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United India Insurance Co. Ltd. v. P.V Lakshmanan
Structured Summary of the Legal Opinion
Factual and Procedural Background
The claimant (respondent No.1) filed a petition under Section 110-A of the Motor Vehicles Act, 1939 in M.V.C. No. 342/87 claiming Rs. 1,00,000 for injuries sustained on 25.2.1987 while travelling as a passenger in a private car (Regn. No. KLN 1176). The car was owned by respondent No.2; United India Insurance Company Limited (appellant) was impleaded as the insurer and initially denied the alleged insurance in its written statement but later produced its office copy of the policy (Ex. R-1). The petition against the driver (respondent No.3) was not pressed and was dismissed as against him.
On the merits the Motor Accident Claims Tribunal (M.A.C.T.), Bengaluru Rural District, allowed the claim partly and awarded Rs. 46,000 to the claimant, holding the owner (respondent No.2) and the insurer (appellant) jointly and severally liable, along with interest at 9% per annum. The insurer appealed against the Tribunal's finding that it was liable to pay compensation on the ground that the claimant was a gratuitous passenger and that an "Act only" policy (type-written on Ex. R-1 as "Rs. 100/- Act only") did not cover such passengers.
Legal Issues Presented
- Whether the Tribunal's finding holding the appellant-insurer also liable to pay compensation to the claimant is legally correct and valid where the claimant was travelling as a gratuitous passenger in the private car of respondent No.2.
Arguments of the Parties
Appellant's Arguments (Insurer)
- The insurer contended that it was not liable to pay compensation because the claimant was a gratuitous (unpaid) passenger in a private car and the policy was an "Act only" policy which, according to the insurer's reliance on Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co., does not create statutory liability to insure gratuitous passengers.
- The insurer relied on the Supreme Court decision in Pushpabai Purshottam Udeshi to support its contention that there is no statutory obligation under the Motor Vehicles Act to insure gratuitous passengers in a private car.
Respondents' Arguments (Claimant and Owner)
- Respondents placed reliance on the decision of the Punjab & Haryana High Court in Kailash Kumari v. Bhola, arguing that subsequent instructions of the Tariff Advisory Committee (dated March 13, 1978) must be deemed incorporated into insurance contracts and, therefore, an insurer could not avoid liability for gratuitous passengers after those instructions took effect.
- Respondents also relied on a clause on the face of Ex. R-1 policy schedule (with seal) which states the policy "covers use for any purpose other than: a) hire or reward, b) organised racing or speed-testing." They argued this clause widens the insurer's liability by permitting use for any purpose other than hire/reward or racing, which includes carrying gratuitous passengers.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co., 1977 A.C.J. 343 (1977) 2 SCC 745 : AIR 1977 SC 1735 | Established that there is no statutory liability of an insurer under the Motor Vehicles Act to pay compensation to a passenger carried without hire or reward (i.e., a gratuitous passenger). | The appellant relied on this decision to argue no insurer liability. The Court, however, accepted the position that Pushpabai states there is no statutory obligation but noted that subsequent developments (Tariff Advisory Committee instructions and contractual terms) affect insurer liability; thus Pushpabai did not, in the circumstances of this case, absolve the insurer. |
| Kailash Kumari v. Bhola (High Court of Punjab & Haryana) | Held that the instructions of the Tariff Advisory Committee (a statutory body) should be deemed incorporated into every insurance contract from the date they came into force and that, consequently, insurers could be held liable for gratuitous passengers after those instructions were issued. | The Court in the present appeal adopted and expressed respectful agreement with the observations in Kailash Kumari, treating those instructions as incorporated into existing policies from 13 March 1978 and using that reasoning to uphold insurer liability for gratuitous passengers in this case. |
| Tariff Advisory Committee — Instructions dated March 13, 1978 | Administrative/statutory instructions to insurance companies regarding coverage; treated by the Punjab & Haryana High Court as having statutory force and as being incorporated into insurance contracts. | The Court accepted that these instructions are effective and must be deemed incorporated into policies with effect from 13 March 1978, and that by virtue of those instructions the Act policy governs the risk to gratuitous passengers in a private motor car, supporting the Tribunal's finding of insurer liability. |
Court's Reasoning and Analysis
The Court proceeded by examining the procedural and evidentiary background (admission of Ex. R-1, non-pressing of claim against the driver) and the basis of the Tribunal's award. The appellant's core contention—that an "Act only" policy does not cover gratuitous passengers—was noted and linked to the Supreme Court's decision in Pushpabai. The Court then considered the contrary authority of the Punjab & Haryana High Court in Kailash Kumari and the existence of the Tariff Advisory Committee instructions dated 13 March 1978.
