IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30-3-2009 CORAM THE HONOURABLE MR.JUSTICE R.SUDHAKAR C.M.A.Nos.4203 and 4204 of 2008 and M.P.No.1 of 2008 in both appeals C.M.A.No.4203 of 2008:- Royal Sundaram Alliance Insurance Company Limited, No.46, Whites Road, Royapettah, Chennai.14. ...Appellant/2nd Respondent vs. 1. A. Pappathi 2. R. Amavasai 3. Amitt Bhat (3rd respondent ex parte in lower court. Notice may be dispensed with). ...Respondents/Petitioners 1 and 2 and 1st respondent C.M.A.No.4204 of 2008:- Royal Sundaram Alliance Insurance Company Limited, No.46, Whites Road, Royapettah, Chennai.14. ...Appellant/2nd Respondent vs. 1. Lakshmi 2. Kamraj 3. Ambedkdar 4. Kasturibai 5. Manikandan 6. Amitt Bhat (6th respondent ex parte in lower court. Notice may be dispensed with) ...Respondents/Petitioners 1 to 5 and 1st respondent https://hcservices.ecourts.gov.in/hcservices/ Civil Miscellaneous Appeals are filed under Section 173 of Motor Vehicles Act, 1988, against the awards and decrees dated 30.6.2008 passed in M.C.O.P.Nos.315 of 2007 and 309 of 2007 on the file of the Motor Accidents Claims Tribunal ( Subordinate Court), Poonamallee. For appellant in both the appeals : Mr.N.Vijayaraghavan For respondents 1 and 2 in CMA 4203 of 2008 and respondents 1 to 5 in CMA 4204 of 2008 : Mr.P.Selvaraj COMMON JUDGMENT The Insurance Company has filed these two appeals challenging the awards dated 30.6.2008 passed in M.C.O.P.Nos.315 and 309 of 2007 on the file of the Motor Accidents Claims Tribunal (Subordinate Court), Poonamallee. 2. In both the appeals Mr.P.Selvaraj, counsel appears for caveators, the respondents 1 and 2 in C.M.A.No.4203 of 2008 and the respondents 1 to 5 in C.M.A.No.4204 of 2008. In view of the endorsement made by the counsel for the appellant in the appeal grounds, notice to the owner of the vehicle, viz., the respondent No.3 in C.M.A.No.4203 of 2008 and respondent No.6 in C.M.A.No.4204 of 2008 is dispensed with. By consent of both parties, main appeals are taken up for final disposal. 3. C.M.A.No.4204 of 2008 (M.C.O.P.No.309 of 2007):- It is a case of fatal accident. The motor accident in this case happened on 13.8.2006. The deceased in this case is Tamil Selvan, 28 years old, contractor and L.L.B. Final Year student. He was travelling on a Maruti Esteem Car bearing Registration No.TN.02 V 7880 from Pondicherry to Chennai along with his friends. The car was driven by the 6th respondent herein, by name Amitt Bhatt, who is the owner of the Maruti Esteem Car insured with the Royal Sundaram General Insurance Company. According to the claimants, the driver of the car viz., Amitt Bhatt, drove the car in a rash and negligent manner and hit the palm tree and caused grievous injuries which resulted in the death of the said Tamil Selvan. On the death of Tamil Sevan, the mother aged 52 years, three brothers aged 22 years, 21 years and 18 years and one sister aged 19 years filed the claim under Section 166 of Motor Vehicles Act, 1988 for compensation in a sum of Rs.6,00,000/- stating that the deceased was working in Ambattur Clothing Company Limited and was earning a sum of Rs.10,000/- p.m. 4. In support of the claim, the mother of the deceased was examined as P.W.1 and one Jagadesh, the eye witness to the accident, was examined as P.W.2. Documents Exs.A-1 to A-6 were marked. On https://hcservices.ecourts.gov.in/hcservices/ behalf of the insurance company one Vankatakrishnan, senior executive officer of the insurance company was examined as R.W.1. True copy of the insurance policy issued to the Maruti Esteemed Car was marked as Ex.R-1. 5. Based on the oral and documentary evidence and considering the age, income, occupation of the deceased and the age of the claimants, the Tribunal granted the following amount as compensation with interest at the rate of 7.5% p.a.:- Sl.No. Head Amount granted by the Tribunal 1 Loss of pecuniary benefits Rs.4,32,000/- 2 Transport expenses Rs. 1,000/- 3 Funeral expenses Rs. 2,000/- Total Rs.4,35,000/- 6. C.M.A.No.4203 of 2008 (MCOP No.315 of 2007):- In the fatal accident which happened as above, another occupant of the car, Suresh, 27 years old self-employed contractor, said to be earning Rs.10,000/- p.m., while travelling in the very same Maruti Esteemed Car, driven by the third respondent herein, viz., Amitt Bhatt, suffered grievous injuries and died. The mother aged 58 years and father aged 61 years filed a claim under Section 166 of Motor Vehicles Act, 1988 for compensation in a sum of Rs.5,00,000/-. 