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    REPORTABLE

    IN THE SUPREME COURT OF INDIA

    CIVIL APPELLATE JURISDICTION

    CIVIL APPEAL NO. 6659 OF 2008


    (Arising out of SLP (C) No. 20608 of 2004)

    The General Manager, United


    Insurance Co. Ltd. ….Appellant

    Versus

    M. Laxmi and Ors. ….Respondents

    JUDGMENT

    Dr. ARIJIT PASAYAT, J.

    1. Leave granted.

    2. Challenge in this appeal is to the judgment of a learned Single

    Judge of the Andhra Pradesh High Court allowing the appeal filed by

    respondent Nos. 1 to 3.

    1
    3. Background facts in a nutshell are as follows:

    One Ramulu (hereinafter referred to as the ‘deceased’) died in a

    vehicular accident on 8.10.1996. Respondents 1 to 3 are his widow, son

    and father respectively. A claim petition was filed under Section 166 of the

    Motor Vehicles Act, 1988 (in short ‘the Act’) claiming compensation of

    Rs.3,00,000/-. The claimants averred in the claim petition that the deceased

    and one Mohd. Mohsin were going on a scooter belonging to M. Yadireddy,

    respondent no.4 in the present appeal. The scooter was being driven by

    Mohd. Mohsin. At about 7.00 p.m. the scooter hit a bullock cart which was

    going in the same direction because of rash and negligent driving of the

    scooter, the deceased fell down and sustained fatal injuries. At the time of

    his death, he was 29 years of age. Compensation was claimed from the

    owner of the scooter. Present appellant was the insurer which had insured

    the vehicle in question. The insured remained ex-parte. The present

    appellant filed its counter-affidavit denying all the material allegations. It

    was pointed out that admittedly, the policy of insurance was an Act policy

    and the deceased was a pillion rider and also gratuitous passenger and

    hence, not a third party, and he cannot claim compensation from the

    2
    insurance company which insured the vehicle. The learned Additional

    Special Judge for SPE and ACB Cases-cum-V Additional Chief Judge, City

    Civil Court, Hyderabad (hereinafter referred to as ‘MACT’) who adjudicated

    the claim petition, held that the policy was an Act policy in respect of the

    Scooter on the date of accident, therefore, the insurer had no liability. It was

    categorically held that unless the policy in question covers even a gratuitous

    passenger, such person, who met with an accident while going in the vehicle

    in question and received injuries or his legal heirs, in case of his death

    following such accident, cannot proceed against the concerned insurance

    company for any compensation. The compensation payable was fixed at

    Rs.1,07,436/- with 12% interest per annum. It was held that the sum was to

    be realized from the insured and not from the present appellant.

    An appeal was preferred by the claimants before the High Court,

    which, by the impugned judgment relying on a Circular of the Tariff

    Advisory Committee held that the liability of the insurer was there. The

    appeal was, accordingly, allowed.

    4. Learned counsel for the appellant submitted that the High Court

    3
    has misread the Circular of the Tariff Advisory Committee dated 2.6.1986.

    The same referred to compensation payable to pillion riders in case of

    comprehensive policy. The Clarification/Circular has no relevance so far as

    Act Policy Cases are concerned and it related to only Comprehensive Policy.

    5. Learned counsel for respondent Nos. 1 to 3, on the other hand,

    supported the judgment of the High Court.

    6. There is no dispute that the Circular dated 2.6.1986 refers to

    Comprehensive Policy. It categorically states that standard form for

    motorcycle should cover liability to pillion passengers in case of

    Comprehensive Policy. As noted by the MACT, the policy in the instant

    case was an Act Policy.

    7. In New India Assurance Co. Ltd. v. Asha Rani and Ors. (2003

    (2) SCC 223), it has been noted as follows:

    “Section 147 of the 1988 Act, inter alia, prescribes


    compulsory coverage against the death of or bodily injury
    to any passenger of “public service vehicle”. Proviso ap-
    pended thereto categorically states that compulsory cover-
    age in respect of drivers and conductors of public service
    vehicle and employees carried in a goods vehicle would be
    limited to the liability under the Workmen’s Compensa-

    4
    tion Act. It does not speak of any passenger in a “goods
    carriage”.

    In view of the changes in the relevant provisions in


    the 1988 Act vis-à-vis the 1939 Act, we are of the opinion
    that the meaning of the words “any person” must also be
    attributed having regard to the context in which they have
    been used i.e. “a third party”. Keeping in view the provi-
    sions of the 1988 Act, we are of the opinion that as the
    provisions thereof do not enjoin any statutory liability on
    the owner of a vehicle to get his vehicle insured for any
    passenger travelling in a goods vehicle, the insurers would
    not be liable therefor.

    Furthermore, sub-clause (i) of clause (b) of sub-sec-


    tion (1) of Section 147 speaks of liability which may be
    incurred by the owner of a vehicle in respect of death of or
    bodily injury to any person or damage to any property of a
    third party caused by or arising out of the use of the vehi-
    cle in a public place, whereas sub-clause (ii) thereof deals
    with liability which may be incurred by the owner of a ve-
    hicle against the death of or bodily injury to any passenger
    of a public service vehicle caused by or arising out of the
    use of the vehicle in a public place.”

    8. In United India Assurance Co. Ltd., Shimla v. Tilak Singh and

    Ors. (2006 (4) SCC 404), it has been noted as follows:

    “In our view, although the observations made in


    Asha Rani case (supra) 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 appel-
    lant 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.”

    5
    9. In view of what has been stated by this Court in Asha Rani and

    Tilak Singh cases (supra), the order of the High Court is clearly

    unsustainable and is set aside and that of the MACT is restored.

    10. The appeal is disposed of accordingly.

    ………………………………….J.
    (Dr. ARIJIT PASAYAT)

    ………………………………….J.
    (Dr. MUKUNDAKAM SHARMA)
    New Delhi,
    November 14, 2008

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