IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH : HYDERABAD THURSDAY, THE TWENTY THIRD (23RD) DAY OF JUNE, TWO THOUSAND AND ELEVEN Present: HON’BLE SRI JUSTICE G.V.SEETHAPATHY MA CMA No.128 of 2009 Between: United India Insurance Co.Ltd., Kadapa …Appellant And: Nagareddy Bhagya Lakshmi & 4 & others … Respondents HON’BLE SRI JUSTICE G.V.SEETHAPATHY MA CMA No.125 of 2009 JUDGMENT: This appeal is directed against the order dated 30.10.2008 in OP No.396 of 2006 on the file of the MACT cum Principal District Judge, Kadapa, wherein the said application filed by the first respondent herein, was allowed in part granting compensation of Rs.90,000/- with interest at 6% per annum from the date of petition. 2. Heard the learned counsel for the appellant and the learned counsel for the first respondent. Perused the record. 3 . The first respondent herein filed claim application seeking compensation of Rs.1,50,000/- for the injuries sustained by him in the motor vehicle accident that occurred on 10.05.2004. According to the claimant, on that day at about 4.40 p.m. while he was being taken in the said jeep by the police to produce him before the Court at Proddatur in connection Cr.No.76 of 2004, on account of the rash and negligent driving of the jeep by its driver, the vehicle over turned, resulting in fracture of the left hand and another injury to the right knee. The claimant was shifted to Government Hospital, Kamalapuram and from there to Government Headquarters hospital, Kadapa, where he was treated as inpatient and he also visited bone setting centre, Puttur twice. According to the claimant, he was aged 58 years and was agriculturist and also doing business and earning Rs.10,000/- per month. 4. The 2nd respondent herein owner of the vehicle remained ex-parte and the appellant-insurer filed counter denying their liability and contending that there has been violation of the terms and conditions of the policy and the insurance company is not liable to pay any compensation. 5. The Tribunal framed the following issues for trial. 1. Whether the accident did not occur due to the rash and negligent driving of the jeep bearing No.TSR 4316 belonging to the first respondent and insured with second respondent by its driver? 2. Whether the petitioner is entitled for compensation for the injuries sustained by him, if so, to what amount and from whom? 3. To what relief? 6. During enquiry, PWs.1 and 2 were examined and Exs.A.1 to A.4 were marked on behalf of the claimant. RW.1 was examined and Exs.B.1 and B.2 were marked on behalf of the appellant herein. On a consideration of the evidence available on record, the Tribunal held that the accident occurred due to the rash and negligent driving of the jeep by its driver. The Tribunal further held that the claimant is entitled for compensation of Rs.90,000/- and accordingly awarded the said amount with interest at 6% per annum. Aggrieved by the said award, the insurer preferred the present appeal. 7. The finding of the Tribunal that the accident occurred due to the rash and negligent driving of the driver of the vehicle by its driver and the claimant is entitled for a sum of Rs.90,000/- towards compensation is not seriously challenged. The only contention raised by the appellant-insurer is that the policy Ex.B.1 is an Act policy and it does not cover the risk of a passenger travelling in the vehicle, as he is not a third party and therefore, the appellant- insurer is not liable to pay the compensation. Learned counsel for the first respondent-claimant on the other hand seeks to justify the award passed against the appellant. 8. A perusal of Ex.B.1 would show that it is an Act policy and apart from basic premium of Rs.700/- for third party risk, a sum of Rs.25/- is paid to cover the risk of one employee. The policy does not show that any additional premium is paid to cover the risk of any passenger travelling in that vehicle, which is a private car. 9. In ‘United India Insurance Co. Ltd., v. Tilak Singh[1]’, the apex Court held as follows: “In our view, although the observations made in Asha Rani’s case, 2003 ACJ 1 (SC), 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 gratuitous passenger”. 10. In ‘United India Insurance Co. Ltd., v. C Goverdhan[2]’, this Court while following the ruling in Tilak Singh’s case (supra), held as follows: “As per Section 147(1)b(ii) of the act, a policy of insurance has to be taken compulsorily 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. Since the jeep was not a public service vehicle, insurance of passengers traveling in a jeep was optional and not compulsory. Ex.B.1 shows that the policy is an ‘Act policy’ only. So it covers the risk of third parties but not the passengers either gratuitous or fare paying. In New India Assurance Co. Ltd. V. R. Anand and another, 2006 (1) ALD 38 = 2006 ACJ 1659, it is observed that an insurer is vested with a discretion to cover the risk of persons by a contract as envisaged under the tariff regulations, by collecting additional premium and has an option to cover the risk of a pillion rider of the two wheeler and passengers of a private vehicle, to cover their risk, by a contract on the payment of additional premium, and the risk of pedestrians is covered by act policy, and so beneficiaries, whose risk can be optionally covered under the contract of collecting additional premium would not be covered by the Act policy.” 