National Insurance Company Limited Thru Regional Office Vs Bhogai Lal S/O Late Balla and Ors.

Neutral Citation No. - 2025:AHC-LKO:13822

Court No. - 4

Case :- FIRST APPEAL FROM ORDER No. - 136 of 2011

Appellant :- National Insurance Company Limited Thru Regional Office Respondent :- Bhogai Lal S/O Late Balla And Ors. Counsel for Appellant :- Deepak Kumar Agarwal Counsel for Respondent :- Lalji Prasad Shukla,Santosh Kumar Kanaujia

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Hon'ble Rajnish Kumar,J.

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Heard Sri Deepak Kumar Agarwal, learned counsel for the appellant. None appeared on behalf of the respondents even in the revised list. Learned counsel for the respondents had not appeared on earlier occasions also.

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The sole argument advanced by learned counsel for the appellant is that the deceased was a pillion rider on the motor cycle having registration No. U.P.34 A 0388, who was not covered under the insurance policy as it was an 'Act only policy', in which there was only third party cover but the learned tribunal without considering it allowed the claim petition, which could not have been done. He relies on Oriental Insurance Company Ltd. versus Sudhakaran K.V. and others; 2008(3) T.A.C. 1(S.C.).

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The photocopy of the policy is on record as Paper No.46(Ga) (3) bearing Insurance Policy No.450900/31/08/6700020193 w.e.f. 21.03.2009 to mid night of 20.03.2010, which shows policy A liability only, which is Act only. The claim of the claimant respondent is that the deceased Sri Ram was going on motor cycle with the respondent Sunil on his motor cycle on 23.03.2009 to Kazi Kamlapur, when in the evening at 7:30 p.m. near Tikra village and canal bridge, the motor cycle had an accident on account of rash and negligent driving of the driver of the motor cycle, in which the deceased had suffered serious injuries who was a pillion rider. Thus, the findings on record indicate that the accident had occurred on account of rash and negligent driving of the driver of the motor cycle of which the deceased was a pillion rider.

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The Hon'ble Supreme Court, in the case of Oriental Insurance Company versus Sudhakaran K.V. and others has held that the policy for 'Act liability' only does not cover the pillion rider and the insurance company is liable for reimbursement of the claim to a third party only under Section 147 of the Act. The relevant paragraphs 7 to 19 are extracted herein below:-

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"7. Before embarking on the rival contentions, we may notice the insurance policy. The contract of insurance was entered into on or about 2.12.1992. It was 'A policy for act liability' meaning thereby a third party liability.

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The relevant clauses of the said contract of insurance are as under:

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"1. Subject to the Limit of liability as laid down in the Motor Vehicles Act the Company will indemnify the insured in the event of accident caused by or arising out of the use of Motor Vehicle any where in India against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of death or bodily injury to any person and/or damage to any property of Third Party.

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Exception Except so far as necessary to meet the requirements of the Motor Vehicles Act the Company shall not be liable in respect of death arising out of and in the course of employment of person in the employment of the insured or in the employment of any person who is indemnified under this Policy or bodily injury sustained by such person arising out of and in the course of such employment."

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8. In terms of Section 147 of the Act only in regard to reimbursement of the claim to a third party, a contract of insurance must be taken by the owners of the vehicle. It is imperative in nature. When, however, an owner of a vehicle intends to cover himself from other risks; it is permissible to enter into a contract of insurance in which event the insurer would be bound to reimburse the owner of the vehicle strictly in terms thereof. 9. The liability of the insurer to reimburse the owner in respect of a claim made by the third party, thus, is statutory whereas other claims are not.

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10. The only question which, therefore, arises for our consideration is as to whether the pillion rider on a scooter would be a third party within the meaning of Section 147 of the Act.

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Indisputably, a distinction has to be made between a contract of insurance in regard to a third party and the owner or the driver of the vehicle.

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11. This Court in a catena of decisions has categorically held that a gratuitous passenger in a goods carriage would not be covered by a contract of insurance entered into by and between the insurer and the owner of the vehicle in terms of Section 147 of the Act. [See New India Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223]

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12. A Division Bench of this Court in United India Insurance Co. Ltd., Shimla v. Tilak Singh and Ors. [(2006) 4 SCC 404] extended the said principle to all other categories of vehicles also, stating as under:

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"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."

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13. The submission of Mrs. Bhat, learned counsel, however, is that this Court should not extend the said principle to the vehicles other than the goods carriage. As at present advised, we may not go into the said question in view of some recent decisions of this Court, viz., National Insurance Co. Ltd. v. Laxmi Narain Dhut [(2007) 3 SCC 700], Oriental Insurance Co. Ltd. v. Meena Variyal [(2007) 5 SCC 428] and New India Assurance Co. Ltd. v. Ved Wati [(2007) 9 SCC 486].

