Royal Sundaram Alliance Insurance Company Limited v. A. Pappathi

Civil Miscellaneous Appeals are filed under Section 173 of MotorVehicles Act, 1988, against the awards and decrees dated 30.6.2008passed in M.C.O.P.Nos.315 of 2007 and 309 of 2007 on the file of theMotor Accidents Claims Tribunal ( Subordinate Court), Poonamallee.For appellant inboth the appeals : Mr.N.VijayaraghavanFor respondents 1 and 2in CMA 4203 of 2008 andrespondents 1 to 5 inCMA 4204 of 2008 : Mr.P.SelvarajCOMMON JUDGMENTThe Insurance Company has filed these two appeals challengingthe awards dated 30.6.2008 passed in M.C.O.P.Nos.315 and 309 of 2007on the file of the Motor Accidents Claims Tribunal (SubordinateCourt), Poonamallee.2. In both the appeals Mr.P.Selvaraj, counsel appears forcaveators, the respondents 1 and 2 in C.M.A.No.4203 of 2008 and therespondents 1 to 5 in C.M.A.No.4204 of 2008. In view of theendorsement made by the counsel for the appellant in the appealgrounds, notice to the owner of the vehicle, viz., the respondentNo.3 in C.M.A.No.4203 of 2008 and respondent No.6 in C.M.A.No.4204 of2008 is dispensed with. By consent of both parties, main appealsare taken up for final disposal. 3. C.M.A.No.4204 of 2008 (M.C.O.P.No.309 of 2007):- It is acase of fatal accident. The motor accident in this case happened on13.8.2006. The deceased in this case is Tamil Selvan, 28 years old,contractor and L.L.B. Final Year student. He was travelling on aMaruti Esteem Car bearing Registration No.TN.02 V 7880 fromPondicherry to Chennai along with his friends. The car was driven bythe 6th respondent herein, by name Amitt Bhatt, who is the owner ofthe Maruti Esteem Car insured with the Royal Sundaram GeneralInsurance Company. According to the claimants, the driver of thecar viz., Amitt Bhatt, drove the car in a rash and negligent mannerand hit the palm tree and caused grievous injuries which resulted inthe death of the said Tamil Selvan. On the death of Tamil Sevan, themother aged 52 years, three brothers aged 22 years, 21 years and 18years and one sister aged 19 years filed the claim under Section 166of Motor Vehicles Act, 1988 for compensation in a sum ofRs.6,00,000/- stating that the deceased was working in AmbatturClothing Company Limited and was earning a sum of Rs.10,000/- p.m.4. In support of the claim, the mother of the deceased wasexamined as P.W.1 and one Jagadesh, the eye witness to the accident,was examined as P.W.2. Documents Exs.A-1 to A-6 were marked. On https://hcservices.ecourts.gov.in/hcservices/ behalf of the insurance company one Vankatakrishnan, senior executiveofficer of the insurance company was examined as R.W.1. True copy ofthe insurance policy issued to the Maruti Esteemed Car was marked asEx.R-1. 5. Based on the oral and documentary evidence and consideringthe age, income, occupation of the deceased and the age of theclaimants, the Tribunal granted the following amount as compensationwith interest at the rate of 7.5% p.a.:-Sl.No.HeadAmount granted bythe Tribunal1Loss of pecuniary benefitsRs.4,32,000/-2Transport expensesRs. 1,000/-3Funeral expensesRs. 2,000/-TotalRs.4,35,000/-6. C.M.A.No.4203 of 2008 (MCOP No.315 of 2007):- In thefatal accident which happened as above, another occupant of the car,Suresh, 27 years old self-employed contractor, said to be earningRs.10,000/- p.m., while travelling in the very same Maruti EsteemedCar, driven by the third respondent herein, viz., Amitt Bhatt,suffered grievous injuries and died. The mother aged 58 years andfather aged 61 years filed a claim under Section 166 of MotorVehicles Act, 1988 for compensation in a sum of Rs.5,00,000/-. 7. In support of the claim, the mother of the deceased Sureshwas examined as P.W.1 and one Jegadeesh, the eye witness to theaccident, was examined as P.W.2. Documents Exs.A-1 to A-7 weremarked. On behalf of the appellant/2nd respondent before theTribunal, one Venkatakrishnan, Senior Executive Officer was examinedas R.W.1 and the copy of insurance policy issued to the MarutiEsteemed Car was marked as Ex.R-1. 8. Based on the oral and documentary evidence and consideringthe age, income and the occupation of the deceased and the age of theclaimants, the Tribunal granted the following amounts as compensationwith interest at the rate of 7.5% p.a.:-Sl.No.HeadAmount granted bythe Tribunal1Loss of pecuniary benefitsRs.2,88,000/-2Loss of love and affection to the parentsRs. 30,000/-3Transport expensesRs. 1,000/-4Funeral expensesRs. 2,000/-TotalRs.3,21,000/- https://hcservices.ecourts.gov.in/hcservices/

9. The owner-cum-driver of the vehicle remained ex parte beforethe Tribunal. In both cases, the appellant before the Tribunalcontended that the victims are gratuitous passengers in a private carand therefore, there is no statutory liability on the appellantinsurer to cover the risk of the occupants of private car undersection 147 of the Motor Vehicles Act, 1988 as they are not thirdparties and further no additional premium was paid to cover the riskto occupants, gratuitous passengers, under the policy of insuranceEx.R-1. 10. The Tribunal in this case placing reliance on the decisionof this court in National Insurance Company Ltd., - vs. - Komalamreported in 2008(2) MLJ 736 stated that in the insurance policy Ex.R-1 no additional premium was paid to cover the risk to occupants ofthe car, who are gratuitous passengers and therefore, held that theinsurance company was not liable. The Tribunal, however, relyingupon the Apex Court's decision in Deddappa – vs. - B.M., NationalInsurance Co. Ltd., reported in (2008)2 MLJ 575 (SC) and variousother decisions, directed the insurer appellant to pay the claimantsand recover the award amount from the insured/owner of the vehicle.Hence, the appeal. 