An 'Act Only Policy' does not cover gratuitous passengers unless explicitly stated, even with additional premium collection.

JUDGMENT

The appellant in both these appeals is the insurer with whom the vehicle involved in the accident in respect of which the Original Petitions were filed. The Tribunal found that the accident was due to the negligence of the driver of the vehicle and the claimants, who are 1st Respondent in each of the cases, are entitled to compensation. The appellant contended in the Tribunal that the claimants were gratuitous passengers in a private car and there was no insurance coverage for them and it is not liable to pay the compensation. The learned Tribunal found that the policy was an 'Act Only Policy' but the appellant had collected extra premium and the gratuitous passengers were covered by the insurance policy.

This finding is assailed in these appeals.

2. Heard.

3. The only question that arises for consideration is the liability of the appellant in paying the compensation to the 1st Respondent. There is no dispute that the policy was an 'Act Only Policy'. The following observation is seen in the award passed by the Tribunal:

“It is true that Ext.B1 was a liability only policy. But Ext.B1 shows that additional premium was collected by the insurance company to the personal accident coverage of the driver and form the passengers in it. Form the risk of the passengers an amount of Rs.180/- was collected as additional premium. So applicants cannot be considered as gratuitous passengers in a private car”.

4. This warrants interpretation of Ext.B1 policy. In the policy, the first item is basic liability for which the appellant collected Rs.600/-. The second item is Personal Accident, for which it collected Rs.100/-. The next item is legal liability of the driver, for which it collected Rs.25/-. The next item is the relevant entry. It is “extra loading”. Towards this item, the appellant collected Rs.180/-. The question is what does the term “extra loading” mean. According to the learned counsel for the appellant, it is the extra amount collected by the insurer over the basic liability the rate of which has been fixed by the Insurance Regulatory Development Authority. On the other hand, the learned counsel for the 1st Respondent submits that it is additional premium collected for giving insurance coverage to gratuitous passengers also.

5. As noted above, the first item is basic liability. Its significance is that it should be the basis for claim of the premium that may be made by the Insurance Company. But, every Insurance Company is given the liberty to collect additional amount for certain reasons. It is not additional amount collected to cover gratuitous passengers. I am supported by the decision in ' Appukuttan Pillai v. Sunil Kumar ' in M.A.C.A No.1632/2011 of this Court. In that decision, a learned Single Judge of this Court held that premium collected for extra loading has noting to do with a pillion rider, as the vehicle involved in that case was a scooter. The interpretation cannot be different in this case also. The learned counsel for the 1st Respondent submits that the decision in 'Appukuttan Pillai's' case was rendered subsequent to the award passed in this case and so the decision is not applicable. I cannot accept the same because the law has been the same even before the decision in Appukuttan Pillai's case. This court only interpreted the term appearing in the policy. The amount collected under the head “extra loading” is not collected as additional premium for gratuitous passengers. It follows that gratuitous passengers were not covered by Ext.B1 policy in this case. The Tribunal went wrong in holding that the 1st Respondent in each case was covered by the policy and they were entitled to get compensation from the appellant Insurance Company. To this extent, the award is liable to be set aside.

6. The learned counsel for the 1st Respondent has invited my attention to the decision reported in 'Shafeeque v. Jamsheer ' (2014 (2) K.L.T SN 77) and ' Shriram General Insurance Company Ltd., Kollam v. Baby Jalaja and Another ' (