Judgement
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 1345-1346 OF 2009
Oriental
Insurance Company Ltd. ...Appellant
Versus
Surendra Nath Loomba and Others
...Respondents
WITH CIVIL APPEAL NOS. 1347-1348 OF 2009
Surendra Nath Loomba
...Appellant
Versus
Oriental Insurance Company Ltd. & ors. ...Respondents
Dipak Misra, J.
In the present batch of appeals, two preferred by the Oriental Insurance
Company Limited and two preferred by claimant, the assail is to the common
judgment passed by the High Court of Uttarakhand at Nainital in A.O. No. 201 of
2003 and A.O. No. 284 of 2003 wherein the award dated 19.5.2003 passed by the
Motor Accidents Claims Tribunal, Dehradun (for short ‘the tribunal’) in
M.A.C.T. Petition No. 10 of 1999 was challenged by the insurer and the claimant
from different spectrums.
2. The facts which are requisite to be stated are that on 9.10.1998 about
4.30 a.m. claimant, Surendra Nath Loomba, was travelling in a Maruti Esteem Car
bearing Registration No. DL 8C-5096 belonging to the respondent No. 3, Savita
Matta, and driven by the respondent No. 2, Raj Loomba, the son of the claimant.
Near the President Body-guard House, Rajpur Road, the vehicle dashed against a
tree and in the accident the windscreen (front) of car was smashed and its
pieces got inserted into the eyes of the claimant as a consequence of which he
lost his both eyes. As set forth, at the time of the accident the claimant was
working as a Senior Manager in Punjab National Bank and his gross salary was
Rs.18,949.86 per month and various perquisites were also attached to the
service. Keeping in view his salary and other perquisites he filed an
application under Section 166 of the Motor Vehicles
Act, 1988 before the tribunal putting forth a claim of Rs.62,00,000/- with
18% interest as compensation.
3. The respondent No. 2, Raj Loomba, filed his written statement contending,
inter alia, that at the time of accident the vehicle was insured with the
Oriental Insurance Company Limited and hence, it being the insurer was liable to
pay the compensation.
4. The insurance company resisted the claim of the claimant on the ground
that the driver of the vehicle did not have a valid driving licence;
that the proceedings had been initiated in a collusive manner; and that even
if the accident as well as the injuries were proven the insurer was not liable
to indemnify the owner as the claimant was travelling as a gratuitous passenger.
5. The tribunal on the basis of material brought on record came to hold that
as the insurer had issued Certificate of Insurance in respect of the vehicle in
question and it was valid during the period when the accident occurred, it was
liable to pay the compensation; that the opposite party No. 1 had a valid
driving licence and the accident had occurred and there was no collusion between
the parties; and that the victim was entitled to get a total sum of
Rs.20,97,984/- towards compensation with 9% interest per annum regard being had
to the pecuniary and non-pecuniary losses. Be it noted, the tribunal, while
computing the amount, had deducted certain sum under certain heads which need
not be stated in detail.
6. Aggrieved by the aforesaid award the insurance company preferred A.O.
No. 201 of 2003 and the injured claimant preferred A.O. No. 284 of 2003
before the High Court. The High Court, by the common impugned order, reduced the
amount of compensation to Rs.16,42,656/- and concurred with the conclusion
arrived at by the tribunal as regards the liability. Thus, the appeal preferred
by the insurance company was allowed in part and the appeal preferred by the
claimant was dismissed. Hence, the present batch of appeals by the insurance
company as well as by the claimant.
7. First, we shall deal with the appeals preferred by the insurance company
It is worth noting that the Certificate of Insurance was filed before the
tribunal which clearly showed that the vehicle was insured with the
appellant-company. Dr. Meera Agarwal, learned counsel for the appellant-insurer
would submit that it was only an “Act Policy†and, therefore, the liability
of the insurer does not arise. She has commended us to the decisions in United
India Insurance Co. Ltd., Shimla v. Tilak Singh and Others[1], Oriental
Insurance Company Ltd. v. Jhuma Saha (Smt.)[2], Oriental Insurance Company Ltd.
v. Sudhakaran K.V. and others[3] and New India Assurance Company Ltd. v.
Sadanand Mukhi and others[4].
