PETITIONER:
AMRIT LAL SOOD & ANR.
Vs.
RESPONDENT:
SMT. KAUSHALYA DEVI THAPAR & ORS.
DATE OF JUDGMENT: 17/03/1998
BENCH:
K.T.THOMAS, M. SRINIVASAN
ACT
HEADNOTE
JUDGMENT
JUDGMENT SRINIVASAN, J.
On August 25, 1970 the fiat car owned by the second appellant collided with a goods carrier on Shimla-Kalka National Highway near Kandaghat Post office. The car was being driven by the first appellant, a brother of the Second appellant. The car was insured with the fifth respondent. Kishan Sarup Thapar, an advocate of Chandigarh who was travelling in the car got injured and was hospitalised for some time. He approached the Motor Accidents claims Tribunal, Solan and Srimur Districts claiming compensation of Rs. 1,25,000/-. The owners and drivers of both the vehicles as well as the insurers were impleaded as parties. The Tribunal found that the accident occurred due to negligence of the driver of the car and passed an award for Rs. 15,800/- against the appellants and the fifth respondent herein. The claimant filed an appeal in the High Court claiming more compensation while the insurer (5th respondent), filed an appeal disputing its liability to satisfy the claim. The claimant’s appeal was allowed by a learned judge in part and the compensation was enhanced to Rs. 20,800/-. The learned judge held that the claimant was a gratuitous passenger travelling in the car and the insurer was therefore not liable. 2. That judgment was assailed in two Letters Patent Appeals, one by the legal representatives of the Claimant and another by the driver of the vehicle who is the first appellant herein. A Division Bench of the High Court dismissed the appeal filed by the 1st appellant confirming the view of the single judge that the insurer is not liable as the claimant was only a passenger in the vehicle. In the other appeal, the Bench enhanced the compensation to Rs. 56,600/-. The driver and the owner of the car have preferred these appeals on special leave. 3. The question to be decided is whether the insurer, is liable to satisfy the claim for compensation made by the person travelling gratuitously in the car. the factual findings are not in dispute before us but for the contention of the appellants that the amount of compensation awarded by the Division Bench is excessive. We have no difficulty in repelling that contention as we find the materials on record to be sufficient to support the award of enhanced by sufficient to support the award of enhanced compensation. 4. The liability of the insurer in this case depends on the terms of the contract between the insured and the insurer as evident from the policy. Section 94 of the Motor Vehicles Act, 1936 compels the owner of a motor vehicle to insure the vehicle in compliance with the requirements of Chapter Viii of the Act. Section 95 of the Act provides that a policy of insurance must be one which insures the person against any liability which may be incurred by him in respect of death or bodily injury to any person or damage to any property of third party caused by or arising out of the use of the vehicle in a public place. The section does not however require a policy to cover the risk to passengers who are not carried for hire or reward. The statutory insurance does not cover injury suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot be held liable under the Act. But that does not prevent an insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby the risk to gratuitous passengers could also be covered. In such cases where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer. 5. In the present case, the policy is admittedly a ’ comprehensive Policy’. comprehensive insurance’ has been defined in Black’s Law Dictionary 5th edition as ’All risk insurance’ which in turn is defined as follows:-
" Type of insurance policy which
ordinarily covers every loss that
may happen, except by fraudulent
acts of the insured. Miller v.
Boston Ins. Co. 218 A. 2d 275, 278,
420 Pa. 566. Type of policy which
protects against all risks and
perils except those specifically
enumerated." 6. The relevant clauses in the policy before us are found in ’SECTION - II LIABILITY TO THIRD PARTIES’. They are:-
"1. The Company will indemnify the
Insured in the event of accident
caused by or arising out of the use
of the Motor Car against all sums
including claimant’s costa and
expenses which the Insured shall
become legally liable to pay in
respect of
(a) death of or bodily injury to
any person but except so far as is
necessary to meet the requirements
of Section 95 of the Motor Vehicles
Act, 1939, 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.
(b) damage to property other than
property belonging to the Insured
or held in trust by or in the
custody or control of the insured.
2. The Company will pay all costs
and expenses incurred with its
written consent.
