High Court of KeralaSingle Judge2010-09-20Appeals disposed of; insurer may recover amount...

MACA.No. 3022 of 2009 (Shiby v. Thambi; Oriental Insurance Co. Ltd.; Annakkutty)

Case / Petition Number:MACA.No. 3022 of 2009

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: M.N.KRISHNAN
Judgment Date: 2010-09-20
Court Decision / Holding: The appeals are disposed of. The court holds that if the vehicle is insured only under an Act-only policy, the passengers are not covered and the insurer is exonerated, and that the insurer can recover from the owner the amounts already paid towards the awards. The court grants four months for payment and directs that revenue recovery, if any, be kept in abeyance during this period. The outcome reconciles policy-type distinctions with a recovery mechanism for amounts already paid by the insurer.
Final Disposition: Appeals disposed of; insurer may recover amounts paid, with a four-month window for payment; revenue recovery stayed during this period; liability under Act-only policy to passengers is exonerated, subject to recovery against owner where amounts have already been paid by insurer.

Parties to the Case

Appellants / Petitioners

SHIBY, S/O.THOMAS, AGED 40, KUNJANKUDIYIL, MACHIPLAVU.P.O, ADIMALI, IDUKKI DISTRICT.

Respondents

THAMBI, S/O.POULOSE, CHENNATTU HOUSE, MACHIPLAVU.PO, ADIMALI.
ORIENTAL INSURANCE COMPANY LTD, KOTHAMANGALAM.
ANNAKUTTY, W/O.PAILY, PAREKUDIYIL HOUSE, PARATHODE, IDUKKI.PO.

Legal Representation & Advocates

Counsels for Petitioners

• SRI.C.S.MANILAL

Counsels for Respondents

• SRI.GEORGE CHERIAN (THIRUVALLA)

Case Synopsis & Summary

These appeals arise from awards of the Motor Accidents Claims Tribunal, Thodupuzha, in multiple O.P.(MV) numbers, challenging the liability and quantum of awards against the insurance company and vehicle owner. The appellant in MACA No. 3022/09 is Shiby, while the respondents and petitioners include Thambi and Annakkutty along with Oriental Insurance Co. Ltd. The core dispute is whether the insurer is liable where the vehicle—a private jeep—was insured only with an Act-only policy and used as a passenger carrier, allegedly with overloading. The insurer contends that an Act-only policy covers only gratuitous passengers, and that overloading and breach of policy conditions relieve the insurer of liability; the owner argues the vehicle functioned as a private car with excess passengers and that any liability should rest on the vehicle’s insured status and policy type. The Tribunal had directed payment by the insurer and later steps were sought to recover amounts from the owner. The High Court surveys relevant jurisprudence, noting that mere overloading does not absolve liability but limits it to permitted passengers (Anjana Shyam), while package policies may cover pillion riders (Hydrose, Mathew v. Shaji Mathew) and that an Act-only policy excludes coverage for passengers, yielding a gratuitous passenger principle (Tilak Singh, Asha Rani). Ultimately, the court holds that where the policy is Act-only, the insurer may be exonerated, but since it had already paid awards, it may recover those amounts from the owner, with a four-month window for payment and a stay of revenue recovery. The appeals are disposed of accordingly.

Legal Doctrines & Maxims

Gratuitous passenger doctrine
Pillion rider under Act-only policy not covered (Tilak Singh)
Overloading does not automatically exonerate liability; liability limited to number of persons permitted (Anjana Shyam)
Package policy covers passengers including pillion riders under IRDA clarifications
Act-only policy excludes coverage for passengers unless gratuitous/ non-covered rider context

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant submits that the vehicle was insured only under an Act-only policy for a private car, and thus the insurer cannot be held liable for passengers. It is argued that overloading, breach of policy, and use as public transport are not sufficient to keep the insurer liable; the law, as per Anjana Shyam and related decisions, limits insurer liability to the number permitted or, in Act-only policies, absolves liability for passengers; if a package policy is in force, pillion riders and other passengers may be covered; IRDA clarified that standard package policy covers pillion riders and even two-wheeler passengers. The appellant contends that, given an Act-only policy, liability should not be imposed on the insurer, and the claim amounts already paid should be recoverable from the owner.