8. Learned counsel for the respondents would contend that whether the policy
is an “Act Policy†or a “Comprehensive/Package Policy†or whether any
extra premium was paid to cover the passenger, is not reflected from the
Certificate of Insurance as the policy was not brought on record by tendering
the same before the tribunal.
9. In Tilak Singh (supra) this Court referred to the concurring opinion
rendered in a three-Judge Bench decision in New India Assurance Co. Ltd. V.
Asha Rani[5] and ruled thus:- “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 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.†It is worthy to note in the said case the
controversy related to gratuitous passenger carried in a private vehicle.
10. In Jhuma Saha (Smt.) (supra) this Court has stated thus: - “The
additional premium was not paid in respect of the entire risk of death or bodily
injury of the owner of the vehicle. If that be so, Section 147 (b) of the Motor Vehicles
Act which in no uncertain terms covers a risk of a third party only would be
attracted in the present case.â€
11. In National Insurance Co. Ltd. v. Laxmi Narain Dhut[6] after elaborately
referring to the analysis made in Asha Rani (supra) the Bench ruled thus:-
“Section 149 is part of Chapter XI which is titled “Insurance of Motor
Vehicles against Third-Party Risksâ€. A significant factor which needs to be
noticed is that there is no contractual relation between the insurance company
and the third party. The liabilities and the obligations relatable to third
parties are created only by fiction of Sections 147 and 149 of the Actâ€.
In the said case it has been opined that although the statute is a beneficial
one qua the third party but that benefit cannot be extended to the owner of the
offending vehicle. The said principle was reiterated in Oriental Insurance
Company Ltd. v. Meena Variyal and Other[7], Sudhakaran K. V. (supra) and
Sadanand Mukhi (supra).
12. It is apt to note here that this Court in Bhagyalakshmi and others v.
United Insurance Company Limited and another[8], after dealing with various
facets and considering the authorities in Amrit Lal Sood and Another v.
Kaushalya Devi Thapar and Others[9], Asha Rani (supra), Tilak Singh (supra),
Jhuma Saha (supra), Sudhakaran K. V. and Others (supra), has observed thus :-
“Before this Court, however, the nature of policies which came up for
consideration were Act policies. This Court did not deal with a package policy.
If the Tariff Advisory Committee seeks to enforce its decision in regard to
coverage of third-party risk which would include all persons including occupants
of the vehicle and the insurer having entered into a contract of insurance in
relation thereto, we are of the opinion that the matter may require a deeper
scrutiny.†13. Recently this Bench in National Insurance Company Ltd. v.
Balakrishnan & Another[10], after referring to various decisions and
copiously to the decision in Bhagyalakshmi (supra), held that there is a
distinction between “Act Policy†and “Comprehensive/Package Policyâ€.
Thereafter, the Bench took note of a decision rendered by Delhi High Court in
Yashpal Luthra and Anr. V. United India Insurance Co. Ltd. and Another[11]
wherein the High Court had referred to the circulars issued by the Tariff
Advisory Committee (TAC) and Insurance Regulatory and Development Authority
(IRDA). This Court referred to the portion of circulars dated 16.11.2009 and
3.12.2009 which had been reproduced by the High Court and eventually held as
follows: - “19. It is extremely important to note here that till 31st
December, 2006 Tariff Advisory Committee and thereafter from 1st January, 2007,
IRDA functioned as the statutory regulatory authorities and they are entitled to
fix the tariff as well as the terms and conditions of the policies by all
insurance companies. The High Court had issued notice to the Tariff Advisory
Committee and the IRDA to explain the factual position as regards the liability
of the insurance companies in respect of an occupant in a private car under the
“comprehensive/ package policyâ€. Before the High Court the Competent
Authority of IRDA had stated that on 2nd June, 1986 the Tariff Advisory
Committee had issued instructions to all the insurance companies to cover the
pillion rider of a scooter/motorcycle under the “comprehensive policy†and
the said position continues to be in vogue till date. He had also admitted that
the comprehensive policy is presently called a package policy. It is the
admitted position, as the decision would show, the earlier circulars dated 18th
March, 1978 and 2nd June, 1986 continue to be valid and effective and all
insurance companies are bound to pay the compensation in respect of the
liability towards an occupant in a car under the “comprehensive/package
policy†irrespective of the terms and conditions contained in the policy. The
competent authority of the IRDA was also examined before the High Court who
stated that the circulars dated 18th March, 1978 and 2nd June, 1986 of the
Tariff Advisory Committee were incorporated in the Indian Motor Tariff effective
from 1st July, 2002 and they continue to be operative and binding on the
insurance companies.
