THE ORIENTAL INSURANCE CO. LTD., THR ITS MANAGER, NANDEDversusATAUR RAHEMAN ABDUL RAHEMAN AND ORS

2026:BHC-AUG:31769


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                         IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                    BENCH AT AURANGABAD

                                 2 FIRST APPEAL NO. 2816 OF 2018

                      The Oriental Insurance Co. Ltd., Thr Its Manager, Nanded
                                               VERSUS
                             Ataur Raheman Abdul Raheman and others
                                                 ...
                 Advocate for Appellant : Mr. Rameshwar F. Totala
                 Advocate for Respondent No.1 : Mr. Taher Ali Quadri a/w Mohd.
                 Rizwan h/f Mr. Zia-ul-Mustafa
                  Advocate for Respondent No.3 : Mr. R.C. Bora h/f Mr. A.R. Borulkar
                                                 …..

                                     CORAM : SANJAY A. DESHMUKH, J.
                                     DATED : 27th JULY, 2026

                 PER COURT :-


                 1.       This appeal has been preferred by the Insurance Company

                 of the auto-rickshaw involved in the accident with a jeep, challenging

                 the judgment and award dated 02.05.2017 passed by the learned

                 Motor Accident Claims Tribunal, Nanded, in M.A.C.P. No. 184 of

                 2012.



                 2.       The only disputed issue in this case is that the claimant was

                 travelling in the auto-rickshaw and accident took place of head-on

                 collision, in which he sustained 100% permanent disability.



                 3.       Learned advocate for the appellant Insurance Company

                 submitted that the policy of the auto rickshaw at Exh.37 does not
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cover the risk of the passenger. It is ‘act only’ policy and therefore,

the Insurance company cannot be held liable. At the most, owner of

the auto rickshaw can be held liable. He pointed out the terms and

conditions of the policy. He submitted that this aspect was not

considered by the Tribunal and liability was fastened upon the

Insurance company illegally. For that purpose, he is relying upon the

following authorities:-



I)        New India Assurance Company Ltd. vs. Meena Ashok

Ghumre and others, (First appeal No. 38 of 2011, decided on

20.07.2017), in which it is held that an insurance policy is a contract

between the insurer and the insured. The liability of the Insurance

Company cannot be extended beyond the terms and conditions of the

policy. If no additional premium has been paid to cover the risk of

passengers travelling in the vehicle, the Insurance Company cannot be

held liable to pay compensation in respect of such passengers.-



II)       New India Assurance Company Ltd. vs. Kamal wd/o

Gangaram Sapkal and others, first Appeal No. 3158 of 2018,

decided on 27.08.2024, in which it is held that where the offending

vehicle is covered only by an "Act Only Policy" and no additional

premium has been paid to cover the risk of passengers/occupants, the

Insurance Company is not liable to indemnify the owner or pay

compensation to such passengers. In such a case, the principle of "pay
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and recover" is also not applicable merely because the claimants would

otherwise be left without an effective remedy.



4.        Learned advocate for the appellant further submitted that

the issue is pending in the Hon’ble Supreme Court, as directed by the

Hon'ble Supreme Court in S.L.P. (C) No. 10928 of 2020 dated

25.8.2022. The question of liability of third party in case of ‘act only

policy’ was referred to the Larger Bench for decision. He therefore,

submitted that the Insurance Company is not liable to pay the

compensation. He prayed to allow the appeal and dismiss the claim

against the Insurance company.



5.        Leaned advocate for the respondent/claimant submitted

that the policy Exh.37 does not show exclusion of any other persons

like the passenger. He pointed out that 3+1 i.e. driver plus three

passenger was the sitting capacity of the auto rickshaw involved in

the accident. He submitted that for future medical treatment, no any

amount is awarded to the claimant. He therefore, prayed to dismiss

the appeal as the defence was not raised in the written statement that

the third party passenger is not liable to pay the compensation. He is

relying upon the following authorities:-



I)        Ramla vs. National Insurance Company Limited, AIR 2019
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SC 404, in which it is held that The Motor Vehicles Act is a beneficial

and welfare legislation. The duty of the Court is to award "just

compensation" under Section 168 of the Motor Vehicles Act, irrespective

of the amount claimed by the claimants. There is no restriction that

compensation cannot exceed the amount claimed in the claim petition, if

the evidence on record justifies a higher award.



