JUDGMENT [ENTITY], J.
1. This is an appeal under [SECTION] of the [ACT] against the judgment and award of the Additional Claims Tribunal, Dhanbad dated 22.4.1994 whereby the claim of the appellant for compensation has been awarded to the extent of Rs. 57,600/- only against the owner of the offending vehicle, the Tribunal having absolved the insurer from the liability of compensation. The appellant being aggrieved by the quantum of compensation determined by the Tri- bunal and the decision that the insurer was not liable in the facts of the case has filed this appeal. The appellant had claimed com- pensation of Rs. 3,50,000/-. The appellant seeks enhancement of compensation by this Court.
2. The appellant is the widow of [ENTITY], a vegetable merchant. He hired a public carrier goods vehicle bearing the registration No. BRW 2895 on 18.4.1990 for transporting vegetable from Jharia to Saharpura Bazar. He was accompanying the goods. The truck met with accident on way, [ENTITY] was killed on the spot. He was aged 35 years earning Rs. 1,000/- per month from his business. The truck was insured with [ENTITY], respondent No. 2.
3. The appellant brought action for compensation against the owner of the truck and the insurer. The Tribunal relying on a decision in [PRECEDENT], held that under [SECTION] of [ACT], the policy of insurance does not cover liability in respect of death of a person travelling in a goods vehicle for hire or reward hence, in view of [SECTION] of the Act, the insurer cannot be directed to satisfy the judgment.
4. Whether an insurer is liable to indemnify the owner of the vehicle in the event of death of owner of the goods travelling in the truck or a passenger has been vexed and controversial question. There is divergence of opinion amongst different High Courts on this question.
5. In [PRECEDENT], it was held that where an employee or agent of the owner of the goods accompanies the goods in goods vehicle, he does so in pursuance of contract of employment between him and his employer and is covered by the second part of proviso to [SECTION] of 1939 Act and the insurer under Act policy is liable. The same view has been taken in [PRECEDENT]; [PRECEDENT] and [PRECEDENT].
6. So far as the owner of the goods travelling in public carrier goods vehicle is concerned, it has been held that he is not a gratuitous passenger and he travels pursuant to a contract, hire being the consideration and insurer under the Act policy is liable. [See [PRECEDENT]; [ENTITY] v. Nathibai Chaturabhuj 1982 ACJ 153 (Gujarat); [PRECEDENT]; and [PRECEDENT]].
7. A contrary view has been taken by the High Courts of Punjab & Haryana, Madras, Calcutta and Andhra Pradesh [See [PRECEDENT]; [PRECEDENT]; [PRECEDENT]; [PRECEDENT]); and [PRECEDENT]].
8. [SECTION] of the [ACT] [[SECTION] of [ACT]] lays down the requirements of insurance policy and limits of liabilities. This section lays down that in order to comply with the requirements of [SECTION] a policy of insurance must be a policy which should be issued by a person who is the authorised insurer. The policy should insure the person or classes of persons specified in the policy to the extent specified in [SECTION] which prescribes the limit of liability of compensation in terms of money. [SECTION] lays down that the policy of insurance is necessary to insure the person or classes of persons as set out in Sub-clauses (i) and (ii). Under Sub-clause (i) an insurance policy in respect of the use of a vehicle in public place is required to insure the liability which may be incurred by an insured in respect of death or bodily injury caused to any person or any damage caused to the property of any third party arising out of the use of a vehicle. Under Sub-clause (ii) of Clause (b) policy is required to insure against the death of or bodily injury to any passenger of a public service vehicle. A public service vehicle, as defined by [SECTION] means a vehicle used for the carriage of passengers for hire or reward. A transport vehicle as defined by [SECTION] means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle. There are two provisos to [SECTION] which carve out exceptions to the general rule as laid down in the two Sub-clauses (b)(i) and (ii) of the main section making provisions for compulsory insurance. Proviso (i) lays down that no policy shall be required to cover risk in respect of death or bodily injury of an employee of the insured persons engaged in driving the vehicles or conductor or a ticket examiner in the case of public service vehicle and also in the case of the employee being carried in a goods vehicle although the owner may be liable under the [ACT]. Proviso (ii) lays down that no policy is necessary to cover a contractual liability. [SECTION] imposes liability on the insurer to satisfy judgments against persons insured in respect of third party risk. The liability to indemnify the insured person would be to the extent as specified in [SECTION] of the Act. The insurance company is, however, entitled to avoid its liability on the proof of the conditions prescribed under [SECTION] of the Act, of the conditions as laid down in [SECTION] that if the vehicle is used in breach of specified conditions of the policy which may exclude the use of vehicle for hire or reward where the vehicle is not covered by the permit to ply for hire or reward. Thus if the insurance policy is in respect of the public carrier or a goods carrier the policy may contain a condition prohibiting the use of the vehicle for hire or reward if the vehicle is not covered by a permit to ply for hire or reward. The contention of the insurance company is that in the instant case the vehicle was a transport vehicle which had no permit to carry passengers for hire or reward, as such the insurance company is not liable.
