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Thursday, November 22, 2012

whether in the case at hand the policy is an “Act Policy” or “Comprehensive/Package Policy”. There has been no discussion either by the tribunal or the High Court in this regard. True it is, before us Annexure P-1 has been filed which is a policy issued by the insurer. It only mentions the policy to be a comprehensive policy but we are inclined to think that there has to be a scanning of the terms of the entire policy to arrive at the conclusion whether it is really a package policy to cover the liability of an occupant in a car.” 14. We have quoted in extenso to reiterate the legal position. In the case at hand, the policy has not been brought on record. The learned counsel for the appellant-insurer would submit that it is an “Act Policy”. The learned counsel for the respondent would seriously dispute and submit that extra premium might have been paid or it may be a “Comprehensive/Package Policy”. When Certificate of Insurance is filed but the policy is not brought on record it only conveys that the vehicle is insured. The nature of policy cannot be discerned from the same. Thus, we are disposed to think that it would be appropriate to remit the matter to the tribunal to enable the insurer to produce the policy and grant liberty to the parties to file additional documents and also lead further evidence as advised, and we order accordingly. 15. It needs no special emphasis to state that whether the insurer would be liable or not would depend upon the nature of the policy when it is brought on record in a manner as required by law. 16. As far as quantum is concerned, though numbers of grounds were urged, yet the learned counsel for the parties did not really address on the same and, therefore, we do not think it necessary to dwell upon the same and treat it as just and proper compensation requiring no interference. 17. In the result, the appeals preferred by the insurer, namely, Oriental Insurance Company Limited are allowed to the extent indicated hereinabove and to that extent the award is set aside and the matter is remitted to the tribunal and the appeals preferred by the claimant for enhancement of compensation are dismissed. There shall be no order as to costs.


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                     CIVIL APPEAL NOS. 1345-1346 OF 2009

Oriental Insurance Company Ltd.              ...Appellant

                                   Versus
Surendra Nath Loomba and Others              ...Respondents

                                    WITH

                     CIVIL APPEAL NOS. 1347-1348 OF 2009

Surendra Nath Loomba                         ...Appellant

                                   Versus
Oriental Insurance Company Ltd. & ors.       ...Respondents



                               J U D G M E N T

Dipak Misra, J.

      In the present  batch  of  appeals,  two  preferred  by  the  Oriental
Insurance Company Limited and two preferred by claimant, the  assail  is  to
the common judgment passed by the High Court of Uttarakhand at  Nainital  in
A.O. No. 201 of 2003 and A.O. No.  284  of  2003  wherein  the  award  dated
19.5.2003 passed by the  Motor  Accidents  Claims  Tribunal,  Dehradun  (for
short ‘the tribunal’) in M.A.C.T. Petition No. 10 of 1999 was challenged  by
the insurer and the claimant from different spectrums.

2.    The facts which are requisite to  be  stated  are  that

  •  on  9.10.1998

about 4.30 a.m. claimant, Surendra Nath Loomba, was travelling in  a  Maruti
Esteem Car bearing Registration No. DL 8C-5096 belonging to  the  respondent
No. 3, Savita Matta, and driven by the respondent No.  2,  Raj  Loomba,  the
son of the claimant.

  •  Near the President Body-guard House, Rajpur Road,  the

vehicle dashed against a tree and

  •  in the accident the windscreen (front)  of

car was smashed and its pieces got inserted into the eyes  of  the  claimant
as a consequence of which he lost his both eyes. 
 As set forth, at the  time
of the accident  the claimant was working  as  a  Senior  Manager  in  Punjab
National Bank and his gross salary was Rs.18,949.86 per  month  and  various
perquisites were also attached to the service.
 Keeping in view his  salary
and other perquisites

  • he filed an  application  under  Section  166  of  the

Motor Vehicles Act, 1988 before  the  tribunal  putting  forth  a  claim  of
Rs.62,00,000/- with 18% interest as compensation.

3.    The  respondent  No.  2,  Raj  Loomba,  filed  his  written  statement
contending, inter alia, that  at  the  time  of  accident  the  vehicle  was
insured with the Oriental Insurance Company Limited and hence, it being  the
insurer was liable to pay the compensation.

