FR IN THE HIGH COURT 0F SIKKIM : GANGTOK M,A.C.APPEAL NO,01 0F 2009 SENIOR BRANCH MANAGER, NATIONAL INSURANCE CO. LTD. 31 A, NATIONAL HIGHWAY, OPPOSITE TOURISM DEPARTMENT, GANGTOK, EAST SIKKIM. V6.rsus •-.... Appellant SMT. NAMITA DIXIT, W/O LATE JAI KANTA DIXIT SHRI VINEET DIXIT, S/O LATE JAI KANTA DIXIT BOTH REISDENTS OF DEVELOPMENT AREA, GANGTOK, EAST SIKKIM. SMT. NEELAM TAMANG, W/O SHRI TSHERING SHERPA, RESIDING NEAR KRISHI BHAWAN, P.O.TADONG, P.S.GANGTOK. (Owner of Maruti Alto SK-02A/0457) ..... Respondents FORTHE APPELLANT : MR. RAMESH SHARMA, ADVOCATE. MR. A. K. UPADHYAYA, SENIOR ADVOCATE APPEARING AS AMICUS CURIAE BY THE COURT WITH MR. DHURBA TEWARI AND MR. ASHIM CHEITRI, ADVOCATES FOR THE RESPONDENT : MR. A. MOULIK, SENIOR ADVOCATE NOS.1 AND 2. WITH MR. AJAY RATHI AND MS. SUSHMA PRADHAN, ADVOCATES FOR THE RESPONDENT NO.3 MR. N. RAI, ADVOCATE WITH MS. JYOTI KHARKA, ADVOCATE AND M.A.C.APPEAL NO.02 0F 2009 THE BRANCH MANAGER, NATIONAL INSURANCE CO. LIMITED, 6=s±. i ;--i85 16, DR. YEN SING ROAD, DIST. DARJEELING, WEST BENGAL. Versus +nI •..`.. Appellant 1. SMT. SUMITRA DEVI, W/O SHRI J. P. GUPTA R/O SINGTAM, P.O. & P.S. SINGTAM, EAST SIKKIM. 2. sHrdl ]. p. GupTA, S/O LATE RAM CHANDRA PRASAD, R/O SINGTAM, P.O. & P.S. SINGTAM, EAST SIKKIM. 3. SHRI AJAY GUPTA, S/O SHRI J. P. GUPTA, RESIDENT OF SINGTAM, P.O. & P.S. SINGTAM, EAST SIKKIM. 4. MR. ANIL PRASAD, R/O SINGTAM, P.O. & P.S. SINGTAM, EAST SIKKIM. (Owner of the Vehicle No.SK-02/9933) ...... Respondents FOR THE APPELLANT : MS. NAVIARA SARDA, ADVOCATE. FOR THE RESPONDENTS : MR. AJAY RATHI, ADVOCATE WITH 1, 2 AND 3 MS. SUSHMA PRADHAN, ADVOCATE FORTHE RESPONDENT : MS. SABINA GURUNG, ADVOCATE NO.4. PRESENT : THE HON'BLE MR. JUSTICE S. P. WANGDI, JUDGE DATE 01= LAST HEARING : 16.11.2009 DATE OF JUDGMENT : 01.12.2009 Wanadi,J. 3= .S ` c€c- IRE ±. - `6 JUDGMENT The two appeals have been taken up together for disposal by this common ].udgment as the issues involved in them are the same. M.A.C. ADDeal No.1 of 2009 In M.A.C. Appeal No.01 of 2009 the appellant, who is the Senior Branch Manager, Nat:ional Insurance Company Limited, Gangtok, has preferred this appeal under Section 173 of the Motor Vehicles Act, 1988 against the I.udgment of the learned Motor Accident Claims Tribunal, East and North Sikkim at Gangtok, dated 19.05.2008 in M.A.C.T. Case No.33 of 2006. The facts of the case mat:erial for the purpose of disposal of this appeal are that on 05.02.2005, the deceased Jai Kant Dixit was travelling by a Maruti Alto Car along with some other persons from Kaluk, West Sikkim to Gangtok, East Sikkim, after attending a marriage ceremony. On the way, the vehicle met with an accident at a place called Charcharey Bhir on the Jorethang Melli Road, South Sikkim, resulting in the death of the deceased on the spot. The respondents 1 and 2 who are the wife and son of t:he deceased, filed an application under Section 166 of t:he Motor Vehicles Act,. 1988 against the appellant in the present case and the owner of t:he vehicle who is t:he present respondent No.3, for award of death compensation of Rs.18,10,052.00. The claim was contested ------ __ -air . primarily by the appellant here who was the respondent No.1 before the learned trial Court by filing a written ob].ection t:o the claim petition substantially on the following grounds: - (i) The driver of the accident vehicle did not possess a valid driving licence at the time of the accident; (ii) The claim petition was not maintainable and the terms and conditions of the Insurance Policy had been grossly violated as the vehicle in question registered as a private vehicle was used for the purpose of hire and reward at the time when the accident took place; (iii) There being neither a statutory liability nor any contractual obligation on the part of the appellant to pay the compensation or to indemnify the owner of the vehicle, no liabilit:y could be fastened on the appellant, and that, if at all the petition would be maintainable only against the opposite party no.2 (the respondent no.3 in this appeal), the owner of the vehicle in question. Apart from the above, some formal ob].ections had been taken in the written object:ions which were not pressed before the tribunal and are also immaterial and irrelevant for the purpose of disposal of this appeal. The respondent no.3 who was the owner of the vehicle and impleaded as the -respondent no.2 before the Claims Tribunal in her