K.K Usha, J.:— The question that arises for consideration in this appeal is whether passengers in private vehicle carried not for hire or reward are covered by an insurance policy issued in toms of the provisions contained under S. 147 of the Motor Vehicles Act, 1988. The Motor Accidents Claims Tribunal, Perumbavoor following a bench decision of this Court in United India Ins. Co. Ltd. v. Appukuttan & Anr. (1995 (1) KLT 807), took the view that such a policy, which is usually referred as an ‘Act policy’, would cover such gratuitous passengers. After admitting the appeal a Bench of this Court referred the matter for consideration of a larger bench doubting the correctness of 1995 (1) KLT 807.

2. In an accident happened on 8.2.91 by way of collision between a tempo van and a jeep the 1st respondent who was a passenger in the jeep sustained injuries. He filed O.P (MV) No. 1045/91 before the Motor Accidents Claims Tribunal, Perumbavoor claiming compensation to the extent of Rs. 50,000/-. The appellant who was the insurer of the jeep at the time of the accident was impleaded as 5th respondent. The Tribunal granted an amount of Rs. 12,500/- as compensation to the petitioner and the appellant was directed to pay the amount The contention raised by the appellant that the insurance policy issued by it being an ‘Act policy’ would not cover the passenger in the jeep, was not accepted by the Tribunal. The appellant placed reliance on a Bench decision of this Court in Chacko v. Rosamma, (1991 (1) KLT 711) which held that a passenger in a private vehicle is not covered by an Act policy. The Tribunal was inclined to follow the principle laid down by a later Bench decision 1995 (1) KLT 807 holding that a pillion rider of a two wheeler would be covered by an ‘Act policy’ issued under S. 147 of the Motor Vehicles Act, 1988. The learned counsel appearing on behalf of the appellant contended that the decision in 1995 (1) KLT 807 has not laid down correct law. In support of his contention he placed reliance on Velunni v. Vellakutty, 1989 (2) KLT 227, 1991 (1) KLT 711, Pushpabai Prushottam Udeshi v. Ranjit Ginning & Pressing Co. 1977 ACJ 343 and Amrit Lal Sood v. Smt. Kaushalya Devi Tapar, (1998) 3 SCC 744 : AIR 1998 SC 1433. Before we enter upon a discussion on these decisions we would first refer to the relevant provisions undo-the earlier enactment and the current statute. S. 95 is the parallel provision in the Motor Vehicles Act, 1939. The relevant portion of S. 95 reads as follows:

“95. Requirement of policies and limits of liability.— (1) In order to comply with the requirement 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-s. (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 a policy shall not be required—

(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment, (other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee—

(a) engaged in driving the vehicle; or

(b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle; or

(c) if it is a good vehicle, being carried in the vehicle; or

(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, or

(iii) to cover any contractual liability.”

3. Before an amendment under Act 56 of 1969 S. 95(1)(b) contained only one clause. It read as follows:

“(b) in sures the person or classes of person specified in the policy to the extent specified in sub-s. (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place in India or in a reciprocating territory”.

4. In S. 147 of the Motor Vehicles Act, 1988 the second proviso under clause (b) is omitted. Otherwise sub-s. (1) of S. 147 contains the same provisions as sub-s. (1) of S. 95. The relevant portion of S. 147 is quoted below:—

“147. Requirements of policies and limits of liability. (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, and

(b) Insures die person or classes of persons specified in the policy to the extent specified in sub-s. (2)—

(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including owner of the goods or his authorised representative carried in the vehicle 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 a policy shall not be required—

(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment, other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee—

(a) engaged in driving the vehicle; or

(b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle; or

(c) if it is a good carriages, being carried in the vehicle, or

(ii) to cover any contractual liability.”

5. We may point out that in sub-s. (1)(b)(i) the words ‘including owner of the goods or his representative carried in the vehicle’ were added with effect from 14.11.1994 by Amendment Act 54 of 1994.

6. S. 95(1)(b)(i) provided that the Act policy would indemnify the insured against any liability which may be incurred by him in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place (underline supplied). It also covers liability in respect of damage to any property of a third party. The contention raised on behalf of the appellants is that the term “any person” contained in S. 95(1)(b)(i) would not take in a passenger in a private vehicle. It is the case of the appellant that the only passenger who can be covered by the Act policy is a passenger of a public service vehicle coming un to S. 95(1)(b)(ii). Therefore, according to the appellant, the omission of the second proviso in S. 147 is not relevant at all. The submission is that second proviso was superfluous and its omission would not make any difference in the scheme of sub-s. (1) of S. 147 from what was available under sub-s. 95.