3. In terms of and subject to
the limitations of the indemnity
which is granted by this Section b
to the insured the Company will
indemnify and Driver who is driving
the Motor Car on the insured order
or with his permission provided
that such Driver
(a) is not entitled indemnity under
any other Policy
(b) shall as though he were the
Insured observe fulfil and be
subject to the terms exceptions
conditions and limitations of this
policy in so far as they can
apply." 7. Under the heading General Exceptions the company’s liability is excluded inter alia in respect of any accident occurred whilst the car is being used otherwise than in accordance with the limitations as to use or bring driven by any person other than a Driver. The Limitations as to use set out in the policy are not relevant in this case as it is not the case of the insurer that there is a violation thereof. The term ’Driver’ is expressly defined in the policy as any of the following:
" (a) Any person,
(b) The insured may also drive a
Motor car belonging to him and not
hired to him under a Hire Purchase
Agreement. Provided that the person
driving hold is a licence to drive
the Motor car or has held and is
not disqualified for holding or
obtaining such a licence". 8. Thus under Section 11 1(a) of the policy the insurer has agreed to indemnify the insured against all sums which the insured shall become legally liable to pay in respect of death of or bodily injury to any person.’ The expression ’any person’ would undoubtedly include an occupant of the car who is gratuitously traveling in the car. The remaining par of clause (a) relates to cases of death or injury arising out of and in the course of employment of such person by the insured. In such cases the liability of the insurer is only to the extent necessary to meet the requirements of Section 95 of the Act. In so far as gratuitous passengers are concerned there is no limitation in the policy as such. Hence under the terms of the policy, the insurer is liable to satisfy the award passed in favour of the claimant. We are unable to agree with the view expressed by the High Court in this case as the terms of the policy are unambiguous. 9. Learned counsel of the appellants has drawn our attention to the following judgments in which similar clauses in insurance policy have been considered and a similar view has been expressed: (i) Madras Motor and General Insurance Co. Ltd. Versus Katanreddi Subbareddy and others 1975 A.C.J. 95, (ii) The premier Insurance Co. Ltd. and others Versus Gambhirsing Galabsing and others AIR 1975 Gujarat 133, (iii) Prabhudayal Agarwal versus Saraswati Bai and another 1975 A.C.J. 355, We approve of the reasoning in the above judgments. 10. The High Court has placed reliance on the judgment of this court in Pushpabai Purshottam Udeshi & Ors. Versus M/S. Ranjit Ginning & Pressing Co. (p) Ltd. & Anr. (1977) 2 S.C.C. 745. That judgment was based upon the relevant clause in the insurance policy in that case which restricted the legal liability of the insurer to the statutory requirement under Section 95 of Motor vehicles Act. That decision will have no bearing in the present case in as much as the terms of the policy here are wide enough to cover a gratuitous occupant of the vehicle. 11. Our attention has also been drawn to the judgment of this court in National Insurance. Co. Ltd., New Delhi Versus Jugal Kishore and others AIR 1988 S.C. 719. It is held in that case that though it is not permissible to use a vehicle unless it is covered at least under an "act only" policy, it is not obligatory for the owner of a vehicle to get it comprehensively insured, but it is open to the insurer to take a policy covering a higher risk. 12. Learned counsel for the appellants has placed reliance on the Judgment in New Asiatic Insurance Co. Ltd. Versus Pessumal Dhanamal Aswani and Ors. 1964 (7) S.C.R. 867 in support of the claim of the first appellant. In that case, the insurer permitted another person to drive his car and while the said person was driving the car, it met with an accident. The driver of the car faced an action for damages. The question was whether the insurance policy would enable the said driver to claim indemnity from the insurance company. On a consideration of the terms of the policy, the court held that the company would be liable to indemnify him. In the course of the judgment, the court said:
" The Act contemplates the
possibility of the policy of
insurance undertaking liability to
third parties providing such a
contract between the insurer and
insured, that is, the person who
effected the policy, as would make
the company entitled to recover the
whole or part of the amount it has
paid to the third party from the
insured. The insurer thus acts as
security for the third party with
respect to its realising damages
for the injuries suffered, but vis
a vis the insured, the company does
not undertake that liability or
undertakes it to a limited extent.
It is in view of such a possibility
that various conditions are laid
down in the policy. Such
conditions, however, are effective
only between the insured and the
company, and have to be ignored
when considering the liability of
the company to third parties. this
is mentioned prominently in the
policy itself and is mentioned
under the heading ’Avoidance of
certain terms and rights of
recover’, as well as in the form of
’An Important Notice’ in the
schedule to the policy. the
avoidance clause says that nothing
in the policy or any endorsement
there an shall affect the right of
any person indemnified by the
policy or any other person
indemnified by the policy or any
other person to recover an amount
under or by virtue of the
provisions of the Act. It also
provides that the insured will
repay to the company all sums paid
by it which the company would not
have been liable to pay but for the
said provisions of the Act. The
’Important Notice’ mentions that
any payment made by the company by
reason of wider terms appearing in
the by reason of wider terms
appearing in the certificate in
order to comply with the Act is
recoverable from the insured, and
refers to t he avoidance clause.
Thus the contract between the
insured and t he company may not
provide for all take liabilities
which the company has to undertake
vis a vis the third parties, in
view of the provisions of the Act.
We are of opinion that once the
company had undertaken liability to
third parties incurred by the
persons specified in the policy,
the third parties’ right to recover
any amount under or by virtue of
the provisions of the Act is not
affected by any condition in the
policy. Considering this aspect of
the terms of the policy, it is
reasonable to conclude that proviso
(a) of para 3 of Section it is a
mere condition affecting the rights
of the insured who effected the
policy and the persons to whom the
cover of the policy was extended by
the company, and does not come in
the way of third parties claim
against the company on account of
its claim against a person
specified in para 3 as one to whom
cover of the policy was extended". 13. In the policy in the present case also, there is a clause under the heading:
" AVOIDANCE OF CERTAIN TERMS AND
RIGHT OF RECOVERY - Which reads
thus: "Nothing in this policy or
any endorsement hereon shall effect
the right of any person indemnified
by this policy or any other person
to recover an amount under or by
virtue of the provisions of the
Motor Vehicles Act. 1939, Section
96, But the Insured shall repay to
the Company all sums paid by the
Company which the Company would not
have been liable to pay but the
said provisions". 14. The above clause does not enable the insurance company to resist or avoid the claim made by the claimant. the clause will arise for consideration only in a dispute between he insurer and insured. The question whether under the said clause the insurer can claim repayment from the insured is left open. The circumstance that the owner of the vehicle did not file an appeal against t he judgment of single judge of the High court under the letters Patent may also be relevant in the event of a claim by the insurance company against the insured for repayment of the amount. We are not concerned with that question here. 15. In the result, we hold that the insurance company is also liable to meet the claim of the claimant and satisfy the award passed by the Tribunal and modified by the High Court. The judgment of the High Court in so far as it exonerates the insurance company (5th respondent herein) from the liability, is set aside. The award passed by the Division Bench of the High Court can be enforced against the 5th respondent also. The appeal is allowed to t he extent indicated above. The parties will bear their respective costs.