7. In support of the claim, the mother of the deceased Suresh was examined as P.W.1 and one Jegadeesh, the eye witness to the accident, was examined as P.W.2. Documents Exs.A-1 to A-7 were marked. On behalf of the appellant/2nd respondent before the Tribunal, one Venkatakrishnan, Senior Executive Officer was examined as R.W.1 and the copy of insurance policy issued to the Maruti Esteemed Car was marked as Ex.R-1. 8. Based on the oral and documentary evidence and considering the age, income and the occupation of the deceased and the age of the claimants, the Tribunal granted the following amounts as compensation with interest at the rate of 7.5% p.a.:- Sl.No. Head Amount granted by the Tribunal 1 Loss of pecuniary benefits Rs.2,88,000/- 2 Loss of love and affection to the parents Rs. 30,000/- 3 Transport expenses Rs. 1,000/- 4 Funeral expenses Rs. 2,000/- Total Rs.3,21,000/- https://hcservices.ecourts.gov.in/hcservices/ 9. The owner-cum-driver of the vehicle remained ex parte before the Tribunal. In both cases, the appellant before the Tribunal contended that the victims are gratuitous passengers in a private car and therefore, there is no statutory liability on the appellant insurer to cover the risk of the occupants of private car under section 147 of the Motor Vehicles Act, 1988 as they are not third parties and further no additional premium was paid to cover the risk to occupants, gratuitous passengers, under the policy of insurance Ex.R-1. 10. The Tribunal in this case placing reliance on the decision of this court in National Insurance Company Ltd., - vs. - Komalam reported in 2008(2) MLJ 736 stated that in the insurance policy Ex.R- 1 no additional premium was paid to cover the risk to occupants of the car, who are gratuitous passengers and therefore, held that the insurance company was not liable. The Tribunal, however, relying upon the Apex Court's decision in Deddappa – vs. - B.M., National Insurance Co. Ltd., reported in (2008)2 MLJ 575 (SC) and various other decisions, directed the insurer appellant to pay the claimants and recover the award amount from the insured/owner of the vehicle. Hence, the appeal. 11. In both the appeals, at the out set, it was fairly conceded by the learned counsel for the appellant that the appellant is not aggrieved by the quantum of compensation awarded in both the cases and that it is just and reasonable. 12. The point that is canvassed in appeal before this Court and before the Tribunal as well, is that the insurance policy Ex.R-1 issued to the ill-fated Maruti Esteem Car, which is a package policy for a private vehicle, covers risk only to the extent of third party claims in terms of Section 147 of the Motor Vehicles Act 1988 and does not cover the risk of the gratuitous passengers, the occupants of the car. According to the appellant, even under the package policy issued in respect of the vehicle, since no additional premium was paid to cover the occupants of the private vehicle (car) and since the deceased are gratuitous passengers, the insurance company is not liable. On this premise, these two appeals are canvassed. 13. In support of this contention counsel for appellant relied on the decision of the Apex Court in UNITED INIDA INSURANCE COMPANY – Vs. - TILAK SINGH (2006 ACJ 1441 (SC) = 2006(4) SCC 404), a case relating to death of a pillion rider, a gratuitous passenger; wherein the Apex Court while dealing with the case of statutory insurance policy, held in paragraphs 1, 2 and 21 as follows:- "1. The core issue involved in this appeal is: Whether a statutory insurance policy under the Motor Vehicles Act, 1988, intended to cover the risk to life or damage to properties of third https://hcservices.ecourts.gov.in/hcservices/ parties would cover the risk of death or injury to a gratuitous passenger carried in a private vehicle? 2. Bal Krishan, the respondent No.5, had insured his scooter with the appellant insurance company for the period 7.3.1989 to 6.3.1990. For covering liability to pillion passengers the endorsement of I.M.T.70 pertaining to accident to unnamed hirer/driver/pillion passenger, is required on the insurance policy, which may be obtained by payment of additional premium. The insurance policy covering the scooter of respondent No.5 did not contain an endorsement of I.M.T.70." "21. 