IMPORTANT POINT
An 'act only' insurance policy does not cover gratuitous passengers, thus the insurer is not liable for compensation.

JUDGMENT :

SHOBA ANNAMMA EAPEN, J.

This appeal has been filed by the third respondent insurer in OP(MV) No.463 of 2008 on the file of the Motor Accidents Claims Tribunal, Kasaragod, challenging the liability to pay compensation awarded to the claimants for the death of the deceased Ibrahim Haji. The respondents 1 to 8 herein were the claimants; and respondents 9 &10 herein were the respondents 1 & 2 before the tribunal.

2. The case of the claimants was that on 13.07.2008, while the deceased along with his family members was travelling in a car bearing Reg.No.KA-12N-9927 driven by the first respondent in a rash and negligent manner, the car overturned twice or thrice, whereby the deceased sustained fatal injuries and succumbed to the injuries on the way to hospital. The claimants, being the legal heirs of the deceased, approached the tribunal claiming a total compensation of Rs.2,50,000/-.

3. Respondents 1 and 2, the driver and owner of the offending vehicle respectively, remained ex parte before the tribunal. The third respondent insurer filed a written statement, admitting the policy coverage for the offending vehicle, but disputing the liability and quantum of compensation claimed. Before the tribunal, PW1 was examined and Exts.A1 and A2 were marked on the side of the claimants, and Ext.B1 was marked on the side of the respondent insurer. The tribunal, after analysing the pleadings and materials on record, held that the accident took place on account of the negligence of the driver of the offending vehicle and awarded a sum of Rs.1,29,500/- as compensation under different heads with interest @ 8% per annum from the date of petition till realization against the third respondent being the insurer. The respondent insurer has come up in appeal, challenging its liability to pay compensation.

4. Heard the learned Standing Counsel for the appellant/insurer and the learned counsel for the respondents 1-8/claimants.

5. The claimants are the wife and children of the deceased Ibrahim Haji. The driver of the offending car was the son of the deceased.

6. The learned Standing Counsel for the insurer submitted that before the tribunal, a specific contention was taken that Ext.B1 policy was an “act only” policy and the deceased, being a gratuitous passenger in the car, was not covered by the policy and the insurer is not liable to pay any compensation. The tribunal, however, found that though the policy was an “act only” policy, the deceased, who was a gratuitous passenger, was a third party, and accordingly, granted compensation to the claimants against the insurer. The learned Standing Counsel for the insurer relied on a catena of decisions such as, United India Insurance Co. Ltd. v. Tilak Singh [2006 (2) KLT 884 (SC)], National Insurance Co. Ltd. v. Balakrishnan & Another [(2013) 1 SCC 731], National Insurance Co. Ltd. v. Parvathneni & Another [2009) 8 SCC 785], Oriental Insurance Co. Ltd. v. Sudhakaran [2008 (2) KLT 936 (SC)] and New India Assurance Co. Ltd. v. Daisy Paul & Another [2021 (2) KHC 449], and argued that since the policy is “act only” policy, there is no liability for the insurer to indemnify the insured and to pay compensation to the legal heirs of the deceased.

7. Per contra, the learned counsel for the claimants/legal heirs of the deceased submitted that since there was a valid policy in respect of the offending vehicle, the insurer is liable to pay compensation and then to recover the amount from the owner of the offending vehicle. To substantiate the said contention, the learned counsel relied on the judgments of the apex court in National Insurance Co. Ltd. v. Saju P. Paul & Another [2013 KHC 4013] and Manuara Khatun and others v. Rajesh Kr. Singh and others [2017 KHC 6151].

8. The question to be considered is whether any liability can be thrust upon the insurer to pay compensation to gratuitous passengers in a private car if the policy issued is an “act only” policy.

9. A perusal of Ext.B1 policy shows that it is an “act only”