Siyaram @ Jaisiyaram vs Smt. Devkuwar and Others

G.D. Saxena, J.—This appeal u/s 173 of the Motor Vehicles Act 1988 has been preferred by the owner/appellant of the jeep involved in accident against an Award dated 24th December 2004 in Claim Case No. 25/2004 passed by the Fifth Additional Member of the Motor Accident Claims Tribunal, Gwalior, thereby exonerating the Insurance Company on the ground that the jeep was insured under ''Act Policy'' and therefore the Insurance company was not held liable to indemnify the liability on behalf of the insured for death of the travelling passenger under third part risk. Undisputed facts of the case are that on 22nd May 2004, in night at about 1 a.m., deceased Radhavallabh, aged 45 years, who was earning monthly salary of Rs. 8,000/- as Lineman posted in MPSEB Dabra, was going accompanying his friend Parwat Singh in a jeep bearing registration No. MP06-B/6579 from Gwalior to his house situated at Dabra. On the way of Arru Crossing towards Dabra, due to rash and negligent driving the jeep owned by the appellant collided with a tree as a result, Radhavallabh received serious injuries and died on the spot. The F.I.R. was lodged in the Police Station Dabra and after investigation, the charge-sheet was filed before the criminal court, having jurisdiction. The claim petition, filed by the claimants of the deceased was decided with an Award of Rs. 9,45,500/- passed by the tribunal in favour of the claimants and against the driver and owner of the offending jeep on the principles of joint and several liability. However, while issuing such directions, the Insurance Company was exonerated from indemnifying the liability on behalf of the owner of the vehicle involved in accident, hence, this appeal.

The submission put forth on behalf of the owner-appellant is that since the jeep involved in accident was insured by the appellant for third party under ''Act Policy'' with the insurance company and the passengers travelling in the jeep involved in accident including deceased Radhavallabh who died in an accident being third party to the insurance policy, the insurance company was liable to indemnify the negligent acts of the driver and consequently under vicarious liability of the owner of vehicle to satisfy the award amount on his behalf as well as driver of the vehicle involved in accident to the claimants of the deceased passenger. Therefore, it is prayed that by allowing the appeal, the direction to the extent of exoneration of the Insurance Company from the liability of satisfying the award on behalf of the insured may be set aside and instead the Insurance Company may be directed to satisfy the award amount to the claimants of the deceased.

The respondents/claimants did not challenge the contents of the Award nor did they seek any enhancement of compensation. The appellant/owner of the offending vehicle remained ex parte before the tribunal, in such circumstance, he could not prove his case by producing cogent evidence that the jeep involved in accident was sold prior to the date of accident and therefore the appellant-owner can never be made liable to pay the award amount to the claimants of the deceased.

Heard the learned counsel for the parties at sufficient length. Also perused the materials and the law covering the issues.

In view of the submissions made by the learned counsel on either side, the question that now arises for consideration is:-

Whether, the Insurance Company under the terms of policy or under statutory liability is obliged to indemnify the liability to satisfy the award on behalf of the insured in case of pillion rider of a two wheeler or gratuitous passengers travelling in four wheelers by would be a third party within the meaning of Section 147 of the Act?

At this juncture, this court may usefully quote relevant provisions of the Act for ready reference. They are as under:-

Definitions.-In this Chapter-

(a) xx xx xx xx

(b) xx xx xx xx

(c) xx xx xx xx

(d) xx xx xx xx

(e) xx xx xx xx

(f) xx xx xx xx

(g) "Third party" includes the Government.

Necessity for insurance against third party risk.-(1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.

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 authorised 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 [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) 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 Workmen''s 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.