11. In both the appeals, at the out set, it was fairly concededby the learned counsel for the appellant that the appellant is notaggrieved by the quantum of compensation awarded in both the casesand that it is just and reasonable. 12. The point that is canvassed in appeal before this Court andbefore the Tribunal as well, is that the insurance policy Ex.R-1issued to the ill-fated Maruti Esteem Car, which is a package policyfor a private vehicle, covers risk only to the extent of third partyclaims in terms of Section 147 of the Motor Vehicles Act 1988 anddoes not cover the risk of the gratuitous passengers, the occupantsof the car. According to the appellant, even under the packagepolicy issued in respect of the vehicle, since no additional premiumwas paid to cover the occupants of the private vehicle (car) andsince the deceased are gratuitous passengers, the insurance companyis not liable. On this premise, these two appeals are canvassed. 13. In support of this contention counsel for appellant reliedon the decision of the Apex Court in UNITED INIDA INSURANCE COMPANY –Vs. - TILAK SINGH (2006 ACJ 1441 (SC) = 2006(4) SCC 404), a caserelating to death of a pillion rider, a gratuitous passenger;wherein the Apex Court while dealing with the case of statutoryinsurance policy, held in paragraphs 1, 2 and 21 as follows:-"1. The core issue involved in this appealis: Whether a statutory insurance policy underthe Motor Vehicles Act, 1988, intended to coverthe risk to life or damage to properties of third https://hcservices.ecourts.gov.in/hcservices/ parties would cover the risk of death or injuryto a gratuitous passenger carried in a privatevehicle?2. Bal Krishan, the respondent No.5, hadinsured his scooter with the appellant insurancecompany for the period 7.3.1989 to 6.3.1990. Forcovering liability to pillion passengers theendorsement of I.M.T.70 pertaining to accident tounnamed hirer/driver/pillion passenger, isrequired on the insurance policy, which may beobtained by payment of additional premium. Theinsurance policy covering the scooter ofrespondent No.5 did not contain an endorsement ofI.M.T.70.""21. In our view, although the observationsmade in Asha Rani’s case, 2003 ACJ 1 (SC), werein connection with carrying passengers in a goodsvehicle, the same would apply with equal force togratuitous passengers in any other vehicle also.Thus, we must uphold the contention of theappellant insurance company that it owed noliability towards the injuries suffered by thedeceased Rajinder Singh who was a pillion rider,as the insurance policy was statutory policy andhence it did not cover the risk of death of orbodily injury to gratuitous passenger."14. The learned counsel for the appellant referred to Section147(1) of the Motor Vehicles Act, 1988 and stated that the claim inboth the cases is not covered by statutory prescription. Sec.147(1) and 147(5) of the Motor Vehicles Act, 1988, which is relevant forthe issue, reads as follows:-"147. Requirements of policies and limitsof liability. (1) In order to comply with therequirements of this Chapter, a policy ofinsurance must be a policy which-- (a) is issued by a person who is anauthorised insurer; and (b) insures the person or classes ofpersons specified in the policy to the extentspecified in sub-section (2)-- (i) against any liability which may beincurred by him in respect of the death of orbodily injury to any person including, owner of https://hcservices.ecourts.gov.in/hcservices/ the goods or his authorised representative carriedin the vehicle or damage to any property of athird party caused by or arising out of the use ofthe vehicle in a public place; (ii) against the death of or bodilyinjury to any passenger of a public servicevehicle caused by or arising out of the use of thevehicle in a public place: Provided that a policy shall not berequired-- (i) to cover liability in respect of thedeath, arising out of and in the course of hisemployment, of the employee of a person insuredby the policy or in respect of bodily injurysustained by such an employee arising out of andin the course of his employment other than aliability arising under the Workmen's CompensationAct, 1923, (8 of 1923) in respect of the deathof, or bodily injury to, any such employee-- (a) engaged in driving the vehicle, or (b) if it is a public service vehicleengaged as a conductor of the vehicle or inexamining tickets on the vehicle, or (c) if it is a goods carriage, beingcarried in the vehicle, or (ii) to cover any contractualliability. Explanation.--For the removal of doubts, it ishereby declared that the death of or bodily injuryto any person or damage to any property of a thirdparty shall be deemed to have been caused by or tohave arisen out of, the use of a vehiclein a public place notwithstanding that theperson who is dead or injured or the propertywhich is damaged was not in a public place atthe time of the accident, if the act oromission which led to the accident occurred in apublic place.