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 statutory policy and hence it did not cover the risk of death of or bodily injury to gratuitous passenger." 14. The learned counsel for the appellant referred to Section 147(1) of the Motor Vehicles Act, 1988 and stated that the claim in both the cases is not covered by statutory prescription. Sec.147 (1) and 147(5) of the Motor Vehicles Act, 1988, which is relevant for the issue, reads as follows:- "147. Requirements of policies and limits of liability. (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-- (a) is issued by a person who is an authorised insurer; and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)-- (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including, owner of https://hcservices.ecourts.gov.in/hcservices/ the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place; (ii) 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: Provided that a policy shall not be required-- (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923, (8 of 1923) in respect of the death of, or bodily injury to, any such employee-- (a) engaged in driving the vehicle, or (b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or (c) if it is a goods carriage, being carried in the vehicle, or (ii) to cover any contractual liability. Explanation.--For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place. (2) x x x (3) x x x (4) x x x https://hcservices.ecourts.gov.in/hcservices/ (5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons." 15. Learned counsel for the appellant placed reliance on the Full Bench decision of the Kerala High Court in Mathew Joseph – vs. - Janaki reported in 2007 ACJ 912. It is a case of death of a gratuitous passenger in a private jeep. The policy is a comprehensive policy. Relying upon the Apex Court's decision in New India Assurance Co. Ltd., - vs. - Asha Rani reported in (2003)2 SCC 223 : 2003 SCC (Cri) 493, and UNITED INIDA INSURANCE COMPANY – Vs. - TILAK SINGH (2006 ACJ 1441 (SC) = 2006(4) SCC 404), it has been held thus:- “Gratuitous passengers in transport vehicles, including a motor cycle, can have coverage only when a comprehensive policy or extended policy as might be possible to be issued has been availed of by the owner of the vehicle. Only in such cases the insurance company is required to compensate. We hold that the guidelines set by the Supreme Court are unambiguous, viz., that payment of premium alone can cast a corresponding duty on the insurer for rendering coverage on any such group, when they are not required to be mandatorily brought under insurance protection.” 16. Learned counsel for the appellant also placed reliance on the decision in Amit Bar – vs. - National Insurance Co. Ltd., reported in 2008(1) T.A.C. 51 (Cal.). It is a case of death of a gratuitous passenger, pillion rider in a two wheeler. The policy is a package policy. The Court held that no additional premium was paid to cover the risk of a pillion rider. In this factual background, the Calcutta High Court in para 21 held as follows:- "21. Thus, after considering submissions of the learned Advocate of both the sides and on careful consideration of the insurance policy and fact and evidence of the present case, we find that the victim woman as a pillion-rider met the accident, the insurance policy of the motorcycle was valid on the date of accident, the insurance policy did not cover the risk of the pillion-rider since there were no terms and conditions on payment of additional premium to cover the risk https://hcservices.ecourts.gov.in/hcservices/ of the pillion-rider and in such a situation having regard to the provision of Section 147 of the Motor Vehicles Act and the ratio of decision rendered in the case of United India Insurance Co. Ltd. (supra), we are of the considered view that the Insurance Company as per terms of the insurance policy is not liable to pay any compensation and the claimants are to realise the compensation amount from the owner of the offending motorcycle." 