In the light of the aforesaid reproduced definitions of sections, learned counsel appearing on behalf of the owner/appellant contends that on bare reading of the chapter XI "Insurance of Motor Vehicles against Third Party Risks" it appears that in Section 145 "Definition "(g)" third party" includes the Government. He submits that the word third party does not carry the exhaustive meaning except that the Government. So it denotes that in reference to third party means first party will be insurer, the insurance company, the second will be the insured in whose favour the insurance policy is issued as per provision of law and the third party shall be all/any person for whom the policy of insurance is issued. Inviting attention of this court on the provisions as contained in sub-section 1(b)(i) and (ii) to Section 147 of the Motor Vehicle Act 1988, learned counsel submits that above provisions are of wide aptitude and so the wordings contained therein must also be attributed having regard to the context in which they are used, i.e., "third party" and will include 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. According to him, these words cannot be interpreted in narrow sense. He states that the insurance against third party risk for using the motor vehicle in a public place by The persons or that any person, as the case may be, is necessary and u/s 147 of Act, the insurance company is bound under the cover of insurance policy to indemnify the liability towards third party. The expression ''third party'' in a policy of insurance cannot be construed to mean when the policy does not say so. Eventually, the insurer or the Insurance company, being one party to the contract, under the statutory liability u/s 147 of the Motor Vehicle Act 1988 is bound to indemnify the liability of the insured to satisfy the claims of the third party claims arise out of the rash and negligent act of the insured or the person authorised by him. Learned counsel has supported his contentions by placing reliance on the decision in the case of New India Assurance Company Vs. Shri Satpal Singh and Others, wherein the Hon. Apex Court observed ''with reference to the provisions in Motor Vehicle Act 1939 and the provisions in the Act 1988, particularly Section 147 in the following wordings:-

Under the 1988 Act an insurance policy covering third party risk was not required to exclude gratuitous passengers in a vehicle no matter that the vehicle is of any type or class. It was also held that the earlier decisions of this court render under the 1939 Act vis-�-vis gratuitous passengers were of no avail while considering the liability of the insurance company in respect of any accident which occurred or would occur after the 1988 Act came in force.

On the basis of the aforesaid arguments, it is contended by the learned counsel for the appellant that the deceased who was going in a jeep, owned by the appellant and insured with the respondent No. 8-the Oriental Insurance Company was third party to the insurance. This being so, the insurance company under Sections 147 and 149 of the Motor Vehicles Act 1988 is bound under the cover of insurance policy to indemnify the liability towards third party risk. It is therefore prayed that by allowing the appeal, the Insurance Company may be directed to indemnify the award amount payable to the claimants of the deceased-passenger travelling in the jeep.

Having heard the learned counsel for the parties, the only point that arises for decision is whether the policy held by the insured covers the risk in respect of third party.

Section 145(g) defines the ''third party'' thus: ''third party'' will include the Government. It is trite, the above definition simply states that ''third party'' includes the Government. The term ''third party'' must necessarily refer to a party other than those who are parties to the contract of insurance. If a party to the contract of insurance is regarded as a third party within the meaning of that term, it would offend the natural and ordinary meaning of the term ''third party''. It is trite, the insurer is one party while the insured is the other party for a contract of insurance. Therefore, it is unreasonable to construe that any person other than the said two parties would also be a third party. In reaching this conclusion, this court may derive support from the fact how the term ''third party'' is understood in legal parlance. In Stroud''s Judicial Dictionary, which explains third party risks in the following words:

Third Party Risks Road Traffic Act 1930 (C 13), Section 35, Road Traffic Act, 1972 (C 20), Section 143] connotes that the insurer is one party to the contract, that the policy-holder is another party, and that the claims made by others in respect of the negligent use of the car may be naturally described as claims by third parties Digby v. General Accident Fire and Life Insurance Corporation (1943) A.C. 121.

In Black''s Law Dictionary seventh edition the terms, ''third party'' and ''third party beneficiary'' are defined thus:

Third party-One who is not a party to a law suit, agreement, or other transaction but who is somehow involved in the transaction; someone other than the principal parties. Also termed outside party.

Third party beneficiary-A person who, though not a party to a contract, stands to benefit from the contract''s performance. For example, if Ann and Bob agree to a contract under which Bob will render some performance to Chris, then Chris is a third party beneficiary.