4.    The insurance company resisted  the  claim  of  the  claimant  on  the
ground that

  • the driver of the vehicle did not have a valid driving  licence;

that the proceedings had been initiated in  a  collusive  manner;  and

  •  that

even if the accident as well as the injuries were  proven  the  insurer  was
not liable to indemnify the owner  as  the  claimant  was  travelling  as  a
gratuitous passenger.

5.    The tribunal on the basis of material brought on record came  to  hold
that as the insurer had issued Certificate of Insurance in  respect  of  the

  • vehicle in question and it was valid during the  period  when  the  accident

occurred, it was liable to pay the compensation;  that  the  opposite  party
No. 1 had a valid driving licence and the accident had  occurred  and  there
was no collusion between the parties; and that the victim  was  entitled  to
get a total sum of Rs.20,97,984/- towards compensation with 9% interest  per
annum regard being had to the pecuniary and  non-pecuniary  losses.   Be  it
noted, the tribunal, while computing the amount, had  deducted  certain  sum
under certain heads which need not be stated in detail.

6.    Aggrieved by the aforesaid award the insurance company preferred  A.O.
No. 201 of 2003 and the injured claimant preferred  A.O.  No.  284  of  2003
before the High Court.

  •  The  High  Court,  by  the  common  impugned  order,

reduced the amount of compensation to Rs.16,42,656/- and concurred with  the
conclusion arrived at by the tribunal as  regards  the  liability.  
 Thus,
the appeal preferred by the insurance company was allowed in  part  and  the
appeal preferred by the claimant was dismissed.  Hence,  the  present  batch
of appeals by the insurance company as well as by the claimant.

7.    First, we shall deal with  the  appeals  preferred  by  the  insurance
company

  • It is worth noting that  the  Certificate  of  Insurance  was  filed

before the tribunal which clearly showed that the vehicle was  insured  with
the  appellant-company.
 Dr.  Meera  Agarwal,  learned  counsel   for   the
appellant-insurer would submit  that
 it  was  only  an  “Act  Policy”  and,
therefore, the liability of the insurer does not arise.
She  has  commended
us to the decisions in United India Insurance  Co.  Ltd.,  Shimla  v.  Tilak
Singh  and  Others[1],  Oriental  Insurance  Company  Ltd.  v.  Jhuma   Saha
(Smt.)[2], Oriental Insurance Company Ltd. v. Sudhakaran K.V. and  others[3]
and New India Assurance Company Ltd. v. Sadanand Mukhi and others[4].

8.    Learned counsel for the respondents would  contend  that

  • whether  the

policy is an “Act Policy” or a  “Comprehensive/Package  Policy”  or  whether
any extra premium was paid to cover the passenger,  is  not  reflected  from
the Certificate of Insurance as the policy was  not  brought  on  record  by
tendering the same before the tribunal.

9.    In Tilak Singh (supra) this Court referred to the  concurring  opinion
rendered in a three-Judge Bench decision in New India Assurance Co. Ltd.  V.
Asha Rani[5] and ruled thus:-

           “In our view, although the observations made in Asha  Rani  case
           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 a gratuitous passenger.”




It is worthy to note in the said case the controversy related to  gratuitous
passenger carried in a private vehicle.

10.   In Jhuma Saha (Smt.) (supra) this Court has stated thus: -

           “The additional premium was not paid in respect  of  the  entire
           risk of death or bodily injury of the owner of the vehicle.   If
           that be so, Section 147 (b) of the Motor Vehicles Act  which  in
           no uncertain terms covers a risk of a third party only would  be
           attracted in the present case.”

11.    In  National  Insurance  Co.  Ltd.  v.  Laxmi  Narain  Dhut[6]  after
elaborately referring to the analysis made in Asha Rani  (supra)  the  Bench
ruled thus:-

           “Section 149 is part of Chapter XI which is titled “Insurance of
           Motor Vehicles against Third-Party Risks”.  A significant factor
           which needs to be  noticed  is  that  there  is  no  contractual
           relation between the insurance company and the third party.  The
           liabilities and the obligations relatable to third  parties  are
           created only by fiction of Sections 147 and 149 of the Act”.




  • In the said case  it  has  been  opined  that  although  the  statute  is  a

beneficial one qua the third party but that benefit cannot  be  extended  to
the owner of the offending vehicle.  
The said principle  was  reiterated  in
Oriental Insurance Company Ltd. v. Meena Variyal  and  Other[7],  Sudhakaran
K. V. (supra) and Sadanand Mukhi (supra).