9. In [PRECEDENT], a Division Bench of the Allahabad High Court considered the scope and ambit of [SECTION] of the [ACT] read with [SECTION] of the [ACT]. The facts of that case were that two persons had hired a public carrier which was insured for carrying onions from a village in district Fatehpur to Kanpur. After loading the onions into the vehicle co-owners boarded the public carrier along with two other persons. The truck capsized on the Grand Trunk Road. One of the owners was crushed under the vehicle and died instantaneously. The insurance company resisted the claim on the ground that in view of the proviso to [SECTION] of the 1939 Act the fatal injury caused to the deceased who was hirer of the vehicle was not covered by the terms of the insurance policy and as such the insurance company was not liable to indemnify the owner. In his exhaustive judgment, [ENTITY], J. (later hon'ble Chief Justice of the Supreme Court) having analysed all the relevant provisions of the 1939 Act came to the following conclusion:
When the provisions of the Act and the Rules framed thereunder permit carrying of a hirer or his employee on a goods vehicle, does the law not require an insurance policy to cover their risk? In answering this question we have to bear in mind the purpose and object of [SECTION] of the Act which provides for compulsory insurance policy to enable the third party to get damages for injuries suffered by them from the insurance company. In [PRECEDENT], this aspect was emphasised by the Supreme Court in the following words:
[SECTION] of the Act, it appears from the heading, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third parties who suffer on account of the user of motor vehicle would be able to get damages for the injuries suffered and that their ability to get the damages will not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment.' The owner or the driver of a vehicle may not have financial capacity to pay damages to those who suffer on account of injuries by the use of vehicle in public place. In order to meet this contingency the legislature has by enacting [SECTION] of the Act provided that there should be insurance policy in respect of the use of the vehicle in public place to confer the risk of bodily injury or death of third party who suffers on account of the use of the motor vehicle. The risk of persons who are carried in a transport vehicle is compulsorily covered by an insurance policy. [SECTION] of the Act also lays down that a policy shall be necessary where passengers are carried in a vehicle for hire or reward or by reason of or in pursuance of a contract of employment. The proviso is in two parts. The first part relates to carrying of passengers for hire or reward in the vehicle, while the second part contemplates carriage of passengers by reason of or in pursuance of a contract of employment. We would first consider the scope of the first part of the proviso. The first part of the proviso provides for insurance policy to cover liability in respect of death or bodily injury to persons being carried in a transport vehicle for hire or reward. Such a vehicle need not be a public service vehicle because risk of a passenger being carried in a public service vehicle is already covered by [SECTION].
In [PRECEDENT], Supreme Court considered [SECTION] and [SECTION] to determine the question as to whether the risk of a person being carried in a vehicle gratuitously was covered by a compulsory policy of insurance. [ENTITY], J. speaking for the court observed:
Therefore, it is not required that a policy of insurance should cover risk of the passengers who are not carried for hire or reward as under [SECTION] the risk of a passenger in a vehicle who is not carried for hire or reward is not required to be insured.' In view of the Supreme Court decision the risk of a passenger being carried in a vehicle is covered by compulsory policy of insurance provided that such passenger was being carried for hire or reward. [SECTION] which deals with compulsory policy of insurance, requires all classes of vehicles, passenger, goods or motor cabs to get the risk of passengers covered. A gratuitous passenger being carried in a vehicle is not covered by the compulsory policy of insurance although his risk may be covered under the agreement between the insurance company and the owner of the vehicle. (Imprint of some words missing) entitled to travel in a goods vehicle along with their goods in the event of any risk arising in the course of user of the vehicle. The Bench referred to [SECTION] of the Rules framed by the Karnataka State authorising carrying of hirer of the vehicle along with his goods in the vehicle in holding that a goods vehicle which was permitted to carry along with the goods passengers for hire or reward fell within the exception contained in the first part of the second proviso so as to require the coverage of the risk of the person travelling as passenger by compulsory insurance.