(2) x x x (3) x x x(4) x x x https://hcservices.ecourts.gov.in/hcservices/ (5) Notwithstanding anything contained in anylaw for the time being in force, an insurerissuing a policy of insurance under this sectionshall be liable to indemnify the person or classesof persons specified in the policy in respect ofany liability which the policy purports to coverin the case of that person or those classes ofpersons."15. Learned counsel for the appellant placed reliance on theFull Bench decision of the Kerala High Court in Mathew Joseph – vs. -Janaki reported in 2007 ACJ 912. It is a case of death of agratuitous passenger in a private jeep. The policy is acomprehensive policy. Relying upon the Apex Court's decision in NewIndia Assurance Co. Ltd., - vs. - Asha Rani reported in (2003)2 SCC223 : 2003 SCC (Cri) 493, and UNITED INIDA INSURANCE COMPANY – Vs. -TILAK SINGH (2006 ACJ 1441 (SC) = 2006(4) SCC 404), it has been heldthus:-“Gratuitous passengers in transport vehicles,including a motor cycle, can have coverage onlywhen a comprehensive policy or extended policy asmight be possible to be issued has been availed ofby the owner of the vehicle. Only in such casesthe insurance company is required to compensate.We hold that the guidelines set by the SupremeCourt are unambiguous, viz., that payment ofpremium alone can cast a corresponding duty on theinsurer for rendering coverage on any such group,when they are not required to be mandatorilybrought under insurance protection.”16. Learned counsel for the appellant also placed reliance onthe decision in Amit Bar – vs. - National Insurance Co. Ltd.,reported in 2008(1) T.A.C. 51 (Cal.). It is a case of death of agratuitous passenger, pillion rider in a two wheeler. The policy isa package policy. The Court held that no additional premium was paidto cover the risk of a pillion rider. In this factual background,the Calcutta High Court in para 21 held as follows:-"21. Thus, after considering submissions ofthe learned Advocate of both the sides and oncareful consideration of the insurance policy andfact and evidence of the present case, we findthat the victim woman as a pillion-rider met theaccident, the insurance policy of the motorcyclewas valid on the date of accident, the insurancepolicy did not cover the risk of the pillion-ridersince there were no terms and conditions onpayment of additional premium to cover the risk https://hcservices.ecourts.gov.in/hcservices/ of the pillion-rider and in such a situationhaving regard to the provision of Section 147 ofthe Motor Vehicles Act and the ratio of decisionrendered in the case of United India Insurance Co.Ltd. (supra), we are of the considered view thatthe Insurance Company as per terms of theinsurance policy is not liable to pay anycompensation and the claimants are to realise thecompensation amount from the owner of theoffending motorcycle."17. On this premise, it was submitted by the appellant that theinsurance policy which is the subject matter of the present appealsthough termed as a package policy, since no additional premium waspaid in respect of the occupants of the Car involved in the accident,the insurance company is not liable in respect of the claimsconsequent to the death of the two persons, who are the occupants ofthe ill-fated private vehicle, Maruti Esteemed Car.18. The undisputed facts in this case are:-(i) the policy of insurance Ex.R-1 is a package policy and (ii) the victims of the accident are gratuitous passengers, theoccupants in a private car,In this case, the finding of the Tribunal is that no additionalpremium was paid to cover gratuitous passengers in a private car.Before proceeding further in this matter, the nature of insurancepolicy issued by the appellant needs to be considered. The policyissued to the private vehicle (car) MP 1 0082955 is a package policyfor private vehicle issued at 10.52 a.m., on 27th December 2005. Thepolicy reads as follows:- "ROYALSUNDARAMROYAL SUNDARAM ALLIANCE INSURANCE COMPANY LTD.Sundaram Towers, 46 Whites Road, Royapettah, Chennai-600014.Tel:044-28517387 (Hunting Lines), Fax; 044-28585912,28517376,e-mail – customer, services @ in.royalsun.comService Tax Registration No. Insurance/Chennai-II/2/STCCertificate Cum Policy ScheduleInsurancePolicy No:MP10082955Package policy(Private vehicle) (Issued at 10:52:58 AM on27-Dec.2005)THEINSURED:Name:Address:BusinessMr.AMIT BHATTNO:162/2, GOLDEN, UBLEE FLATS, PADI KUPPAM ROAD,THIRUMANGALAM, ANNA NAGAR EXTN, CHENNAI-600040, Tamil NaduBusinessPeriod of insurance:From 10:52:33 AM on 27 –Dec.2005 to midnight on 26 – Dec.2006 https://hcservices.ecourts.gov.in/hcservices/ Thevehicle:Maruti/Esteem Vxi/MARUTI ESTEEMMPI VXI BS III (WITH HLL)Date and Proposal No: 27-Dec.2005/P00210402.GeographicalAreaEngine-ChassisNo.Type of bodyCCMfg.YearSeatingcapacityRegistration Mark& Place ofRegistrationINDIA252662-448327SALOON129820055CHENNAIINSURED'S DECLARED VALUEVehicleNon Elec. accessoriesElec.accessoriesCNG/LPGkitTotal Value (IDV)463472000463472Schedule of premiumA. OWN DAMAGEB. LIABILITY Vehicle & Accessories: 15215Vehicle600Total15215Total600Add15215Add600b)Geographical Area Extn.NAa)Compulsory PA CoverPremium100Sub-Total Additions a)b)Additional PA CoverPremium (0 per person)(IMT-16)NAc)5% Extra premium towardsinbuilt CNG NALessd)Legal Liability(WC) toDriver (IMT-28)25i)Auto AssociationmembershipNASub Total Additions 125Sub Total (deductions)Total(A)15215Total (B)725Note: 1. If the premium is paid by Cheque,the issue of Policy is subject tothe realisation of Cheque.2. Consolidated Stamp duty paid. Grand TotalService Tax @ 10.2%Total Premium15941162617567Compulsory deductibles 50019. The Insurance Act, provides for establishment of a TariffAdvisory Committee otherwise known as TAC which lays down the Rules,Regulations, Rates, Advantages, Terms and Conditions, for transactionof motor insurance business in India. For this purpose, the IndiaMotor Tariff, hereinafter referred to as "IMT" and it containsSection 1 to Section 8 and General Regulations G.R.1 to G.R.48 and itis issued from time to time. As far as the present case isconcerned, the India Motor Tariff (IMT) 2002 supersedes theprovisions of the India Motor Tariff (IMT) in existence upto 30th https://hcservices.ecourts.gov.in/hcservices/ June, 2002. It is also stated that it is binding on all concernedand any breach of the Tariff will be a breach of the provisions ofthe Insurance Act, 1938. 