Under an ‘Act Only’ policy, the insurer is not liable for claims from the owner/rider as they do not qualify as third parties.

JUDGMENT Since these two appeals arise from the very same award dated

31.12.2007 in O.P.(MV) No.1179 of 2004 on the file of the Motor Accidents Claims Tribunal, Pala, these appeals are heard together and being disposed of by this judgment. M.A.C.A. No.1230 of 2008 is filed by the claimants challenging the finding of the Tribunal exonerating the insurer from the liability, whereas M.A.C.A. No.2210 of 2008 was filed by the 1st respondent/previous owner of the vehicle challenging the award passed directing the 1st respondent to pay the award amount.

2. Brief facts of the case is as follows :-

On 26.09.2002 at about 08.15 a.m., while the deceased was riding a scooter bearing reg. No. KL-07/D-373, from Edamattom to Pala, it hit an electric post. As a result of the accident, he sustained fatal injuries and succumbed to the injuries on the same day.

3. Respondents 1 and 2 are the owner and insurer of the offending vehicle respectively. In the written statement, the 2^nd respondent denied liability as the policy in question was only an ‘Act Only Liability Policy’. Before the tribunal, no oral evidence was adduced on either side. Exts.A1 to A8 and Exts.B1 were marked. The tribunal, after analysing the pleadings and materials on record, awarded a ₹

sum of 3,09,500/- as compensation under different heads with interest @9% per annum from the date of petition till realization with proportionate costs from the 1st respondent, owner.

4. Heard the learned counsel for the claimant, the learned counsel appearing for the respondent/owner and the learned Standing Counsel for the insurance company.

5. The learned counsel for the claimants/legal heirs of the deceased submitted that since there was a valid policy in respect of the offending vehicle, the insurer is liable to pay compensation and thereafter can recover the amount from the owner of the offending vehicle. To substantiate the said contention, the learned counsel relied on the judgments of the apex court in National Insurance Co. Ltd. v. Saju P. Paul & Another [2013 KHC 4013] and Manuara Khatun and others v. Rajesh Kr. Singh and others [2017 KHC

6151].

Per contra, the learned Standing Counsel for the insurer submitted that a specific contention was raised before the tribunal, that Ext.B1 policy was an “act liability” policy issued in the name of the 1^st respondent. Hence, rider as well as pillion rider is not covered by the policy. The driver of the vehicle happens to be the tortfeasor, the person responsible for the accident. The learned counsel further submits that the tribunal, however, found that though the policy was an “act only” policy, the deceased, who was a gratuitous passenger, was a third party, and accordingly, granted compensation to the claimants against the insurer. The learned Standing Counsel for the insurer relied on a catena of decisions such as, United India Insurance Co. Ltd. v. Tilak Singh [2006 (2) KLT 884 (SC)], National Insurance Co. Ltd. v. Balakrishnan & Another [(2013) 1 SCC 731], National Insurance Co. Ltd. v. Parvathneni & Another [2009) 8 SCC 785], Oriental Insurance Co. Ltd. v. Sudhakaran [2008 (2) KLT 936 (SC)] and New India Assurance Co. Ltd. v. Daisy Paul & Another [2021 (2) KHC 449], and argued that since the policy is “act only” policy, there is no liability for the insurer to indemnify the insured and to pay compensation to the legal heirs of the deceased.

6. The learned counsel for the 1^st respondent submitted that he had transferred the vehicle to Benny, the deceased person, prior to the date of the accident. The deceased was the owner of the vehicle at the relevant time of accident and had unlawfully obtained the insurance policy in the name of the 1^st respondent. The liability of the erstwhile owner is only against the 3^rd party. B