Holding

The insurer is not liable for the claimant’s compensation because the claimant was a gratuitous passenger not covered under the policy, and the High Court’s construction of Section 147(1) was erroneous.

Summary

The claimant, Saju P. Paul, a heavy‑vehicle driver employed by another company, was travelling as a "spare driver" in the cabin of a goods vehicle that met with an accident in 1993. The vehicle owner had taken a motor‑vehicle insurance policy covering only the driver and cleaner, not a spare driver. The Motor Accident Claims Tribunal awarded compensation to the claimant, holding the insurer jointly liable with the owner. The Kerala High Court upheld the award, interpreting the proviso to Section 147(1) of the Motor Vehicles Act, 1988 to cover any liability, including that of a gratuitous passenger. The Supreme Court held that the claimant was a gratuitous passenger not covered by the policy, that the High Court mis‑read Section 147, and that the insurer could not be directed to pay and then recover from the owner. Consequently, the appeal of the insurer was allowed, the High Court judgment set aside, and the insurer discharged from liability, with the owner remaining liable for the award.

Issues considered

The scope of the proviso to Section 147(1) of the Motor Vehicles Act, 1988 with respect to liability for a spare driver who is a gratuitous passenger.
Whether an insurance policy covering only driver and cleaner extends to a spare driver in a goods vehicle.
Whether the insurer can be directed to satisfy the award and subsequently recover the amount from the vehicle owner.
The applicability of the pre‑1994 version of Section 147 and its amendment by the Motor Vehicles (Amendment) Act, 1994.
The permissibility of invoking Article 142 of the Constitution to create a liability where none exists.

Legislation cited

Subjects

Motor Vehicles ActSection 147insurance liabilitygratuitous passengerspare driverthird‑party insuranceWorkmen's Compensation ActArticle 142Civil appeal

Judgment

[2013] 2 S.C.R. 1 2 SUPREME COURT REPORTS [2013] 2 S.C.R.

MANAGER, NATIONAL INSURANCE CO. LTD. A A employment and overlooked the fact that the claimant
v. was not in any manner engaged on the vehicle that met
SAJU P. PAUL AND ANOTHER with an accident, but he was employed as a driver in
(Civil Appeal No. 5 of 2013) another vehicle. The insured (owner of the vehicle) got
JANUARY 3, 2013 insurance cover in respect of the subject goods vehicle
B B for driver and cleaner only and not for any other
[R.M. LODHA AND ANIL R. DAVE, JJ.] employee. Therefore, second driver or for that purpose
'spare driver' was not covered under the policy. As a
Motor Vehicles Act, 1988 - s. 147 - Motor accident of matter of law, the claimant did not cease to be a
goods vehicle - Injury to the claimant, who was travelling in gratuitous passenger though he claimed that he was a
the vehicle and claiming to be a spare driver - Liability of the C C spare driver. [Para 16] [14-G-H; 15-A-C]
insurance company - Held: Insurance company not liable to
New India Assurance Co. Ltd. v. Asha Rani and Ors.
pay compensation - Spare driver was not covered under the (2003) 2 SCC 223:2002 (4) Suppl. SCR 543; National
policy - He was admittedly not driving the vehicle nor was Insurance Co. Ltd. v. Cholleti Bharatamma and Ors. (2008)
engaged for driving the said vehicle - Thus he was a gratuitous
1 SCC 423:2007 (11) SCR 531; Oriental Insurance Co. Ltd.
passenger - In the facts of the case, Insurance Company v. Devireddy Konda Reddy and Ors. (2003) 2 SCC 339:2003
D D
directed to pay the compensation and later to recover the (1) SCR 537 - relied on.
same from the owner-insured.
New India Assurance Company v. Satpal Singh and Ors.
The question for consideration in the present appeal
(2000) 1 SCC 237:1999 (5) Suppl. SCR 149 - referred to.
was as to whether the insurance company was liable to
pay compensation for the bodily injury caused to the 1.3 The High Court misconstrued the proviso
E E following sub-section (1) of s. 147 of the Act. What is
claimant who was travelling in a goods vehicle as a spare
driver, though he was employed as a driver in another contemplated by proviso to s.147 (1) is that the policy
vehicle owned by the vehicle owner-insured. shall not be required to cover liability in respect of death
or bodily injury sustained by an employee arising out of
Allowing the appeal, the Court and in the course of his employment other than a liability
HELD: 1.1 The impugned judgment is founded on F F arising under the Workmen's Compensation Act, 1923.
misconstruction of s. 147 of the Motor Vehicles Act, 1988. The claimant was admittedly not driving the vehicle nor
The High Court was wrong in holding that the insurance he was engaged in driving the said vehicle. Merely
company was liable to indemnify the owner of the vehicle because he was travelling in a cabin, would not make his
and pay the compensation to the claimant [Para 18] [15-F] case different from any other gratuitous passenger. [Para
1.2 The High Court committed grave error in holding G G 17] [15-D-E]
that s.147(1)(b)(i) takes within its fold any liability which 2. In the peculiar facts of the present case, a direction
may be incurred by the insurer in respect of the death or is issued to the insurance company to first satisfy the
bodily injury to any person. The High Court erroneously awarded amount in favour of the claimant and recover
assumed that the claimant died in the course of the same from the owner of the vehicle. The insurance
1 H H company has already deposited the entire awarded
[2013] 2 S.C.R. 1 2 SUPREME COURT REPORTS [2013] 2 S.C.R.

