United India Insurance Company Ltd. v. Antony and others

1 MACA.No.771 OF 2020 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE C.S.DIAS** **TUESDAY, THE 16TH DAY OF MARCH 2021 / 25TH PHALGUNA, 1942** ## **MACA.No.771 OF 2020(F)** **AGAINST THE AWARD IN OPMV 923/2017 DATED 03-02-2020 OF MOTOR ACCIDENT CLAIMS TRIBUNAL , IRINJALAKUDA** ## **APPELLANT/S:** **UNITED INDIA INSURANCE COMPANY LTD.,** **FASHION TOWER, KANNUR REPRESENTED BY ITS ADMINISTRATIVE OFFICER, A. SHOBHA, UNITED INDIA INSURANCE CO-LTD., REGIONAL OFFICE, SHARANYA, HOSPITAL ROAD, KOCHI-682011.** **BY ADV. SRI.S.K.AJAY KUMAR** ## **RESPONDENT/S:** - **1 ANTONY,AGED 63 YEARS, S/O. VAREETH, PAYYAPPILLY HOUSE, VENDOOR DESOM, AMBALLUR VILLAGE AND P.O., MUKUNDAPURAM TALUK, THRISSUR DISTRICT-680302.** - **2 ANNIE,AGED 54 YEARS, W/O. ANTONY, PAYYAPPILLY HOUSE, VENDOOR DESOM, AMBALLUR VILLAGE AND P.O., MUKUNDAPURAM TALUK, THRISSUR DISTRICT-680302.** - **3 ANCY BABY,AGED 28 YEARS, D/O. ANTONY, PAYYAPPILLY HOUSE, VENDOOR DESOM, AMBALLUR VILLAGE AND P.O., MUKUNDAPURAM TALUK, THRISSUR DISTRICT-680302.** - **4 SUVARNA,AGED 23 YEARS, D/O. ANTONY, PAYYAPPILLY HOUSE, VENDOOR DESOM, AMBALLUR VILLAGE AND P.O., MUKUNDAPURAM TALUK, THRISSUR DISTRICT-680302.** - **5 SHIDHIN SHAJI,AGE NOT KNWON, S/O.K.P. SHAJI, SINDHOORAM, THAVAKKARA, CIVIL STATION P.O., KANNUR-670002.** - **6 VASUDEVAN,KATTIKULAM HOUSE, ALAGAPPA NAGAR P.O., THRISSUR DISTRICT-680302, NOW RESIDING AT KHB COLONY, YELAHANKA TOWN, BANGALORE-560064.** **R1-3 BY ADV. SRI.A.R.NIMOD** **R1-3 BY ADV. SRI.M.A.AUGUSTINE** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 16.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 2 MACA.No.771 OF 2020 ## **C.S.DIAS, J. ====================== MACA No.771 of 2020** **====================== Dated this the 16[th] day of March, 2021** ## **JUDGMENT** Can an Insurance Company be directed to pay compensation to a pillion rider in a motor cycle covered by a statutory policy is the question that emanates for consideration in the appeal. 2. The relevant background facts for the determination of the appeal are as follows:- 2.1. The appellant (Insurance Company) was the third respondent in OP (MV) 923/2017 on the file of the Motor Accidents Claims Tribunal, Irinjalakkuda. The respondents 1 to 4 in the appeal were the petitioners and the respondents 5 and 6 were the respondents 1 and 2 in the claim petition. The parties are, wherever the context so requires, referred to as per their status in the claim petition. 3 MACA.No.771 OF 2020 2.2. The petitioners had filed the claim petition under Section 166 of the Motor Vehicles Act, 1988 (in short ‘the Act’), claiming compensation on account of the death of one Issac Antony, who died in a motor accident on 30.9.2016. 2.3 The case of the petitioners was that, while the deceased was travelling as a pillion rider on a motor cycle bearing registration No.KL-13-Y-7323 on Major Sandeep Unnikrishnan Road near Thirumala Daba from Yelahanka New Town to M.S Palaya Road, the rider of the motor cycle, by name, Adarsh rode the motor cycle in a rash and negligent manner and lost control of the vehicle and hit the motor cycle against a wall. As a result of the accident, Issac Antony sustained fatal injuries and died on the spot. The first respondent is the owner of the vehicle and the second respondent is the legal representative of the deceased rider and the third respondent is the insurer of the motor cycle. The petitioners claiming themselves to be the legal representatives of the deceased Issac Antony, claimed an amount of Rs.25,00,000/- as compensation. 4 MACA.No.771 OF 2020 2.4. The respondents 1 and 2 did not contest the proceedings. 2.5. The third respondent filed a written statement admitting the insurance policy of the motor cycle. However, the third respondent contended that the insurance policy was only a ‘Limited Liability Policy’, therefore, the third respondent was not liable to cover the pillion rider. Hence the claim petition be dismissed. 2.6. The petitioners marked Exhibits A-1 to A-13 in ― evidence. The third respondent marked Ext B1 copy of ― the insurance policy in evidence. 2.7. The Tribunal by the impugned award allowed the claim petition by holding that the respondents 1 and 2 were jointly and severally liable to pay compensation of Rs.14,90,800/- with interest @ 8% interest per annum from the date of petition till the date of realisation with proportionate costs. . The third respondent was directed to deposit the amount and recover it from the first respondent. - 2.8. Aggrieved by the impugned award, the third 5 MACA.No.771 OF 2020 ## respondent is in appeal. 3. Heard Sri.S.K.Ajay Kumar, the learned Counsel appearing for the appellant and Sri.A.R Nimod, the learned counsel appearing for the respondents 1 t o 4. 