12.   It is apt to note here that this Court in Bhagyalakshmi and others  v.
United Insurance Company Limited and another[8], after dealing with  various
facets and considering the authorities in Amrit  Lal  Sood  and  Another  v.
Kaushalya  Devi  Thapar  and  Others[9],  Asha  Rani  (supra),  Tilak  Singh
(supra), Jhuma Saha (supra),  Sudhakaran  K.  V.  and  Others  (supra),  has
observed thus :-

           “Before this Court, however, the nature of policies  which  came
           up for consideration were Act policies. This Court did not  deal
           with a package policy. If the Tariff Advisory Committee seeks to
           enforce its decision in regard to coverage of  third-party  risk
           which would include  all  persons  including  occupants  of  the
           vehicle and the  insurer  having  entered  into  a  contract  of
           insurance in relation thereto, we are of the  opinion  that  the
           matter may require a deeper scrutiny.”



13.    Recently  this  Bench  in  National   Insurance   Company   Ltd.   v.
Balakrishnan  &  Another[10],  after  referring  to  various  decisions  and
copiously to the decision in Bhagyalakshmi (supra), held  that 

  •  there  is  a

distinction  between  “Act  Policy”  and   “Comprehensive/Package   Policy”.
Thereafter, the Bench took note of a decision rendered by

  • Delhi  High  Court

in  Yashpal  Luthra  and  Anr.  V.  United  India  Insurance  Co.  Ltd.  and
Another[11] wherein the High Court had referred to the circulars  issued  by
the  Tariff  Advisory  Committee  (TAC)   and   Insurance   Regulatory   and
Development Authority  (IRDA).  

  • This  Court  referred  to  the  portion  of

circulars dated 16.11.2009 and 3.12.2009 which had been  reproduced  by  the
High Court and eventually held as follows: -

           “19.  It is extremely important to  note  here  that  till  31st
           December, 2006 Tariff Advisory Committee and thereafter from 1st
           January, 2007,  IRDA  functioned  as  the  statutory  regulatory
           authorities and they are entitled to fix the tariff as  well  as
           the terms and  conditions  of  the  policies  by  all  insurance
           companies.  
The High Court  had  issued  notice  to  the  Tariff
           Advisory Committee and the IRDA to explain the factual  position
           as regards the liability of the insurance companies  in  respect
           of an occupant  in  a  private  car  under  the  “comprehensive/
           package policy”. 
 Before the High Court the Competent  Authority
           of IRDA had stated that on 2nd June, 1986  the  Tariff  Advisory
           Committee had issued instructions to all the insurance companies
           to cover the pillion rider of  a  scooter/motorcycle  under  the
           “comprehensive policy” and the said position continues to be  in
           vogue till date.  
He had also admitted  that  the  comprehensive
           policy is presently called a package policy.  
It is the admitted
           position, as the decision  would  show,  the  earlier  circulars
           dated 18th March, 1978 and 2nd June, 1986 continue to  be  valid
           and effective and all insurance companies are bound to  pay  the
           compensation in respect of the liability towards an occupant  in
           a car under the “comprehensive/package policy”  irrespective  of
           the terms and conditions contained in the policy.  
The competent
           authority of the IRDA was also examined before  the  High  Court
           who stated that the circulars dated 18th  March,  1978  and  2nd
           June, 1986 of the Tariff Advisory Committee were incorporated in
           the Indian Motor Tariff effective from 1st July, 2002  and  they
           continue to be operative and binding on the insurance companies.
            Because of the aforesaid factual position the  circulars  dated
           16th November 2009  and  3rd  December,  2009,  that  have  been
           reproduced hereinabove, were issued.

           20.   It is also worthy  to  note  that  the  High  Court  after
           referring to individual circulars issued  by  various  insurance
           companies and eventually stated thus:-

                 “In  view  of  the  aforesaid,  it  is   clear   that   the
                 comprehensive/package policy of  a  two  wheeler  covers  a
                 pillion  rider  and  comprehensive/  package  policy  of  a
                 private car covers the occupants and where the  vehicle  is
                 covered under a comprehensive/package policy, there  is  no
                 need for Motor Accident Claims  Tribunal  to  go  into  the
                 question  whether  the  Insurance  Company  is  liable   to
                 compensate for the death or injury of a pillion rider on  a
                 two-wheeler or the occupants in a private car. In fact,  in
                 view of the TAC’s directives and those of the IRDA, such  a
                 plea was not permissible and ought not to have been  raised
                 as, for instance, it was done in the present case.”


