Important Point
The question whether Insurance Co. is liable to pay the compensation on account of the death or bodily injury to the gratuitous passengers including owner or his representative of the goods travelling in a goods vehicle u/s. 147(i)(b)(i) or (ii) r/w 149(2) of the Motor Vehicles Act, 1988 (before 1994 amendment) require determination by a larger Bench.

Headnote:Motor Vehicles Act, 1988—Sections 147(1)(b)(i)and (ii), 149(2) and 2(4) (Before 1994 amendment)—Liability of Insurance Co.—Difference between Section 95 of Motor Vehicles Act, 1940 and Section 147 of M.V. Act, 1988 (before 1994 amendment)—Judgment in Satpal Singh Case (2000) 1 SCC 227 given in ignorance of differences in old and New Act—Therefore, requires consideration by a larger Bench to determine liability of Insurance Co. when gratuitous passengers are carried in goods vehicle including owner of goods or his representative—Matter referred to be decided by a larger Bench.
Held : We feel as some of the striking features of the new Act were not brought to the notice of this Court which we are recording hereunder may have bearing to the conclusion which was arrived at in Satpal Singh (supra), viz., (a) Difference between the definition of ‘Goods Vehicle’ under the old and ‘Goods Carriage’ under the new Act. Under the old Act ‘goods vehicles’ is defined under Section 2(8) and under the new Act Section 2(14) defines ‘goods carriage’. The significant difference is, under the old Act the ‘goods vehicle’ could be used for the carriage of goods ‘or in addition to passengers’ while in definition of ‘goods carriage’ the words ‘or in addition to passengers’ stand deleted. The submission is, now goods carriage cannot carry any passenger. The other striking feature is with reference to Section 149(2) of the new Act. It is submitted that the defence available to the insurer under it would be obliterated in view of the declaration of law in Satpal Singh (supra). Under New Act, it would be a breach of condition in case vehicle is used for a purpose other than for which permit has been issued. Thus in a case a permit is issued for a ‘goods carriage’ it would not include any passengers and in case they travel it would be contrary to the mandate of the statute and thus in view of Section 149(2) no liability could be passed on to the insurance company. This apart, the effect of the deletion of sub-clause (ii) to the proviso to Section 95(1)(b) in the new Act also requires reconsideration. Accordingly we feel it appropriate in view of what we have recorded above, Satpal Singh (supra) requires reconsideration by a larger Bench. Let this matter be placed before Hon’ble the Chief Justice for constituting a larger Bench. (Paras 17 & 18)

Judgement Key Points

Key Points: - The liability of the insurance company for gratuitous passengers in a goods vehicle under Section 147 read with Section 149(2) of the Act was pending determination (!) . - The Court noted that the question requires consideration by a larger Bench due to differences between the old and new Act provisions (!) (!) . - The deletion of sub-clause (ii) to the proviso of Section 95(1)(b) in the new Act raises interpretative issues regarding coverage of gratuitous passengers in goods vehicles (!) .

Is the insurance company liable to pay compensation for death or bodily injury to gratuitous passengers including the owner or his representative travelling in a goods vehicle under Section 147 read with Section 149(2) of the Motor Vehicles Act, 1988 (pre-1994 amendment)?

Judgment

Misra, J.—The aforesaid sets of appeals were listed under category two out of the three categories. The arguments were heard, compositively for all the three categories. We have delivered judgment today for category one and three, while we are passing this order for the appeals falling under category two. The appeals falling under first category were those which fell under the Motor Vehicles Act, 1939 (hereinafter referred to as ‘old Act’). The appeals falling under second category are those which falls under Motor Vehicles Act 1988 (hereinafter referred to as ‘new Act’), prior to its 1994 amendment, while the appeals falling under category three were those falling under the new Act but those after the 1994 amendment.

2. Learned counsel for the insurance company submits that in New India Assurance Company v. Satpal Singh and Ors.1 this Court held that insurance company is liable to pay compensation in all cases where the deceased or injured persons are gratuitous passengers including owner or his representative of the goods while travelling in a goods carriage under Section 147 of the new Act. He seeks reference of this point to a larger Bench as it vitally affects Insurance Company and as relevant provisions of the new Act were not placed before this Court and if it were placed, a different conclusion would have come.

3. This Court in Satpal Singh (supra) held :

“The result is that under the new Act an insurance policy covering third-party risk is not required to exclude gratuitous passengers in a vehicle, no matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act vis-à-vis gratuitous passengers are of no avail while considering the liability of the insurance company in respect of any accident which occurred or would occur after the new Act came into force.”

4. To Section 95 of the old Act the corresponding section is Section 147 of the new Act, which deals with liability to pay the compensation. The relevant portion of Section 95 under the old Act and Section 147 of the new Act is quoted hereunder:

‘‘Section 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 or arising out of the use of the vehicle in a public place;

(ii) against the death of or bodily injury or 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 no 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) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on 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 contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon

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2001 Supreme(SC) 1120

Is the insurance company liable to pay compensation for death or bodily injury to gratuitous passengers including the owner or his representative travelling in a goods vehicle under Section 147 read with Section 149(2) of the Motor Vehicles Act, 1988 (pre-1994 amendment)?

Cases Referred (3)