An 'Act only policy' does not cover the risk of bodily injury to non-fare paying passengers unless the requisite premium is paid to cover their risk.

JUDGMENT :

B.P. ROUTRAY, J.

1. All these three appeals are inter-related being against the claims granted in respect of the same accident that took place on 11.4.2000.

2. The common case of the Appellant in all the appeals is that, the claimants while were travelling as occupants of the Ambassador Car bearing Registration No. ORO-2662 on 11.4.2000, the said vehicle dashed against the road side wall thereby causing injuries to them. The claimants are the friend and relations of the owner of the said Ambassador Car and were travelling in the vehicle in question as non-fare paying passengers.

3. MACA Nos. 921, 922 and 923 of 2009 are against the respective judgments dated 31.08.2009 of the learned MACT - IV, Bhadrak passed in M.A.C. No. 70, 68 and 67 of 2000. The insurer is the Appellant in all those three appeals.

4. Learned Tribunal upon adjudication of the dispute has granted compensation of Rs. 32,000/- and Rs. 24,500/- and Rs. 45,000/- along with 6% interest per annum to the respective claimants, namely, Gayadhar Mallick, Smt. Kanaklata @ Kamini Mallick and Bhagyadhar Mallick, who are Respondent No. 1 in all those three appeals respectively.

5. The entire contention of the insurer is that, the policy in respect of the offending Ambassador Car being “Act only policy” and the claimants being the occupants of the same, the limits of liability in the policy do not cover the risk of their bodily injury.

6. The claimants do not dispute their status as the occupants of the Ambassador Car being the friend and relatives of the owner of the Car. It is only contended that the insurer should be directed for payment of the amount of compensation with right of recovery of the same from the owner.

7. The nature of the policy for “Act liability only” is not disputed. It also remains undisputed that no extra premium has been paid to cover the risk in respect of the occupants of the vehicle. It is seen from the impugned judgment that the learned Tribunal while admitting such facts has come to the conclusion that the Insurance Company is liable to pay the compensation even if the claimants were travelling in the private car of the owner as non-fare paying passengers being the friends of the owner.

8. Law is no more res integra in respect of “Act only policy.” The Supreme Court in the case of Oriental Insurance Co. Ltd. vs. Sudhakaran K.V. and Others, AIR 2008 SC 2729 while considering the question whether an ‘Act only’ policy would cover the risk of the pillion rider of a scooter, proceeded to hold that such a contract of insurance covered the risk of a third party only and not that of the owner or pillion rider of a two wheeler. The Supreme Court held as follows:

“The law which emerges from the said decisions, is:

(i) the liability of the insurance company in a case of this nature is not extended to a pillion rider of the motor vehicle unless the requisite amount of premium is paid for covering his/her risk.

(ii) the legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion rider.

(iii) the pillion rider in a two wheeler was not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle.”

9. The Supreme Court in the case of New India Assurance Company Ltd. vs. Sadanand Mukhi and Others, 2009 (2) SCC 417 held as under:

“Contract of insurance of motor vehicle is governed by the provisions of the Insurance Act. The terms of the policy as also the quantum of premium payable for insuring the vehicle in question depends not only upon the carrying capacity of the vehicle but also on the purpose for which the same was being used and the extent of the risk covered thereby. By taking and ‘act policy’ the owner of a vehicle fulfils his statutory obligation as contained in Section 147 of the Act. The liability of the insurer is either statutory or contractual. If it is contractual its li