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whether in the case at hand the policy is an “Act Policy” or “Comprehensive/Package Policy”. There has been no discussion either by the tribunal or the High Court in this regard. True it is, before us Annexure P-1 has been filed which is a policy issued by the insurer. It only mentions the policy to be a comprehensive policy but we are inclined to think that there has to be a scanning of the terms of the entire policy to arrive at the conclusion whether it is really a package policy to cover the liability of an occupant in a car.” 14. We have quoted in extenso to reiterate the legal position. In the case at hand, the policy has not been brought on record. The learned counsel for the appellant-insurer would submit that it is an “Act Policy”. The learned counsel for the respondent would seriously dispute and submit that extra premium might have been paid or it may be a “Comprehensive/Package Policy”. When Certificate of Insurance is filed but the policy is not brought on record it only conveys that the vehicle is insured. The nature of policy cannot be discerned from the same. Thus, we are disposed to think that it would be appropriate to remit the matter to the tribunal to enable the insurer to produce the policy and grant liberty to the parties to file additional documents and also lead further evidence as advised, and we order accordingly. 15. It needs no special emphasis to state that whether the insurer would be liable or not would depend upon the nature of the policy when it is brought on record in a manner as required by law. 16. As far as quantum is concerned, though numbers of grounds were urged, yet the learned counsel for the parties did not really address on the same and, therefore, we do not think it necessary to dwell upon the same and treat it as just and proper compensation requiring no interference. 17. In the result, the appeals preferred by the insurer, namely, Oriental Insurance Company Limited are allowed to the extent indicated hereinabove and to that extent the award is set aside and the matter is remitted to the tribunal and the appeals preferred by the claimant for enhancement of compensation are dismissed. There shall be no order as to costs.

IN THE SUPREME COURT OF INDIA

Insurance

Insurance (Photo credit: Christopher S. Penn)

CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1345-1346 OF 2009

Oriental Insurance Company Ltd. …Appellant

Versus
Surendra Nath Loomba and Others …Respondents

WITH

CIVIL APPEAL NOS. 1347-1348 OF 2009

Surendra Nath Loomba …Appellant

Versus
Oriental Insurance Company Ltd. & ors. …Respondents

 

J U D G M E N T

Dipak Misra, J.

In the present batch of appeals, two preferred by the Oriental
Insurance Company Limited and two preferred by claimant, the assail is to
the common judgment passed by the High Court of Uttarakhand at Nainital in
A.O. No. 201 of 2003 and A.O. No. 284 of 2003 wherein the award dated
19.5.2003 passed by the Motor Accidents Claims Tribunal, Dehradun (for
short ‘the tribunal’) in M.A.C.T. Petition No. 10 of 1999 was challenged by
the insurer and the claimant from different spectrums.

2. The facts which are requisite to be stated are that on 9.10.1998
about 4.30 a.m. claimant, Surendra Nath Loomba, was travelling in a Maruti
Esteem Car bearing Registration No. DL 8C-5096 belonging to the respondent
No. 3, Savita Matta, and driven by the respondent No. 2, Raj Loomba, the
son of the claimant. Near the President Body-guard House, Rajpur Road, the
vehicle dashed against a tree and in the accident the windscreen (front) of
car was smashed and its pieces got inserted into the eyes of the claimant
as a consequence of which he lost his both eyes. As set forth, at the time
of the accident the claimant was working as a Senior Manager in Punjab
National Bank and his gross salary was Rs.18,949.86 per month and various
perquisites were also attached to the service. Keeping in view his salary
and other perquisites he filed an application under Section 166 of the
Motor Vehicles Act, 1988 before the tribunal putting forth a claim of
Rs.62,00,000/- with 18% interest as compensation.

3. The respondent No. 2, Raj Loomba, filed his written statement
contending, inter alia, that at the time of accident the vehicle was
insured with the Oriental Insurance Company Limited and hence, it being the
insurer was liable to pay the compensation.

