Case: New India Assurance Co. Ltd Vs. Asha Rani & Others

Patnaik, C.J.I 1. Leave granted in SLP (C) Nos. 12040, 12369 and 13159 of 2002. 2. The question that arises in this batch of appeals is whether the insurer is liable to pay compensation to the dependants of the deceased passenger, while the deceased passenger was traveling in a goods vehicle and that vehicle met with an accident, on account of which the passenger died or suffered bodily injury. Originally, when the bunch of appeals was being heard, a Bench of this court by order dated 27th March, 2001, came to the conclusion that all the appeals fall in three categories - category (i) being those cases which are covered by the provisions of Motor Vehicles Act, 1939, category (ii) are the cases which are covered by the Motor Vehicles Act, 1988, prior to the amendment of 1994; category (iii) are those cases which fall after the amendment of 1994. When the matters were finally heard, a Bench delivered judgment in respect of cases under category (i) and (iii) above on 17th August, 2001. But so far as cases falling under category (ii) namely which are covered under the Motor Vehicles Act, 1988, prior to its amendment in 1994, it was felt that the decision of the court in Satpal Singhs case, (2000 (1) SCC 237 ), requires reconsideration by a larger Bench and that is how this bunch of appeals had been placed before a three judge Bench. This, in turn, necessitates interpretation of the provisions in Section 147 of the Motor Vehicles Act, 1988 (herein after referred to as the Act) as it stood prior to its amendment in 1994. It may be stated that the provisions of Section 147 of the Act correspond to Section 95 of the Motor Vehicles Act, 1939. 3. Before considering the rival submissions, it would be appropriate to notice the provisions of Sec. 95 of the Motor Vehicles Act, 1939, Sec. 147 of the Act as it stood prior to its amendment of 1994 and the provision as it stands now after the amendment of 1994. 4. Section 95 of the Motor Vehicles Act, 1939 reads as under: 95. 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 authorized insurer or by a co-operative society allowed under Section 108 to transact the business of an insurer, and (b) insures the person or classes of persons specified in the policy to the extent 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 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 Workmens 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 vehicles, or (c) if it is a goods vehicle, being carried in the vehicle, or (ii) 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, or (iii) 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) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely :- (a) where the vehicle is a goods vehicle, a limit of fifty thousand rupees in all, including the liabilities, if any, arising under the Workmens Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding six in number, being carried in the vehicle; (b) 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 - (i) in respect of persons other than passengers carried for hire or reward, a limit of fifty thousand rupees in all; (ii) in respect of passengers, - (1) a limit of fifty thousand rupees in all where the vehicle is registered to carry not more than thirty passengers; (2) a limit of seventy-five thousand rupees in all where the vehicle is registered to carry more than thirty but not more than sixty passengers; (3) a limit of one lakh rupees in all where the vehicle is registered to carry more than sixty passengers; and (4) subject to the limits aforesaid, ten thousand rupees for each individual passenger where the vehicle is a motor cab, and five thousand rupees for each individual passenger in any other case; (c) save as provided in clause (d), where the vehicle is a vehicle of any other class, the amount of liability incurred; (d) irrespective of the class of the vehicle, a limit of rupees two thousand in all in respect of damage to any property of a third party. (4) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases. (4-A) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period, of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribed. (5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person 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 person. Section 147 of the Motor Vehicles Act, 1988 prior to its amendment reads as under: 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 authorized 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 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 Workmens 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) 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 that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier. (3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases. (4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe. (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. Section 147 of The Motor Vehicles (Amendment) Act, 1994 reads as under: 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 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 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) ..... 5. Before the Tribunal, it was contended on behalf of the insurer that the insurer would not be liable to pay compensation for the death of the deceased who was going in a goods vehicle and met with death on account of an accident. The Tribunal, however, came to the conclusion that in view of the decision of the Supreme Court in the case of Mallawwa (Smt) and others vs. Oriental Insurance Co. Ltd. and others - 1999 (1) Supreme Court Cases 403, the insurer must be held liable and accordingly directed the compensation amount to be paid by the insurance company. The insurer carried an appeal to the High Court, but the High Court disposed of the appeal solely on the ground that the case is covered by the decision of this Court in the case of New India Assurance Company vs. Sat Pal Singh and others (2000) 1 Supreme Court Cases 237 . 