http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (civil)  2892 of 2008

PETITIONER: Oriental Insurance Co. Ltd

RESPONDENT: Rajni Devi & Ors

DATE OF JUDGMENT: 22/04/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T REPORTABLE

CIVIL APPEAL NO.  2892            OF 2008 (Arising out of SLP (C) No.11521 of 2007)

S.B. Sinha, J.

1.      Leave granted. 2.      Respondent filed an application under Section 163-A of the Motor  Vehicles Act, 1988 (the Act) claiming compensation for death of one Janak  Raj (the deceased).  He was riding on a motorcycle along with one Sukhdev  Raj.  Who was actually on the driver’s seat is not known.  The motorcycle is  said to have gone out of control resulting in the accident.   3.      Appellant herein, having been issued notice, resisted the claim, inter  alia, contending that although the owner of the vehicle deposited an extra  amount of Rs.50 covering his personal insurance, the same would not cover  the case of the pillion rider and in any event, the owner of the vehicle is not  a third party within the meaning of Section 147 of the Act.   The Motor Vehicles Accident Claims Tribunal, having regard to the  pleadings of the parties, framed the following issues : "1.     Whether on 7.9.2004 at 4.05 pm Janak Raj  had died in a road accident? OPP 2.      Whether the Claimants are LRs and were  dependant upon the deceased? OPP 3.      Whether the claimants are entitled to  compensation? If so, how much and from  which of the respondents? OPP 4.      Whether the motorcycle was being driven in  contravention of terms and conditions of the  insurance policy? OPR 5.      Whether the driver of the motorcycle was  not holding a valid and effective driving  licence? OPR 6.      Whether the claim petition is bad for non- joinder of necessary parties? OPR 7.      Relief."

4.      The Tribunal noticed that the First Information Report (FIR) lodged at  the Police Station in relation to the said accident was not clear to establish as  to who was driving the motorcycle but despite the same proceeded to  determine the question as to whether Janak Raj being himself the tort feasor,  any application under Section 163-A of the Motor Vehicles Act was  maintainable.  The premise on which the Tribunal proceeded to determine  the said issue was that a comprehensive insurance policy having been taken,  the only question which arose for its consideration was as to whether the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

accident took place by reason of use of the motor vehicle irrespective of the  fact as to whether the deceased or the said Sukhdev Raj was driving the  motorcycle or not.  It, however, held that if the deceased was the tort feasor,  the question of reimbursement of any amount of compensation by the insurer  would not arise, opining : "If we presume that deceased had no  comprehensive policy even then, claimants are  entitled to compensation because evidence is silent  as to who was driving the offending vehicle."

5.      On issue Nos.4, 5 and 6, the Tribunal held :

"Onus to prove all the issues was upon the  Insurance Company.  As discussed in the  preceding issues, offending vehicle was insured  but no evidence on the file as to who was driving  the motor cycle.  That is whether Janak Raj was  driving the motorcyele or Sukhdev Raj Was  driving the motorcycle.  Janak Raj and Sukhdev  Raj were on the motor cycle.  Both received  injuries in the accident.  Sukhdevraj had  succumbed to his injuries in the Civil Hospital,  Dalhousie.  Janak Raj was shifted to different  hospitals.  Ultimately, Janak Raj had also  succumbed to his injuries.  Motorcycle was owned  by Janak Raj.  Counsel for the company failed to  convince how the petition is bad for non-joinder of  necessary parties and what is the effect of non- production of driving licence when evidence is not  clear as to who was driving the offending vehicle.   So, all the issues are decided against the Insurance  Company."

