Judgment:
Mohamed Anwar, J.
Appellant is the insurer of the offending jeep vehicle bearing No. CTA 5241 of respondent 4 (R-4). The judgment and award dated 17-10-1996 of the M.A.C.T., Udupi, Dakshina Kannada, holding the appellant also liable to pay 50% of the compensation to the claimants has been challenged by it on the' ground that it is not liable in law to pay the same since the 'Act only policy of insurance' issued by it in respect of the said private jeep vehicle did not cover the risk to the passengers travelling therein, as the deceased victim Ganapathi Adiga was an occupant thereof when it met with accident.
2. A few relevant facts, as justifiably found proved by the Tribunal,are as stated under:
On 7-10-1992, the deceased was travelling as a gratuitous passenger in the said jeep vehicle from Udupi to Kundapura in the District of Dakshina Kannada. It was being driven in high speed by its owner R-4. It was racing behind the goods truck bearing registration No. MIR 9247 which was transporting the load of wooden logs which were protruding beyond its body. When both these vehicles reached near a place called Brahmavara, the truck was suddenly stopped without giving any signal. As a result, the jeep which was coming from behind, dashed against the hind portion of the truck so stopped, which resulted in fatal wounds to the deceased who succumbed to his injuries on the following day while under treatment in the K.M.C. Hospital at Manipal. Since the truck driver failed to give the signal of the stoppage of the truck, which he was duty bound to give; and the jeep driver was careless in driving the vehicle in a high speed behind the said truck without keeping a reasonable distance from it so as to avoid meeting with accident in the event of the truck coming to an abrupt halt on a public road, both drivers are rightly held by the Tribunal guilty of contributory negligence in causing the accident. Therefore, the apportionment of their liability equally by the Tribunal, in the ratio of 50:50, is not in dispute.
3. The deceased was aged 48 years and was running a grocery shop at his place. He was maintaining the family consisting of his widow aged 42 years and 5 minor children, who are the claimants-respondents. Keeping in view the evidence on record, his monthly income was determined at Rs. 3,600/-. Deducting l/3rd thereof on his personal expenses, the total dependency loss suffered by the claimants is determined by the Tribunal at Rs. 3,74,400/- by quantifying the annual loss of Rs. 28,800/-with appropriate multiplier of 13. Besides, a total sum of Rs. 17,464.35 has been added as the special damages payable under the heads of medical expenses, funeral expenses, loss of consortium and loss to the estate. Accordingly, a total compensation of Rs. 3,91,864.35 has been awarded to the claimants as against their petition claim of Rs. 2,50,000/-, following the rulings of the Himachal Pradesh High Court in the cases of Oriental Fire and General Insurance Company Limited v Mast Ram ,and Surjit Singh v Waryam Singh , where it is held that as it is not the requirement of law under the M.V. Act for the claimants to specify the amount of compensation in their claim petition, the duty enjoined on the Tribunal by the relevant provisions thereof is to assess the just amount of compensation payable to the claimants; and it, therefore, follows that the Tribunal is not powerless in making an award even in excess of the amount of compensation claimed. Therefore, the adequacy of compensation so determined and awarded by the Tribunal is also not and cannot be disputed by the appellant-insurer.
4. However, the defence of the appellant-insurer raised before the Tribunal and urged before us is that under its 'Act only policy of insurance' which was duly issued in favour of R-4 jeep owner, the risk to a passenger, muchless a gratuitous passenger, travelling in the jeep was not covered and, therefore, it cannot be held liable to pay any compensation to the claimants. Since the Tribunal found this defence untenable, the impugned award has been passed by it fastening liability on the appellant to the extent of 50% to pay compensation thereunder to the claimants. It is the legality and correctness of this finding of the Tribunal which is seriously challenged by the appellant-insurer in this appeal. Mr. K. Suryanarayana Rao, learned Counsel representing the appellant, argued assailing validity of only this part of the impugned award.