           21.   In view of the aforesaid  factual  position  there  is  no
           scintilla of doubt that a “comprehensive/package  policy”  would
           cover the liability of the insurer for payment  of  compensation
           for the occupant in a car.  There  is  no  cavil  that  an  “Act
           Policy”   stands    on    a    different    footing    than    a
           “Comprehensive/Package Policy”.  As the circulars have made  the
           position very  clear  and  the  IRDA,  which  is  presently  the
           statutory  authority,  has  commanded  the  insurance  companies
           stating  that  a  “Comprehensive/Package  Policy”   covers   the
           liability, there cannot be any dispute in that regard.  
We  may
           hasten to clarify that the earlier pronouncements were  rendered
           in respect of the “Act Policy” which admittedly cannot  cover  a
           third party risk of an occupant in a car.
 But, if the policy is
           a  “Comprehensive/Package  Policy”,  the  liability   would   be
           covered.  
These  aspects  were  not  noticed  in  the  case  of
           Bhagyalakshmi (supra) and, therefore, the matter was referred to
           a larger Bench.
 We are disposed  to  think  that  there  is  no
           necessity to refer the present matter to a larger Bench  as  the
           IRDA, which is presently the statutory authority, has  clarified
           the position by issuing circulars which have been reproduced  in
           the judgment by the Delhi High Court and we have also reproduced
           the same.

           22.   In view of the aforesaid legal position the question  that
           emerges for consideration is
whether in the  case  at  hand  the
           policy is an “Act  Policy”  or  “Comprehensive/Package  Policy”.
           There has been no discussion either by the tribunal or the  High
           Court in this regard.
True it is, before us  Annexure  P-1  has
           been filed which is a policy issued by  the  insurer.  
It  only
           mentions the policy to be a  comprehensive  policy  but  we  are
           inclined to think that there has to be a scanning of  the  terms
           of the entire policy to arrive at the conclusion whether  it  is
           really a package policy to cover the liability of an occupant in
           a car.”

14.   We have quoted in extenso to reiterate the  legal  position.   In  the
case at hand, the policy has  not  been  brought  on  record.   The  learned
counsel for the appellant-insurer would submit that it is an  “Act  Policy”.
The learned counsel for the respondent would seriously  dispute  and  submit
that   extra   premium   might   have   been   paid   or   it   may   be   a
“Comprehensive/Package Policy”.

  • When Certificate of Insurance is filed  but

the policy is not brought on record it only  conveys  that  the  vehicle  is
insured.  The nature of policy cannot be discerned from the same.  Thus,  we
are disposed to think that it would be appropriate to remit  the  matter  to
the tribunal to enable the insurer to produce the policy and  grant  liberty
to the parties to file additional documents and also lead  further  evidence
as advised, and we order accordingly.

15.   It needs no special emphasis to state that whether the  insurer  would
be liable or not would depend upon the nature  of  the  policy  when  it  is
brought on record in a manner as required by law.

16.   As far as quantum is concerned, though numbers of grounds were  urged,
yet the learned counsel for the parties did not really address on  the  same
and, therefore, we do not think it necessary to  dwell  upon  the  same  and
treat it as just and proper compensation requiring no interference.

17.   In the result, the appeals preferred by the insurer, namely,  Oriental
Insurance Company Limited are allowed to the  extent  indicated  hereinabove
and to that extent the award is set aside and the matter is remitted to  the
tribunal and the appeals  preferred  by  the  claimant  for  enhancement  of
compensation are dismissed.  There shall be no order as to costs.


                                                             ……………………………….J.
                                                       [K. S. Radhakrishnan]



New Delhi;                      ……………………………….J.
November 20, 2012                    [Dipak Misra]
-----------------------
[1]    (2006) 4 SCC 404
[2]    (2007) 9 SCC 263
[3]    (2008) 7 SCC 428
[4]    (2009) 2 SCC 417

[5]    (2003) 2 SCC 223
[6]    (2007) 3 SCC 700
[7]    (2007) 5 SCC 428
[8]    (2009) 7 SCC 148
[9]    (1998) 3 SCC 744
[10]   Civil Appeal No.8163 of 2012 (Arising out of SLP(C) No. 1232/2012)
decided on 20.11.2012

[11]   2011 ACJ 1415



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