Contentions of Respondents

The respondents contend that the vehicle was used as a public carriage vehicle though insured as a private vehicle, with potential overloading and breach of policy conditions; such circumstances may trigger non-liability of the insurer under an Act-only policy for passengers; thus the tribunal’s direction to pay could be challenged. They emphasize the distinction between a private car under an Act-only policy and a package policy, arguing that pillion passengers are not covered under the former.

Cited Precedents (5)

Case Name	Citation	Treatment	Explanation
National Insurance Company v. Anjana Shyam	2007 (3) KLT 993	Positive	Used to assert that overloading does not completely exonerate liability; insurer liability limited to number of persons permitted.
New India Assurance Co. Ltd. v. Hydrose	2008 (3) KLT 778	Positive	Supports coverage of pillion passengers under package policies.
Mathew v. Shaji Mathew	2009 (3) KLT 813	Positive	Affirms package policy coverage for pillion riders.
United India Insurance Co. Ltd. v. Tilak Singh	2006 (2) KLT 884(SC)	Positive	Pillion rider not a third party under Act-only policy; gratuitous passenger principle extended.
Asha Rani's case	N/A	Positive	States gratuitous passenger principle under Act-only policy.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE M.N.KRISHNAN** **MONDAY, THE 20TH SEPTEMBER 2010 / 29TH BHADRA 1932** **MACA.No. 3022 of 2009()** **------------------------------------** **OPMV.1245/2002 of MOTOR ACCIDENT CLAIMS TRIBUNAL, THODUPUZHA** **....................** ## **APPELLANT/2ND RESPONDENT IN O.P.(MV)** **-----------------------------------------------------------------** **SHIBY, S/O.THOMAS, AGED 40, KUNJANKUDIYIL, MACHIPLAVU.P.O, ADIMALI, IDUKKI DISTRICT.** **BY ADV. SRI.C.S.MANILAL** ## **RESPONDENTS/RESPONDENTS 1 & 3 AND PETITIONER** **----------------------------------------------------------------------------------** **1. THAMBI,S/O.POULOSE, CHENNATTU HOUSE, MACHIPLAVU.PO, ADIMALI.** **2. ORIENTAL INSURANCE COMPANY LTD, KOTHAMANGALAM.** **3. ANNAKUTTY, W/O.PAILY, PAREKUDIYIL HOUSE, PARATHODE, IDUKKI.PO.** **R2 BY ADV. SRI.GEORGE CHERIAN (THIRUVALLA).** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING COME UP FOR ADMISSION ON 20/09/2010, ALONG WITH MACA NO.3126 OF 2009 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **rs.** ## **MACA.No. 3022 of 2009** ## **ORDER ON I.A. NO.3678/2009 IN MACA NO.3022/2009** ## **DISMISSED** ## **20/09/2010.** **SD/- M.N.KRISHNAN, JUDGE** **//TRUE COPY//** **P.A. TO JUDGE** **rs.** ## **M.N. KRISHNAN, J.** **= = = = = = = = = = = = = = M.A.C.A. NOs. 3022, 3126, 3141, 3142, 3146, 3147, and 3218 OF 2009 and 24 of 2010 = = = = = = = = = = = = = = = Dated this the 20[th] day of September, 2010.** ## **J U D G M E N T** These appeals are preferred against the awards of the Motor Accidents Claims Tribunal, Thodupuzha in O.P.(MV)Nos.1245/02, 255/02, 669/02, 257/02, 258/02, 1242/02, 256/02 and 667/02. The point that arises for determination in these appeals are regarding the liability of the insurance company and the liability of the owner with respect to the claim amounts are concerned. It is the case of the claimants that while they were travelling in a private jeep it met with an accident resulting in injuries to the claimants. The insurance company would contend that the policy was issued to the vehicle as a private passenger vehicle but it was used as a public carriage vehicle and the ## **M.A.C.A. NOs. 3022/09 & con. Cases** -:2:- policy does not cover the risk of passengers. It is also contended that there is breach of policy conditions as well and there was overloading which also resulted in the breach of policy conditions. The owner who is the appellant before this Court would strongly contend that the persons were travelling in a private vehicle though excess in number and the vehicle was covered by an Act only policy. Now in the light of the contention that the vehicle was covered only by an Act only policy the other contentions