5. Admittedly, the accident, which occurred on 7-10-1992, was subsequent to coming into force of the M.V. Act of 1988 ('New Act' or 'Act of 1988' for short) which came into force on 1-7-1989. It is also an admitted fact that the insurance policy effected in respect of the said jeep vehicle involved in the accident is the 'Act only policy' i.e., the policy fulfilling only the statutory requirements under the M.V. Act. Therefore, the short question of law which calls for our decision for effective disposal of this appeal is:
'Whether or not the risk arising out of death of or bodily injury to a gratuitous passenger travelling in a private jeep or a private car resulting from motor accident involving the said vehicle is covered under an 'Act only policy' under the M.V. Act, 1988, issued with respect thereto; and whether such a passenger be stated a 'third party' in relation to that insurance policy'?
The answer to this question requires a closer examination of the scope and extent of the statutory liability of the insurer created by the relevant provisions of the Act of 1988 vis-a-vis, the corresponding provisions of the M.V. Act of 1939 ('the Old Act' in short).
6. The position of law in this regard earlier to the Act of 1988 was covered by Sections 94 and 95 of the Old Act contained in Chapter VIII thereof which dealt with 'the insurance of motor vehicles against third party risks'. While Section 94 stipulated the necessity of insurance against third party risk, Section 95 dealt with the legal requirement of insurance policies and the limits of liability thereunder of an insurer. Under the New Act i.e.. Act of 1988, Chapter XI relates to insurance ofmotor vehicles against third party risks. Section 146 occurring in this Chapter was corresponding almost verbatim to Section 94 of the Old Act till a proviso to sub-section (1) of Section 146 was inserted by the 'Motor Vehicles (Amendment) Act, 1994' ('the Amendment Act' for short) with effect from 14-11-1994 which proviso is not of much relevance for our purpose. Unamended Section 147 of the New Act brings about certain significant change in the extent of limit and liability of the insurer under the statutory policy i.e., the 'Act only policy'. The corresponding material provisions of Section 95 of the Old Act and of Section 147 of the New Act are reproduced below for better appreciation of this change:
OLD ACT
NEW ACT
Section 95:
Section 147:
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 --
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) is issued by a person who is anauthorised insurer orby a co-operativesociety allowed under Section 108 totransact the business of an insurer, and
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extentspecified in sub-section (2) --
(b) insures the person or classes of persons specified in the policy to the extentspecified 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 personor damage to any property of a third party caused by or arising out of theuse of the vehicle in a public place;
(i) against any liability which may be incurred by him in respect of the deathof or bodily injury to any person ordamage to any property of a third party caused by or arising out ofthe use of the vehicle in a public place;
(ii) against the death of or bodily injury to anypassenger of a public service vehiclecaused by or arising out of the use of the vehicle in a public place:
(ii) against the death of or bodily injury to anypassenger of a public service vehicle caused by or arising out of the use ofthe vehicle in a public place:
Provided that a policy shall not be required --
Provided that a policy shall not be required --
(i) to cover liability in respect ofthe death, arising out of and in the course of his employment, of the employeeof a person insured by the policy or inrespect of bodily injury sustained by suchan employee arising out ofand in the course of his employment other than a liability arising under the Workmen's Compensation Act,1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee --
(i) to cover liability in respectof the death, arising out of and in thecourse of his employment, of the employeeof a person insured by the policy or in respect of bodily injury sustained by such anemployee arising out of and in the course of his employment other than a liabilityarising under the Workmen's CompensationAct, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee --
(a) engaged in driving thevehicle, or
(a) engaged in driving the vehicle, or
(b) if it is apublic service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(b) if it is apublic service vehicle,engaged as a conductor of the vehicleor in examining tickets on the vehicle,or
(c) if it is agoods vehicle, being carriedin the vehicle, or
(c) if it is agoods carriage, being carriedin the vehicle, or
(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason ofor in pursuance of a contract of employment,to cover liability in respect ofthe death of or bodily injury to persons being carried in or upon or entering or mounting or alighting fromthe vehicle at the time of the occurrenceof the event, out of which a claimarises, or
(ii) to cover anycontractual liability.
