M/S United India Insurance Co v. A.Thangamani

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 31.10.2023

CORAM:

THE HONOURABLE MR.JUSTICE M.DHANDAPANI M/s. United India Insurance Company Limited, Situated at Giriram Building, Sathy Main Road, Gobi Town, Gobichettipalayam Taluk, Erode District.

...Appellant Vs.

1.

A.Thangamani 2.

S.Sakthivel

...Respondents

Civil Miscellaneous Appeal filed under Section 173 of Motor Vehicles Act, 1988, as against the judgment and decree made in MCOP.No.527 of 2014 dated 29.04.2017 on the file of the Motor Accidents Claims Tribunal, Subordinate Court, Gobichettipalayam. For Appellants : Mr.M.B.Raghavan For Respondents : Mr.S.P.Yuvaraj, for R1 No Appearance, for R2 Page No.1 of 13

JUDGEMENT Challenging the judgment and decree dated 29.04.2017 passed in MCOP.No.527 of 2014 on the file of the Motor Accidents Claims Tribunal, Subordinate Court, Gobichettipalayam, the appellant is before this Court.

2. The case of the appellant is that, the 1st respondent filed a claim petition as against the appellant & the 2nd respondent, claiming a compensation of Rs.9,00,000/-, alleging that, on 31.08.2014 when the 1st respondent was travelling as a pillion rider in a Bajaj Platina motorcycle bearing Regn.No.TN37-AU-0402, owned by the 2nd respondent, insured with the appellant, ridden by her husband in a cautious manner, due to unavoidable circumstances, the husband of the 1st respondent dashed against a woman and lost the control and fell down, due to which, the husband died on spot and the 1st respondent sustained grievous injuries all over her body and was admitted in the hospital. After contest, the tribunal, vide impugned judgment, fixed a compensation of Rs.5,03,330/- payable to the 1st respondent, jointly and severally by the appellant and the 2nd respondent. Aggrieved with the said order, the present appeal has been preferred by the appellant, questioning the liability fixed. Page No.2 of 13

3. Learned counsel appearing for the appellant submitted that the above said accident happened solely due to the rash and negligent driving of the husband of the 1st respondent, for which, an FIR also came to be registered as against the husband of the 1st respondent. Further, the 2nd respondent had taken a third party liability policy, viz., an Act Only Policy and no separate premium was paid for the pillion rider, hence, the 1st respondent herein being a pillion rider cannot claim compensation from the appellant/insurance company as the pillion rider is not covered under the terms of the Act Only Policy. Therefore, the claim petition filed by the 1st respondent under Section 166 of the Motor Vehicles Act, 1988 is not maintainable. While so, without considering any of the above said facts, the Tribunal, vide impugned award, had fastened the entire liability as against the appellant/insurance company, which is wholly unsustainable. Accordingly, he prayed for appropriate orders.

4. Per contra, the learned counsel appearing for the 1st respondent submitted that, admittedly, the accident occurred on 31.08.2014, due to which, the husband of the 1st respondent died on spot and the 1st respondent suffered fracture over the right side of her head, right ankle and sustained grievous Page No.3 of 13

injuries all over her body and the 1st respondent being a tailor by profession was unable to perform her avocation which she was carrying on before the accident and due to which, her earning capacity got reduced. Hence, the tribunal, after taking into consideration all the above said facts and after carefully perusing the documents placed before it, passed the impugned award fixing a compensation of Rs.5,03,330/-, payable to the 1st respondent jointly and severally by the appellant/insurance company and the 2nd respondent, which does not warrants interference of this Court. Accordingly, he prayed for dismissal of this appeal.

5. Heard the learned counsel for the appellant and the learned counsel appearing on behalf of the 2nd respondent and perused the materials available on record.

6. The major issue that arises for consideration in the present appeal is whether the 1st respondent being a pillion rider is eligible to claim compensation at the hands of the appellant/insurance company, though the vehicle in question is insured only under an Act Only Policy. Page No.4 of 13

7. The issue which is raised in the present appeal is no longer res integra, as the similar issue has already been considered by the Apex Court in the case of Oriental Insurance Co. Ltd. - Vs - Sudhakaran K.V. & Ors. (2008

(7) SCC 428), wherein, the Apex Court held thus :- "14. The provisions of the Act and, in particular, Section 147 of the Act were enacted for the purpose of enforcing the principles of social justice. It, however, must be kept confined to a third party risk. A contract of insurance which is not statutory in nature should be construed like any other contract.