II)       Nagappa vs. Gurudayal Singh and others, AIR 2003 SC

674, in which it is held that Section 168 empowers the Claims Tribunal

to make an award determining the amount of compensation which

appears to it to be just. Therefore, the only requirement for determining

the compensation is that it must be 'just'. There is no other limitation or

restriction on its power for awarding just compensation.



III)       Khenyei vs. New India Assurance Company Limited and

others, (2015) 9 SCC 273,        in which it is held that in a case of

composite negligence, the claimant is entitled to recover the entire

amount of compensation from any one or all of the joint tortfeasors, as

their liability is joint and several. Apportionment of compensation

between the joint tortfeasors, so far as the claimant is concerned, is

impermissible.



6.        For deciding the issue, Exh. 37, the copy of the insurance

policy of the offending auto-rickshaw, is required to be considered. A
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perusal of the liability clause in the policy shows that the basic third-

party (T.P.) premium is Rs.740. The policy further indicates that an

additional premium has been paid towards the liability of the driver,

conductor and cleaner under IMT. It is an admitted fact that the

offending vehicle is an auto-rickshaw used for carrying passengers.

Therefore, the inclusion of the conductor and cleaner under the said

policy does not appear to be consistent with the purpose for which

the auto-rickshaw is used. The seating capacity clause in Exh. 37

shows that the auto-rickshaw has a seating capacity of 1+3

passengers. In such circumstances, it is not explained how the

liability clause in the policy provides coverage for a conductor and

cleaner. The Insurance Company has not examined any of its officers

to explain or prove the said terms and conditions of the policy. This is

sufficient to draw an inference that the policy was not properly issued

by the Insurance Company.           On the contrary, the Insurance

Company has attempted to avoid its liability by contending that Exh.

37 is merely an "Act Only" policy. However, the policy does not

specifically clarify that it covers only the driver of the auto-rickshaw

and excludes all other occupants. Liability Clause No. 3, therefore,

appears to be ambiguous and misleading. In fact, there was no

necessity to provide coverage for a conductor and cleaner in the case

of an auto-rickshaw, as such categories of employees are not

ordinarily required for that class of vehicle. Therefore, having regard
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to the facts and circumstances of the case, it cannot be accepted that

Exh. 37 is merely an "Act Only" policy. Moreover, the Insurance

Company did not raise defence in its written statement that a

passenger such as the claimant was not covered under the said

policy, which is raised in this appeal. Such course of taking defence

of fact for the first time in the appeal is not permissible in law.


7.         The Insurance company is rightly held liable by the learned

Tribunal to pay the compensation jointly and severally in terms of the

insurance policy Exh.37. It must be noted that while issuing the

policy, there is tripartite agreement. Two parties are available for that

agreement and the third party is not present, to whom the

compensation is paid.      The Insurance Company has issued such

policy in deception by mentioning that the paid driver, conductor and

cleaner are covered for which the premium of Rs.250/- has been

charged.       The    Insurance    company      therefore,   cannot       take

disadvantage of the same. The appeal being devoid of merits and

deserves to be dismissed. For the above reasons, the laws laid in

the aforesaid cases are not helpful to the appellants and therefore it

is not relied upon.


8.         As far as the award of compensation to the claimant under

the head of future medical expenses is concerned, the claimant has

not adduced any evidence to establish that he requires any specific
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future medical treatment or the approximate expenditure likely to be

incurred for such treatment through an expert or the treating doctor.

Therefore, the claimant is not entitled to compensation under the

head of future medical expenses. Consequently, the appeal deserves

to be dismissed. The appeal is accordingly dismissed.


9.       The amount deposited in this court be paid to the claimant

with accrued interest thereon.



                                   (SANJAY A. DESHMUKH, J.)



10.      At this stage, the learned advocate for the appellant–

Insurance Company submits that the operation, implementation and

execution of this order may be stayed for a period of eight (08) weeks

from today. The learned advocate for the respondents strongly

opposes the said prayer.


11.         Considering the peculiar facts and circumstances of the

case, it would be appropriate to grant a stay for a period of four

weeks. Accordingly, the operation, implementation and execution of

this order shall remain stayed for a period of four weeks from today.




                                   (SANJAY A. DESHMUKH, J.)

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