(iii) to cover anycontractual liability.
Explanation.__ xxx xxx
Explanation.__ xxx xxx
(2) Subject to theproviso to sub-section(1), a policy of insurance shall cover any liability incurred in respect ofany one accident up to the followinglimits, namely: --
(2) Subject to the proviso to subsection(1), a policy of insurance referred to in sub-section (1) shall cover any liabilityincurred in respect of any accident, up to the following limits, namely: --
(a) where thevehicle is a goods vehicle,a limit of one lakh and fifty thousand rupees in all, including theliabilities, if any, arising under theWorkmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, employees(other than the driver), not exceedingsix in number, being carried in thevehicle:
(a) save asprovided in clause (b), the amount of liability incurred;
(b) where thevehicle is a vehicle in whichpassengers are carried for hire or rewardor by reason of or inment, --
(b) in respect of damage to any propertyof a third party, a limit of rupees sixthousand:
(i) in respect of persons other thanpassengers carried for hire or reward, a limit of fifty thousand rupees in all;
Provided that any policyof insurance issued withany limited liability and in force, immediately before the commencement ofthis Act, shall continue to be effectivefor commencement or till the date of expiry of such policy whichever isearlier.
(ii) in respect of passengers, a limitof fifteen thousand rupees for each individual passenger;
(c) save as provided in clause (d), where the vehicle is a vehicle of any otherclass, the amount of liability incurred;
(d) irrespective of the class of the vehicle, a limit of rupees six thousandin all in respect of damage to anyproperty of a third party.
(3) omitted.
(3) xxx xxx xxx
(4) xxx xxx xxx
(4) xxx xxx xxx
(5) xxx xxx xxx
(5) xxx xxx xxx
By Amendment Act of 1994, the words 'injury to any person' occurring in Section 147 of the New Act were substituted with the words 'injury to any person, including owner of the goods or his authorised representative carried in the vehicle' with effect from 14-11-1994.
7. In Pushpabai Parshottam Udeshi and Others v M/s. Ranjit Ginning and Pressing Company Private Limited and Another , a Bench of two Judges of the Supreme Court had an occasion to deal with the question of liability of the insurer to pay compensation for the death of a gratuitous passenger travelling in an insured private car, which resulted on account of the accident occurred on 18-12-1960 due to its negligent driving. Interpreting Section 95 of the Old Act and dealing with its scope, especially with reference to sub-clause (ii) of Section 95(b), the Supreme Court has ruled that:
'20. .... Therefore it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire orreward. As under Section 95 the risk to a passenger in a vehicle who is not carried for hire or 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'.
Restating the same law by relying on its decision in the case of Pushpabai, supra, a Bench comprising three Judges of Supreme Court in its recent decision in the case of Amrit Lal Sood and Another v Kaushalya Devi Thapar and Others, while considering the same question, has said:
''4. ..... Section 94 of the Motor Vehicles Act, 1939 compels theowner of a motor vehicle to insure the vehicle in compliance with the requirements of Chapter VIII of the Act. Section 95 of the Act provides that a policy of insurance must be one which insures the person against any liability which may be incurred by him in respect of death or bodily injury to any person or damage to any property of third party caused by or arising out of the use of the vehicle in a public place. The section does not however require a policy to cover the risk to passengers who are not carried for hire or reward. The statutory insurance does not cover injury suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. ....'.
The Supreme Court has further proceeded to observe:
'4. ..... But that does not prevent an insurer from entering into acontract of insurance covering a risk wider than the minimum requirement of the statute whereby the risk to gratuitous passengers could also be covered. In such cases where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer'.