Because of the aforesaid factual position the circulars dated 16th November
2009 and 3rd December, 2009, that have been reproduced hereinabove, were issued.
20. It is also worthy to note that the High Court after referring to
individual circulars issued by various insurance companies and eventually stated
thus:- “In view of the aforesaid, it is clear that the comprehensive/package
policy of a two wheeler covers a pillion rider and comprehensive/ package policy
of a private car covers the occupants and where the vehicle is covered under a
comprehensive/package policy, there is no need for Motor Accident Claims
Tribunal to go into the question whether the Insurance Company is liable to
compensate for the death or injury of a pillion rider on a two-wheeler or the
occupants in a private car. In fact, in view of the TAC’s directives and those
of the IRDA, such a plea was not permissible and ought not to have been raised
as, for instance, it was done in the present case.â€
21. In view of the aforesaid factual position there is no scintilla of doubt
that a “comprehensive/package policy†would cover the liability of the
insurer for payment of compensation for the occupant in a car. There is no cavil
that an “Act Policy†stands on a different footing than a
“Comprehensive/Package Policyâ€. As the circulars have made the position very
clear and the IRDA, which is presently the statutory authority, has commanded
the insurance companies stating that a “Comprehensive/Package Policy†covers
the liability, there cannot be any dispute in that regard. We may hasten to
clarify that the earlier pronouncements were rendered in respect of the “Act
Policy†which admittedly cannot cover a third party risk of an occupant in a
car. But, if the policy is a “Comprehensive/Package Policyâ€, the liability
would be covered. These aspects were not noticed in the case of Bhagyalakshmi
(supra) and, therefore, the matter was referred to a larger Bench. We are
disposed to think that there is no necessity to refer the present matter to a
larger Bench as the IRDA, which is presently the statutory authority, has
clarified the position by issuing circulars which have been reproduced in the
judgment by the Delhi High Court and we have also reproduced the same.
22. In view of the aforesaid legal position the question that emerges for
consideration is whether in the case at hand the policy is an “Act Policyâ€
or “Comprehensive/Package Policyâ€.
There has been no discussion either by the tribunal or the High Court in this
regard. True it is, before us Annexure P-1 has been filed which is a policy
issued by the insurer. It only mentions the policy to be a comprehensive policy
but we are inclined to think that there has to be a scanning of the terms of the
entire policy to arrive at the conclusion whether it is really a package policy
to cover the liability of an occupant in a car.â€
14. We have quoted in extenso to reiterate the legal position. In the case at
hand, the policy has not been brought on record. The learned counsel for the
appellant-insurer would submit that it is an “Act Policyâ€.
The learned counsel for the respondent would seriously dispute and submit
that extra premium might have been paid or it may be a “Comprehensive/Package
Policyâ€. When Certificate of Insurance is filed but the policy is not brought
on record it only conveys that the vehicle is insured. The nature of policy
cannot be discerned from the same. Thus, we are disposed to think that it would
be appropriate to remit the matter to the tribunal to enable the insurer to
produce the policy and grant liberty to the parties to file additional documents
and also lead further evidence as advised, and we order accordingly.
15. It needs no special emphasis to state that whether the insurer would be
liable or not would depend upon the nature of the policy when it is brought on
record in a manner as required by law.
16. As far as quantum is concerned, though numbers of grounds were urged, yet
the learned counsel for the parties did not really address on the same and,
therefore, we do not think it necessary to dwell upon the same and treat it as
just and proper compensation requiring no interference.
17. In the result, the appeals preferred by the insurer, namely, Oriental
Insurance Company Limited are allowed to the extent indicated hereinabove and to
that extent the award is set aside and the matter is remitted to the tribunal
and the appeals preferred by the claimant for enhancement of compensation are
dismissed. There shall be no order as to costs.
........................................J.
[K. S. Radhakrishnan]
.................................................J.
[Dipak Misra]
New Delhi;
November 20, 2012
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