The Judge accepted the following legal points (as articulated in the opinion):
- The Tariff Advisory Committee had issued relevant instructions on March 13, 1978, and the fact of issuance was not disputed by the appellant.
- Those instructions, being issued by a statutory body, must be deemed incorporated into all existing policies of insurance with effect from that date and have statutory force.
- Where the instructions apply, they alter the practical effect of an "Act only" policy by bringing within the scope of insured risk the gratuitous passenger carried in a private car.
The Court further relied on an express clause on the face of Ex. R-1 policy schedule, which stated that the policy "covers use for any purpose other than: a) hire or reward, b) organised racing or speed-testing." The Court interpreted this clause (as argued by respondents) to widen the scope of the policy to include carrying gratuitous passengers, and found no satisfactory explanation from the insurer for including that clause if liability were to be avoided.
Putting these strands together, the Court concluded that (a) the Tariff Advisory Committee instructions apply and must be read into the policy, and (b) the wording on the face of Ex. R-1 further supports coverage of gratuitous passengers. Consequently, the Tribunal's finding that the insurer was jointly and severally liable with the owner was legally justified and could not be held illegal or invalid.
Holding and Implications
Holding: The appeal is DISMISSED. The Tribunal's Award (Rs. 46,000 to the claimant, with interest at 9% per annum, against the owner and the insurer jointly and severally) is upheld. The appeal was dismissed with costs in favour of the respondent-claimant; the Advocate Fee was fixed at Rs. 500/-.
Implications:
- Direct effect on the parties: The insurer (appellant) remains liable to the claimant for the compensation awarded by the Tribunal (Rs. 46,000) jointly and severally with the vehicle owner (respondent No.2). The insurer must also bear the costs awarded and the fixed advocate fee.
- Legal significance noted by the Court: The opinion expressly accepts the view that the Tariff Advisory Committee's instructions dated 13 March 1978 must be deemed incorporated into existing insurance policies and have statutory force so as to govern the risk to gratuitous passengers in private motor cars. The Court applied that reasoning to sustain the Tribunal's finding of insurer liability. The opinion therefore aligns with the Punjab & Haryana High Court's approach in Kailash Kumari on this point.
- The Court did not state that it was laying down a new principle contrary to existing authority; rather it applied the Tariff Advisory Committee instructions and the contractual wording on the policy (Ex. R-1) to uphold the Tribunal's award.
All content in this summary is drawn exclusively from the text of the provided opinion and does not add facts or inferences beyond that text.
Mohamed Anwar, J.:— This appeal by the Insurer, United India Insurance Company Limited, is filed against the Judgment and Award dated 8th August, 1990 of the M.A.C.T II, Bangalore Rural District, made in M.V.C No. 342/87 disposed of on its file holding the appellant also liable to pay the compensation of Rs. 46,000/- to respondent No. 1-Claimant jointly and severally with respondent No. 2, owner of the offending car bearing Regn. No. KLN 1176.