10. Allahabad High Court followed Full Bench decision of the Gujarat High Court in the case of [PRECEDENT], in which the Full Bench interpreted [SECTION] and held that so far as the policy contemplated by [SECTION] is concerned, it does not cover the risk of persons other than those who were carried for hire or reward at the time of occurrence of event which gives rise to the claim including the liability in respect of the owner or hirer of the insured vehicle or his bonafide employees within the permissible limits, will be covered by the statutory insurance either by virtue of [SECTION](i) read with the second clause of the proviso or by reason of [SECTION] of the Act. Similar is the view of the Karnataka High Court in [PRECEDENT].
11. A Division Bench of Bombay High Court in [PRECEDENT], held that when the hirer of a goods vehicle for carriage of his goods is travelling by the said vehicle in connection with the carriage of the goods with the consent of the driver or owner of the goods vehicle in question he must be deemed to be a passenger on the vehicle for reward within the meaning of [SECTION] of the Act and hence the tortious liability of the owner towards him must be covered by the insurance policy contemplated by the said section. There are detailed discussions in para 16 of the report which need not be quoted. The decision of the Bombay High Court is based on [PRECEDENT]; [PRECEDENT]); and [PRECEDENT]. Bombay High Court also held that [SECTION] of the [ACT] permits carriage of passengers on goods vehicle. It was held that that does not mean that there is any prohibition against the hirer of goods vehicle from travelling in the said goods vehicle by virtue of anything contained in said [SECTION].
12. In [PRECEDENT], the Rajasthan High Court decided the question having regard to Clause (ii) to proviso to [SECTION] of the old Act read with [SECTION] of the [ACT] which is pari materia with [SECTION] of the [ACT]. The Bihar rule is equivalent to [SECTION] of the [ACT] which reads as follows:
[SECTION]. Carriage of persons in goods vehicle.-(a) Save in the case of a vehicle which is used for the carriage of troops or police or a stage carriage in which goods are being carried in addition to passengers, no person shall be carried in a goods vehicle other than a bona fide employee of the owner or the hirer of the vehicle, and except in accordance with this rule.
13. The question raised before the Full Bench of the Rajasthan High Court was answered in para 8 of the decision as follows:
8. We shall now consider Clause (ii) to the proviso to [SECTION] of the Act which is directly relevant to the controversy raised in the present cases and on which there is a divergence of opinion among the various High Courts. It may be mentioned that this provision is an exception to an exception and as such if a case falls within the purview of this provision, then it would mean that there is statutory liability of the insurer and the provision of not taking the policy as contained in the proviso will not apply in such cases. Clause (ii) of the proviso includes passengers carried for hire or reward and also passengers, who are carried by reason of or in pursuance of a contract of employment. It may be important to mention here that the legislature has not mentioned the class of vehicle but has only qualified the word 'vehicle' being such a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. An argument has been raised by learned Counsel for the insurance company that goods vehicle cannot be considered as a vehicle in which passengers are carried for hire or reward. In our view, there is no force in this contention as [SECTION] of the Rules permits the carrying of persons in a goods vehicle also subject to limitation of number of persons and seating capacity etc. The legislature has not used the words 'public service vehicle' in the above clause and this clearly shows that a goods vehicle will also come within the purview of this clause if passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment even in goods vehicle. Now so far as the employees of the owner of the vehicle are concerned, if carried in goods vehicle they would be covered under Sub-clause (c) of Clause (i) to the proviso of [SECTION]. Thus, the other category of passengers carried in a vehicle in pursuance of a contract of employment under Clause (ii) of the proviso will be those, who would be employees of the owners of the goods or of such person who had hired such goods vehicle.
14. A Full Bench of Bombay High Court in [PRECEDENT], held:
By the very necessity of the contract of hire of the vehicle, the hirer, who is the owner of the goods to be transported, has to travel in the vehicle, to supervise the transport. The consideration paid by the hirer of the vehicle being composite included consideration for the incidental transport of the hirer.
15. In [PRECEDENT], it was held that the owner of the goods travelling in the goods vehicle is not a gratuitous passenger but passenger for hire or reward and his case is covered by exception to second proviso to [SECTION] of 1939 Act. The insurance company, therefore, is liable to pay compensation. It was observed in the judgment:
The owner of the goods pays hire for the goods vehicle to carry his goods. Where it becomes necessary for him to travel in the goods vehicle for the purpose of loading, unloading or taking care of the goods, the contract between him and the owner of the vehicle must necessarily imply permission for him or his agent to travel in the vehicle.