4. The insurance company resisted the claim of the claimant on the
ground that the driver of the vehicle did not have a valid driving licence;
that the proceedings had been initiated in a collusive manner; and that
even if the accident as well as the injuries were proven the insurer was
not liable to indemnify the owner as the claimant was travelling as a
gratuitous passenger.

5. The tribunal on the basis of material brought on record came to hold
that as the insurer had issued Certificate of Insurance in respect of the
vehicle in question and it was valid during the period when the accident
occurred, it was liable to pay the compensation; that the opposite party
No. 1 had a valid driving licence and the accident had occurred and there
was no collusion between the parties; and that the victim was entitled to
get a total sum of Rs.20,97,984/- towards compensation with 9% interest per
annum regard being had to the pecuniary and non-pecuniary losses. Be it
noted, the tribunal, while computing the amount, had deducted certain sum
under certain heads which need not be stated in detail.

6. Aggrieved by the aforesaid award the insurance company preferred A.O.
No. 201 of 2003 and the injured claimant preferred A.O. No. 284 of 2003
before the High Court. The High Court, by the common impugned order,
reduced the amount of compensation to Rs.16,42,656/- and concurred with the
conclusion arrived at by the tribunal as regards the liability. Thus,
the appeal preferred by the insurance company was allowed in part and the
appeal preferred by the claimant was dismissed. Hence, the present batch
of appeals by the insurance company as well as by the claimant.

7. First, we shall deal with the appeals preferred by the insurance
company It is worth noting that the Certificate of Insurance was filed
before the tribunal which clearly showed that the vehicle was insured with
the appellant-company. Dr. Meera Agarwal, learned counsel for the
appellant-insurer would submit that it was only an “Act Policy” and,
therefore, the liability of the insurer does not arise. She has commended
us to the decisions in United India Insurance Co. Ltd., Shimla v. Tilak
Singh and Others[1], Oriental Insurance Company Ltd. v. Jhuma Saha
(Smt.)[2], Oriental Insurance Company Ltd. v. Sudhakaran K.V. and others[3]
and New India Assurance Company Ltd. v. Sadanand Mukhi and others[4].

8. Learned counsel for the respondents would contend that whether the
policy is an “Act Policy” or a “Comprehensive/Package Policy” or whether
any extra premium was paid to cover the passenger, is not reflected from
the Certificate of Insurance as the policy was not brought on record by
tendering the same before the tribunal.

9. In Tilak Singh (supra) this Court referred to the concurring opinion
rendered in a three-Judge Bench decision in New India Assurance Co. Ltd. V.
Asha Rani[5] and ruled thus:-

“In our view, although the observations made in Asha Rani case
were in connection with carrying passengers in a goods vehicle,
the same would apply with equal force to gratuitous passengers
in any other vehicle also. Thus, we must uphold the contention
of the appellant Insurance Company that it owed no liability
towards the injuries suffered by the deceased Rajinder Singh who
was a pillion rider, as the insurance policy was a statutory
policy, and hence it did not cover the risk of death of or
bodily injury to a gratuitous passenger.”

 
It is worthy to note in the said case the controversy related to gratuitous
passenger carried in a private vehicle.

10. In Jhuma Saha (Smt.) (supra) this Court has stated thus: –

“The additional premium was not paid in respect of the entire
risk of death or bodily injury of the owner of the vehicle. If
that be so, Section 147 (b) of the Motor Vehicles Act which in
no uncertain terms covers a risk of a third party only would be
attracted in the present case.”

11. In National Insurance Co. Ltd. v. Laxmi Narain Dhut[6] after
elaborately referring to the analysis made in Asha Rani (supra) the Bench
ruled thus:-

“Section 149 is part of Chapter XI which is titled “Insurance of
Motor Vehicles against Third-Party Risks”. A significant factor
which needs to be noticed is that there is no contractual
relation between the insurance company and the third party. The
liabilities and the obligations relatable to third parties are
created only by fiction of Sections 147 and 149 of the Act”.