7. In 1989 (2) KLT 227 a Bench of this Court considered the scope of S. 95(1)(b)(i) and (ii) in relation to the liability for the death of a pillion rider on a motorcycle. Referring to the terms of proviso (ii) it was held that since the motorcycle is not a vehicle in which passengers are carried or hire or reward or by reason of or in pursuance of a contract of reward or by reason of or in pursuance of a contract of employment, proviso (ii) is not attracted and it must follow that the Act policy is not required to cover liability in respect of the pillion rider. In 1991 (1) KLT 711 it was held that an Act policy will not cover gratuitous passengers in a private car. There is also an observation in the above judgment that the policy being only an Act policy, it covers only third party risk. It does not cover risk of passengers. In 1995 (1) KLT 807 a bench of this Court considered the scope of an Act policy under S. 147 of the Motor Vehicles Act, 1988. Reliance was sought to be placed on 1989 (2) KLT 227 to support the contention that Act policy will not take in passengers in a private vehicle. This contention was repelled by the Bench pointing out of the omission to incorporate proviso (ii) of S. 95(1) in S. 147. It was observed as follows:—

“…………In the proviso (ii) to S. 95(1) of the said Act a policy of insurance was not required to cover liability in respect of death or bodily injury to persons who were carried in or upon the vehicle at the time of occurrence. It was in consideration of the said proviso that the Division Bench has held in Vellunni's case that a pillion rider of a motorcycle is not required by statute to be covered for the risk regarding bodily injuries.

8. But the position has completely been changed when the new Motor Vehicles Act, 1988 came into force. In S. 147 of the new Act which corresponds to S. 95 of the old Act there is no limit in certain cases as contained in clause (ii) of the old Act. The corresponding proviso in the old Act contained three clauses whereas now there are only two clauses. What was dropped in the new Act is the clause which excluded the coverage for death or bodily injury to persons carried in or upon the vehicle. That means such liability cannot now be excluded from the policy. The result is, when a policy of insurance “is an act policy”, it does not necessarily mean that the insurance company will stand absolved from the liability in respect of the pillion rider of a motorcycle.”

9. We do not find any reason to disagree with the above view taken in 1995 (1) KLT 807. According to us, the term ‘any person’ contained in S. 95(1)(b)(i) would take in even a passenger in a private vehicle. But proviso (ii) mandates that a policy under S. 95 shall not be required to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment We are not able to agree with the learned counsel for the appellant that proviso (ii) is super fluous in view of the provisions contained under S. 95(1)(b)(ii) and therefore, its omission in S. 147 of the 1988 statute would not make any difference. Clause (b)(i) refers to death of or bodily injury to “any person” arising out of the use of the vehicle in a public place. Proviso (i) makes special provision in respect of employees who are carried in the vehicle limiting the liability to that arising under the Workmen's Compensation Act, 1923 in respect of the death of, or bodily injury to, any such employee. Proviso (ii) limits the application of clause (b)(i) to a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment It excludes liability in respect of the death of or bodily injury to passengers in other vehicles.

10. S. 95(1)(b)(ii) is a special provision dealing with the liability against the death of or bodily injury to any passenger of a public service vehicle. The public service vehicle is defined under S. 2(25) of 1939 Act and 2(35) of 1989 Act as “any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage”.

11. Therefore, it cannot be said that proviso (ii) is superfluous. There is a detailed discussion on the scope of different clauses under S. 95(1)(b) in a decision of the Supreme Court in Smt. Mallawa etc. v. Oriental Insurance Co. Ltd., (1999) 1 SCC 403 : AIR 1999 SC 589. The question that arose for consideration in the appeals which were heard together was whether the owner of the goods being carried in a goods vehicle is covered by an Act policy. Therefore, it had to be considered whether clause (b)(i) would take in a goods vehicle and also a person carried in a goods vehicle. After referring to the provisions of S. 95 as it stood before the amendment under Act 56 of 1969 it was observed that clause (b) of sub-s. (1) is couched in wide terms so as to include “any person” and “every motor vehicle” within its sweep. Then exceptions are carved out by proviso (ii). The effect of provisions (i), (ii) is explained in the following manner:—

“By proviso (ii), it restricted the generality of the main provision by confining the requirement to cases where the “vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment.” In absence of the proviso the main provision would have included all classes of vehicles including goods vehicles and all passengers whether carried for hire or reward or by reason of or in pursuance of a contract of employment or otherwise. That is the reason why there is a reference to different classes of vehicles in proviso (i). It refers to “vehicle”, “public service vehicle” and “goods vehicle”. The words “any person” in the main provision would have included the employee of the person insured, and therefore, an exception was made by enacting proviso (i) so as to restrict liability of the insurer in respect of his employees. Both these exceptions were made as the legislature did not want to widen the liability of the insurer and the insured by making it more than what it was under the English Act, upon which S. 95 was based.”

