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National Insurance Co. Ltd v. Ajit Kumar And Others
Factual and Procedural Background
The appeals arose from awards passed by the Motor Accidents Claims Tribunal and affirmed by the High Court, holding the appellant-insurer liable to pay compensation for the death or bodily injury of persons who were travelling as passengers in a goods vehicle. Relying on the Supreme Court’s earlier decision in “New India Assurance Co. v. Satpal Singh”, both forums below fastened liability on the insurer. The insurer challenged those findings before the Supreme Court. The factual matrix giving rise to the accident was undisputed and, therefore, not elaborated by the Court.
Legal Issues Presented
- Whether, under the Motor Vehicles Act, 1988 (prior to its 1994 amendment), an insurer is statutorily liable to indemnify the owner for death or bodily injury sustained by a gratuitous passenger travelling in a goods carriage.
Arguments of the Parties
Appellant-Insurer's Arguments
- Section 149(2) of the 1988 Act is materially different from proviso (ii) to Section 96(2)(b) of the 1939 Act; hence the ratio in Satpal Singh, which treated the two provisions as identical, is inapplicable.
- The statutory scheme of the 1988 Act, read with its definitions, does not contemplate carriage of passengers in a goods vehicle; therefore, no compulsory insurance cover is required for such passengers.
Claimants/Respondents' Arguments
- Satpal Singh squarely covers the situation and binds the Court; it held that insurers are liable even for gratuitous passengers.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| New India Assurance Co. v. Satpal Singh, (2000) 1 SCC 237 | Treated Section 95(1) of the 1939 Act as pari materia with Section 147(1) of the 1988 Act, thereby extending insurer’s liability to gratuitous passengers. | Distinguished; the Court held that Satpal Singh proceeded on an incorrect assumption of parity between the two statutes. |
| New India Assurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223 | Three-Judge Bench holding that the 1988 Act does not impose liability on insurers for passengers in goods vehicles. | Relied upon as authoritative support for the present conclusion negating insurer’s liability. |
| Oriental Insurance Co. Ltd. v. Devireddy Konda Reddy, (2003) 2 SCC 339 | Reiterated that the statutory policy under the 1988 Act does not cover gratuitous passengers in goods carriages. | Cited as corroborative authority reinforcing the Court’s reasoning. |
Court's Reasoning and Analysis
Justice Arijit Pasayat undertook a textual and structural comparison between the 1939 and 1988 Motor Vehicles Acts. Key analytical steps were:
- Statutory definitions differ materially. The 1939 Act defined “goods vehicle” as one that could carry goods “in addition to passengers”, whereas the 1988 Act defines “goods carriage” as meant solely for carriage of goods.
- Absence of a parallel proviso. Clause (ii) of the proviso to Section 95 of the 1939 Act, which dealt with passengers in vehicles other than those “carried for hire or reward”, finds no counterpart in Section 147 of the 1988 Act.
- Scope of compulsory insurance. Section 147 of the 1988 Act mandates coverage for passengers only in a “public service vehicle”. The proviso limits coverage for employees in a goods carriage to liabilities under the Workmen’s Compensation Act, 1923; it does not mention other passengers.
- Legislative intent. The shift from “in addition to passengers” to “solely for the carriage of goods” evinces Parliament’s intention to prohibit carriage of passengers in goods vehicles and, by extension, to exclude them from compulsory insurance.
- Precedential support. The Court endorsed the three-Judge Bench ruling in Asha Rani (followed in Devireddy Konda Reddy) which had already overruled the contrary approach of Satpal Singh.
Consequently, the Court concluded that the insurer bears no statutory liability for gratuitous passengers travelling in a goods carriage under the unamended 1988 Act.
Holding and Implications
Holding: The appeals were allowed; the judgments of the Tribunal and the High Court fastening liability on the insurer were set aside.
Implications: The decision reaffirms that, under the Motor Vehicles Act, 1988 (prior to its 1994 amendment), insurers are not liable for death or bodily injury suffered by gratuitous passengers in goods carriages. While the claimants remain free to pursue recovery from persons legally liable (e.g., the vehicle owner), the ruling clarifies statutory limits of compulsory insurance and aligns lower-court jurisprudence with the Supreme Court’s three-Judge Bench authority.
Arijit Pasayat, J.— Leave granted.
2. The only question raised in these appeals is whether the insurer is liable to pay the compensation under the Motor Vehicles Act, 1988 (in short “the Act”) for the death or bodily injury to a person travelling in a goods vehicle as passenger. Liability of the insurer was fixed by relying on this Court's decision in New India Assurance Co. v. Satpal Singh (2000) 1 SCC 237.
