1. These two appeals are by the appellants who are the owners of School Bus No. MRR 7274 and the Insurance Company with whom the said vehicle was insured. Respondent No. 1 in the two appeals are the two original claimants who were injured as a result of an accident that took place on 21st September 1973 when they were sitting in the abovesaid bus. It is pertinent to mention that when the School Bus No. MRR 7274 was stationed on the fateful day on a public road, another School Bus No. MRS 8374 came at a high speed from a by-lane and dashed against the stationary bus. The impact was so heavy that all the children travelling in the school bus were thrown from their seats and fell down inside the bus and received bodily injuries. The two claimants hereinabove received comparatively serious injuries and filed the claim applications.

2. The Motor Accidents Claims Tribunal by its separate judgments and orders dated 15th July 1977 accepted the contention of appellant No. 1 that the driver of the School Bus No. MRR 7274 was not in any way negligent and that the accident occurred without any fault on his part. However, referring to the provisions of S. 95(1)(b)(ii) of the Motor Vehicles Act, the Tribunal held that the owner of the said bus was liable for damages despite the fact that the driver of the said bus was not negligent. Accordingly, the Tribunal awarded compensation of Rupees 6,400/- and Rs. 9,330/- with interest thereon at the rate of 9 per cent per annum from the date of the order till payment. Further, referring to the provisions of S. 95(2)(b)(ii)(4) of the Act, the Tribunal held that the liability of the Insurance Company was limited to Rs. 5,000/- in each case and that therefore the Insurance Company was liable to pay compensation of Rs. 5,000/- to each of the two claimants only. The award in the two cases was of course passed against the owners of the vehicles, i.e, appellant No. 1 as well as respondent No. 2.

3. Shri Kudroli, the learned Counsel for the appellants, i.e, the owner of the stationary bus No. MRR-7274 and the Insurance Company, stated that the Tribunal was not justified in holding appellant No. 1 to be liable for any compensation whatsoever in view of the admitted position that he or the driver of his vehicle was not at all negligent in the occurrence of the accident. In this connection, Shri Kudroli relied on a Kerala High Court decision in Kesavan Nair v. State Insurance Officer, 1971 ACJ 219, in which Krishna Iyer J. (as he then was) observed in paragraph 4 at page 221 that there was an imperative need of a provision in the statute for fixing liability on the insurer even where the negligence of the driver was not proved. Shri Kudroli then referred to the Supreme Court decision in the case of Minu B. Mehta v. Balkrishna, AIR 1977 SC 1248. In that case, this Court's judgment in Marine & General Insurance Co. v. Balkrishna, AIR 1977 Bom 53, was reversed. However, observations were made in paragraph 23 to the effect that under S. 95(1)(b)(ii) of the Motor Vehicles Act, the liability of a person would arise in the case of bodily injury to any passenger caused by or use of a public service vehicle in a public place, even though the liability might not have been incurred by the insured due to the negligence of the driver or the owner. It was pointed out that when such a question again came up for consideration before the Supreme Court in the case of Gujarat State Road Transport Corpn. Ahmedabad v. Ramanbhai, AIR 1987 SC 1690, the above observations were held to be obiter dicta and not necessary for the decision in that case (vide paragraph 6 at page 1697). All the same, the Supreme Court held (vide paragraph 8) that the purport and scope of S. 92-A introduced in the Motor Vehicles Act in the year 1988 supported the view taken by the Supreme Court earlier. In particular, Shri Kudroli referred to and relied upon the following observations from the said decision at pages 1697 and 1698:—

“This part of the Act is clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicles before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. To that extent the substantive law of the country stands modified.”

Alternatively, it was contended by Shri Kudroli that assuming the Insurance Company was held to be liable in respect of death 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 irrespective of the fact whether the driver or the owner was negligent, such a liability could at the most be that of the Insurance Company and not of the owner of the vehicle. So far as the owner of the vehicle is concerned, he cannot be fastened with any liability unless he or the driver is found to be negligent. Referring then to S. 96 of the Motor Vehicles Act which makes the Insurance Company liable in two situations, viz., where the vehicle is insured and the owner is held liable, Shri Kudroli contended that the owner being not liable, it would be difficult to fasten the liability on the Insurance Company, which depends upon the liability of the owner.