MANAGER, NATIONAL INSURANCE CO. LTD. A A employment and overlooked the fact that the claimant
v. was not in any manner engaged on the vehicle that met
SAJU P. PAUL AND ANOTHER with an accident, but he was employed as a driver in
(Civil Appeal No. 5 of 2013) another vehicle. The insured (owner of the vehicle) got
JANUARY 3, 2013 insurance cover in respect of the subject goods vehicle
B B for driver and cleaner only and not for any other
[R.M. LODHA AND ANIL R. DAVE, JJ.] employee. Therefore, second driver or for that purpose
'spare driver' was not covered under the policy. As a
Motor Vehicles Act, 1988 - s. 147 - Motor accident of matter of law, the claimant did not cease to be a
goods vehicle - Injury to the claimant, who was travelling in gratuitous passenger though he claimed that he was a
the vehicle and claiming to be a spare driver - Liability of the C C spare driver. [Para 16] [14-G-H; 15-A-C]
insurance company - Held: Insurance company not liable to
New India Assurance Co. Ltd. v. Asha Rani and Ors.
pay compensation - Spare driver was not covered under the (2003) 2 SCC 223:2002 (4) Suppl. SCR 543; National
policy - He was admittedly not driving the vehicle nor was Insurance Co. Ltd. v. Cholleti Bharatamma and Ors. (2008)
engaged for driving the said vehicle - Thus he was a gratuitous
1 SCC 423:2007 (11) SCR 531; Oriental Insurance Co. Ltd.
passenger - In the facts of the case, Insurance Company v. Devireddy Konda Reddy and Ors. (2003) 2 SCC 339:2003
D D
directed to pay the compensation and later to recover the (1) SCR 537 - relied on.
same from the owner-insured.
New India Assurance Company v. Satpal Singh and Ors.
The question for consideration in the present appeal
(2000) 1 SCC 237:1999 (5) Suppl. SCR 149 - referred to.
was as to whether the insurance company was liable to
pay compensation for the bodily injury caused to the 1.3 The High Court misconstrued the proviso
E E following sub-section (1) of s. 147 of the Act. What is
claimant who was travelling in a goods vehicle as a spare
driver, though he was employed as a driver in another contemplated by proviso to s.147 (1) is that the policy
vehicle owned by the vehicle owner-insured. shall not be required to cover liability in respect of death
or bodily injury sustained by an employee arising out of
Allowing the appeal, the Court and in the course of his employment other than a liability
HELD: 1.1 The impugned judgment is founded on F F arising under the Workmen's Compensation Act, 1923.
misconstruction of s. 147 of the Motor Vehicles Act, 1988. The claimant was admittedly not driving the vehicle nor
The High Court was wrong in holding that the insurance he was engaged in driving the said vehicle. Merely
company was liable to indemnify the owner of the vehicle because he was travelling in a cabin, would not make his
and pay the compensation to the claimant [Para 18] [15-F] case different from any other gratuitous passenger. [Para
1.2 The High Court committed grave error in holding G G 17] [15-D-E]
that s.147(1)(b)(i) takes within its fold any liability which 2. In the peculiar facts of the present case, a direction
may be incurred by the insurer in respect of the death or is issued to the insurance company to first satisfy the
bodily injury to any person. The High Court erroneously awarded amount in favour of the claimant and recover
assumed that the claimant died in the course of the same from the owner of the vehicle. The insurance
1 H H company has already deposited the entire awarded
MANAGER, NATIONAL INSURANCE CO. LTD. v. 3 4 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER
amount pursuant to the order of this Court passed on A A 2. The appellant, insurance company, is in appeal by
01.08.2011 and the said amount has been invested in a special leave against the judgment and order dated 23.03.2011
fixed deposit account. The claimant is allowed to whereby the Division Bench of the Kerala High Court allowed
withdraw the amount deposited by the insurance the review petition and reviewed its order dated 09.11.2010
company before this Court, along-with accrued interest. and held that the insurance company was liable to pay
The insurance company thereafter may recover the B B compensation in sum of Rs. 2,88,000/- with 9% interest
amount so paid, from the owner-respondent No. 2 by thereon to the claimant awarded by the Motor Accident Claims
following the procedure as laid down by this Court in the Tribunal in its award dated 23.07.2002.
case of *Challa Bharathamma case . [Paras 19 and 25] 3. The question of law that arises in this appeal is as to
[15-G; 19-E-F] whether having regard to the provisions of the Motor Vehicles
Act, 1988 (for short, ‘1988 Act’), the insurance company is liable
National Insurance Co. Ltd. v. Baljit Kaur and Ors. (2004) C C