15. We have noticed the terms of the contract of insurance. It was entered into for the purpose of covering the third party risk and not the risk of the owner or a pillion rider. An exception in the contract of insurance has been made, i.e., by covering the risk of the driver of the vehicle. The deceased was, indisputably, not the driver of the vehicle.

16. The contract of insurance did not cover the owner of the vehicle, certainly not the pillion rider. The deceased was travelling as a passenger, stricto sensu may not be as a gratuitous passenger as in a given case she may not be a member of the family, a friend or other relative. In the sense of the term which is used in common parlance, she might not be even a passenger.

In view of the terms of the contract of insurance, however, she would not be covered thereby.

18. Yet again in Ghulam Mohammad Dar v. State of J&K and Ors. [(2008) 1 SCC 422], this Court opined that the words Page No.5 of 13

"injury to any person" as inserted by reason of the 1994 Amendment would only mean a third party and not a passenger travelling on a goods carriage whether gratuitous or otherwise. [See also The New India Insurance Company v. Darshana Devi & Ors. 2008 (2) SCALE 432]

19. The law which emerges from the said decisions, is: (i) the liability of the insurance company in a case of this nature is not extended to a pillion rider of the motor vehicle unless the requisite amount of premium is paid for covering his/her risk (ii) the legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion rider; (iii) the pillion rider in a two wheeler was not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle."

8. The aforesaid view has been followed by this Court in the case of The New Indian Assurance Co. Ltd. Vs. S.Krishnasamy (CMA.No.3567 of 2013 dated 10.12.2014), wherein the Division Bench held thus :- "18.In view of the rulings cited above, we are of the considered view that since, the policy is only an Act policy issued by the appellant Insurance company to the insurer and the deceased Palanisamy was only an occupant of the private car, cannot be considered as 'third party' of the vehicle and the policy is covered risks to the third party alone. Hence, the deceased was only the occupant of the private car and the said policy will not cover the risk of the deceased. The doctrine of pay and recovery cannot be applied to the facts of the case, since the appellant Page No.6 of 13

Insurance company is not liable to pay the compensation. Hence, pay amount to the claimants and then recover the same from the owner of the vehicle involved in the accident cannot be ordered and in view of the above, the rulings cited on the side of the respondents 1 to 5/claimants are not applicable to the facts of the present case."

9. Recently, this Court in M/s.Iffco Tokio General Insurance Co. Ltd. - Vs - Shajahan (CMA No.4163 of 2019 - Dated - 19.01.2024), has discussed the applicability of the Act Only Policy with reference to third parties and in the said context held thus :- "74. The above decision relied on by the claimant leans more in favour of the insurance company rather than the claimants. From the above, it is very clear that though all the parties other than the first and second party, viz., the insurer and the insured, are deemed to be third parties, however, in respect of policy cover, as held in the aforesaid decision, the same is not guided by Section 147 (1)(b)(i) of the Act, 1988; rather, the same is guided by the terms of the policy, which has been entered into between the insurer and the insured.

As held in the aforesaid decision, the requirement to pay would only flow from the wider cover, which the insured has secured beyond the minimum prescribed under Section 147 by paying an additional premium, in which case alone, the insurer would be liable to compensate the occupant of the private vehicle, in case of any claim. But for the payment of additional premium, the liability of the insurer to compensate the occupants of the private vehicle, even if they fall under the definition of "third party" would stand extinguished insofar as the insurer is concerned as no liability has been Page No.

undertaken by the insurer on behalf of the insured to indemnify the claim of the occupants of a private vehicle as the occupants are not agreed to be covered under the Act Only Policy. Therefore, the liability to compensate the occupant injured in any such event will flow not only from the requirements of Section 147, but would be only on the basis of the terms of the policy issued.

75. From the above, it is clear that the occupant of a private vehicle, though would be deemed to be a third party, but in the absence of specific inclusion of the occupant of the private vehicle by the contracting parties by paying additional premium for the purpose of covering the liability of the insured, the liability would not stand transposed on the insurer on behalf of the owner of the vehicle. In fine, additional premium over and above the minimum prescribed should have been paid for indemnifying the claim of a passenger of a private vehicle.