3. The factual aspects need not be gone into in detail, as there is practically no dispute on the factual aspects.
4. The learned counsel for the appellant insurer submitted that Sec-tion 149(2) of the Act is etymologically different from proviso (ii) to Section 96(2)(b) of the Motor Vehicles Act, 1939 (hereinafter referred to as “the old
Act”) and, therefore, the ratio in Satpal Singh case (2003) 2 SCC 223 has no application. In response, the learned counsel appearing for the claimants submitted that in the said case such a stand has been negatived and it has been held that the insurer is liable to pay compensation to gratuitous passengers.
5. This Court had occasion to deal with cases of passengers travelling in goods vehicles which met with accident resulting in death of such person or bodily injury. Such cases belong to three categories i.e: (1) those covered by the old Act; (2) those covered by the Act; and (3) those covered by amendment of the Act in 1994 by the Motor Vehicles (Amendment) Act, 1994 (hereinafter referred to as “the Amendment Act”).
6. The present appeals belong to the second category.
7. In Satpal Singh case (2003) 2 SCC 223 this Court proceeded on the footing that provision of Section 95(1) of the old Act is in pari materia with Section 147(1) of the Act, as it stood prior to the amendment in 1994.
8. On a closer reading of the expressions “goods vehicle”, “public service vehicle”, “stage carrier” and “transport vehicle” occurring in Sections 2(8), 2(25), 2(29) and 2(33) of the old Act with the corresponding provisions i.e Section 2(14), 2(35), 2(40) and 2(47) of the Act, it is clear that there are conceptual differences. The provisions read as follows:
Old Act
“2. (8) ‘goods vehicle’ means any motor vehicle constructed or adapted for use for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods solely or in addition to passengers;
(25) ‘public service vehicle’ means 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;
(29) ‘stage carriage’ means a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey;
(33) ‘transport vehicle’ means a public service vehicle or a goods vehicle;”
New Act
“2. (14) ‘goods carriage’ means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods;
(35) ‘public service vehicle’ means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a maxi-cab, a motor cab, contract carriage, and stage carriage;
(40) ‘stage carriage’ means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey;
(47) ‘transport vehicle’ means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle;”
(emphasis supplied)
9. “Liability” as defined in Section 145(c) of the Act reads as follows:
“145. (c) ‘liability’, wherever used in relation to the death of or bodily injury to any person, includes liability in respect thereof under Section 140;”
10. Third-party risks in the background of vehicles which are the subject-matter of insurance are dealt with in Chapter VIII of the old Act and Chapter XI of the Act. Proviso to Section 147 needs to be juxtaposed with Section 95 of the old Act. Proviso to Section 147 of the Act reads as follows:
“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 goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.”
It is of significance that the proviso appended to Section 95 of the old Act contained clause (ii) which does not find place in the new Act. The same reads as follows:
“(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”.
The difference in the language of “goods vehicle” as appearing in the old Act and “goods carriage” in the Act is of significance. A bare reading of the provisions makes it clear that the legislative intent was to prohibit goods vehicle from carrying any passenger. This is clear from the expression “in addition to passengers” as contained in the definition of “goods vehicle” in the old Act. The position becomes further clear because the expression used in “goods carriage” is “solely for the carriage of goods”. Carrying of passengers in a goods carriage is not contemplated in the Act. There is no provision similar to clause (ii) of the proviso appended to Section 95 of the old Act prescribing requirement of the insurance policy. Even Section 147 of the Act mandates compulsory coverage against death of or bodily injury to any passenger of “public service vehicle”. The proviso makes it further clear that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in goods vehicle would be limited to liability under the Workmen's Compensation Act, 1923 (in short “the WC Act”). There is no reference to any passenger in “goods carriage”.
11. The inevitable conclusion, therefore, is that provisions of the Act do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the insurer would have no liability therefor.
12. Our view gets support from a decision of a three-Judge Bench in New India Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223 and Oriental Insurance Co. Ltd. v. Devireddy Konda Reddy (2003) 2 SCC 339.
13. Learned counsel for the respondents submitted that Respondent 1 should be permitted to avail such remedies as are available in law for recovering any amount to be paid as compensation from a person liable to pay compensation at the first instance. No permission is necessary for such purpose. If Respondent 1 has any remedy in law it is open to pursue it in accordance with law. The appeals are allowed by setting aside the judgment of the Tribunal and the High Court. There shall be no order as to costs.
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