4. The learned Counsel appearing for the appellant drew the attention of this Court to Sections 147 and 149 of the Motor Vehicles Act, 1988 and contended that under a ‘Limited Liability Policy, unless additional premium is paid, the Insurance Company is not liable to pay the compensation to person(s) falling outside the purview of Section 147 of the Act. when there is a Only violation/breach of the Policy conditions, the Insurance Company can be directed to pay the compensation to the victim/dependents and then recover the amount from the insured as provided under Section 149 of the Act. According to him, in the present case, Exhibit B-1 is a ‘Limited Liability Policy’ and no additional premium was paid to cover the pillion rider on the motor cycle. Therefore, the impugned award is patently erroneous. He placed reliance on the decisions of the Honourable 6 MACA.No.771 OF 2020 Supreme Court in **New India Assurance Company Ltd vs. Asha Rani and others** [2003 (2) SCC 223] and **United India Insurance Co. Ltd, Shimla vs. Tilak Singh and others [** 2006 (4) SCC 404] to fortify his contentions. He prayed that the appeal be allowed and the Insurance Company be exonerated. 6. Per contra, Sri.A.R.Nimod, the learned Counsel appearing for the respondents 1 to 4 defended the impugned award and contended that in **National Insurance Co Ltd vs. Saju P.Paul and Another** [2013 (2) SCC 41] the Honourable Supreme Court has held that there is no embargo or prohibition in the Tribunal directing the Insurance Company to pay the compensation to the victim and recover it from the insured. He placed strong reliance on the decision in **Manuara Khatun and others vs. Rajesh Kr. Singh and others** [2017 (4) SCC 796] and argued that the Honourable Supreme Court following **Saju P.Paul** (supra) had directed the Insurance Company to pay the compensation to the victim and recover the same from the insured. Finally, he placed 7 MACA.No.771 OF 2020 reliance on **Shamanna and another vs. the Divisional Manager, Oriental Insurance Co Ltd and others** [ 2018 (4) KLT 367] and submitted that the Honourable Supreme Court following the decisions in **National Insurance Co.Ltd vs. Swaran Singh and others** [(2004) 3 SCC 297] and **National Insurance Co.Ltd vs. Laxmi Narain Dhut** [(2007) 3 SCC 700], has held that the proper course to be adopted in matters of compensation is to direct the Insurance Company to pay the compensation and recover it from the insured. The learned counsel argued that the law laid down in **Asha Rani** (supra) has got watered down over the years, by the pronouncements in **Saju Paul** and **Manuara Khatun** (supra) and, therefore, there is no wrong in directing the Insurance Company to pay and recover the compensation. 7. It is an undisputed fact that the deceased was a pillion rider on the motor cycle bearing registration No.KL13-Y-7323. Exhibit B-1 is the insurance policy in respect of the said motor cycle. Undisputedly, no additional premium was paid to cover a pillion rider. 8 MACA.No.771 OF 2020 ## 8. Sub-Sections (1) and (2) of Section 147 of the Motor ## Vehicles Act, 1988, reads as follows: “147. **Requirement 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, and - (b) **insures the person or classes of persons specified in the policy to the extent specified in subsection (2)** - - (i) **against any liability which may be incurred by him in respect of the death of or bodily injury to any person including owner of the goods or his authorised representative carried in the motor vehicle or damage to any property of a third party caused by or arising out of the use of the motor vehicle in a public place** ; - (ii) **against the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor 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) - (b)if it is a public service vehicle engaged as conductor of the vehicle or in examining tickets on the vehicle, or - (c) if it is a goods carriage, being carried in the vehicle, or (ii) to cover any contractual liability. Explanation – For the removal of doubts, it is hereby clarified that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place, notwithstanding that the person 9 MACA.No.771 OF 2020 who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place. ## **(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:—** ## **(a) save as provided in clause (b), the amount of liability incurred;** (b) in respect of damage to any property of a third party, a limit of rupees six thousand: Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier”. (emphasis given) ## 9. Sub-Section (1) of Section 149 of the Motor Vehicles Act, 1988, reads thus: “149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.— (1) **If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (l) of section 147 (being a liability covered by the terms of the policy) 1[or under the provisions of section 163A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments** . (emphasis given) ## 10. A three Judge Bench of the Honourable Supreme Court in **New India Assurance Company Ltd vs. Asha** 10 MACA.No.771 OF 2020 ## **Rani and others** (supra), interpreting Section 147 of the Act, in paragraphs 27 to 29 held as follows: 27. In view of the changes in the relevant provisions in 1988 Act vis-a-vis 1939 Act, we are of the opinion that the meaning of the words “any person” must also be attributed having regard to the context in which they have been used i.e., 'a third party'. Keeping in view the provisions of 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor. 28. Furthermore, sub cls (i) of Cl.(b) of sub-s.