20. Under the Indian Motor Tariff (IMT) different types ofpolicies are issued and they are contained in IMT Section 6(page 107of IMT). They are:-(a)Standard form for liability only policy, (b)Standard form for private car package policy,(c)Standard form for two wheeler package policy, (d)Standard form for commercial vehicles package policy, (e)Standard form for motor trade package policyand the like. Each policy is split into different sections to dealwith different contingencies and the parties bind themselves to theterms of the clause contained in each section of the policy. Forexample, the package policy for a private car which is applicable tothe present case contains:-Section I – Loss of or damage to the vehicle insured,Section II – Liability to third parties,Section III – Personal accident cover for owner-driverThere are other conditions and limits.In this appeal we are concerned with the liability of the insurancecompany in respect of a gratuitous passengers/occupants in a privatevehicle (car).21. The first policy in Section 6 of IMT is liability onlypolicy or act only policy. In that the liability to third parties isset out as hereunder:-"LIABILITY TO THIRD PARTIES:1. Subject to the Limit of liability as laid downin the schedule hereto, the Company will indemnifythe insured in the event of accident caused by orarising out of the use of the Motor Vehicleanywhere in India against all sums includingclaimant's costs and expenses which the insuredshall become legally liable to pay in respect of https://hcservices.ecourts.gov.in/hcservices/ i. death of or bodily injury to any person sofar as it is necessary to meet the requirementsof the Motor Vehicles Act.ii. damage to property other than propertybelonging to the insured or held in trust or inthe custody or control of the insured up to thelimit specified in the schedule." (emphasis supplied)22. The next policy in Section 6 of IMT that is relevant tothis case is a private car package policy in which Section II (page119 of IMT) deals with liability to third parties, which reads asfollows:-"Standard Form for private car package policyWhereas the insured by a proposal and declarationdated as stated in the Schedule which shall be thebasis of this contract and is deemed to beincorporated herein has applied to the Company forthe insurance hereinafter contained and has paidthe premium mentioned in the schedule asconsideration for such insurance in respect ofaccidental loss or damage occurring during theperiod of insurance.Now this policy witnesseth:That subject to the Terms Exceptions andConditions contained herein or endorsed orexpressed hereon; Section I xxxSection II – Liability to third parties 1. Subject to the limits of liability as laiddown in the Schedule hereto the Company willindemnify the insured in the event of an accidentcaused by or arising out of the use of the vehicleagainst all sums which the insured shall becomelegally liable to pay in respect of:-(i) death of or bodily injury to any personincluding occupants carried in the vehicle(provided such occupants are not carried forhire or reward) but except so far as it isnecessary to meet the requirements of MotorVehicles Act, the Company shall not be https://hcservices.ecourts.gov.in/hcservices/ liable where such death or injury arises outof and in the course of the employment ofsuch person by the insured. (ii) damage to property other than propertybelonging to the insured or held in trust orin the custody or control of the insured." (emphasis supplied)The specific terms of the Section II of the package policy casts aliability on the insurance company to compensate the death or bodilyinjury to any person including occupants carried in the vehicle(provided such occupants are not carried for hire or reward). Thereis, therefore, a clear distinction in Section II of Act Policy (i.e.)liability only policy and Section II of package policy. 23. Further, Section 1 (Page 1 of IMT) contains GeneralRegulations, in that the provision is made for various types ofpersonal accidents covers. To name a few, the following covers whichare available are extracted:-"Cover is available only in respect of thefollowing persons:-1. Private Cars including three wheelers rated asPrivate cars and motorised two wheelers with orwithout side car (not for hire or reward): Forinsured or any named person other than the paiddriver and cleaner.Endorsement IMT – 15 is to be used.2. Private Cars, three wheelers rated as Privatecars and Motorised Two Wheelers (not used for hireor reward) with or without side car: For unnamedpassengers limited to the registered carryingcapacity of the vehicle other than the insured,his paid driver and cleaner. Endorsement IMT – 16 is to be used.3. In respect of all classes of vehicles: For paiddrivers, cleaners and conductors.Endorsement IMT – 17 is to be used.4................. etc.," The various types of endorsements ranging from IMT–1 to IMT-65 arecontained in Section-7. IMT Endorsements are made in appropriate https://hcservices.ecourts.gov.in/hcservices/ Section of the policy. Based on the need of the insured, the type ofpolicy with necessary endorsements are made. In the present case,which is a package policy, in addition to third party liability interms of Section-II as has been extracted in para 22 above, theinsured has also taken further endorsement under Section-III, underthe head personal accident cover. A premium of Rs.65/- has beenpaid under IMT-20 and no premium was paid under IMT-16. In thepresent package policy, in addition to liability cover in respect ofoccupants of the vehicle, the insured has also made further paymentunder IMT-28. It is in this background, that the claim of the legalheirs of the deceased has to be considered. If under Section-II ofthe package policy the claim of passengers, occupants of the car iscovered, the question that has to be decided is as to whether anyadditional premium is required to be paid to cover a claim in respectof risk of occupants of the car and what will be the consequence ofsuch further payment.24. At the first instance, the liability of the insurancecompany insofar as the claim for compensation in respect of thepassengers of a private vehicle came for consideration before theSupreme Court in Pushpabai Purshottam Udeshi and Others – Vs. - M/s.Ranjit Ginning and Pressing Co. and another reported in 1977 A.C.J.343. The policy issued in that case was a comprehensive policy andthe terms of the policy which has been extracted in the above citeddecision of the Apex Court reads as follows:-" In consideration of the payment of anadditional premium, it is hereby understood andagreed that the company undertakes to pay,compensation on the scale provided below forbodily injury as hereinafter defined sustained byany passenger......"In that case, under the policy, the compensation to any passengersfor bodily injury was restricted by the contract clause to a sum ofRs.15,000/- only. The Apex Court in that decision held that the actdoes not enjoin the insurance company to cover the risk ofpassengers, who are not carried for hire or reward. In 1977 ACJ 343Pushpabhai Purshottam Udeshi - vs - Ranjit Ginning & Pressing Co.,the Apex Court in paras 21 to 26 held as follows:- "21. Section 95(a) and 95 (b)(i) of theMotor Vehicles Act adopted the provisions of theEnglish Road Traffic Act, 1960 and excluded theliability of the insurance company regarding therisk to the passengers. Section 95 provides thata policy of insurance must be a policy whichinsures the persons against any liability whichmay be incurred by him in respect of death orbodily injury to any person or damage to any https://hcservices.ecourts.gov.in/hcservices/ property of a third party caused by or arising outof the use of the vehicle in a public place. Theplea that the words "third party" are wide enoughto cover all persons except the person and theinsurer is negatived as the insurance cover is notavailable to the passengers is made clear by theproviso to sub-section which provides that apolicy shall not be required:"(ii) except where the vehicle is avehicle in which passengers are carriedfor hire or reward or by a reason of orin pursuance of a contract ofemployment, to cover liability inrespect of the death of or bodily injuryto persons being carried in or upon orentering or mounting or alighting fromthe vehicle at the time of theoccurrence of the event out of which aclaim arises."22. Therefore it is not required that apolicy of insurance should cover risk to thepassengers who are not carried for hire or reward.As under section 95 the risk to a passenger in avehicle who is not carried for hire or reward isnot required to be insured the plea of the counselfor the insurance company will have to be acceptedand the insurance company held not liable underthe requirements of the Motor Vehicles Act. 23. The insurer can always take policiescovering risks which are not covered by therequirements of Section 95. In this case theinsurer had insured with the insurance company therisk to the passengers. By an endorsement to thepolicy the insurance company had insured theliability regarding the accidents to passengers inthe following terms: “In consideration of the payment ofan additional premium it is herebyunderstood and agreed that the Companyundertakes to pay compensation on thescale provided below for bodily injuryas hereinafter defined sustained by anypassenger........” 24. The scale of compensation is fixed atRs.15,000/-. The insurance company is ready and https://hcservices.ecourts.gov.in/hcservices/ willing to pay compensation to the extent ofRs.15,000/- according to this endorsement but thelearned Counsel for the insured submitted that theliability of the insurance company is unlimitedwith regard to risk to the passengers. Thecounsel relied on Section II of the Policy whichrelates to liability to third parties. The clauserelied on is extracted in full: “Section II - Liability to Third Parties: 1. The Company will indemnify the insuredin the event of accident caused by orarising out of the use of the Motor Caragainst all sums including claimant'scosts and expenses which the insuredshall become legally liable to pay inrespect of (a) death of or bodily injury to anyperson but except so far as is necessaryto meet the requirements of Section 95of the Motor Vehicles Act, 1939, theCompany shall not be liable where suchdeath or injury arises out of and in thecourse of the employment of such personsby the insured.” 