So, the expression "third party" needs to be determined in each case with reference to the terms of the insurance policy. If the risk of a person is covered under the contract of insurance, then he/she would be the third party regarding whom the insurance cover can be used and the insurer will be liable to indemnify such a person or his legal representatives/dependents. However, the person, who is not covered under terms of the insurance policy cannot be treated as "third party" within the meaning of the provisions of Section 147 and Section 149 of the Motor Vehicles Act, 1988.

Alternatively, it needs to be noticed that Section 147 enjoins that the policy issued by the authorised insurer should insure the person specified in the policy against any liability which may be incurred by him in respect of death of or bodily injury to any person specified in Sub-section (1)(b)(i) and (ii). The critical expression "against any liability which may be incurred by him" occurring in section 147(1)(b)(i) undoubtedly shows that the policy of the insurance which the owner obtained from the authorised insurer is meant to insure the owner or the holder of the policy against any liability that he may incur qua third parties whether such liability be on account of death or bodily injury to any such person or damage to any property owned by him due to the accident involving motor vehicle/vehicles. Subsection (1)(b)(ii) of Section 147 further requires that the policy must also insure the owner against the death of or bodily injury caused by or arising but of the use of the vehicle if it is public service vehicle used in a public place. Therefore, it is clear that if no liability arises against the holder of the policy, the same cannot arise against the Insurance Company.

It is amply clear that Sub-clause (2) carves out an exception in respect of the liability of the insurer, which is enumerated in Sub-clause (1) of Section 149. The immunity available to the insurer is under special circumstances. It is also manifest that the insurer has a duty to satisfy the award against persons insured in respect of third party risk. Obviously, a question is as to whether gratuitous passengers or passengers allowed to travel in a goods vehicle for hire or reward can be regarded as "third parties" vis-�-vis, the insurer. They are not the persons, who are totally unconnected with the insurance contract. They travel in the insured vehicle with connivance or consent of the owner or representative of the owner, viz., the authorised driver. So, their rights stem from their oral or written agreement, as the case may be, with the owner. In other words, they are vicariously concerned with the insurance agreement through the owner. They are not third parties as such. The gratuitous passenger cannot be regarded as third party only because he is not signatory to the insurance contract. For this reason, the insurer would be placed outside the purview of Section 149(2) of the Motor Vehicles Act. Hence, the insurer cannot be held liable even for the purpose of satisfying the award in respect of the gratuitous passengers, who are not third parties qua the owner (insured). The necessary corollary would be that in such a case, the learned M.A.C.T. cannot give direction to indemnify the gratuitous passenger or the dependents of such a passenger, who was travelling in the goods vehicle.

Chapter X of the Act makes insurance of motor vehicles compulsory but to some extent only, in view of the danger they pose in public places to human beings, so that the insured may not go without compensation altogether. Generally speaking there are two kinds of policies pertaining to the risk of injury to the person or death, on account of the use of a motor vehicle. The first is an accident insurance policy, where the proposer is the insured and the other person being the subject-matter of the insurance and for the policy to be legal, the insurer must have an insurable interest in the other person and if a claim arises, the sum insured is not received by the other person, but by the insured. The contract here is not one of indemnity in the strict sense, as the sum insured is a predetermined sum. The second kind of policy is a motor insurance policy, where the motor vehicle is the subject-matter of the insurance and if a claim in respect of death or personal injury to third party arises, the insured is indemnified and the third party receives the compensation from the insurer. In such a case, the amount of compensation is not pre-determined, but, is assessed by the courts u/s 147 of the Act, the insurance policy is required to insure risks to a person or classes of persons to the extent specified in the insurance policy. In this case, the insured has a policy in respect of third party risk only, but under the said policy no premium was paid for passengers and, therefore, the police does not cover risk of the passengers and the Insurance Company is not liable to pay compensation for the injuries suffered by such passengers or on the death of such passengers, as the case may be.