writt:en ob].ection, simply stated that the accident vehicle had indeed been insured with the appellant. On the basis of t:he pleadings of the parties, learned claims Tribunal framed two issues which are as under: - 1. Whether the deceased (late Jai Kant Dixit) died on 05.02.2005 due to mot:or accident involving vehicle bearing, ----Of -- -I • `..i 2. registration No.SK-02 A/0457 at Charcharey Bhir, near Jorethang Bazar, South Sikkim? Whet:her the claimants are entitled for the compensation, and if so, who is liable for the same? It appears that the respondent no.2, as the claimant no.2 ` before the learned Tribunal, had entered int:o the witness box and deposed on the facts of the case and exhibited all relevant documents including the Cert:ificate of Insurance/Insurance Policy as Ext. 12 wit:h the object to subst:antiate the fact t:hat the deceased Jai Kant Dixit died on 05.02.2005 due to motor accident involving the accident vehicle and that the vehicle was indeed insured with the appellant and that it belonged to the respondent no.3. In his cross- examination, no material contradictions were brought out on behalf of t:he appellant and his evidence remained unshaken leading to the t:ribunal deciding Issue No.1 in favour of the respondents. It: is quite significant to note that although in its written ob].ection, the appellant had denied the claims and made certain assert:ions, subst:ance of which have been set out hereinbefore, the appellant chose not to adduce any evidence t:o substantiate them. Based upon the materials available, the learned Tribunal decided issue no.2 also in favour of the claimants and passed the impugned ].udgment awarding a compensation of Rs.19,50,252.00 and interest @ 10% per annum if the amount was not paid within a period of two months from the date of the judgment. Before this Court, amongst the grounds set up for assailing the impugned judgment, the appellant only preferred t:o .,,9 •, -1+..:.fist. , press the ground that since the deceased was a gratuitous passenger whose risk was not covered by the Insurance Policy, the appellant was not liable for payment of the compensation. Mr. Sudipto Majumdar, learned Advocate, appearing on behalf of the appellant in support of this content:ion, placed reliance upon the decision of the Hon'ble Supreme Court in the case of Wew rnd/`a Insurance Company Ltd. vs. Asha Rani and Others .. 2003 (2) SCC 223 in which it was held that as the Motor Vehicles Act, 1988 do not enjoin any statutory liability on the owner of a vehicle t:o get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor and that in order to cover such risk, an owner of passenger carrying vehicle must pay additional premium. As per him although the accident vehicle in the present: case was not a passenger carrying vehicle but a private car, the principle in the case of Asha Rani would apply in equal force. Since no additional premium had been paid to cover the passengers by the owner, the claim petition was not maintainable against the appellant. Mr. A. Moulik, learned Senior Advocate, appearing on behalf of the respondents no.1 and 2, t:he claimants, at the outset raised a preliminary objection and submitted that as the present ob].ection was never raised before the learned tribunal either in the written objection filed on behalf of the appellant or in the oral arguments it was not permissible to raise it for the time in appeal. It was submit:ted that the matter involved the question of a ought t:o have been raised specifically. Having not done so, the appellant is estopped from raising them at the appellate stage and should be deemed to have been waived and extinguished. Mr. Moulik further submitted that even on the merits, such objection was clearly misconceived and uhsustainable in law. As per him, the case of Asha Rani, the principle of which was adopted in the case of united India Insurance Company Lid. vs. Tilak Singh and Others : 2006 f4J SCC 404, is clearly distinguishable in as much as those two decisions relat:ed to ``statutory or Act policies" whereas in t:he present case we are dealing with a ``package policy" as was evident from Certificate of Insurance Exhibit 12 filed as Annexure `C' to the memo of appeal. Mr. Moulik went on to submit that the Tariff Advisory Committee constituted under Section 64(u) of the Insurance Act, 1938 has prescribed a number of tariffs termed as The India Motor Tariff (IMT for short) and the