17. On this premise, it was submitted by the appellant that the insurance policy which is the subject matter of the present appeals though termed as a package policy, since no additional premium was paid in respect of the occupants of the Car involved in the accident, the insurance company is not liable in respect of the claims consequent to the death of the two persons, who are the occupants of the ill-fated private vehicle, Maruti Esteemed Car. 18. The undisputed facts in this case are:- (i) the policy of insurance Ex.R-1 is a package policy and (ii) the victims of the accident are gratuitous passengers, the occupants in a private car, In this case, the finding of the Tribunal is that no additional premium was paid to cover gratuitous passengers in a private car. Before proceeding further in this matter, the nature of insurance policy issued by the appellant needs to be considered. The policy issued to the private vehicle (car) MP 1 0082955 is a package policy for private vehicle issued at 10.52 a.m., on 27th December 2005. The policy reads as follows:- "ROYAL SUNDARAM ROYAL SUNDARAM ALLIANCE INSURANCE COMPANY LTD. Sundaram Towers, 46 Whites Road, Royapettah, Chennai-600 014. Tel:044-28517387 (Hunting Lines), Fax; 044-28585912, 28517376, e-mail – customer, services @ in.royalsun.com Service Tax Registration No. Insurance/Chennai-II/2/STC Certificate Cum Policy Schedule Insurance Policy No: MP10082955 Package policy(Private vehicle) (Issued at 10:52:58 AM on 27-Dec.2005) THE INSURED: Name: Address: Business Mr.AMIT BHATT NO:162/2, GOLDEN, UBLEE FLATS, PADI KUPPAM ROAD, THIRUMANGALAM, ANNA NAGAR EXTN, CHENNAI-600040, Tamil Nadu Business Period of insurance: From 10:52:33 AM on 27 –Dec.2005 to midnight on 26 – Dec. 2006 https://hcservices.ecourts.gov.in/hcservices/ The vehicle: Maruti/Esteem Vxi/MARUTI ESTEEM MPI VXI BS III (WITH HLL) Date and Proposal No: 27-Dec.2005/ P00210402. Geographical Area Engine- Chassis No. Type of body CC Mfg. Year Seating capacity Registration Mark & Place of Registration INDIA 252662- 448327 SALOON 1298 2005 5 CHENNAI INSURED'S DECLARED VALUE Vehicle Non Elec. accessories Elec. accessories CNG/LPG kit Total Value (IDV) 463472 0 0 0 463472 Schedule of premium A. OWN DAMAGE B. LIABILITY Vehicle & Accessories: 15215 Vehicle 600 Total 15215 Total 600 Add 15215 Add 600 b) Geographical Area Extn. NA a) Compulsory PA Cover Premium 100 Sub-Total Additions a) b) Additional PA Cover Premium (0 per person) (IMT-16) NA c) 5% Extra premium towards inbuilt CNG NA Less d) Legal Liability(WC) to Driver (IMT-28) 25 i) Auto Association membership NA Sub Total Additions 125 Sub Total (deductions) Total(A) 15215 Total (B) 725 Note: 1. If the premium is paid by Cheque, the issue of Policy is subject to the realisation of Cheque. 2. Consolidated Stamp duty paid. Grand Total Service Tax @ 10.2% Total Premium 15941 1626 17567 Compulsory deductibles 500 19. The Insurance Act, provides for establishment of a Tariff Advisory Committee otherwise known as TAC which lays down the Rules, Regulations, Rates, Advantages, Terms and Conditions, for transaction of motor insurance business in India. For this purpose, the India Motor Tariff, hereinafter referred to as "IMT" and it contains Section 1 to Section 8 and General Regulations G.R.1 to G.R.48 and it is issued from time to time. As far as the present case is concerned, the India Motor Tariff (IMT) 2002 supersedes the provisions of the India Motor Tariff (IMT) in existence upto 30th https://hcservices.ecourts.gov.in/hcservices/ June, 2002. It is also stated that it is binding on all concerned and any breach of the Tariff will be a breach of the provisions of the Insurance Act, 1938. 20. Under the Indian Motor Tariff (IMT) different types of policies are issued and they are contained in IMT Section 6(page 107 of IMT). They are:- (a)Standard form for liability only policy, (b)Standard form for private car package policy, (c)Standard form for two wheeler package policy, (d)Standard form for commercial vehicles package policy, (e)Standard form for motor trade package policy and the like. Each policy is split into different sections to deal with different contingencies and the parties bind themselves to the terms of the clause contained in each section of the policy. For example, the package policy for a private car which is applicable to the present case contains:- Section I – Loss of or damage to the vehicle insured, Section II – Liability to third parties, Section III – Personal accident cover for owner-driver There are other conditions and limits. In this appeal we are concerned with the liability of the insurance company in respect of a gratuitous passengers/occupants in a private vehicle (car). 