NATIONAL INSURANCE CO LTD Vs. FAQIR CHAND

JUDGEMENT

(1.) The only ground urged by Mr. Shekhar today in the appeal is that respondent No. 1 who was the passenger of the bus in question could not be included in the category of "third party" and, therefore, the liability of the appellant qua respondent No. 3 in relation to an accident involving a passenger could not be invoked. According to Mr. Shekhar "third party" is an expression which should exclude the passengers travelling in a bus. No other point was urged.

(2.) Chapter XI of the Motor Vehicles Act, 1988 deals with the insurance of motor vehicles against the third party risk. Section 145 is the definition section, it does not define a third party, even though in clause (g), it has been stated that "third party" includes the Government. Section 146 relates to the necessity for insurance against a third party risk and lays down that no person shall use, except as a passenger a motor vehicle in a public place unless there is in force in relation to such motor vehicle a policy of insurance complying with the requirements of Chapter XI of the Act. What are the requirements of this Chapter and how are these requirements to be complied with in a policy of insurance are not, however, mentioned in Section 146 of the Act. For these, one has to look at Section 147 which lays down that in order to comply with the requirements of Chapter XI, a policy of insurance must be a policy which, inter alia is issued by an insurer and insures the person specified in the insurance policy against any liability which may be incurred by him in respect of the death 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. As will be evident once again the expression "third party" has not been defined in Section 147. What is the true meaning of the expression "third party"? A contract of insurance has two parties to it, the insurer and the insured. These are the contracting parties of the contract of insurance and they, therefore, can be called as the first party and the second party. Any party, therefore, who is not a contracting party to the policy of insurance will automatically be referred to and called as a third party because he is neither the first party (the insurer) nor the second party (the insured) (or vice versa, if one pleases). The use of the words "third party" therefore, in Chapter XI of the Motor Vehicles Act clearly refers to the intention of the Legislature to point out to a party who is neither the first party nor the second party to a contract of insurance.

(3.) . Other than the contracting parties to the insurance policy, the expression "third party" therefore, should include everyone, be it a person travelling in another vehicle, one walking on the road or a passenger in the vehicle itself which is the subject matter of the insurance policy. Every insured takes out an insurance policy against a third party risk, and enters into a contract with insurer, only with the motive, intention and purpose of covering the risks which may arise in relation to claims lodged against him by a third party By agreeing to issue the insurance policy, the insurer undertakes to insure the insured and indemnify him against all risks and in relation to all claims lodged against him by third parties. Narrowing the concept, scope and ambit of a third party, and therefore, excluding the passengers in the vehicle from the operation and purview would not only defeat the very purpose of taking out the insurance policy, but the very object of the Motor Vehicles Act which makes it a mandatory requirement of law that all vehicles/owners of vehicles must be compulsorily insured against third party risks. The appeal has no merit and is dismissed. Appeal dismissed.