16. In [PRECEDENT], it has been held that the insurer, in order to successfully disclaim his liability on the grounds mentioned in [SECTION] has to establish:
(i) that on the date of the contract of insurance, the insured vehicle was expressly or implicitly not covered by a permit to carry any passenger for hire or reward;
(ii) that there was a specified condition in the policy which excluded the use of the insured vehicle for the carriage of any passenger for hire or reward;
(iii) that the vehicle was, in fact, used in breach of such specified condition on the occasion giving rise to the claim by reason of the carriage of the passenger therein for hire or reward; and
(iv) that the vehicle was used by the insured or at his instance in breach of specific conditions including a condition that in the goods vehicle passengers for hire or reward were not to be carried. If it is done without knowledge of the insured by the driver's acts or omission, the insurer would be liable to indemnify the insured.
17. In [ENTITY] v. Dundamma 1992 ACJ 1 (Karnataka), Karnataka High Court dissenting with the view of Allahabad, Karnataka, Bombay and Rajasthan High Courts referred to above held that in such cases, exception in [SECTION] proviso is not attracted and the insurance company is not statutorily liable. The decision of the Full Bench proceeds on the reasoning that the insurance company cannot be made liable in respect of death or bodily injury to any person travelling in a vehicle which is not a vehicle constructed or adapted and meant in law for carrying passengers for hire or reward such as a goods vehicle even to the extent of number of passengers/ persons permitted to be carried in the vehicle, except in respect of the owners of the goods travelling in a goods vehicle having engaged the vehicle under an agreement with the owner for carrying goods for hire or reward and the goods carried are those as defined in [SECTION] of the 1939 Act, subject to the condition that such liability shall cover only up to the extent of a number of persons permitted to be carried in the goods vehicle under [SECTION] of [ACT].
18. All the decisions referred to above, except [ENTITY] v. Dundamma 1992 ACJ 1 (Karnataka), are based on interpretation of [SECTION] of the old Act which reads as follows:
Except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises.
It was in the cases referred to above that [SECTION] quoted above is an exception to [SECTION] inasmuch as it states that the passengers are not compulsorily required to be insured, it contains an exception to exception according to which the insured is statutorily to be insured in regard to claims arising out of death or bodily injury to such passengers coming within the exception to exception in [SECTION] which applied irrespective of the nature of vehicle, whether it is a goods vehicle or public service vehicle.
Proviso (ii) of [SECTION] of 1939 Act has been omitted in [SECTION] of the new Act.
Proviso now consists two Sub-clauses (i) and (iii) of 1939 Act which were in the same words as present as the Clauses (i) and (ii). The subsequent repeal/omission of [SECTION] of the old Act means that what was excepted by the proviso is now not excepted and falls within the main provision. The effect of the omission of [SECTION] means that now the liabilities set out at that (a) and (b) of [SECTION] of 1988 Act are required to be compulsorily insured.
19. Mr. [ENTITY], learned Counsel for the insurance company has heavily relied on a Full Bench decision of the Orissa High Court in [PRECEDENT]. Full Bench of the Orissa High Court did not approve the views of Allahabad High Court, Bombay High Court and Rajasthan High Court. The Full Bench held that [SECTION] did not apply to person carried in a goods vehicle for hire or reward, it is restricted to passengers carried in a public service vehicle. It was also held that the owner of goods who has hired a goods vehicle does not become a person travelling on the goods vehicle in pursuance of a contract of employment and even if he is carrying his goods after hiring the vehicle, the person does not become a person travelling on the vehicle in pursuance of a contract of employment and even if he is carrying his goods after hiring the vehicle, the vehicle does not become a vehicle meant for carrying passengers for hire or reward and consequently, would not come within the [SECTION].
20. I have carefully examined the decisions referred to above. The decisions of Allahabad, Rajasthan and Bombay High Courts are more logical and I prefer to follow these decisions in preference to Orissa Full Bench which, in my opinion, does not lay down the correct law. The Orissa case is distinguishable because Bihar Rule does not prohibit carrying passengers on goods vehicle unlike [ACT].
21. Mr. [ENTITY], learned Counsel for the insurance company relied on [ENTITY]'s case [PRECEDENT]. In this case, the question raised was not decided and it was only held that the insurance company is not liable in the case of death or bodily injury to third person, i.e., an outsider or an illegal occupant of the vehicle.
22. I find that Claims Tribunal has determined the question of quantum of compensation in a slipshod manner. The compensation appears to be grossly inadequate. The award of the Tribunal is, therefore, set aside and the matter is remitted to the Tribunal for a fresh decision. The decision of the Tribunal that insurance company is not liable is patently erroneous in view of the discussions made above. The finding of the Tribunal is set aside and it is held that the insurance company is liable under the new Act. The matter is remitted to the Claims Tribunal for fresh decision in accordance with law within six weeks from the date of receipt of copy of this order and the records. Let the lower court's record be sent down to the concerned court at once. The costs will abide ultimate result of the case.