4. I have given my careful consideration to the submissions made by Shri Kudroli. In order to appreciate the submissions, it is desirable to refer to the relevant provisions of Ss. 95(1), 96(1) and 96(2) of the Motor Vehicles Act. The provisions read thus:—

“95. (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 or by a co-operative society allowed under S. 108 to transact the business of an insurer, and

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)—

(i) against any liability which may be incurred by him in respect of the 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;

(ii) 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:

Provided that ……………………..

(i) to (iii) ………………………

Explanation ………………………..

96. (1) If, after a certificate of insurance has been issued under sub-section (4) of S. 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of S. 95 (being a liability covered by the terms of the policy) 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.

(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:—

(a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of Section 105; or

(b) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:—

(i) to (iii) …………………………..

(c) & (2A) ……………………………

(3) to (6) ……………………………..

5. Section 95(1)(b)(i) evidently makes the Insurance Company liable against any liability which may be incurred by the insured and since the insured is not or cannot be made liable in this case as he or his driver is not found negligent, the case will not fall under sub-clause (i) of clause (b) of sub-section (1) of S. 95. Sub-clause (ii) of clause (b) of sub-section (1) of S. 95, however, uses a different expression. It does not make the Insurance Company liable in respect of liability which may have been incurred by the insured. It makes the Insurance Company liable straightway 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. The emphasis in this sub-clause is on the nature and situation of the vehicle at the time of the accident rather on the liability of the insured in respect of the vehicle. There is no doubt that the school bus in which the claimants were passengers was a public service vehicle and the accident occurred when this vehicle was in use in a public place. There is also no dispute that bodily injury has been caused to the applicants in such a situation. Under the circumstances, as stated by me above, I am inclined to hold that so far as sub-clause (ii) of clause (b) is concerned, the liability of the Insurance Company does not depend upon the liability of the owner of the vehicle and the liability is directly related to the injury caused in a particular situation.

6. As regards the alternative contention that the Insurance Company cannot be asked to pay any amount by way of compensation unless the liability is or can be fastened on the owner of the motor vehicle in the first instance, the submission, though attractive, is not tenable. It is true that under S. 96 of the Motor Vehicles Act, the Insurance company is liable only if the vehicle is insured with it and the liability is fastened on the owner of the motor vehicle. It is also true that the function of the Insurance Company primarily is to indemnify the insured in respect of third party risks. However, when S. 95(1)(b)(ii) makes the Insurance Company directly liable in respect of death of or bodily injury to any passenger in a particular situation, I do not think there is any further need to have recourse to S. 96 to make the Insurance company liable. Accordingly, the Insurance Company is held liable under S. 95(1)(b)(ii) of the Motor Vehicles Act, though, as rightly held by the Tribunal, the liability of the Insurance Company is limited to Rs. 5,000/- in each case in view of S. 95(2)(b)(ii)(4) of the said Act.

7. For reasons stated earlier, the owner of the vehicle, i.e appellant No. 1, is not liable in view of the admitted position that he or his driver has not been held negligent.

8. Before concluding, reference may be made to the decisions referred to and relied upon by Shri Kudroli in brief. So far as the Kerala High Court decision is concerned, it does support Shri Kudroli's submission inasmuch as a hope was expressed in that case that there was a need of a provision in the statute for fastening the liability on the insurer even where the negligence of the driver was not proved. The Supreme Court in Minu B. Mehta v. Balkrishna, AIR 1977 SC 1248, admittedly made certain observations in paragraph 23 of its judgment which support the view I am taking in this case. No doubt, there are certain observations in Gujarat State Road Transport Corpn., Ahmedabad v. Ramanbhai, AIR 1987 SC 1690, which, on the face of it, appear to be against the observations made by the Supreme Court in the earlier decision. It is, however, seen that those observations are made in the context of Section 92-A introduced in the Act in the year 1982. There cannot possibly be any dispute that Section 92-A is a substantive provision. Its purport and scope is much bigger than the scope of Section 95(1)(b)(ii). As against Section 95(1)(b)(ii) which made the Insurance Company alone liable in respect of cases falling under that clause, Section 92-A makes both the owner and the Insurance Company liable under the principle of no fault liability.

9. In the result, the Awards passed by the Tribunal in the two cases are confirmed except against the appellant No. 1, i.e, the owner of the School Bus No. MRR-7274. No order as to costs. Thus, the appeals stand partly allowed.

Appeals partly allowed.