regarding overloading of the vehicle as well as breach of policy conditions falls into insignificance. It is true that if a vehicle is insured as a private vehicle and then it is used as a taxi it amounts to breach of policy conditions. So far as the overloading of passengers are concerned the Hon'ble Supreme **M.A.C.A. NOs. 3022/09 & con. Cases** -:3:- Court has laid down that mere overloading does not amount to total exoneration of the liability but the liability of the insurance company has to be limited to the number of persons permitted to be carried in a vehicle( _**Anjana Shyam's case, 2007 (3) KLT 993 National Insurance Company v. Anjana Shyam).**_ 2. The most important thing as far as this case is concerned is even if it is admitted as contended by the appellant that it is only a private vehicle covered by an Act only policy then the law gives a total free chit to the insurance company and the insurance company is not liable for the amount. By virtue of the two decisions of this Court reported in **New India Assurance Co. Ltd. v. Hydrose (2008 (3) KLT 778)** and **Mathew v. Shaji Mathew (2009 (3) KLT 813)** the Division Bench considered the ## **M.A.C.A. NOs. 3022/09 & con. Cases** ## -:4:- contentions of a package policy and held that the contentions enumerated therein covers the risk of a pillion rider even without premium. The Insurance Regulatory and Development Authority also by a clarificatory circular dated 16.11.2009 made it clear that the persons carried in a private vehicle and persons carried in a two wheeler are covered under the terms and conditions of Standard Motor Package Policy. So the difference is when a vehicle is covered by only an Act only policy it does not cover the risk of persons carried in that private vehicle. But if that vehicle is covered by a package policy by the terms and conditions of the policy passengers are covered. 3. Now so far as this case is concerned the vehicle is covered by an Act only policy. Then the status of a person carried in a vehicle ## **M.A.C.A. NOs. 3022/09 & con. Cases** -:5:- covered by an Act only policy is only that of a gratuitous passenger as held in _**Asha Rani's case.**_ The Hon'ble Supreme Court in the decision reported in **Tilak Singh's case [United India Insurance Co. Ltd. v. Tilak Singh)2006 (2) KLT 884(SC)** has considered the case of a pillion rider in a two wheeler covered by an Act only policy. There the Hon'ble Supreme Court held that he will not be a third party so as to be covered by an Act only policy but he will be only a gratuitous passenger not covered by the policy. The same principle has to be extended to a private car where there is only coverage by an Act only policy. Therefore it has to be held that even if the contention of the appellant is taken note of in these cases by virtue of the fact that it is only an Act only policy the persons carried therein are not covered and **M.A.C.A. NOs. 3022/09 & con. Cases** -:6:- therefore the insurance company is to be exonerated from the liability. But as far as these cases are concerned the Tribunal made an order about 5 years back directed the insurance company to pay the amount and recover it from the owner and therefore the insurance company has paid the amounts to the claimants. So at least right to recover has to be granted to the insurance company and therefore I hold that the insurance company can recover back the amount which is paid by it towards satisfaction of the award by executing the very same award. Considering the amount involved and the pitiable position argued by the learned counsel for the appellant I am inclined to grant 4 months time to make the payment and I direct the insurance company not to take any coercive steps till the expiry of four months. Revenue recovery ## **M.A.C.A. NOs. 3022/09 & con. Cases** -:7:- proceedings, if any initiated be kept in abeyance for this period and thereafter be pursued for realisation of the amount. The appeals are disposed of accordingly. **M.N. KRISHNAN, JUDGE.** ul/-