Now, it would be relevant to refer some other decisions highlighting on the point as under:-

(i) In National Insurance Co. Ltd. Vs. Bommithi Subbhayamma and Others, , the Hon. Apex Court had occasion to consider the award rendered by the Motor Accident Claims Tribunal, in which the deceased was travelling in a lorry as a gratuitous passenger. The Apex Court held that the insurer was not liable to pay the compensation to gratuitous passenger travelling in the goods vehicle. The Apex Court categorically directed that the claimants would be entitled to recover the amount of compensation granted in their favour by the Motor Accident Claims Tribunal from the owner of the vehicle. This case may be usefully referred to say that the view of the Apex Court is that in each case the insurer need not be directed to satisfy the award and then proceed to recover the amount from the insured (owner).

(ii) In United India Insurance Co. Ltd., Shimla Vs. Tilak Singh and Others, the Hon. Apex Court referred to the concurring opinion rendered in a three-Judges Bench decision in New India Assurance Co. Ltd. v. Asha Rani 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 that in the said case the controversy related to gratuitous passenger carried in private vehicle.

(iii) In Oriental Insurance Co. Ltd. Vs. Smt. Jhuma Saha and Others, the controversy related to fastening of liability on the insurer for the death of the owner of a registered vehicle, Maruti van. The Court observed that the accident did not involve any other motor vehicle than the one which he was driving and as the liability of the insurer Company is to the extent of indemnification of the insured against the respondent or an injured person, a third person or in respect of damages of property, the insured cannot be fastened with any liability under the provisions of the Motor Vehicles Act, and, therefore, the question of the insurer being liable to indemnify the insured does not arise. Thereafter, the Bench referred to the decision in Dhanraj Vs. New India Assurance Co. Ltd. and Another, and ruled 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.

(iv) In National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, , after elaborately referring to the analysis made in Asha Rani (supra), the Hon. Apex Court stated 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, yet that benefit cannot be extended to the owner of the offending vehicle.

(v) In The Oriental Insurance Company Limited Vs. Meena Variyal and Others, , the Hon. Apex Court held that the insurance company was not liable to indemnify owner of the car vehicle involved in the accident because, the deceased, who was Regional Manager of the Company and owner of the vehicle, was himself driving the vehicle of the company and the accident occurred due to his own negligence. The Apex Court observed:

We must say that one would have expected the high Court to apply its mind to the question arising, in a better manner and to specifically answer the question that arose for decision in the case. For instance, we may observe that it has not reversed the finding of the Tribunal that the deceased was himself driving the vehicle. Then, what was the position? The position was that a Regional Manager of the Company, which was owner of the vehicle, was himself driving the vehicle of the Company and during the course of it, he died in an accident, whether the accident occurred due to his negligence or otherwise. It appears to us that mere going by some decision or other, without appreciating the facts in a given case, in the light of the law, if any, declared by this Court, does not lead a court or Tribunal to a correct conclusion in the normal course.

It is difficult to apply the ratio of this decision to a case not involving a third party. The whole protection provided by Chapter XII of the Act is against third party risk. Therefore, in a case where a person is not a third party within the meaning of the Act, the insurance company cannot be made automatically liable merely by resorting to the Swaran Singh (supra) ratio.

29............ In these circumstances, we hold that the appellant Insurance Company is not liable to indemnify the insured and is also not obliged to satisfy the award of the Tribunal/Court and then have recourse to the insured, the owner of the vehicle. The High Court committed was in error in modifying the award of the Tribunal in the context.