21. The first policy in Section 6 of IMT is liability only policy or act only policy. In that the liability to third parties is set out as hereunder:- "LIABILITY TO THIRD PARTIES: 1. Subject to the Limit of liability as laid down in the schedule hereto, the Company will indemnify the insured in the event of accident caused by or arising out of the use of the Motor Vehicle anywhere in India against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of https://hcservices.ecourts.gov.in/hcservices/ i. death of or bodily injury to any person so far as it is necessary to meet the requirements of the Motor Vehicles Act. ii. damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured up to the limit specified in the schedule." (emphasis supplied) 22. The next policy in Section 6 of IMT that is relevant to this case is a private car package policy in which Section II (page 119 of IMT) deals with liability to third parties, which reads as follows:- "Standard Form for private car package policy Whereas the insured by a proposal and declaration dated as stated in the Schedule which shall be the basis of this contract and is deemed to be incorporated herein has applied to the Company for the insurance hereinafter contained and has paid the premium mentioned in the schedule as consideration for such insurance in respect of accidental loss or damage occurring during the period of insurance. Now this policy witnesseth: That subject to the Terms Exceptions and Conditions contained herein or endorsed or expressed hereon; Section I xxx Section II – Liability to third parties 1. Subject to the limits of liability as laid down in the Schedule hereto the Company will indemnify the insured in the event of an accident caused by or arising out of the use of the vehicle against all sums which the insured shall become legally liable to pay in respect of:- (i) death of or bodily injury to any person including occupants carried in the vehicle (provided such occupants are not carried for hire or reward) but except so far as it is necessary to meet the requirements of Motor Vehicles Act, the Company shall not be https://hcservices.ecourts.gov.in/hcservices/ liable where such death or injury arises out of and in the course of the employment of such person by the insured. (ii) damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured." (emphasis supplied) The specific terms of the Section II of the package policy casts a liability on the insurance company to compensate the death or bodily injury to any person including occupants carried in the vehicle (provided such occupants are not carried for hire or reward). There is, therefore, a clear distinction in Section II of Act Policy (i.e.) liability only policy and Section II of package policy. 23. Further, Section 1 (Page 1 of IMT) contains General Regulations, in that the provision is made for various types of personal accidents covers. To name a few, the following covers which are available are extracted:- "Cover is available only in respect of the following persons:- 1. Private Cars including three wheelers rated as Private cars and motorised two wheelers with or without side car (not for hire or reward): For insured or any named person other than the paid driver and cleaner. Endorsement IMT – 15 is to be used. 2. Private Cars, three wheelers rated as Private cars and Motorised Two Wheelers (not used for hire or reward) with or without side car: For unnamed passengers limited to the registered carrying capacity of the vehicle other than the insured, his paid driver and cleaner. Endorsement IMT – 16 is to be used. 3. In respect of all classes of vehicles: For paid drivers, cleaners and conductors. Endorsement IMT – 17 is to be used. 4................. etc.," The various types of endorsements ranging from IMT–1 to IMT-65 are contained in Section-7. IMT Endorsements are made in appropriate https://hcservices.ecourts.gov.in/hcservices/ Section of the policy. Based on the need of the insured, the type of policy with necessary endorsements are made. In the present case, which is a package policy, in addition to third party liability in terms of Section-II as has been extracted in para 22 above, the insured has also taken further endorsement under Section-III, under the head personal accident cover. A premium of Rs.65/- has been paid under IMT-20 and no premium was paid under IMT-16. In the present package policy, in addition to liability cover in respect of occupants of