehicle

     who is not carried out hire of reward

     is  not required to be insured the plea of the counsel for  the  insurance-.  company will have to be accepted  and the insurance company held not liable under the requirements of the Motor Vehicles Act."

     in  fact the said ratio has been approved by the three Judge  Banch  in Mallava vs.  Oriental Insurance  Co.   Ltd. (supra).   At .the same time learned Judges pointed out that the  old Act is now repealed by the new Acr and Section  147 of  the  new Act correspondinq to Section 95 of the old  Act has   been  siubstantially  altered   and  hence  the  above interpretation ,of Section 95 of the old Act will govern the cases which have arisen under the old Act.

     Proviso  to  Section 147 (1) of the.  new  Act  ’shows that  it  is a recast by provision by placng  the  erstwhile clause  (iii)  as the present clause (ii) In-  other  words, clause  (ii) of the proviso in Section 95(1) of the old  Act is totally non-existent in the proviso to Section 147 (1) of the new Act.

     Under Section 147 of the new Act, the policy must be a policy  which  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, 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)  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.

     The  proviso  to the said sub-section is not  relevant here a it pertains to death or bodily injury to the employee mentioned  therein.  Sub-section (2) provides that a  policy of  insurance shall cover any liability incurred in  respect

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of any accident, up to the following limits, namely:-

     (i).   save  as provided in clause (b) the  amount  of liability incurred;

     (ii)  in respect of damage to any proporty of a  third party, a limit:  of rupees six thousand:

     Provided  that any policy of insurance issued with any limited liability and in force, immediately before the

     commencement  of  this  Act,   shall  continue  to  be effective   for  a  period  of   four  months   after   such commencement  or  till  the date of expiry  of  such  policy whichever is earlier.

     Hence,  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 ot 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 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 insurer’s  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  resuit  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  chat  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.

     The  Division  Bench  of the High  Court  has  rightly repelled the contention of the appellant - insurance company on  the  aforesaid  score.   We  therefore,  dismiss   these appeals.