12. The Supreme Court observed that proviso (ii) in clear terms ‘restricted’ the scope of main provision by confining its application to that vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment Thus, the confinement of the operation of the main provision was in respect of vehicles and also passengers. Amendment brought to S. 95 by Amendment Act 56 of 1969 was then considered. As mentioned earlier, after the amendment clause (b) contained sub-clauses (i) and (ii). Provisos (i) to (iii) continued as such. The effect of the amendment is explained as follows:—

“Though apparently, it looked as if the Legislature by introducing two sub-clauses in clause (b) had tried to make a distinction between passengers and non-passengers, that was not really so. Though the proviso appeared after sub-clause (ii) of clause (b), it really remained a proviso to the earlier clause (b) which after the amendment became clause (b)(i). Neither the object of introducing sub-clause (ii) in clause (b) nor the language of the proviso indicate that the proviso was to act as a proviso to sub-clause (ii) also. Even earlier, the passengers of a public service vehicle were required to be covered compulsorily as they answered the description of passengers carried for hire or reward. The only effect of making a special provision for passengers of a public service vehicle was that pioviso (ii) there after remained applicable to vehicles other than public service vehicles”.

13. In the above decision the Supreme Court has taken the view that it would not be proper to consider a goods vehicle as a passenger vehicle on the basis of a single use or use on some stray occasions that vehicle for carrying passengers for hire or reward. For the purpose of construing a provision like proviso (ii) to S. 95(1)(b), the correct test to determine whether a passenger was carried for hire or reward, would be whether there has been a systematic carrying of passengers. Only if the vehicle is so used then that vehicle can be said to be a vehicle in which passengers are carried for hire or reward. Finally it was held that it is not required that a policy of insurance to cover risk to the passengers who are not carried for hire or reward. The above discussion regarding the scope of S. 95 would clearly show that proviso (ii) plays a very important role in limiting the liability cast under S. 95(1)(b)(i).

14. It is in the light of the above we have to examine the effect of deletion of proviso (ii) while enacting S. 147 of the Motor Vehicles Act, 1988. Clause (b)(i) of S. 147 now stands limited only by proviso (i) and also the contractual liability which was in corporated originally as proviso (iii) in S. 95(1)(b), but as proviso (ii) in S. 147(1)(b). Proviso (i) deals with only the case of employees. The liability referred in clasue (i) would apply to death or bodily injury to ‘any person’. Since the limitation brought under proviso (ii) that is by excluding liability in respect of death or bodily injury to a passenger except a passenger who is carried for hire or reward or by reason of or in pursuance of contract of employment is no longer available in the statute. Therefore, it has to be taken that the term “any person” referred in clause (b)(i) would take in all passengers for hire or reward or otherwise. We do not find any merit in the contention raised by the learned counsel for the appellant that if the term “any person” in clause (b)(i) would take in passengers in private vehicle carried in for hire or reward then it was unnecessary for the Legislature to bring in the amendment under Act 54 of 1994 to include owner of the goods or his authorised representative carried in the vehicle in clause (i). As was clearly observed by the Supreme Court in (1999) 1 SCC 403 : AIR 1999 SC 589 it would not be proper to consider a good vehicle as a vehicle in which passengers are carried normally. It was under these circumstances, an amendment was required to include the owner of the goods or his authorised representative carried in the vehicle by specific amendment in clause (i).

15. In Road Transport Co. v. Bhan Singh, (1998) 6 SCC 307 : AIR 1998 SC 2487, a claim put forward for compensation in respect of death of 35 passengers travelling in a bus came up for consideration. The contention raised on behalf of the appellant was that the claim in respect of the death of the passengers in the bus should be considered under S. 95(1)(b)(i) and if that be so, the limitation regarding the quantum of compensation provided under S. 95(2)(b)(ii) will not be applicable. It was submitted that wording of S. 95(1)(b)(i) is very wide to include a passenger in a bus, since the words used are “any person”. This contention was rejected by the Supreme Court It was held that S. 95(1)(b)(ii) being a specific provision made in respect of passengers of a public service vehicle, it is that provision which is applicable in the case and not the general provision contained in S. 95(1)(b)(i), when the in sured incurs liability in respect of the passengers travelling in his public service vehicle. As mentioned earlier, it was proviso (ii) which excluded passengers in private vehicle from the net of S. 95(1)(b)(i), since that proviso is not available in S. 147 of the Motor Vehicles Act, 1988, the general provision in clause (i) has to be taken as applicable to passengers carried in private vehicles not for hire or reward. A similar view was taken by Madhya Pradesh High Court in Oriental Insurance Co. Ltd. v. Smt. Radharani, AIR 1999 MP 47. It was held that an Act policy under S. 147 would cover occupant of a jeep who is earried without hire or reward.

16. We, therefore, fully agree with the view taken in 1995 (1) KLT 807 that a gratuitous passenger in a private vehicle is also covered by the Act policy under S. 147 of the Motor Vehicles Act, 1988. Therefore, according to us, the Tribunal was correct in holding the appellant liable under the Act policy to compensate the 1st respondent. In the result, the appeal stands dismissed.