 

In the said case it has been opined that although the statute is a
beneficial one qua the third party but that benefit cannot be extended to
the owner of the offending vehicle. The said principle was reiterated in
Oriental Insurance Company Ltd. v. Meena Variyal and Other[7], Sudhakaran
K. V. (supra) and Sadanand Mukhi (supra).
12. It is apt to note here that this Court in Bhagyalakshmi and others v.
United Insurance Company Limited and another[8], after dealing with various
facets and considering the authorities in Amrit Lal Sood and Another v.
Kaushalya Devi Thapar and Others[9], Asha Rani (supra), Tilak Singh
(supra), Jhuma Saha (supra), Sudhakaran K. V. and Others (supra), has
observed thus :-

“Before this Court, however, the nature of policies which came
up for consideration were Act policies. This Court did not deal
with a package policy. If the Tariff Advisory Committee seeks to
enforce its decision in regard to coverage of third-party risk
which would include all persons including occupants of the
vehicle and the insurer having entered into a contract of
insurance in relation thereto, we are of the opinion that the
matter may require a deeper scrutiny.”

 

13. Recently this Bench in National Insurance Company Ltd. v.
Balakrishnan & Another[10], after referring to various decisions and
copiously to the decision in Bhagyalakshmi (supra), held that there is a
distinction between “Act Policy” and “Comprehensive/Package Policy”.
Thereafter, the Bench took note of a decision rendered by Delhi High Court
in Yashpal Luthra and Anr. V. United India Insurance Co. Ltd. and
Another[11] wherein the High Court had referred to the circulars issued by
the Tariff Advisory Committee (TAC) and Insurance Regulatory and
Development Authority (IRDA). This Court referred to the portion of
circulars dated 16.11.2009 and 3.12.2009 which had been reproduced by the
High Court and eventually held as follows: –

“19. It is extremely important to note here that till 31st
December, 2006 Tariff Advisory Committee and thereafter from 1st
January, 2007, IRDA functioned as the statutory regulatory
authorities and they are entitled to fix the tariff as well as
the terms and conditions of the policies by all insurance
companies. The High Court had issued notice to the Tariff
Advisory Committee and the IRDA to explain the factual position
as regards the liability of the insurance companies in respect
of an occupant in a private car under the “comprehensive/
package policy”. Before the High Court the Competent Authority
of IRDA had stated that on 2nd June, 1986 the Tariff Advisory
Committee had issued instructions to all the insurance companies
to cover the pillion rider of a scooter/motorcycle under the
“comprehensive policy” and the said position continues to be in
vogue till date. He had also admitted that the comprehensive
policy is presently called a package policy. It is the admitted
position, as the decision would show, the earlier circulars
dated 18th March, 1978 and 2nd June, 1986 continue to be valid
and effective and all insurance companies are bound to pay the
compensation in respect of the liability towards an occupant in
a car under the “comprehensive/package policy” irrespective of
the terms and conditions contained in the policy. The competent
authority of the IRDA was also examined before the High Court
who stated that the circulars dated 18th March, 1978 and 2nd
June, 1986 of the Tariff Advisory Committee were incorporated in
the Indian Motor Tariff effective from 1st July, 2002 and they
continue to be operative and binding on the insurance companies.
Because of the aforesaid factual position the circulars dated
16th November 2009 and 3rd December, 2009, that have been
reproduced hereinabove, were issued.