(1) of S.147 speaks of liability which may be incurred by the owner of a vehicle in respect of 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, whereas sub cl.(ii) thereof deals with liability which may be incurred by the owner of a vehicle 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. 29. **An owner of a passenger carrying vehicle must pay premium for covering the risks of the passengers. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid. But if the ratio of this Court's decision in New India Assurance Company v. Satpal Singh and others (JT 1999 (9) SC 416) is taken to its logical conclusion, although for such passengers, the owner of a goods carriage need not take out an insurance policy, they would be deemed to have been covered under the policy where for even no premium is required to be paid** ”. 11. Again in paragraph 21 in **United India Insurance Co. Ltd, Shimla vs. Tilak Singh and others** (supra), the Honourable Supreme Court held as follows: **“ 21. In our view, although the observations made in Asha Rani case were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also. Thus, we must uphold the contention of the appellant Insurance Company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who was a pillion** 11 MACA.No.771 OF 2020 **rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to a gratuitous passenger.”** (emphasis given) 12. In **United India Insurance Co. Ltd vs. M Laxmi and others** (supra) the Honourable Supreme Court has reiterated the position that in an ‘Act Policy’, the Insurance Company is not liable to pay any amount in the case of injuries sustained by a pillion rider. The same view has been taken in **Jagtar Singh @ Jagdev Singh vs. Sanjeev Kumar and others** (supra) in respect of occupants/gratuitous passengers in a passenger car. 13. On a careful analysis of the decision in **National Insurance Co Ltd vs. Saju P.Paul and Another** (supra) it is seen that the Honourable Supreme Court has, without referring to Sections 147 and 149 of the Act or **Asha Rani and Tilak Singh,** in exercise of its plenary powers under Article 142 of the Constitution of India and taking into consideration **the peculiar facts and circumstances of that case** , directed the Insurance Company to pay the compensation to the victim and recover the amount from 12 MACA.No.771 OF 2020 the insured. 14. Following **Saju Paul** (supra) the Honourable Supreme Court in **Manuara Khatun and others vs. Rajesh Kr. Singh and others** (supra) also in the peculiar facts of the above cases, de-hors the fact that the victims were gratuitous passengers, directed the Insurance Companies to pay the compensation to the dependents of the deceased and then recover the amount from the insured. 15. In **Shamanna and another vs. the Divisional Manager, Oriental Insurance Co Ltd and others** (supra), the Honourable Supreme Court relying on its earlier decisions in **Swaran Singh** and **Laxmi Narain Dhut** (supra) directed the Insurance Company to pay compensation and recover it from the insured. However, these decisions were rendered in cases falling within the ― sweep of Section 149 of the Act cases involving violation of policy conditions. Therefore, the said decisions are not applicable to present case. 16. The power of Honourable Supreme Court to direct 13 MACA.No.771 OF 2020 an Insurance Company to pay the compensation to the victim and recover the amount from the insured, in exercise of its powers under Article 142 of the Constitution of India, was doubted and referred to a larger Bench in **National Insurance Co Ltd vs. Parvathneni and another [(2009) 8 SCC 785]** . However, by order dated 17.9.2013, the Special Leave Petition was dismissed and the reference has been kept open to be decided in an appropriate case. Again in **National Insurance Company** **vs. Roshan Lal and another [(2017) 4 SCC 803]** the question has been placed before a larger Bench. 17. On an overall re-appreciation of the facts, Sections 147 and 149 of the Act and the aforecited precedents, I am of the definite opinion that the law laid by the three Judge Bench in **Asha Rani** , and **Tilak Singh** , that a ‘Statutory Policy’ only covers death or bodily injury of a third party falling within the sweep of Section 147 of the Act, is squarely applicable to the facts of the present case. Therefore, as additional premium was admittedly not paid to cover the deceased, who was a pillion rider on the 14 MACA.No.771 OF 2020 motor cycle, which was covered by only 'Act Policy', I have no hesitation to hold that the deceased was not covered by Exhibit B-1 policy. Hence, the impugned award directing the appellant to pay compensation to the respondents 1 to 4 and then recover the amount from the fifth respondent/ first respondent in the claim petition is erroneous and unsustainable in law. Hence, the impugned award directing the appellant to pay compensation to the respondents 1 to 4 is set aside. In the result, the appeal is allowed and the impugned award directing the appellant to pay compensation to the respondents 1 to 4 is set aside. The parties shall suffer their respective costs. **Sd/-** **C.S.DIAS** **JUDGE** SKS/16.3.2021