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14. The provisions of the Act and, in particular, Section 147 of the Act were enacted for the purpose of enforcing the principles of social justice. It, however, must be kept confined to a third party risk. A contract of insurance which is not statutory in nature should be construed like any other contract.

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15. We have noticed the terms of the contract of insurance. It was entered into for the purpose of covering the third party risk and not the risk of the owner or a pillion rider. An exception in the contract of insurance has been made, i.e., by covering the risk of the driver of the vehicle. The deceased was, indisputably, not the driver of the vehicle.

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16. The contract of insurance did not cover the owner of the vehicle, certainly not the pillion rider. The deceased was travelling as a passenger, stricto sensu may not be as a gratuitous passenger as in a given case she may not be a member of the family, a friend or other relative. In the sense of the term which is used in common parlance, she might not be even a passenger.

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In view of the terms of the contract of insurance, however, she would not be covered thereby.

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It is not necessary for us to deal with large number of precedents operating in this behalf as the question appears to be covered by a few recent decisions of this Court. 17. In United India Insurance Company Ltd. v. Serjerao & Ors. [2007 (13) SCALE 80], it was held as under:

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"7....When a statutory liability has been imposed upon the owner, in our opinion, the same cannot extend the liability of an insurer to indemnify the owner, although in terms of the insurance policy or under the Act, it would not be liable therefor.

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17. In a given case, the statutory liability of an insurance company, therefore,either may be nil or a sum lower than the amount specified under Section 140 of the Act. Thus,when a separate application is filed in terms of Section 140 of the Act, in terms of Section 168 thereof, an insurer has to be given a notice in which event, it goes without saying, it would be open to the insurance company to plead and prove that it is not liable at all. 18. Furthermore, it is not in dispute that there can be more than one award particularly when a sum paid may have to be adjusted from the final award. Keeping in view the provisions of Section 168 of the Act, there cannot be any doubt whatsoever that an award for enforcing the right under Section 140 of the Act is also required to be passed under Section 168 only after the parties concerned have filed their pleadings and have been given a reasonable opportunity of being heard. A Claims Tribunal, thus, must be satisfied that the conditions precedent specified in Section 140 of the Act have been substantiated, which is the basis for making an award.

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19. Furthermore, evidently, the amount directed to be paid even in terms of Chapter-X of the Act must as of necessity, in the event of non- compliance of directions has to be recovered in terms of Section 174 of the Act. There is no other provision in the Act which takes care of such a situation. We, therefore, are of the opinion that even when objections are raised by the insurance company in regard to it liability, the Tribunal is required to render a decision upon the issue, which would attain finality and, thus, the same would be any award within the meaning of Section 173 of the Act." It was furthermore held as under:

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"8. So far as the question of liability regarding labourers travelling in trollies is concerned, the matter was considered by this Court in Oriental Insurance Company Ltd. Vs. Brij Mohan and Ors. (2007) 7 SCALE 753 and it was held that the Insurance Company has no liability...""

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18. Yet again in Ghulam Mohammad Dar v. State of J&K and Ors. [(2008) 1 SCC 422], this Court opined that the words "injury to any person" as inserted by reason of the 1994 Amendment would only mean a third party and not a passenger travelling on a goods carriage whether gratuitous or otherwise. [See also The New India Insurance Company v. Darshana Devi & Ors. 2008 (2) SCALE 432]

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19. The law which emerges from the said decisions, is: (i) the liability of the insurance company in a case of this nature is not extended to a pillion rider of the motor vehicle unless the requisite amount of premium is paid for covering his/her risk (ii) the legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion rider; (iii) the pillion rider in a two wheeler was not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle."

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In view of above, this Court is of the view that a direction for payment of the compensation awarded by the tribunal to the Insurance Company could not have been made by the tribunal. Thus the impugned judgment and award is liable to be set aside.

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The appeal is allowed. The impugned judgment and award dated 12.10.2010 passed by learned Additional District Judge, Court No.1/ Motor Accident Claims Tribunal, Sitapur in Motor Accident Claim Petition No.192 of 2009(Bhogai Lal and others versus Suneel Kumar and Another)is hereby set aside. No order as to costs.

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Order Date :- 6.3.2025 Akanksha Sri/-

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Digitally signed by :- AKANKSHA SRIVASTAVA High Court of Judicature at Allahabad, Lucknow Bench

National Insurance Company Limited Thru Regional Office v. Bhogai Lal S/O Late Balla and Ors.

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National Insurance Company Limited Thru Regional Office v. Bhogai Lal S/O Late Balla and Ors.

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