6.      It is now a well settled principle of law that in a case where third party  is involved, the liability of the insurance company would be unlimited.   Where, however, compensation is claimed for the death of the owner or  another passenger of the vehicle, the contract of insurance being governed  by the contract qua contract, the claim of the insurance company would  depend upon the terms thereof. 7.      The Tribunal, in our opinion, therefore, was not correct in taking the  view that while determining the amount of compensation, the only factor  which would be relevant would be merely the use of the motor vehicle.   Section 163-A reads thus : 163A. Special provisions as to payment of  compensation on structured formula basis\027(1)    Notwithstanding anything contained in this Act or  in any other law for the time being in force or  instrument having the force of law, the owner of  the motor vehicle of the authorised insurer shall be  liable to pay in the case of death or permanent  disablement due to accident arising out of the use  of motor vehicle, compensation, as indicated in the  Second Schedule, to the legal heirs or the victim,  as the case may be. Explanation.-For the purposes of this sub-section,  "permanent disability" shall have the same  meaning and extent as in the Workmen’s  Compensation Act, 1923 (8 of 1923).  (2) In any claim for compensation under sub- section (1), the claimant shall not be required to  plead or establish that the death or permanent  disablement in respect of which the claim has been

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

made was due to any wrongful act or neglect or  default of the owner of the vehicle or vehicles  concerned or of any other person. (3) The Central Government may, keeping in view  the cost of living by notification in the Official  Gazette, from time to time amend the Second  Schedule."

       The said provision cannot be said to have any application in regard to  an accident wherein the owner of the motor vehicle himself is involved.  The  question is no longer res integra.   8.      In Oriental Insurance Co. Ltd. v. Smt. Jhuma Saha & Ors. [AIR 2007  SC 1055], it was held : "10. The deceased was the owner of the vehicle.  For the reasons stated in the claim petition or  otherwise, he himself was to be blamed for the  accident. The accident did not involve motor  vehicle other than the one which he was driving.  The question which arises for consideration is that  the deceased himself being negligent, the claim  petition under Section 166 of the Motor Vehicles  Act, 1988 would be maintainable. 11. Liability of the insurer Company is to the  extent of indemnification of the insured against the  respondent or an injured person, a third person or  in respect of damages of property. Thus, if the  insured cannot be fastened with any liability under  the provisions of the Motor Vehicles Act, the  question of the insurer being liable to indemnify  the insured, therefore, does not arise.  12. In Dhanraj v. New India Assurance Co. Ltd.2 it  is stated as follows :  

"8. Thus, an insurance policy covers the  liability incurred by the insured in respect of  death of or bodily injury to any person  (including an 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. Section 147 does not require an  insurance company to assume risk for death or  bodily injury to the owner of the vehicle.         *       *       * 10. In this case, it has not been shown that  the policy covered any risk for injury to the  owner himself. We are unable to accept the  contention that the premium of Rs       4989 paid  under the heading ’Own damage’ is for  covering liability towards personal injury.  Under the heading ’Own damage’, the words  ’premium on vehicle and non-electrical  accessories’ appear. It is thus clear that this  premium is towards damage to the vehicle and  not for injury to the person of the owner. An  owner of a vehicle can only claim provided a  personal accident insurance has been taken out.  In this case there is no such insurance."

9.      In National Insurance Co. Ltd. v. Laxmi Narain Dhut [2007 (4)  SCALE 36], it has been held : "Where the claim relates to own damage claims, it  cannot be adjudicated by the insurance company.   But it has to be decided by another forum i.e.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

forum created under the Consumer Protection Act,  1985(in short the ’CP Act’).  Before the Tribunal,,  there were essentially three parties i.e. the insurer,  insured and the claimants.  On the contrary, before  the consumer forums there were two parties i.e.  owner of the vehicle and the insurer.  The claimant  does not come into the picture.  Therefore, these  are cases where there is no third party involved."

       The said principle has been reiterated recently in Prem Kumari & Ors.  v. Prahlad Dev & Ors. [2008 (1) SCALE 531] and Oriental Insurance Co.  Ltd. v. Prithvi Raj [2008 (1) SCALE 727]. 10.     The liability under Section 163-A of the Act is on the owner of the  vehicle as a person cannot be both, a claimant as also a receipient.  The heirs  of Janakraj could not have maintained a claim in terms of Section 163-A of  the Act.  For the said purpose only the terms of the contract of insurance  could be taken recourse to. 11.     According to the terms of contract of insurance, the liability of the  insurance company was confined to Rs.1,00,000/- (Rupees one lac only).  It  was liable to the said extent and not any sum exceeding the said amount.  12.     To the aforementioned extent, the appeal is allowed.  No costs.