25. It was submitted that the wording ofclause 1 is wide enough to cover all risksincluding injuries to passengers. The clauseprovides that the Company will indemnify theinsured against all sums including claimant'scosts and expenses which the insured shall becomelegally liable. This according to the learnedcounsel would include legal liability to pay forrisk to passengers. The legal liability isrestricted to clause 1(a) which states that theindemnity is in relation to the legal liability topay in respect of death of or bodily injury to anyperson but except so far as is necessary to meetthe requirements of Section 95 of the MotorVehicles Act, the Company shall not be liablewhere such death or injury arises out of and inthe course of the employment of such person by theinsured. Clause 1 and 1(a) is not very clearlyworded but the words "except so far as isnecessary to meet the requirements of Section 95of the Motor Vehicles Act, 1939", would indicatethat the liability is restricted to the liability https://hcservices.ecourts.gov.in/hcservices/ arising out of the statutory requirements underSection 95. The second part of clause 1(a) refersto the non-liability for injuries arising in thecourse of employment of such person. The meaningof this sub-clause becomes clear when we look tothe other clauses of the insurance policy. Thepolicy also provides for insurance of risk whichare not covered under Section 95 of the Act bystipulating payment of extra premium. Theseclauses would themselves indicate that what wasintended to be covered under clause 1 and 1(a) isthe risk required to be covered under Section 95of the Motor Vehicles Act. 26. On a construction of the insurance policywe accept the plea of the insurance company thatthe policy had insured the owner only to theextent of Rs.15,000/- regarding the injury to thepassengers. In the result we hold that theliability of the insurance company is restrictedto Rs.15,000/-. There shall be a decree in favourof the claimants/appellants to the extent ofRs.27,500/- against the respondents out of whichthe liability of the insurance company will berestricted to Rs.15,000/-. The appeal is allowedwith the costs of the appellant which will be paidby the respondents in equal share."25. The Apex Court in Tilak Singh's case (cited supra)considered the decisions in Pushpabai Purshottam Udeshi – vs. -Ranjit Ginning and Pressing Co., reported in 1977 ACJ 343, withregard to the provisions of Section 95(1)(a) read with Section 95(1)(b)(i) of the Motor Vehicles Act, 1939 and the Section 147(1) of theMotor Vehicle's Act, 1988. In paragraph 18 of the decision in TilakSingh's case, the scope of Section 147 of Motor Vehicles Act 1988 wasconsidered consequent to the elimination of Section 95(1) of MotorVehicles Act 1939. It was specifically held by the Apex Court thatunless there is a specific coverage of a risk pertaining togratuitous passenger, the insurer was not liable. Paragraph 18 isextracted hereunder:-18. Thus, even under the 1939 Act theestablished legal position was that unless therewas a specific coverage of the risk pertaining toa gratuitous passenger in the policy, the insurerwas not liable. We find that clause (ii) of theproviso to Section 95(1) has been eliminatedwhile drafting Section 147 of the 1988 Act.Under sub-section (1)(b) under the 1988 Act,compulsory policy of insurance required under https://hcservices.ecourts.gov.in/hcservices/ the statute must now provide against anyliability which may be incurred by the owner ofthe vehicle"in respect of the death of orbodily injury to any person, includingowner of the goods or his authorisedrepresentative carried in the vehicle ordamage to any property of a third partycaused by or arising out of the use ofthe vehicle in a public place".In Tilak Singh's case, the Apex Court also considered the decisionsof Amrit Lal Sood – vs. - Kaushalya Devi Thapar reported in (1998)3SCC 744 : 1999 SCC (Cri) 158 and T.V.Jose(Dr.) - vs. - Chacko P.M.,reported in (2001)8 SCC 748 : 2002 SCC (Cri) 94. However, followingthe decision of New India Assurance Co. Ltd., - vs. - Asha Ranireported in (2003)2 SCC 223 : 2003 SCC (Cri) 493, the Apex Court inTilak Singh's case held in paragraph 21 that the ratio of Asha Rani'scase though relating to carrying passengers in goods vehicle, wouldapply in equal force to gratuitous passengers in any other vehicle.I, however, hasten to add that the Apex Court in paragraph 21clearly stated that the deceased was a pillion rider and theinsurance policy was a statutory policy and it did not cover the riskof death of or bodily injury to the gratuitous passenger. AshaRani's case decided by the Apex Court also related to the case ofpassengers travelling in a goods vehicle, whereas the facts in thepresent case is different and cannot be applied as such. 26. Having considered the Apex Court's decision in TilakSingh's case and Asha Rani's case in relation to the policy issued,this court has to consider the present case on its own facts. Ifthere is a ruling it has to be considered as to how it will beapplicable to the facts of the case on hand. In Amrit Lal Sood'scase (cited supra), the Apex Court, while dealing with the claimunder the 1939 Act, observed that the