policy we are \, presently dealing with is Section II(1)(i) of the IMT. Taking his arguments further, Mr. Moulik submitted that under Section 95(2) of the Motor Vehicles Act, 1939 there was a limit capped on the amount of compensation which has since been superseded in Section 147(2)(a) of the Motor Vehicles Act, 1988. This provision read with Section 11 (1)(i) of the IMT Policy of 2002 which present:ly holds the field, includes a gratuitous passenger and the liability of t:he Insurance Company rendered unlimited. In support of his submission, Mr. Moulik relied upon a Single Bench decision of the Madras High Court in C.M.A. Nos. 4203 and 4204 of ::-:i...:r-) i... 2008 -in the matter Of Royal Sundaram AIIiance Insuranc:e vs. A. Pappatl.i & Others and Royal Sundaram AIIiance Insurance vs. [akshm/- and Others respectively, and drew the at:tention of t:his Court to paragraphs 28 and 30 thereof, relevant portions of which are reproduced below: - ``28. Since the policy in this case is a package policy and Section 11 (page 119 to IMT) third party liability clearly covers occupants in a private car which is the case on hand, the appellant insurance company cannot avoid their liability merely on the ground that no additional premium was paid. ...................... But the fact remains that Section 11 liability specifically covers occupants, passengers of a private car and its limit will be governed by the terms contained therein. The difference by reading the terms of the policy. In Tilak Singh's case which is a case of act only policy, the Apex Court clearly held that the IMT-70 endorsement covering the liability to pillion passengers was not: made.'' ``30. In view of the above discussion, the contention of the learned counsel for the appellant on the above stated issue stands rejected. The package policy issued in this case clearly covers the liability in respect of death of or bodily injury to any persons including occupants carried in the vehicle, the ill fat:ed Maruti Car." Mr. Moulik contended that since the facts in the present case was identical and that the policy was also a package policy with the limits of liability covered under Sect:ion II(1)(i) of the IMT Rules, the case of the claimants was fully covered thereby. 10. Mr. N. Rai, learned Counsel appearing on behalf of the respondent No.3, the owner of the car, generally supported t:he case of the respondents no.1 and 2 and rather inappropriately placed reliance upon the case of Sarpa/ S;ngh reported in AIR 2000 SC 235 in para 11 of which it had been held that there was no upper limit to the liability of Insurance Company to pay compensation and t:hat the term `third party' included a gratuitous passenger. C) t>__ ONeedless to state that.this decision has since been categorically overruled in the Asha Rani Case (supra). 11. Mr. A. K. Upadhyaya, learned Senior Advocate, who had been requested to conduct the case amicus curiae by this Court supplemented the arguments placed by Mr. A. Moulik and referring to and relying upon the case of Un/-red Jndt-a Insurance Co,[[d. vs. Alka Mangla .. AIR 2008 Delhi 201, subm.itted that -in a package policy of the kind under consideration, a gratuitous passenger should be deemed to have been covered and is inherent in the policy due t:o t:he higher premium required to be paid therefor. 12. I have heard the learned Counsels on behalf of the parties and I am inclined to agree with the submissions made by Mr. Moulik, learned Senior Counsel for the respondent nos. 1 and 2 and Mr. Upadhyaya, the learned Senior Counsel appearing as amicus curiae. Before proceeding to deal with t:he case, it is relevant to put on record at the outset, that: on 08.09.2009 when the case was taken up for final hearing, Mr. Sudipto Majumdar, Advocate, who had argued the case on behalf of the appellant on 07.09.2009 conveyed to this Court through his ].unior colleague, Mr. Ramesh Sharma, Advocate that he had nothing further to add to his submissions made on the previous day. 13. Coming to the case, although the matter could have been decided on the preliminary objection raised by Mr. Moulik, I have felt it necessary to deal with the merit of the case first, keeping in 10 view the larger public interest. The fact that: the deceased was a grat:uitous passenger is an admitted position between the parties. The questions t:hat require determination are (i) whether they are covered by the Insurance Policy