UNITED INDIA INSURANCE CO LTD Vs. CELINAMMA
LAWS(KER)-2003-1-68
HIGH COURT OF KERALA
Decided on January 27,2003

UNITED INDIA INSURANCE CO.LTD. Appellant
VERSUS
CELINAMMA Respondents

JUDGEMENT

J.B.Koshy, J. - (1.) In all these appeals, the main question for consideration is whether passengers of private vehicles carried not for hire or reward (gratuitous passengers) are covered by insurance policies called 'Act policies' which are taken only to meet the minimum requirements of the provisions of the Motor Vehicles Act, 1939 (hereinafter Referred to as 'the old Act'). Facts are not disputed. In all these appeals, the accidents took place during the period 17.1.1980 to 10.3.1988, that is, during the period when old Act was in force as the Motor Vehicles Act, 1988 (hereinafter Referred to as 'the new Act') came into force only with effect from 1.7.1989. All these appeals except M.F.A. No. 1158 of 1994 were filed by the insurance, companies as the Motor Accidents Claims Tribunals fastened the liability on the insurance company. In M.F.A. No. 1158 of 1994 arising out of O.P. (M.V.) No. 116 of 1991, the Tribunal held that under 'Act policy', the insurer is not liable to indemnify the owner of the vehicle for compensation payable on account of the injuries suffered to gratuitous passengers. Claimants are questioning the above finding. The quantum of compensation is also questioned in that appeal. In all these cases, victims of the accidents who were gratuitous passengers were travelling in private jeeps at the time of the accidents. Minimum requirement and risk compulsorily coverable under the insurance are mentioned in section 95 of the old Act.
(2.) The relevant portion of section 95 of the old Act reads as follows: "95. 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 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 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 employee 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 (8 of 1923), in respect of the death of, or bodily injury to, any such employee (a) engaged in driving the vehicle, or (b) if 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 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 a 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."
(3.) Section 95 (1) (b) (i) provided that to meet the requirement of the statute, insurance company must indemnify the insured against any liability which may be incurred by him in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place. It also covers liability in respect of damage to any property of a third party. Section 95 (1) (b) (ii) is a special provision dealing with the liability against the death of or bodily injury to any passenger of a public service vehicle. Passenger of a public service vehicle is also compulsorily insurable and public service vehicle is defined under section 2 (25) of the old Act as 'any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward' and it includes a motor cab, contract carriage and stage carriage. But, here, we are concerned with the coverage of passengers in private vehicles. The term 'any person' contained in section 95 (1) (b) (i) is very wide and would take in even a passenger in a private vehicle. Clause (b) (i) refers to death of or bodily injury to any person arising out of the use of the vehicle in a public place. Proviso (i) makes special provision in respect of employees who are carried in the vehicle limiting the liability to that arising under Workmen's Compensation Act, 1923 in respect of death of or bodily injury to such employee. Proviso (ii) limits the application of clause (b) (i) to a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. A plain reading of the proviso would show that it excludes the liability in respect of death of or bodily injury to passengers in vehicles unless they are carried for hire or reward or they are carried to cover contractual liability. The provisions are discussed in detail by the Supreme Court in Mallawwa v. Oriental Insurance Co. Ltd., 1999 ACJ 1 (SC). In that case, the Supreme Court was considering the question whether owner of the goods being carried in a goods vehicle is covered by an 'Act policy'. A three-member Bench of the Supreme Court after quoting section 95 of the old Act as amended by Act 56 of 1969 held as follows: "What is important to be noted is that the legislature, after providing generally in clause (b) of sub-section (1) in wide terms so as to include 'any person' and every 'motor vehicle' within its sweep, carved out certain exception by adding a proviso to that clause. By proviso (ii), it restricted the generality of the main provision by confining the requirement to cases where 'the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment'. In absence of the proviso, the main provision would have included all classes of vehicles including goods vehicles and all passengers whether carried for hire or reward or by reason of or in pursuance of a contract of employment or otherwise. That is the reason why there is a reference to different classes of vehicles in proviso (i). It refers to 'vehicle', 'public service vehicle' and 'goods vehicle'. The words 'any person' in the main provision would have included the employee of the person insured and, therefore, an exception was made by enacting proviso (i) so as to restrict liability of the insurer in respect of his employees. Both those exceptions were made as the legislature did not want to widen the liability of the insurer and the insured by making it more than what it was under the English Act, upon which section 95 was based." Again the court held as follows: "(8) Again turning back to proviso (ii), we find that it, in clear terms, restricted the scope of the main provision by confining its application to that vehicle which is 'a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment'. In the first instance, the vehicle had to be a vehicle of that class in which passengers were carried. If that was not the intention of the legislature, it would not have used the phraseology 'the vehicle is a vehicle in which passengers are carried' and would have simply provided that 'except where passengers are carried for hire or reward...' So also the compulsory coverage was not intended for all passengers and, therefore, it was provided that 'passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment'.";


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