An 'Act only' insurance policy under the Motor Vehicles Act does not cover passengers, thus insurers are not liable for damages in such cases.

JUDGMENT

The appellant is the 2nd respondent in O.P.

(M.V.)No.2078/2001 on the file of the Motor Accidents Claims Tribunal, Kottayam. It was a claim petition filed by the legal heirs of the deceased pillion rider of a motor cycle, which met with an accident.(Hereinafter the parties are mentioned in accordance to their rank in the Tribunal)

2. Short facts of the case are like this:

On 21.5.2001, the deceased was driving on the pillion seat of the motor cycle bearing Reg.No.KL-06/4022 through Thrippunithura – Poothotta road and when they reached at Kolani bus stop of Udayamperoor, the 3rd respondent who was the rider of the motor cycle has ridden the vehicle in a rash and negligent manner with very high speed. Due to the over speed and reckless driving, the rider has lost his control over the motor cycle and which hit against an electric post and as a result of that, the deceased was thrown away from the vehicle and sustained fatal head injuries and he succumbed to his injury while he was undergoing treatment at R.C.M., a Multi Specialty Hospital at Thrippunithura. The legal heirs claimed compensation against the respondents jointly and severally.

3. To substantiate the case, Exts.A1 to A20 were marked on the side of the petitioner. Ext.B1 is the original policy certificate issued by the 2nd respondent. PWs 1 to 3 were also examined on the side of the petitioner. After going through the evidence and documents, the Tribunal allowed the claim petition and ordered a compensation of Rs.4,10,822/- with interest at the rate of 6% per annum from the date of the application till realisation. Aggrieved by the above award, this appeal is filed by the 2nd respondent.

4. Heard the counsel for the appellant and counsel for the respondents 2 and 3.

5. The counsel for the appellant submitted that, Ext.B1 is only an 'Act only' policy and therefore the Tribunal erred in directing the insurance company to pay the compensation. No additional premium is paid and only third party cover is there in the policy. The learned counsel for the insurance company relied on the judgment of the Apex Court in United India Insurance Company Shimla Vs. Tilak Singh and Others : (2006(4) SCC 404) and also relied on the judgment of this Court in M.A.C.A.No.863/2019.

6. It is now settled by several decisions of the Apex Court and this Court that in an 'Act only' policy, the Tribunal cannot direct the insurance company to pay the compensation.

Therefore, there cannot be any direction to pay and recovery also in such cases, in the light of the decision, of this Court in the judgment dated 8.3.2021 in M.A.C.A.No.863/2019. The relevant portion is extracted as follows:

“On an overall re-appreciation of the facts, Sections 147 and 149 of the Act and the afore cited precedents, I am of the definite opinion that the law laid by the three Judge Bench inAsha Rani, and Tilak Singh, that a 'Statutory Policy' only covers death or bodily injury of a third party falling within the sweep of Section 147 of the Act, is squarely applicable to the facts of the present case. Therefore, as additional premium was admittedly not paid to cover the first respondent, I have no hesitation to hold that the first respondent was a gratuitous passenger and was not covered by Ext.B-1 policy. Hence, the impugned award directing the appellant to pay compensation to the first respondent is erroneous and is liable to be set aside.”

In the light of the above decisions, the direction to pay compensation with interest by the insurance company is liable to be set aside.

Therefore, this appeal is allowed. The direction to pay compensation by the appellant/2nd respondent is set aside. Additional respondent Nos.6 and 7 in this appeal, who are the legal heirs of the 4th respondent, the owner of the vehicle is directed to pay the compensation with interest.