THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE B.CHANDRA KUMAR L.P.A.No.214 of 2001 Date of Order:19 --11--2009 Between: M/s.National Insurance Co. Ltd., rep. by its Divisional Manager, Secunderabad. ..Appellant And 1. Pethupuram Anji Reddy and two others. ..Respondents The Court made the following Judgment: THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE B.CHANDRA KUMAR L.P.A.No.214 of 2001 Judgment: (Per Honourable Sri Justice A.Gopal Reddy) 1. This appeal under Clause 15 of the Letters Patent by the Insurance Company is directed against the common judgment dated 20-11-2000 passed in C.M.A.No.1393 of 1999 and batch whereby the learned single Judge dismissed the appeal preferred by the Insurance Company upholding the award passed by the Chairman, Motor Accidents Claims Tribunal-cum-Additional District Judge Medak at Sangareddy in O.P.No.111 of 1994 dated 01-03-1999. 2. The claimants, who are parents of the deceased— P.Srinivasa Reddy, filed the above O.P. seeking compensation of Rs.1 lakh for the death of their son in a motor accident occurred on 05-11- 1993 due to rash and negligent driving of the driver of the vehicle bearing No.AP11 T 4155 owned by third respondent and insured with the appellant—Insurance Company. 3. According to the claimants, the deceased engaged DCM Toyota Tempo, vehicle in question, to go to Shandy, loaded with vegetables, and while going along with the vegetables when the tempo reached the township of BDL factory due to rash and negligent driving of the driver of the vehicle, while crossing the speed breaker, the deceased fell down from the vehicle and received grievous injuries and died on the spot. The police registered a case against the driver of the vehicle. Hence, the above O.P. for claiming compensation apart from O.P.No.112 of 1994 filed under Section 140 of the Motor Vehicles Act, 1988 (for short “the Act”) seeking compensation of Rs.25,000/- for no-fault liability. 4. The owner of the vehicle remained ex-parte and Insurance Company filed a counter denying its liability contending that the deceased himself was responsible for the accident, as he was travelling in a tempo as unauthorised passenger and contrary to the terms of the policy. As the policy does not cover the risk of passengers, the Insurance Company is not liable for payment of compensation. 5. The 2nd respondent—mother of the deceased was examined as P.W.1 and two more witnesses were examined as P.Ws.2 and 3 and Exs.A1 to A5 were marked. R.W.1 was examined on behalf of the Insurance Company but no document has been marked. 6. The Tribunal by the impugned order dated 01-03-1999 allowed the O.P. awarding the compensation of Rs.91,872/- with interest at 12% per annum from the date of petition till the date of realisation and dismissed the O.P.112 of 1994 in view of awarding compensation in O.P.No.111 of 1994. 7. Aggrieved by the fixation of liability on the Insurance Company, it has filed C.M.A.No.1393 of 1999, which was disposed of along with other CMAs, since common issues were involved. The question, which fell for consideration before the learned single Judge was, “whether in the absence of any permission obtained under Section 170 of the Act the Insurance Company can question the quantum of compensation. The learned single Judge while following the judgments of the Supreme Court in CHINNAMMA GEORGE v. N.K.RAJU[1] and NEW INDIA ASSURANCE COMPANY v. SATPAL SINGH[2] dismissed the appeal. Questioning the correctness of the same the present appeal has been filed by the Insurance Company. 8. Sri T.Ramulu, learned Standing Counsel for the Insurance Company contends that since the liability of the Insurance Company is statutory liability, it is always entitled to question the award. In support of the same, he placed reliance on the judgment of the Supreme Court in MALLAWWA v. ORIENTAL INSURANCE CO. LTD.[3]. 9. On the other hand, learned counsel for the respondents/claimants supported the judgment but fairly conceded that since the accident occurred prior to amending the provisions of Section 147 by Act 54/1994, which came into force from 14-11-1994, the law declared by the Supreme Court in Mallawwa’s case (3 supra) applies to the facts of the present case. 10. It is settled law even if the Insurance Company has not obtained permission under Section 170 of the Act it can always resist the claim and can take all defences available under Section 149(2) of the Act. 11. The Supreme Court in Mallawwa’s case (3 supra) categorically held for the purpose of construing a provision like proviso (ii) to section 95(1) (b), the correct test to determine whether a passenger was carried for hire or reward, would be whether there has been a systematic carrying of passengers. Only if the vehicle is so used then that vehicle can be said to be a vehicle in which passengers are carried for hire or reward. It was further held that Section 95 of the 1939 Act will govern the cases which have arisen under the 1939 Act and as per the interpretation of Section 95(1)(b)(i) and the proviso, the gratuitous person carried in a goods vehicle either along with their goods or after paying fare or gratuitously will not be indemnified by the Insurance Company for the accident occurred prior to amendment Act 54/1994. 12. In view of the same, the order passed by the Motor Accidents Claims Tribunal as confirmed by the learned single Judge fastening the liability on the Insurance Company cannot be upheld. We accordingly set aside the impugned judgment dated 01-03-1999 made in O.P.No.111 of 1994 as confirmed in C.M.A.No.1393 of 1999 dated 20-11-2000 holding that the Insurance Company is not liable to indemnify the compensation awarded and the respondents/claimants are entitled to recover the compensation so awarded from the owner of the vehicle but not from the Insurance Company. However, the Insurance Company is at liberty to recover whatever amounts deposited by it as per the interim order passed by this Court from the owner of the vehicle alone. 13. The L.P.A. is accordingly allowed. No costs. _________________ A.GOPAL REDDY, J. __________________ B.CHANDRA KUMAR,J. 19-11-2009 Murthy [1] (2000) 4 SCC 130 [2] JT 1999 (9) SC 416 [3] 1999 ACJ 1