subscribed by the insured and (ii) having regard to the policy, whether the insurer, i.e., the appellant is liable to defray the entire amount awarded by the tribunal. To answer these questions we need to examine the scope of certain provisions of the Motor Vehicles Act, 1988 more particularly Sections 146 and 147 which are the amended forms of Sections 94 and 95 of the Motor Vehicles Act, 1939 for the purpose of ad].udication of the issues involved in the present case. 14. Chapter XI has been provided in t:he Motor Vehicles Act, 1988 specifically to cater to the requirement of insurance of motor vehicles against third party risks. Section 146 falling under the chapter makes it: mandatory for a vehicle to have insurance policy covering third party risks before it can be used in a public place. This statut:ory compulsion has been created so that the victims of motor vehicle accidents are guaranteed of their security in as much as they would be able to get damages without delay and the recovery of such damages would not be dependent upon the financial condition of the driver or the owner of the vehicle, Section 147 is a composite provision which prescribes the requirement of policies, the limits of coverage and the extent of the liability of the Insurer. It will be useful to reproduce sub-sect:ions 1(b)(i), 2 and 5 of Section 147 for convenience which are as follows: - J^ ^ I = , ` I:-§ '1,,:-.-..§- .11 ``Section 147. Requirement 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) (b)Insures the persons or classes of persons specified in t:he 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 (in]-ury to any person, including owner of 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; Provided............................. (2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:- (a) save as provided in clause (b), the amount of liability incurred; (b) in respect of damage to any property of a third party, a limit of rupees six thousand; Provided......................... (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." It can be seen from the above that sub-section 1(b)(i) prescribes as to what should be covered under an Insurance Policy to comply with the requirement of Chapter XI. Sub-section 2 requires to be read with sub-section 1 and sets the limit of liability and sub-section 5 places a statutory obligation upon the insurer to indemnify those persons specified in the policy against t:he liabilit:ies covered in the policy. 15. It is now well set:t:led that Section 147(1)(b)(i) brings within its ambit all persons in the `third party' category including passengers travelling gratuitously by interpretation of the term `any •,9, 12 person' appearing therein. Under sub-section 2 of Section 147 the limits of liability has been prescribed as t:he amount of liability incurred under the terms of the policy of insurance .involved in the Case. 16. Therefore, when we examine the certificate of insurance (Annexure C to the memo of appeal) we find it endorsed as ``under Section II-1(i) of t:he policy - death of or bodily injury. Such amount as is necessary to meet the requirements of Motor Vehicles Act, 1988 ........ " against the column for limits of liabilities. Inorder to understand the scope and ext:ent of the provision Section II-1(i) of t:he policy relevant portion thereof is reproduced below: - ``Section Il-1- Subject to the limits of liability laid down in the schedule hereto the company will indemnify t:he 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 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, t:he Company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured. (ii) It can be seen from t:he above that the limits of the liability of the appellant and the person or classes of persons t:hat it is liable to indemnify under the policy in pursuance to section 147(5) of the Act are ``such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1988''. In other words, it covers risks in respect of all categories of third party in pursuance of Section 147(1) to the extent of the amount that maybe awarded by a Claims Tribunal in terms of Section 147(2) read with Section 147(5). This remains a `., \±`` -.-a ITS.-<iB I 13 well established position of law as will be revealed from the discussions that will follow hereafter. 