Therefore, in respect of an Act Only Policy, which is the minimum prescribed u/s 147, third party would necessarily be taken to mean a person outside the vehicle and would not include the occupant of the private vehicle; however, if additional premium is paid enabling the said cover in the contract of insurance, then the occupant of the vehicle would stand covered under the Third Party Risk. Therefore, beyond the minimum prescription u/s 147 of Act, 1988, a wider policy could be taken for covering the occupant of the private vehicle, in which case the occupant would also fall within the ambit of third party, by paying additional premium as agreed between the first and second party, viz., the insurer and the insured for the purpose of claiming compensation.

76. When the Three Judge Bench of the Supreme Court in Amrit Lal Sood has clearly spelt out the situations in which the insurance company would be liable to indemnify the insured and Page No.8 of 13

in respect of an Act Only Policy, and has specifically held that in the absence of a wider cover having been accepted between the contracting parties, the liability of the insurance company would be only to the extent of the coverage agreed between the contracting parties, the Division Bench, in Chandrasekaran case (supra), without taking into consideration that the policy in Amrit Lal Sood is a comprehensive policy, had imported the ratio laid down in the said decision erroneously to the case before it and had come to the conclusion that the said decision is squarely applicable even with regard to an Act Only Policy, by holding that the intent of the Legislature is writ large in the omission of clause (ii) of proviso to Section 95 95 (1)(b) in Section 147 of Act, 1988, notwithstanding the fact that in Amrit Lal Sood, the Apex Court had clearly negated that the occupant of the private vehicle would not be entitled to compensation in the absence of any additional premium being paid.

Therefore, with great respect, the interpretation has been erroneously arrived at by the decision of the Division Bench with regard to Act Only Policy by taking cue from the decision in Amrit Lal Sood, though the said case stood on a different footing, viz., which was a case covered by a Comprehensive Policy.

77. Therefore, the mere inclusion of all the persons within the ambit of third party as defined u/s 145 (g) of Act, 1988 would not enure to the benefit of the claimant, who is an occupant of the private vehicle, as the liability to compensate the occupant of the private vehicle for any death or bodily injury will flow not from the requirements of Section 147 but in relation to the terms agreed between the insurance company and the owner of the vehicle.

78. From the above discussion, this Court holds that "any person" as found in Section 147 (1)(b)(i) would fall within the definition of "third party" as defined u/s 145 (g) of Act, 1988 Page No.9 of 13

and all persons irrespective of their position, would be deemed to be "third party" but the indemnification of the insurer towards payment of compensation would flow only from Section 147 (5), which would be based on the terms of the contract entered into between the contracting parties, viz., the insurer and the insured and, therefore, reading Section 147 (1)(b)(i) and 147

(5) together, the occupant of the private vehicle would not be entitled for claiming compensation unless the terms of the policy spells out the intention of the contracting parties towards the occupant, by means of wider coverage under the policy and not otherwise, which alone would have been the intent of the Legislature while enacting the amendment in the year 1988."

10. In view of the ratio laid down in the aforesaid decisions, definitely, the pillion rider cannot be brought within the ambit of third party with regard to an Act Only Policy, when the terms of the contract entered into between the insurer and the insured in regard to a private vehicle does not provide for cover with respect to persons other than the driver of the vehicle. Therefore, definitely, the pillion rider would not be required to be indemnified by the insurance company in the absence of any separate premium being paid to cover the risk towards the pillion rider.

11. In the case on hand, the policy being an Act Only Policy and the Page No.10 of 13

terms and conditions of the policy does not provide for insurer covering the risk relating to pillion rider. In the absence of any additional premium paid for the said purpose, the insurer cannot be fastened with the liability to pay the compensation to the claimant, who was a pillion rider. Therefore, the award passed by the Tribunal fastening the liability as against the appellant/insurer is erroneous and, the same deserves to be interfered with.

12. For the reasons aforesaid, the appeal stands allowed and the impugned award dated 29.04.2017 passed in M.C.O.P.No.527 of 2014 on the file of the Motor Accidents Claims Tribunal, Subordinate Court, Gobichettipalayam, insofar as directing the appellant to pay the compensation amount to the 1st respondent/claimant is set aside. There shall be no order as to costs in this appeal.

31.10.2023 skt Index : Yes / No Speaking Order : Yes / No : Yes / No Page No.11 of 13

M.DHANDAPANI, J.

skt To 1.The Motor Accidents Claims Tribunal, Subordinate Court, Gobichettipalayam.

2.The Section Officer, V.R. Section, High Court, Madras.

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