6. Mr. Rawat, learned counsel appearing for the appellant contended that the decision in Mallawwas case on which the Tribunal relied upon is a decision interpreting the provisions of the old Act of 1939, and in fact that decision cannot be of any assistance. In view of the fact that Section 95(1) proviso (ii) of Motor Vehicles Act, 1939, is not the same as Section 147 (2) of the Motor Vehicles Act, 1988 as it stood prior to its amendment of 1994. Mr. Rawat contended that the decision of this Court in New India Assurance Co. vs. Satpal Singh is undoubtedly based on an interpretation of the proviso to Section 147(1) of the Motor Vehicles Act, 1988, but that decision cannot be held to be good law in as much as the Court has not borne in mind the relevant provisions as it stood nor has it considered the effect of the amendment that was brought about in 1994 as well as the purpose of such amendment. The learned counsel for the respondents on the other hand contended that the subsequent amendment that was brought about in the year 1994 is merely clarificatory in nature and does not bring about any substantive change and further the Act being a beneficial one, construction which is beneficial to the victims of the accident should be followed. Judged from that angle, the decision of this Court in New India Assurance Company vs. Sat Pal Singh and others (supra) does not require any re-consideration. 7. Under the Motor Vehicles Act of 1939 the requirements of policies and limits of liability had been provided in Section 95. Proviso to Section 95(1) of the said Act unequivocally states that the policy shall not be required in case of a good vehicle for passengers being carried in the said vehicle. In Mallawwa (Smt.) and others vs. Oriental Insurance Co. Ltd. and others (supra) while approving the earlier decision of the Court in Pushpabai Purshottam Udeshis case - (1977) 2 SCC 749, the Court construed the provisions of Section 95(1)(b) of the Motor Vehicles Act, 1939 and held that while the expression any person and the expression every motor vehicle are in wide terms but by proviso (ii) it restricts the generality of the main provision by confining the requirement to cases 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, therefore, the vehicle had to be vehicle in which passengers are carried. The Court further held that the goods vehicle cannot be held to be a passenger vehicle even if the vehicle was found to be used on some stray occasions for carrying passengers for hire or reward. Undoubtedly Mallawwas case (supra) was dealing with a situation under the Motor Vehicles Act, 1939. 8. In Satpals case (supra) the Court assumed that the provisions of Section 95(1) of Motor Vehicles Act 1939 are identical with Section 147(1) of the Motor Vehicles Act, 1988, as it stood prior to its amendment. But a careful scrutiny of the provisions would make it clear that prior to the amendment of 1994 it was not necessary for the insurer to insure against the owner of the goods or his authorised representative being carried in a goods vehicle. On an erroneous impression this Court came to the conclusion that the insurer would be liable to pay compensation in respect of the death or bodily injury caused to either the owner of the goods or his authorised representative when being carried in a goods vehicle the accident occurred. If the Motor Vehicles Amended Act of 1994 is examined, particularly Section 46 of Act 6 of 1991 by which expression injury to any person in the original Act stood substituted by the expression injury to any person including owner of the goods or his authorised representative carried in the vehicle the conclusion is irresistible that prior to the aforesaid amendment Act of 1994, even if widest interpretation is given to the expression to any person it will not cover either the owner of the goods or his authorised representative being carried in the vehicle. The objects and reasons of clause 46 also states that it seeks to amend Section 147 to include owner of the goods or his authorised representative carried in the vehicle for the purposes of liability under the Insurance Policy. It is no doubt true that sometimes the legislature amends the law by way of amplification and clarification of an inherent position which is there in the statute, but a plain meaning being given to the words used in the statute, as it stood prior to its amendment of 1994, and as it stands subsequent to its amendment in 1994 and bearing in mind the objects and reasons engrafted in the amended provisions referred to earlier, it is difficult for us to construe that the expression including owner of the goods or his authorised representative carried in the vehicle which was added to the pre-existed expression injury to any person is either clarificatory or amplification of the pre-existing statute. On the other hand it clearly demonstrates that the legislature wanted to bring within the sweep of Section 147 and making it compulsory for the insurer to insure even in case of a goods vehicle, the owner of the goods or his authorised representative being carried in a goods vehicle when that vehicle met with an accident and the owner of the goods or his representative either dies or suffers bodily injury.

Decision reasoning: 1[ds]On an erroneous impression this Court came to the conclusion that the insurer would be liable to pay compensation in respect of the death or bodily injury caused to either the owner of the goods or his authorised representative when being carried in a goods vehicle the accident occurred. If the Motor Vehicles Amended Act of 1994 is examined, particularly Section 46 of Act 6 of 1991 by which expression injury to any person in the original Act stood substituted by the expression injury to any person including owner of the goods or his authorised representative carried in the vehicle the conclusion is irresistible that prior to the aforesaid amendment Act of 1994, even if widest interpretation is given to the expression to any person it will not cover either the owner of the goods or his authorised representative being carried in the vehicleIt is no doubt true that sometimes the legislature amends the law by way of amplification and clarification of an inherent position which is there in the statute, but a plain meaning being given to the words used in the statute, as it stood prior to its amendment of 1994, and as it stands subsequent to its amendment in 1994 and bearing in mind the objects and reasons engrafted in the amended provisions referred to earlier, it is difficult for us to construe that the expression including owner of the goods or his authorised representative carried in the vehicle which was added to the pre-existed expression injury to any person is either clarificatory or amplification of the pre-existing statute. On the other hand it clearly demonstrates that the legislature wanted to bring within the sweep of Section 147 and making it compulsory for the insurer to insure even in case of a goods vehicle, the owner of the goods or his authorised representative being carried in a goods vehicle when that vehicle met with an accident and the owner of the goods or his representative either dies or suffers bodily injury.