(vi) In Bhav Singh Vs. Smt. Savirani and Others, , the Full bench of this court observes as follows:-

Sub Section (5) of Section 147 of the Act, however provides that notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance u/s 147 of the Act shall be liable to indemnify a 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 classes of persons. Thus if the policy of insurance covers any liability in addition to the liability u/s 147(1) of the Act, the insurer will be liability to indemnify the insured in case of any liability not because of the provisions of sub section (1) of section 147 but because of the terms and conditions of contract of insurance between the insurer and the insured. Therefore, if the contract of insurance provides for a liability to a passenger or to an employee other than the liabilities provided under sub section (1) of the Section 147 of the Act, the insurer would be liable to indemnify the insured against such liability.

(vii) In Oriental Insurance Co. Ltd. Vs. Sudhakaran K.V. and Others, the Hon. Apex Court while dealing with the issue whether a pillion rider on a scooter would be a third party within the meaning of Section 147 of the Act, after referring to number of authorities, stated thus:-

The contract of insurance did not cover the owner of the vehicle, certainly not the pillion-rider. The deceased was travelling as a passenger, stricto sensu may not be as a gratuitous passenger as in a given case she may not (sic) be a member of the family, a friend or other relative. In the sense of the term which is used in common parlance, she might not be even a passenger. In view of the terms of the contract of insurance, however, she would not be covered thereby.

The law which emerges from the said decisions, is: (i) the liability of the insurance company in a case of this nature is not extended to a pillion-rider of the motor vehicle unless the requisite amount of premium is paid for covering his/her risk; (ii) the legal obligation arising u/s 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion-rider; (iii) the pillion rider in a two-wheeler was not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle.

(viii) In Bhagyalakshmi and Others Vs. United Insurance Co. Ltd. and Another etc., the Hon. Apex court held:-

The policy in question is a package policy. The contract of insurance if given its face value covers the risk not only of a third party but also of persons travelling in the car including the owner thereof. The question is as to whether the policy in question is a comprehensive policy or only an Act policy.

(ix) However, the aforesaid question dealt with in the case of Bhagyalakshmi and others (supra) was further aptly considered by Hon. Apex Court while commenting in respect of covering third party risk in National Insurance Company Ltd. Vs. Balakrishnan and Another, as under:-

Thus, it is quite vivid that the Bench had made a distinction between the "Act policy" and "comprehensive policy/package policy". The crux of the matter is what would be the liability of the insurer if the policy is a comprehensive/package policy". We are absolutely conscious that the matter has been referred to a larger Bench, but, as is evident, the Bench has also observed that it would depend upon the view of the Tariff Advisory Committee pertaining to enforcement of its decision to cover the liability of an occupant in a vehicle in a comprehensive/package policy" regard being had to the contract of insurance.

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 from 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 and Others Vs. United Insurance Co. Ltd. and Another etc., 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.

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.

In view of the aforesaid analysis, we think it apposite to set aside the finding of the High Court and the tribunal as regards the liability of the insurer and remit the matter to the tribunal to scrutinize the policy in a proper perspective and, if necessary, by taking additional evidence and if the conclusion is arrived at that the policy in question is a "Comprehensive/Package Policy", the liability would be fastened on the insurer. As far as other findings recorded by the tribunal and affirmed by the High Court are concerned, they remain undisturbed.

(x) In Manager, National Insurance Company Ltd. Vs. Saju P. Paul and Another, , the Hon. Apex court has reproduced the observations made in Asha Rani''s case at para 12 of the decision.

In view of the changes in the relevant provisions in the 1988 Act vis-�-vis the 1939 Act, we are of the opinion that the meaning of the words ''any person'' must also be attributed having regard to the context in which they have been used i.e. ''a third party''. Keeping in view the provisions of the 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor.

Furthermore, sub-clause (i) of clause (b) of sub-section (1) of Section 147 speaks of liability which may be incurred by the owner of a vehicle in respect of 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, whereas sub-clause (ii) thereof deals with liability which may be incurred by the owner of a vehicle 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.

An owner of a passenger-carrying vehicle must pay premium for covering the risks of the passengers. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid. But if the ratio of this Court''s decision in New India Assurance Co. v. Satpal Singh is taken to its logical conclusion, although for such passengers, the owner of a goods carriage need not take out an insurance policy, they would be deemed to have been covered under the policy where for even no premium is required to be paid.