The question under examination was also the subject of consideration of the Full Bench of this Court in the case of National Insurance Company v Dundamma, in the light of the provisions under Section 95 of the Old Act. Following the decision of the Supreme Court in the case of Pushpabai, supra, the Court has held:
'16. ..... It is clear that by virtue of the exception incorporatedin clause (ii) below the proviso to Section 95(1), the compulsory coverage provided was only in respect of passengers carried for hire or reward; and in respect of any passenger carried in any vehicle not for hire or reward, no compulsory coverage is prescribed under Section 95. From this it follows that, it is only in respect of vehicles in respect of which the permit has been taken in accordance with the provisions of the Motor Vehicles Act for carrying passengers for hire or reward, Section 95 of the Act makes it obligatory to take an insurance policy which covers the risk in respect of death or bodily injury to passengers travelling insuch vehicles in addition to compulsory coverage of risk as against death or injury to third parties. In respect of every other vehicle even assuming that the vehicle like a private car or an omnibus or a goods vehicle in which passengers/persons could be carried legitimately, but not for hire or reward, Section 95 of the Act does not make it obligatory on the part of the owner to take insurance policy which covers the risk in respect of persons travelling in the said vehicles. The liability of the insurance company in such cases arises only if the owner of the vehicle had chosen to take a policy covering the risk of the persons travelling in such vehicles, as had been the position in the case of Pushpabai, supra'.
The Full Bench of this Court has ruled that the passengers travelling in a goods vehicle other than employees are not required to be covered by a policy in terms of Section 95 of the Act by force of clause (ii) of the proviso to Section 95(1)(b) thereof. Thus, from the authoritative pronouncements of the Supreme Court in the cases of Pushpabai and Amrit Lal Sood and of this Court in Dundamma's case, all supra, the settled legal position emerging from material Section 95 of the Old Act, i.e., Motor Vehicles Act, 1939, was that risk to a gratuitous passenger travelling in a private car/jeep or any other vehicle-not for the purpose of or in connection with the business of insured owner of the vehicle carried pursuant to any contract of employment, was not covered by the 'Act Policy' taken out thereunder for use of the vehicle.
8. As could be seen from the aforequoted relevant provision of Section 147 of the New Act, clause (ii) of the proviso to Section 95(1)(b) of the Old Act has been omitted therefrom, with the result, the aforestated law laid down by the Supreme Court in Pushpabai's case, supra, and followed by this Court in Dundamma's case, supra, which was based on the said sub-clause (ii) of the Old Act, no longer holds the field under the New Act. This material aspect has been touched upon by the Supreme Court in the case of Smt. Mallawwa v Oriental Insurance Company Limited and Others, at paragraph 14 of its judgment, and it has been dealt with in its recent decision in New India Assurance Company v Satpal Singh.
9. The legal effect of omission of clause (ii) of the proviso to Section 95(1)(b) of the Old Act from the corresponding relevant Section 147 of the New Act brings about a sweeping change in the extent of insurer's liability to pay compensation to the injured victims or the dependents of the deceased victim of a motor accident, in that, under the New Act, the insurer is required to cover the risk to 'any person' who is a victim of the motor accident, whether or not the victim was a gratuitous passenger in any insured vehicle - either it be a private car or a private jeep vehicle, or a goods truck or even a two wheeler. This changed position of law emerging from Section 147 of the New Act had been well considered by a Single Bench of Orissa High Court in the case of Divisional Manager, Oriental Insurance Company Limited, Cuttack Divisional Office v Jasoda Mohanta and Others, rendered by the learned Judge Pradipta Hay, while considering the insurer's liability in respect of a claim of a passenger who was injured in a motor accident occurred on 17-9-1989 while travelling in the insured offending goods truck. Since the accident had taken place after the New Act had come into force, the extent of insurer's liability under Section 147 thereof had arisen for consideration of the Court. At paragraphs 12 and 13 of the judgment, the learned Judge dwelt upon the scope and ambit of the relevant proviso to Section 147(1)(b)(i) of the New Act with particular reference to the words 'any person' and the word 'vehicle' occurring therein. At paragraph 12, the learned Judge has observed:
'12. An analysis of the language of Section 147(1)(b)(i) of the M.V. Act, 1988 leaves no doubt that the words 'any person' mean not only third party, but also other persons and the word 'vehicle' covers all kinds of vehicles including a goods vehicle. In case of death or bodily injury the legislature has used the words 'any person' while in case of damage to property the legislature has confined it only to property of a third party. This difference in language is indicative of the wider coverage in case of death or bodily injury'.