liability of the insurerdepends on the terms of the contract between the insured and theinsurer as contained in the policy. This will become relevant inview of Section 147(5) of the Motor Vehicles Act, 1988, which hasalready been set out. It will be appropriate to extract therelevant portion as the ruling in that case will be more appropriateand relevant to the facts of the present case. Paragraph 4 of thesaid decision reads as follows:-"4. The liability of the insurer in thiscase depends on the terms of the contract betweenthe insured and the insurer as evident from thepolicy. Section 94 of the Motor Vehicles Act,1939 compels the owner of a motor vehicle toinsure the vehicle in compliance with the https://hcservices.ecourts.gov.in/hcservices/ requirements of Chapter VIII of the Act. Section95 of the Act provides that a policy of insurancemust be one which insures the person against anyliability which may be incurred by him in respectof death or bodily injury to any person or damageto any property of third party caused by orarising out of the use of the vehicle in a publicplace. The section does not however require apolicy to cover the risk to passengers who are notcarried for hire or reward. The statutoryinsurance does not cover injury suffered byoccupants of the vehicle who are not carried forhire or reward and the insurer cannot be heldliable under the Act. But that does not preventan insurer from entering into a contract ofinsurance covering a risk wider than the minimumrequirement of the statute whereby the risk togratuitous passengers could also be covered. Insuch cases where the policy is not merely astatutory policy, the terms of the policy have tobe considered to determine the liability of theinsurer."(emphasis supplied)In Amrit Lal Sood"s case, the decision in Pushpabai Purshottam Udeshi– vs. - Ranjit Ginning and Pressing Co. (P) Ltd., reported in (1977)2SCC 745 was distinguished and held in paragraph 10 as follows:-"10. The High Court has placed reliance onthe judgment of this Court in Pushpabai PurshottamUdeshi v. Ranjit Ginning & Pressing Co. (P) Ltd.That judgment was based upon the relevant clausein the insurance policy in that case whichrestricted the legal liability of the insurer tothe statutory requirement under Section 95 of theMotor Vehicles Act. That decision will have nobearing in the present case inasmuch as the termsof the policy here are wide enough to cover agratuitous occupant of the vehicle."The Apex Court in Amrit Lal sood's case (cited supra) held that thecomprehensive policy issued covers the risk of gratuitous passengers,the occupants of the car. 27. Consequent to the decision of the Apex Court in PushpabaiPurshottam Udeshi – vs. - Ranjit Ginning and Pressing Co. reported in1977 ACJ 343, the Insurance Company issued a circular with regardto the liability of the insurance company in relation to privatevehicle and which is extracted in 1981 ACJ 277 (Gujarat) reads asfollows:- https://hcservices.ecourts.gov.in/hcservices/ "TARIFF ADVISORY COMMITTEE BOMBAY REGIONALCOMMITTEE“Circular M.V.No.1 of 1978 Bombay 17th March 1978Insurance Company’s Liability in Respect ofGratuitous Passengers conveyed in a Private Car-Standard Form for Private Car Comprehensive Policy– Section II – Liability to Third-Parties.I am directed to inform Insurers that advices havebeen received from the Tariff Advisory Committeeto the effect that since the industry had allthese years holding the view on liability the samepractice should continue.In order to make this intention clear, Insurersare requested to amend clause 1(a) of Section IIof the Standard Private Car Policy byincorporating the following words after the words‘death of or bodily injury to any person’appearing therein:‘Including occupants carried in themotor car provided that such occupantsare not carried for hire or reward’I am accordingly to request Insurers to make thenecessary amendment on sheet 38 of the IndianMotor Tariff pending reprinting of the relevantsheet.All existing policies may be deemed to incorporatethe above amendment as the above decision is beingbrought into force with effect from 25th March,1977.”This Circular, it is fairly conceded by the learned counsel for theappellant, was followed by other circulars issued from time to time.However, the situation as it stands today is that the India MotorTariff 2002 holds the field and the relevant portions have beenextracted earlier. Therefore, under the package policy which isissued in this case, the risk coves occupants carried in the motorcar except occupants carried for hire or reward. 28. Since the policy in this case is a package policy andSection II (page 119 to IMT) third party liability clearly coversoccupants in a private car which is the case on hand, the appellantinsurance company cannot avoid their liability merely on the ground https://hcservices.ecourts.gov.in/hcservices/ that no additional premium was paid. As can be seen from theendorsement which is made in Section III of the policy (page 120 ofIMT), it relates to personal accident cover. It is in addition tothe cover under Section II of the policy. Nowhere in the tariff ithas been stated that unless additional premium is paid by way of IMTendorsements under Section II, the claim of occupants of the privatecar will not be considered. On the contrary, on going through theSection-7, which relates to IMT Endorsement, it is evident that itcovers various aspects like IMT-4 change of vehicle, IMT-5 