2. The arguments of learned counsel on both sides are heard.
3. Respondent No. 1 (hereinafter referred to as ‘the claimant’) filed his petition under Section 110-A of the Motor Vehicle Act, 1939 (‘the Act’ for short) before the Tribunal claiming compensation of Rs. 1,00,000/- on account of the injuries suffered by him in the accident occurred on 25.2.1987 on Mysore-Bangalore road due to negligent driving of the said car bearing Regn. No. 1176 by its driver, in which car he was travelling as a passenger. Appellant was made respondent No. 1 in the petition as Insurer of the said car. Respondent No. 2 herein was made respondent No. 2 in the petition and the Driver of the said car was impleaded as respondent No. 3 therein. Appellant and respondent No. 2 appeared before the Tribunal in the said M.V.C No. 342/87 through their learned counsels but appellants alone contested the petition claim by filing its written statement.
4. Though the alleged insurance of the car with appellant was denied by it in its written statement, the same was admitted by it at subsequent stage of the proceeding before the Tribunal by production of its relevant insurance policy at Ex. R1 in evidence on record. The petition against R-3, Driver, was not pressed before the Tribunal by the claimant and, therefore, the petition stood dismissed as against the Driver.
5. On merits the claimant's petition came to be allowed partly by the Tribunal granting him the said compensation of Rs. 46,000/- as payable jointly and severally by appellant and respondent No. 2 herein, together with interest at 9% per annum under its impugned judgment and Award.
6. Aggrieved by the same the appellant, Insurer, has challenged the finding of the Tribunal holding the appellant also liable to pay the compensation to the claimant. The appeal is filed by the appellant on the ground that he is not liable to pay any compensation to the claimant since he was admittedly travelling as a gratuitous passenger in the said car of respondent No. 2 and that Ex. R-1 being the Act policy it does not cover such a passenger's risk.
7. Learned Counsel for appellant Sri. O. Mahesh reiterating the said ground urged in the appeal, argued against the impugned award of the Tribunal fastening the liability on appellant to pay the said compensation to claimant. He placed reliance on a decision of Supreme Court in Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co. . 1977 ACJ 343.
8. On the other hand the learned counsel for respondents 1 & 2, Messrs B.A Ramakrishna and Ashok Haranahalli, placing reliance on a decision of Punjab & Haryana Court in Kailash Kumari v. Bhola,2 canvassed their arguments in support of the validity of the impugned finding and Award of the Tribunal holding the appellant-Insurer also liable jointly and severally with respondent No. 2, owner of the vehicle, to pay compensation to the claimant.
9. The short point, therefore, that arises for consideration in this appeal is:
Whether finding of the Tribunal holding appellant Insurance Company also liable to pay compensation to the injured (claimant) is legally not correct and valid as he was travelling as a gratuitous passenger in the private car of respondent 2?
10. Admittedly, respondent No. 2 was the owner and appellant was the Insurer of the said car bearing Regn. No. KLN 1176 at the material time. Ex. R1 is merely appellant's office copy of the relevant policy schedule. The copy of the first sheet of that policy schedule was also produced on record in M.V.C 342/87 from respondent's side. In both these documents, in the column pertaining to payment of premium, it is type-written as ‘Rs. 100/- Act only’. It was, therefore, contended by the learned counsel for appellant that the policy in question being the Act policy, it does not cover the risk to the passenger travelling in the said car of respondent No. 2 as has been held by the Supreme Court in the case of Pushpabai Purshottam Udeshi, supra, there being no statutory obligation for the Insurer under Chapter VIII of the Act to insure the risk to gratuituous passenger travelling in a private car.