11. It was further held that ‘in insurance parlance ‘third party’ means a person who is not using the vehicle involved in the accident. A passenger travelling in a vehicle will not be a ‘third party’ for the purpose of insurance and so the Act policy does not cover the risk of the passengers travelling in the vehicle.’ 12. In ‘Jayavarapu Rajamma v. Jayavarapu Laxminarayana[3], the Division Bench of this Court while answering the reference, inter alia, held that ‘the terms of the insurance policy determine the liability of the insurer in each case and mere nomenclature of the policy as a comprehensive policy or otherwise is not the guide, but the specific terms and conditions of the policy govern the existence and extent of the liability of the insurer.’ 13. In ‘Branch Manager, United India Insurance Co. Ltd., Kamareddy v. Kondakotla Saroja[4]’, the Division Bench of this Court held as follows: “Once the Insurance Company under Ex.A.5 cover note has not undertaken the liability by collecting extra premium for the passengers who travelled in the insured vehicle, it cannot be held liable to pay the compensation and it is only the respondent-owner of the vehicle who is liable to satisfy the decree and pay the compensation.’ 14. In the above case also the deceased was travelling in a jeep from Kamareddy to Banswada and due to the rash and negligent driving of the said jeep by its driver, the vehicle over turned. The Tribunal awarded compensation and fastened the liability on the insurance company also along with the owner. In the appeal, it was contended by the insurer that it was an Act policy and the occupants of the vehicle were not third parties and the risk of inmates of the vehicle are not covered by the policy and therefore, they are not liable. The question that arose for consideration in the above case was whether the insurance company was liable to pay the compensation for the passengers who travelled in the jeep which is covered by an Act Policy. The same is the question that arises for consideration in the present case also. Allowing the appeal, this Court in the above case set aside the award passed against the insurer. 15. Learned counsel for the appellant would invite the attention of a circular issued by the Insurance Regulatory and Development Authority on 16.11.2009, wherein attention of all the insurance companies were drawn to Section (II) 1 (i) of Standard Motor Package Policy for private car and two-wheeler under the India Motor Tariff, where under the company shall indemnify the insured in respect of death or bodily injury to any person including occupants carried in the said vehicle (provided such occupants are not carried for hire or reward), the company shall not be liable where such death or injury arises out of and in the course of employment of such person by the insured. The above clarification regarding indemnifying the liability by the insurer in respect of death or bodily injury of the occupants carried in the vehicle was however issued only in respect of comprehensive policy and the same does not extend to Act policy. 16. In the present case, admittedly, Ex.B.1 is an Act policy, under which premium is paid to cover the risk of only third party and one employee. As no additional premium is paid to cover the risk of any passenger either gratuitous or otherwise, the question of fastening liability for the death or injury of such passenger on the insurer does not arise. The claimant in the present case was only a gratuitous passenger as he was being taken by the said jeep a private vehicle, by the police to produce him before the Court at Proddutur and on the way, the accident occurred. As the risk in respect of such passenger is not covered by the policy Ex.B.1, the appellant-insurer is not liable to pay the compensation. In the impugned order, the Tribunal observed that the policy covers the risk of third party and the petitioner indeed is a third party to the policy and therefore, the risk is covered by the policy. The claimant who was travelling in the jeep as a gratuitous passenger cannot be called a third party to the vehicle. 17. In Kondakotla Saroja’s case (4th supra), it is held that the passenger travelling in a vehicle will not be a third party for the purpose of insurance and the Act policy does not cover the risk of such passenger. In view of the principles laid down in the above decisions of the Apex Court and this Court and particularly in Kondakotla Saroja’s case (4th supra), which deals with an identical situation like the present one, it must be held that the appellant-insurer is not liable to pay the compensation and the 2nd respondent, who is the owner of the vehicle alone is liable to pay the same. It is open to the appellant-insurer to recover the amount of compensation if any already paid by them from the owner of the vehicle. The claimant is at liberty to recover the compensation awarded from the owner of the vehicle. In the circumstances, the liability fastened against the appellant-insurer is set aside. 18. In the result, the appeal is allowed as stated above. No order as to costs. __________________ G.V.SEETHAPATHY, J Date: 23.06.2011 bss [1] 2006 ACJ 1441 [2] 2007(4) ALD 665 [3] 2007(6) ALD 306 (DB) [4] 2008(5) ALD 288 (DB)