At paragraph 13, it was further observed:
'13. By the Motor Vehicles (Amendment) Act, 1994, Section 147(1)(b)(i) has been amended substituting the words 'injury to any person, including owner of the goods or his authorised representative carried in the vehicle' for the words 'injury to any person'. The said amendment has made it further clear that 'any person' has been used in a wider sense. It has been argued on behalf of the appellant that the said amendment indicates that prior to such amendment the words 'any person' did not include the owner of the goods or his authorised representative carried in the vehicle. As already stated hereinbefore that the words 'any person' even prior to the amendment were not confined to only third party, but the same had a wider coverage. The nature of the amendment shows that the same is clarificatory by nature. The plain meaning of the words ''any person' is 'all persons' and accordingly it was not at all necessary to insert the words 'including the owner of the goods or the authorised representative carried in the vehicle'. ...... .'.
The above interpretation of the material provision in sub-clause (ii) of Section 147(1)(b) of the New Act stands affirmed by pronouncement of the Supreme Court in its said decision in Civil Appeal Nos. 6926 and 6927 of 1999 where it has held:
'8. Proviso to Section 147(1) of the New Act shows that it is a recast provision by placing 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'.
Further, on examination of sub-clauses (i) and (ii) of sub-section (2) of Section 147, the Supreme Court has said:
'10. .... 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 of the accident. It is, therefore, apparent that the limit contained in the old Act has been removed and the policy should insurer 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'
Finally, at paragraph 11 of its judgment, the Supreme Court has laid down:
'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'.
10(a). Therefore, the law laid down by the Supreme Court declares that by virtue of omission of clause (ii) of the proviso to Section 95(1)(b) of the Old Act from corresponding Section 147 of the New Act, the insurer of a vehicle covered by 'Act only policy' i.e., statutory policy, would be liable to indemnify the insured owner against any liability to pay compensation incurred by him for death of or bodily injury to a gratuitous passenger travelling in the offending vehicle, be it a private car, a private jeep or a goods vehicle or even a two wheeler. This is our answer to I part of the question under examination.
10(b). Furthermore, it becomes manifest that by virtue of the aforestated change in position of the law expanding the statutory liability of the insurer under the New Act it necessarily follows that all victims of a motor accident other than the parties to the contract of insurance are third parties in relation thereto. This finding answers the II part of the said question.
11. Another related aspect which deserves our notice and which was pressed into service by learned Counsel for appellant for our consideration is regarding the effect of the instruction of the Tariff Advisory Committee (T.A.C.) issued on 13-3-1978 directing the insurance companies to incorporate a clause in the insurance contracts reading - 'Death or bodily injury to any person including the occupants carried in the motor car provided that such occupants are not carried for hire or reward' and bringing this instruction into force with effect from 25-3-1977. It is not in dispute that the T.A.C. being a statutory body created under Section 64-U of the Insurance Act, 1938, its instructions have statutory force and are binding on all insurers by virtue of Section 64-UC thereof. However, this point being purely of academic interest in this appeal and in view of the law declared by the Supreme Court in the case of New India Assurance Company Limited, supra, that by virtue of Section 147 of the New Act, suffice it for us to state that by omission of clause (ii) of proviso to Section 95(1)(b) of the Old Act therefrom (i.e., Section 147 of the New Act) the said statutory instruction of the T.A.C. has received a formal statutory recognition under the New Act.
12. Therefore, for the reasons discussed above, we record our affirmative answer to the question under examination. In that view of the matter, we find the impugned award fastening liability on the insurer is legally correct and sustainable.
Therefore, the appeal is bound to fail and it fails.