20. It is also worthy to note that the High Court after
referring to individual circulars issued by various insurance
companies and eventually stated thus:-

“In view of the aforesaid, it is clear that the
comprehensive/package policy of a two wheeler covers a
pillion rider and comprehensive/ package policy of a
private car covers the occupants and where the vehicle is
covered under a comprehensive/package policy, there is no
need for Motor Accident Claims Tribunal to go into the
question whether the Insurance Company is liable to
compensate for the death or injury of a pillion rider on a
two-wheeler or the occupants in a private car. In fact, in
view of the TAC’s directives and those of the IRDA, such a
plea was not permissible and ought not to have been raised
as, for instance, it was done in the present case.”
21. In view of the aforesaid factual position there is no
scintilla of doubt that a “comprehensive/package policy” would
cover the liability of the insurer for payment of compensation
for the occupant in a car. There is no cavil that an “Act
Policy” stands on a different footing than a
“Comprehensive/Package Policy”. As the circulars have made the
position very clear and the IRDA, which is presently the
statutory authority, has commanded the insurance companies
stating that a “Comprehensive/Package Policy” covers the
liability, there cannot be any dispute in that regard. We may
hasten to clarify that the earlier pronouncements were rendered
in respect of the “Act Policy” which admittedly cannot cover a
third party risk of an occupant in a car. But, if the policy is
a “Comprehensive/Package Policy”, the liability would be
covered. These aspects were not noticed in the case of
Bhagyalakshmi (supra) and, therefore, the matter was referred to
a larger Bench. We are disposed to think that there is no
necessity to refer the present matter to a larger Bench as the
IRDA, which is presently the statutory authority, has clarified
the position by issuing circulars which have been reproduced in
the judgment by the Delhi High Court and we have also reproduced
the same.

22. In view of the aforesaid legal position the question that
emerges for consideration is whether in the case at hand the
policy is an “Act Policy” or “Comprehensive/Package Policy”.
There has been no discussion either by the tribunal or the High
Court in this regard. True it is, before us Annexure P-1 has
been filed which is a policy issued by the insurer. It only
mentions the policy to be a comprehensive policy but we are
inclined to think that there has to be a scanning of the terms
of the entire policy to arrive at the conclusion whether it is
really a package policy to cover the liability of an occupant in
a car.”

14. We have quoted in extenso to reiterate the legal position. In the
case at hand, the policy has not been brought on record. The learned
counsel for the appellant-insurer would submit that it is an “Act Policy”.
The learned counsel for the respondent would seriously dispute and submit
that extra premium might have been paid or it may be a
“Comprehensive/Package Policy”. When Certificate of Insurance is filed but
the policy is not brought on record it only conveys that the vehicle is
insured. The nature of policy cannot be discerned from the same. Thus, we
are disposed to think that it would be appropriate to remit the matter to
the tribunal to enable the insurer to produce the policy and grant liberty
to the parties to file additional documents and also lead further evidence
as advised, and we order accordingly.

15. It needs no special emphasis to state that whether the insurer would
be liable or not would depend upon the nature of the policy when it is
brought on record in a manner as required by law.

16. As far as quantum is concerned, though numbers of grounds were urged,
yet the learned counsel for the parties did not really address on the same
and, therefore, we do not think it necessary to dwell upon the same and
treat it as just and proper compensation requiring no interference.

17. In the result, the appeals preferred by the insurer, namely, Oriental
Insurance Company Limited are allowed to the extent indicated hereinabove
and to that extent the award is set aside and the matter is remitted to the
tribunal and the appeals preferred by the claimant for enhancement of
compensation are dismissed. There shall be no order as to costs.
……………………………….J.
[K. S. Radhakrishnan]

 

New Delhi; ……………………………….J.
November 20, 2012 [Dipak Misra]
———————–
[1] (2006) 4 SCC 404
[2] (2007) 9 SCC 263
[3] (2008) 7 SCC 428
[4] (2009) 2 SCC 417

[5] (2003) 2 SCC 223
[6] (2007) 3 SCC 700
[7] (2007) 5 SCC 428
[8] (2009) 7 SCC 148
[9] (1998) 3 SCC 744
[10] Civil Appeal No.8163 of 2012 (Arising out of SLP(C) No. 1232/2012)
decided on 20.11.2012

[11] 2011 ACJ 1415

 

———————–
10

 

 

 

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