(xi) In Oriental Insurance Company Ltd. Vs. Surendra Nath Loomba and Others, , Hon. Apex Court has further taken note of the observations made in the case of Tilak Singh in following manner:-

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 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.

(xii) In further respective paragraphs 10, 11 and 12 of Oriental Insurance Co. Ltd. Vs. Smt. Jhuma Saha and Others, and in National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, are quoted as under:-

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.

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.

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.

Thus, a careful reading of these decisions clearly shows that the liability of the insurer is limited, as indicated in Section 95 of the Act, but it is open to the insured to make payment of additional higher premium and get higher risk covered in respect of third party also. The above judgments of Hon. the Apex Court are authorities to state that unless higher premium is paid, the higher liability of the insurer than the liability of the insured cannot be assumed. There is no further need to dilate this aspect any more because of the discussions made supra. Hence, after considering all the relevant aspects of the matter and having regard to the case laws referred to herein-above, this court comes to analysis the legal issues as follows:-

(i) If the injured/deceased being third party was travelling in vehicle involved in accident and no premium for passengers as gratuitous or otherwise travelling in insured vehicle is paid in that case, the insurance company, under cover of ''Act policy'', cannot be held responsible to indemnify the award passed against the owner of the vehicle involved the insured.

(ii) In case the insurance company has recovered any additional premium for passengers travelling in vehicle or pillion rider on two wheelers, under comprehensive/full insurance cover from the insured or/and the vehicle is fully or compressive insured by the insurance company, certainly it is bound to indemnify the liability of the owner of the vehicle insured and responsible for payment of award amount to injured or deceased travelling in vehicle and/or as pillion rider travelling on two wheeler vehicle to their claimants.

(iii) In case the four wheeler vehicle or two wheeler vehicle in/on which the injured or deceased was travelling, received head and collision with another vehicle, on negligent act of the driver of other offending vehicle or composite/contributory negligence of the other vehicle involved then the insurance company of the opposite/offending vehicle is to indemnify the responsibility of the insured of other vehicle to compensate the injury/death of third party u/s 147 Motor Vehicle Act.

Now, coming to the factual aspects of this present case, it appears from the evidence on record that at the time of accident, the deceased was travelling from Gwalior to Dabra in a Jeep involved in accident. The driver of the jeep was driving the vehicle rashly which resulted in dashing against the tree. In such accident, the deceased travelling in jeep received and succumbed to injuries on the spot. On perusal of the cover-note of the policy (Ex./D1), it is found that the same is proved by witness V.C. Dholkar (DW-1) who stated that the jeep was owned by the appellant and was insured during the period from 7th May 2004 to 6th May 2005. The policy further indicated charging of the amount of Rs. 700/- against act liability, Rs. 100/- against personal accident for owner and driver, Rs. 25/- against legal liability of driver and Rs. 70/- against any extra loading, total amounting to Rs. 895/- with specification and limitation that no own damage will be entertained and that the policy covers use of the vehicle for any purpose of use other than : (b) carriage of goods (n) other than captors or personal luggage (c) organized racing (d) pockmarking (e) speed testing etc. It is further noted that though the vehicle was insured for third party risk or under Act policy but no premium was recovered for risk of the passengers whether gratuitous or otherwise. As has been set out hereinabove, the law on this subject is very much clear. The 8th respondent-Oriental Insurance company will, therefore, not be liable to reimburse the appellant-owner. Eventually, on considering the legal as well as factual aspects of the present case, the appeal filed by the owner of the vehicle insured fails. The learned tribunal rightly concluded that being the Act Policy of the vehicle and since no premium for passengers travelling was recovered, the insurance company was not liable to indemnify the award on behalf of the insured to the claimants. As a result, this appeal filed by the owner is dismissed with cost. Counsel fee Rs. 1000/-, if certified, be added in the costs.