The liability of insurance companies and the determination of compensation in motor accident cases are guided by the provisions of the Motor Vehicles Act, 1988, and relevant judicial interpretations.

( 1 ) THIS appeal is preferred by claimants for enhancement of compensation. On 27. 8. 1989, a young boy, namely, ghanshyam met with an accident and lost his life. The deceased was travelling in tractor No. CIG 4327 which was driven by respondent No. 1 Omkar Lal. It is alleged that tractor was driven in a rash and negligent manner which resulted into accident and caused death of Ghanshyam. Application for compensation of Rs. 2,60,700 was filed before Motor Accidents Claims tribunal, Morena, which was registered as motor Accident Case No. 60 of 1989. The tractor was insured with respondent No. 3, insurance company. Claims Tribunal has held that Ghanshyam was sitting in the tractor and on account of rash and negligent driving, Ghanshyam met with an accident and died on the spot but Tribunal had assessed compensation of Rs. 25,000 only.

( 2 ) LEARNED counsel for appellants submitted that no reasons have been assigned by the Claims Tribunal for arriving at the figure of Rs. 25,000. Learned counsel for the appellants submitted that Rs. 25,000 is a meagre amount for grant of compensation. Claims Tribunal has not at all applied its mind in determining the quantum of compensation. The learned counsel for the appellants further argued that the Claims tribunal has committed error in exonerating the insurance company. Once the finding is recorded that the vehicle was insured with respondent No. 2, the Tribunal ought to have been held that the insurance company is also liable to pay the damages.

( 3 ) THE question of liability of insurance company has been recently determined by supreme Court in the case of New India assurance Co. Ltd. v. Asha Rani, 2003 acj 1 (SC), wherein the judgment of New india Assurance Co. Ltd. v. Satpal Singh, 2000 ACJ 1 (SC), has been overruled. In this case, it is held that owner of vehicle carrying passenger must pay premium for covering the risk of passengers. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid. While considering the effect of the Motor Vehicles Act, 1988 and previous Motor Vehicles Act, 1939, it is held that in the earlier Act, so far as the employees of owner of motor vehicle are concerned, an insurance policy was not required to be taken in relation to their liability other than arising in terms of the provisions of Workmen's Compensation act, 1923. On the other hand, proviso (ii)appended to section 95 of 1939 Act enjoined a statutory liability upon the owner of the vehicle to take out an insurance policy to cover the liability in respect of a person who was travelling in a vehicle pursuant to a contract of employment. The legislature has consciously not inserted the said provision in 1988 Act. It is contended that the ratio of judgment is that unless extra premium is paid, insurance company is not bound to pay compensation for a party not insured by the owner of vehicle.

( 4 ) IT is contended by the learned counsel for the appellants as well as respondent nos. 1 and 2 that the judgment relates to the vehicle which carries passenger or a transport vehicle but it does not include the tractor. Therefore, above judgment of apex Court is not applicable to the present case. Once, it is admitted by insurance company that the vehicle was insured with them, then they are liable to pay compensation.

( 5 ) WE have considered rival arguments of the parties. We have perused the insurance policy filed by the insurance company, which is exhibited as Exh. D-1. In the policy, it is specifically mentioned that a tractor is insured for the use of agriculture and forest purposes. It is further mentioned that the policy does not cover:" (I) Use for hire or reward or for racing, pace making, reliability trial or speed testing; (ii) Use whilst drawing a greater number of trailers in all than is permitted by law. "thus, vehicle was insured for the purpose of agriculture and forest and it was