11. The identical point came up for consideration in appeal before the High Court of Punjab and Haryana in Kailash Kumari v. Bhola. In the case of Kailash Kumari the claimants therein were granted compensation by the Tribunal on the death of the deceased bread winner of their family who died in a motor accident. In that case also the deceased was travelling in a private car as a gratuitous passenger when it met with the accident resulting in his death. The Insurance Company which had issued the policy in respect of the said can therein was not held liable by the Tribunal to pay compensation to the claimants on the ground that the said policy did not cover the risk to gratuitous passenger travelling in a Private car. In appeal the High Court of Punjab and Haryana disagreed with the view taken by the Tribunal in absolving the Insurance Company of its liability and held otherwise on the basis of the relevant instructions of the Tariff Advisory Committee issued to all insurance companies subsequent to the Supreme Court decision in Pushpabai Purushottam Udashi's case. In that case of Kailash Kumari the High Court of Punjab and Haryana made the following material observation:
“Learned counsel for the respondents placed reliance on Pushpabai Purushottam Udeshi v. Ranjit Ginning & Pressing Co., 1977 A.C.J 343 ((1977) 2 SCC 745 : AIR 1977 SC 1735), in support of the proposition that the insurance company is not liable when the passenger is carried without hire or reward. This judgment does not render any assistance to the learned counsel. The decision of the apex Court makes it clear that although there is no statutory liability of the insurance company to pay compensation to a passenger, a contract of insurance can provide otherwise. The instructions of the Tariff Advisory Committee which is a statutory body will be deemed to have been incorporated in every contract of insurance. Even if it is not expressly mentioned in the contract by the deeming provisions, the Court will so read it in the insurance policy that the directions given by the Tariff Advisory Committee were incorporated in the insurance policy. After reading the directions in the insurance policy, the Court will give effect to it. The judgment of the Supreme Court was rendered on the same date, when the instructions of the Tariff Advisory Committee came into force. Moreover, in the Supreme Court case, the accident had taken place on 18.12.1960 prior to the insurance of the directions of the said Committee”.
So, concluding, the learned Judge has further proceeded to observe, ‘after issuance of the instructions of the Tariff Advisory Committee, the insurance company cannot avoid liability. The owner of the vehicle can legitimately say that under the policy, the insurance company was bound to pay to the claimants for the death of the passenger. The insurance company has not let any evidence on record that its liability is limited. In the absence of any evidence, it has to be held that the liability of the insurance company is unlimited.’
12. The fact that the Tariff Advisory Committee has issued the said relevant instructions dated March 13, 1978 is not disputed by Sri. Mahesh, learned counsel for the appellant insurance company. As such I am in respectful agreement with the aforesaid observations of the learned Judge of the Punjab & Haryana Court made in Kailash Kumari's case, supra, to the effect that the said instructions of the Tariff Advisory Committee must be deemed to have been incorporated in all the existing policies of the insurance company on and with effect from March 13, 1978. These instructions will have the statutory force. By virtue of the said Tariff Advisory Instructions it logically follows that the Act policy also governs the risk to the gratuitous passenger travelling in a private motor-car at the time of accident. Therefore, the finding of the Tribunal holding the appellant insurance company also liable to pay compensation to the respondent-claimant cannot be held illegal or invalid. On the other hand I find the Tribunal legally justified in its said finding.
13. Moreover, there is an additional clause put on the face of the front page of Ex. R-1 policy schedule with a seal, which reads:
“The policy covers use for any purpose other than:
a) hire or reward, b) organised racing or speed-resting.”
It is argued by learned counsel for respondents that the clause sufficiently widens the liability of the appellant insurance company so as to cover the risk of gratuitous passenger in a private car in as much as it permits the use of the car for any purpose other than for hire or reward and organised racing and speed testing. It was maintained by learned counsel for respondents that its use includes carrying of gratuitous passengers also. No other plausible explanation was offered by the learned counsel for appellant for incorporation of said clause in its policy schedule. I find sufficient legal force in contention of learned counsel, in that, such a construction falls in complete harmony with the said instructions dated March 13, 1978 issued to the insurance company by the Tariff Advisory Committee. It, therefore, necessarily follows that by virtue of the said clause contained in Ex. R1 policy also, the appellant becomes liable in respect of risk to a gratuitous passenger of the said car of respondent No. 2. Hence, I find the appeal devoid of merit.
14. In the result, for the reasons stated above, the appeal is dismissed with costs of respondent claimant. The Advocate Fee is fixed at Rs. 500/-.
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