17. I.n I:he case Of Amrit Lal Sood vs. Kaushalya Devi 7lf]apar : (I998J 3 SCC 744, the Apex Court while dealing wit:h a poliey termed as comprehensive poliey containing amongst others "SECTION - 11 LIABILITY TO THIRD PARTIES" held t:hat the expression "any person" appearing therein, includes an occupant of a car who is gratuitously travelling and that under the t:erms of the poliey, the insurer is liable t:o satisfy the award passed in favour of the complainant. Para 8 of the judgment is quite explicit to that effect and is reproduced below: - "8. Thus under sect/on IT I/a) of the Doliev the insurer has aareed to indemnify the insured aaainst all sums which the insured shall become leaallv liable to Dav in respect of death of or bodilv iniurv to `anv Person.' The expression `anv Derson' would undoubtedlv include an ocouDant: of the car who is aratuitouslv travellina in the car. The remaining part of clause (a) relates to cases of death or injury arising out of and in the course of employment: of such person by the insured. In such cases the liability of the insurer is only to the extent necessary to meet the requirements of Section 95 of the Act. In so far as gratuitous passengers are concerned, there is no limitation in the poliay as such. Hence under the t:erms of the policy, the insurer is liable to satisfy the award passed in favour of the claimant ............... " ( Emphasis supplied ) ±8. In the case Of New India Assurance Co.Ltd. vs. C. M. Java & Others (supra) .. (2002) 2 SCC 278 a Cor\stiifutiion Bench, while deciding on a reference made t:o it to settle an apparent conflict in a two Judge Bench decisions of the Apex Court, in Amr;I Lal Sood vs. Kaushalya Devi Thapar (supra) ar\d New India Assu.rance Co. Ltd. vs. Shanti Bai : (1995) 2 SCC 529, accepted the observations .in New India Assurance Co.Ltd. vs. Kaushalya Devi 7lhapar (supraj in view of the express term in the policy. CP7 14 S The portions ofthe].udgment relevant so far as the present case is concerned, are reproduced below: - "6 ............................ The question that came up for decision before this Court was whether the insurer was liable to satisfy the claim for cc)mpensation made bv a person travellinci aratuitouslv in the car. In deciding this question the Court took the view that: (SCC p. 747, para 4) "4.The liability of the insurer in this case depends on the terms of the contract between the insured and the insurer as evident from the Doliov. Section 94 of the Motor Vehicles Act, 1939 compels the owner of a motor vehicle to insure the vehicle in compliance with the requirements of Chapter VIII of the Act. Section 95 of the Act Drovides that a Doliov of insurance must be one which insures the Person aaainst anv liabilitv which mav be incurred bv him in resDect of death or bodilv iniurv to anv Person or damaae to anv DroDertv of third Dartv caused bv or arisina out of the use of the vehicle in a Dublic Dlace. The section does not: however require a poliey to cover the risk to passengers who are not carried for hire or reward. The statutory insurance does not cover injury injury suffered by occupants of the vehicle who are not carried for hire or reward and the insurer cannot: be held liable under the Act. But that does not Drevent: an insurer from enterina into a contract of insurance coverina a risk wider than the minimum reauirement of the st:atute wherebv the risk to Gratuitous Dassenaers could also be covered. !ji such cases where the Dolicv is not merelv a statutorv Dolicv, the terms of the Doliov have to be considered to determine the liabilitv of the insurer." ``7. Distinguishing the judgment in Pushpaba/ Purshotfam i/desh/. v. Ranjit Ginning & Pressing Co. (P) Ltd. the Court observed that the said judgment was based upon the relevant dause in the insurance poliey, which restricted the legal liability of the insurer to the statutory requirements under Section 95 of the Act and so that decision had no application to the case as the terms of the poliey stat:ed in paragraph 6 of the judgment were wide enough to cover a gratuitous occupant of the vehicle. The Court also referred to t:he case of Juaal Kishore in which it is held that thouah it is not Dermissible to use a vehicle unless it is covered at least under "Act only" policy, it is not obligatory for the owner to get a comprehensive policy but it is open to the insurer to take a policy covering a higher dsk. 8. Thus, a careful reading of these decisions clearly shows that the liability of the insurer is limited, as indicated in Section 95