A comprehensive insurance policy can cover risks to occupants, including pillion riders, challenging the notion of 'Act Only Policies'.

1. The appellant insurer has assailed the award dated 3.5.2008 passed in Claim Case No. 7 of 2006 by the Additional Motor Accidents Claims Tribunal, Bilaspur (henceforth 'the Tribunal') whereby in a death case liability to pay compensation of Rs.2,16,000 has been fastened upon the appellant insurer.

2. Admittedly, on 5.7.2002 motor cycle No. CG 10 - B 0264 (henceforth 'the motor cycle') owned and driven by the deceased Bisahuram and insured by the appellant insurer, met with an accident in which one Arjunkant, a pillion rider on the said motor cycle died. The widow and two minor children of the deceased filed application under S.166 of the Motor Vehicles Act (hereinafter referred to as ' the Act' ) before the Tribunal on the ground that since the vehicle was insured, liability to pay compensation would rest squarely on the insurer. The appellant insurer pleaded, inter alia, that risk of the pillion rider not having been covered by the appellant insurer under the policy, it was not liable to pay any compensation. It was further pleaded that driver of the motor cycle, i.e., Bisahuram Sahu did not possess a valid driving licence on the date of accident.

3. The Tribunal fastened the liability to pay compensation on the insurer since no evidence was led by the appellant insurer to prove that the motor cycle was driven by Bisahuram in contravention of the conditions of the policy of insurance. Since, admittedly on the date of accident the motor cycle was insured, it fastened the liability to pay compensation on the appellant insurer.

4. The sole ground urged by Mr. H.B. Agrawal, learned senior counsel in this appeal is that the policy of insurance of the motor cycle was an 'Act Only Policy' under which premium was received only for covering third party risk. Placing reliance on Oriental Insurance Co. Ltd. v. Sudhakaran K.V. , 2008 ACJ 2045 (SC), it was argued that the insurance company was not under any statutory liability to cover the risk of a pillion rider on the motor cycle under an 'Act Only Policy' since the pillion rider on a two - wheeler could not be treated as a third party. Reliance was also placed on General Manager, United India Insurance Co. Ltd. v. M. Laxmi , 2009 ACJ 104 (SC).

5. Mr. Suresh Verma, learned counsel for the respondents - claimant Nos. 1 to 3, has argued in support of the impugned award.

6. Mr. Gautam Khetrapal, learned counsel for owner, the respondent No. 4 would submit that the policy in question was not an 'Act Only Policy' but a 'Comprehensive Package Policy'. It was urged that while covering the risk of third party, risk of the occupants carried in the motor cycle was also covered by the insurer. The learned counsel referred to section II of the policy relating to liability to third parties where - under it was mentioned as under:

"(1) Subject to the limits of liability as laid down in the Schedule hereto the company will indemnify the insured in the event of an accident caused by or arising out of the use of the insured vehicle against all sums which the insured shall become legally liable to pay in respect of,

(i) death of or bodily injury to any person including occupants carried in the insured vehicle (provided such occupants are not carried for hire or reward) but except so far as it is necessary to meet the requirements of Motor Vehicles Act , the company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured."

(Emphasis added)

Laying great emphasis on the words 'including occupants carried in the insured vehicle' it was argued that the policy of insurance was a Comprehensive Policy which covered the risk of a