New India Assurance Co. Ltd. vs Hydrose and Others

J.B. Koshy, J.—Insurance company filed this appeal as the liability to pay compensation for the injuries of a pillion rider was cast on the Insurance company. It is the case of the appellant Insurance company that, in United India Insurance Co. Ltd., Shimla Vs. Tilak Singh and Others, . Honourable Supreme Court held that in an Act only Policy, rider and pillion rider are not covered and for covering pillion rider or a gratuitous passenger, there should be specific coverage. As held by the Constitution Bench of the Supreme Court in New India Assurance Co. Ltd. v. Jaya 2002 (1) KLT 596 (SC). merely because policy is comprehensive, the liability is not absolute for the Insurance company. Act only policy covers statutory liability. In certain comprehensive policies, apart from the statutory liability, only own damages are covered. In such circumstances, gratuitous passengers are not covered. Apart from the risk compulsorily to the coverage under the Motor Vehicles Act, coverage of other risk depends upon the terms of policy like any other commercial contract. So, there should be specific coverage as held by the Supreme Court in Amrit Lal Sood and Another Vs. Smt. Kaushalya Devi Thapar and Others, that it is the terms of the policy that has to be considered. Here it is not an Act only policy. It is a "B" policy and Section II(1)(i) of the conditions attached to the policy issued in this case shows that as per the terms and conditions of the policy, gratuitous occupants of the vehicle are covered. Clause (1) of Section II of the policy reads as follows:

Subject to the limits 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 motor cycle against all sums which the insured shall become legally liable to pay in respect of:

i) death or bodily injury to any person including person conveyed in or on the motor cycle provided such person is not carried for hire or reward.

ii) damage to property other than property belonging to the insured or held in trust by or in the custody or control of the insured or any member of the insured''s household are being conveyed by the motor cycle.

The above clearly states that the insurer has undertaken liability in respect of death or bodily injuries to any person including a person conveyed in or on the motor cycle provided such person is not carried for hire or reward. Here no limitation of liability is mentioned in the Schedule. In fact, specific coverage is provided for the risk of gratuitous passenger as per the conditions of policy regarding the coverage of risk due to the death or bodily injury to any person, provided, the person is not carried for hire or reward. In these circumstances, the Insurance company has by contract agreed to indemnify the insured of the risk of gratuitous passenger in the motor cycle. In the above circumstances, we are of the opinion that tribunal has correctly held that Insurance company is liable to pay the amount, and hence, this appeal is dismissed.