VERY IMPORTANT POINT
Under the 1988 Motor Vehicles Act, Insurance Company is liable to pay compensation to gratuitous passenger.

JUDGMENT

Thomas, J.-Leave granted.

2. A 10 year old girl met with her death in a truck accident. Her name was Dupinder Kaur. The accident occurred while she was travelling in the truck on 11.3.1990. She died on the spot. Her father, brother and sister made a joint claim for compensation under the Motor Vehicles Act, 1988 (for short the new Act ). The Motor Accident Claims Tribunal before which the claim was made passed an award in a sum of Rs. 25,000/- to the claimants. The owner of the truck was found liable to pay the compensation amount. M/s. New India Assurance Company, the insurer had been directed to make the amount good with interest, as the vehicle was then covered by an insurance policy issued by that company.

3. The claimants as well as the Insurance Company challenged the said award. The former was dissatisfied with the quantum of compensation awarded. The Insurance Company was aggrieved as the liability was imposed on them. The Insurance Company put forward a contention that the deceased Dupinder Kaur was a gratuitous passenger in the truck and hence no liability can be fastened with the insurer, but that contention was repelled.

4. A Division Bench of the High Court dismissed the appeal filed by the Insurance Company but allowed the other appeal by doubling the compensation amount. Hence this appeal by special leave at the instance of the Insurance Company. After hearing learned counsel for the appellant as felt that it is not necessary to send notice to the respondents to contest the appeal as there is no scope for absolving the Insurance Company from liability.

5. Learned counsel for the appellant banked on the decision of a three Judge Bench this Court in Mallawwa & Ors. v. Oriental Insurance Co. Ltd. & Ors.1, to disclaim liability on the premise that the victim of the accident was gratuitous passenger in the vehicle covered by the insurance policy. But the said decision was rendered under Section 95 of the Motor Vehicles Act, 1939 (which can be referred to as the old Act ). The aforesaid provision contained a rider in clause (ii) of the proviso to sub-section (1) which is absent in the corresponding provision in the New Act. To pinpoint the said distinction we extract Section 95(1) of the old Act as under:

"95. Requirements of policies and limits of liability.-(1) In order to comply with the requirements of this Chapter, a policy of insurance may be a policy which-

(a) is issued by a person who is an authorised insurer or by a co-operative society allowed under Section 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 a 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 employees 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, in respect of the death of, or bodily injury to, any such employee-

(a) engaged in driving the vehicle, or

(b) 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 re