hirepurchase agreement, IMT-6 lease agreement, IMT-13 use of vehiclewithin insured's own premises, IMT-14 use of vehicle confined tosites and IMT-15 personal accident cover to the insured or any namedperson other than paid driver or cleaner and IMT–16 personal accidentto unnamed passengers other than insured and the paid driver andcleaner. It may be relevant to consider IMT-15 and IMT-16 as itrelates to passenger in private car. The said endorsement if maderestricts the liability to a fixed sum. However, as statedearlier, there is no IMT 16 endorsement in this case. In thispolicy the P.A. cover under Section-III for owner driver is Rs.2Lakhs. Any one of the endorsements can be sought for by the insuredby paying a specific premium. This can also apply to a statutorypolicy. There appears to be no restriction with regard to the coverunder IMT Endorsement as long as the insured is willing to pay theadditional premium. But the fact remains that Section II liabilityspecifically covers occupants, passengers of a private car and itslimit will be governed by the terms contained therein. Thedifference between Section II and Section III has to be properlyresolved by reading the terms of the policy. In Tilak Singh's casewhich is a case of act only policy, the Apex Court clearly held thatthe IMT-70 endorsement covering the liability to pillion passengerswas not made. Therefore, under the act only policy, the gratuitouspassengers, pillion riders does not get any cover. The same is thecase in Oriental Insurance Co. Ltd. - vs. Sudhakaran K.V. & othersreported in 2008(6) MLJ 149(SC) and in The General Manager, UnitedInsurance Company. Ltd., v. M.Laxmi and others reported in 2008(8)Supreme 276 = 2008 AIR SCW 7786. Therefore, in the present case,which is the case of package policy and on the terms containedtherein, the ratio of the decisions of the Apex Court may not applyas contended by the appellant. 29. The decisions of the Karnataka High Court and Calcutta HighCourt relied on by the counsel for the appellant will not be bindingon this court as there is a recent decision by the Division Bench ofthis Court in Royal Sundaram Alliance Insurance Co. Ltd., - vs. -A.Meenakshi and others decided on 4.3.2009 in C.M.A.No.312 of 2009reported in 2009(2) M.L.J. 963 wherein the similar issue was decidedholding that under the comprehensive package policy which clearlycontains a clause with regard to liability and risk to cover the caseof occupants/passengers in a private vehicle, the question of payment https://hcservices.ecourts.gov.in/hcservices/ of additional premium was held to be not required. This court inparagraph 29 of the judgment held as follows:-"29. Therefore, it is clear from the Actitself, the words of the policy and the decisionin Amritlal Sood's case (supra) that aComprehensive Policy covers the risk of agratuitous passenger to the extent of theliability incurred. We may imagine what willhappen in a case where the owner is driving hiscar covered by a Comprehensive Policy. He isaccompanied by with his wife and children. Thereis an accident as in this case. The wife andchildren are permanently disabled by the injuries.If we agree with the appellant Insurance Company,those pathetic claimants will not get anycompensation. The law never intended this tohappen. That is why the TAC explicitly came outwith the clarificatory Circular in 1978. Wecannot forget that the words used are "thirdparty" and "Comprehensive", so we cannot deny thisrelief to the third party occupant in a carcovered by a Comprehensive Policy."30. In view of the above discussion, the contention of thelearned counsel for the appellant on the above stated issue standsrejected. The package policy issued in this case clearly covers theliability in respect of death of or bodily injury to any personsincluding occupants carried in the vehicle, the ill fated Maruthi Car.31. The question of paying the claimants and recovering fromthe owner of the vehicle will not arise in the present case. Theappellant cannot rescind from its liability to the claimants as theterms of the policy are very clear. The terms of the contract isvery specific. The non-obstante clause provided under Section 147(5)of the Motor Vehicles Act 1988 covers the case of contract ofinsurance in all respects between parties on mutual agreed terms.The policy under Section II covers the case of the claimants in thiscase. The Tribunal was, therefore, not justified in granting thepartial relief of pay and recover to the present appellant. Thecontention of the appellant on this issue cannot be accepted. Inother respects, the common award of the Tribunal is confirmed.Since, at the instance of the appellant, notice was dispensed withto the owner of the vehicle, no order can be passed against theowner of the vehicle. Accordingly, both the Civil MiscellaneousAppeals are disposed off. Counsel for the appellant prays for eightweeks' time to deposit the award amount and is granted. On such https://hcservices.ecourts.gov.in/hcservices/ deposit, the claimants are permitted to withdraw the award amount asordered by the Tribunal. No costs. Consequently, connectedmiscellaneous petitions are closed.sd/-Asst.Registrar/true copy/Sub Asst.RegistrartsTo The Subordinate Judge, (Motor Accidents Claims Tribunal), Poonamallee.+ 2 c.cs. to Mr. N. Vijayaraghavan, Advocate. S.R.Nos.10466 & 10467.+ 2 c.cs. to Mr. R. Selvaraj, Advocate. S.R.Nos.10283 & 10284. C.M.A.Nos.4203 & 4204/2008RSM (CO)GSK 15.05.2009.