An insurance policy issued under Section 147 of the Motor Vehicles Act, 1988, covers passengers in private vehicles, whether carried for hire or reward or otherwise.

K.K. Usha, J. - The question that arises for consideration in this appeal is whether passengers in private vehicle carried not for hire or reward are covered by an insurance policy issued in terms of the provisions contained under Section 147 of the Motor Vehicles Act, 1988. The Motor Accidents Claims Tribunal, Perumbavoor following a bench decision of this Court in United India Insurance Co. Ltd. v. Appukuttan, 1995(1) KLT 807, took the view that such a policy, which is usually referred as an Act Policy, would cover such gratuitous passengers. After admitting the appeal a bench of this court referred the matter for consideration of a larger Bench doubting the correctness of 1995(1) KLT 807.

2. In an accident happened on 8.2.91 by way of collision between a tempo van and a jeep the Ist respondent who was a passenger in the jeep sustained injuries. He filed O.P.(MV) No. 1045/91 before the Motor Accidents Claims Tribunal, Perumbavoor claiming compensation to the extent of Rs. 50,000/-. The appellant who was the insurer of the jeep at the time of the accident was impleaded as 5th respondent. The tribunal granted an amount of Rs. 12,500/- as compensation to the petitioner and the appellant was directed to pay the amount. The contention raised by the appellant that the insurance policy issued by it being an Act policy would not cover the passenger in the jeep, was not accepted by the tribunal. The appellant placed reliance on a bench decision of this court in Chacko v. Rosamma, 1991(1) KLT 711, which held that a passenger in a private vehicle is not covered by an Act policy. The tribunal was inclined to follow the principle laid down by a later bench decision 1995 (1) KLT 807 holding that a pillion rider of a twowheeler would be covered by an Act policy issued under Section 147 of the Motor Vehicles Act, 1988.

3. The learned counsel appearing on behalf of the appellant contended that the decision in 1995(1) KLT 807 has not laid down correct law. In support of his contention he placed reliance on Velunni v. Vellakutty, 1989(2) KLT 227, 1991(1) KLT 711, Pushpabai Purushotam Udeshi v. M/s. Ranjit Ginning and Pressing Co., 1997 ACJ 343, and Amrit Lal Sood and another v. Smt. Kaushalya Devi Thaper, AIR 1998 Supreme Court 1433. Before we enter upon a discussion on these decisions we would first refer to the relevant provisions under the earlier enactment and the current statute. Sec 95 is the parallel provision in the Motor Vehicles Act, 1939. The relevant portion of Section 95 reads as follows :-

"95. Requirement of policies and limits of liability :- (1) In order to comply with the requirements of this chapter, a policy of insurance must be a policy which -

(a) is issued by a person who is an authorised insurer, (or by a cooperative 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 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 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 Workmens 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 veh