to pay compensation for the bodily injury caused to the claimant
2 SCC 1:2004 (1) SCR 274 ; *National Insurance Co. Ltd. v.
who was travelling in a goods vehicle as a spare driver though
Challa Bharathamma and Ors. (2004) 8 SCC 517: 2004 (4)
he was employed as a driver in another vehicle owned by the
Suppl. SCR 587; National Insurance Company Limited v. owner of the vehicle under the policy of insurance.
Kaushalaya Devi and Ors. (2008) 8 SCC 246: 2008 (8) SCR
500 - relied on. 4. The above question arises in this way. Saju P. Paul,
D D claimant (Respondent No. 1), was a heavy vehicle driver. He
Case Law Reference: was employed with Respondent No. 2 as a driver in some other
1999 (5) Suppl. SCR 149 referred to Para 11 vehicle. On 16.10.1993, he was travelling in a goods vehicle
relied on Para 12 bearing No. KL-2A/3411 in the cabin. The goods vehicle was
being driven by one Jayakumar. In that vehicle, many other
2003 (1) SCR 537 relied on Para 14.1 E E persons were also travelling. At Nilackal, due to rash and
2007 (11 ) SCR 531 relied on Para 15 negligent driving of the driver Jayakumar, the goods vehicle
2004 (1) SCR 274 relied on Para 20 capsized. As a result of which the claimant suffered fracture and
injuries. The claimant remained under treatment for quite some
2004 (4) Suppl. SCR 587 relied on Para 21 time and the injuries that he sustained in the accident rendered
2008 (8) SCR 500 relied on Para 22 F F him permanently disabled. In the claim petition filed by him
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5 before the Motor Accident Claims Tribunal, Pathanamthitta (for
of 2013. short, ‘the Tribunal’), he claimed compensation of Rs.
3,00,000/-. The owner and insurer were impleaded as
From the Judgment & Order dated 23.03.2011 of the High respondent no. 2 and respondent no. 3 respectively in the claim
Court of Kerala at Ernakulam in R.P. No. 106 of 2010 in petition.
M.A.C.No. 713 of 2003. G G
5. The insurer filed its written statement and opposed the
M.K. Dua for the Appellant. claimant’s claim insofar as it was concerned. The insurer set
K. Radhakrishnan, Kiran Bhardwaj for the Respondents. up the plea that the vehicle was a goods vehicle and the risk
The Judgment of the Court was delivered by of the passengers travelling in the goods vehicle was not
covered under the policy of insurance. It was stated in the
R.M. LODHA, J. 1. Leave granted. H H written statement that nearly 50 unauthorised passengers were
MANAGER, NATIONAL INSURANCE CO. LTD. v. 3 4 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER
amount pursuant to the order of this Court passed on A A 2. The appellant, insurance company, is in appeal by
01.08.2011 and the said amount has been invested in a special leave against the judgment and order dated 23.03.2011
fixed deposit account. The claimant is allowed to whereby the Division Bench of the Kerala High Court allowed
withdraw the amount deposited by the insurance the review petition and reviewed its order dated 09.11.2010
company before this Court, along-with accrued interest. and held that the insurance company was liable to pay
The insurance company thereafter may recover the B B compensation in sum of Rs. 2,88,000/- with 9% interest
amount so paid, from the owner-respondent No. 2 by thereon to the claimant awarded by the Motor Accident Claims
following the procedure as laid down by this Court in the Tribunal in its award dated 23.07.2002.
case of *Challa Bharathamma case . [Paras 19 and 25] 3. The question of law that arises in this appeal is as to
[15-G; 19-E-F] whether having regard to the provisions of the Motor Vehicles
Act, 1988 (for short, ‘1988 Act’), the insurance company is liable
National Insurance Co. Ltd. v. Baljit Kaur and Ors. (2004) C C
to pay compensation for the bodily injury caused to the claimant
2 SCC 1:2004 (1) SCR 274 ; *National Insurance Co. Ltd. v.
who was travelling in a goods vehicle as a spare driver though
Challa Bharathamma and Ors. (2004) 8 SCC 517: 2004 (4)
he was employed as a driver in another vehicle owned by the
Suppl. SCR 587; National Insurance Company Limited v. owner of the vehicle under the policy of insurance.
Kaushalaya Devi and Ors. (2008) 8 SCC 246: 2008 (8) SCR
500 - relied on. 4. The above question arises in this way. Saju P. Paul,
D D claimant (Respondent No. 1), was a heavy vehicle driver. He
Case Law Reference: was employed with Respondent No. 2 as a driver in some other
1999 (5) Suppl. SCR 149 referred to Para 11 vehicle. On 16.10.1993, he was travelling in a goods vehicle
relied on Para 12 bearing No. KL-2A/3411 in the cabin. The goods vehicle was
being driven by one Jayakumar. In that vehicle, many other
2003 (1) SCR 537 relied on Para 14.1 E E persons were also travelling. At Nilackal, due to rash and
2007 (11 ) SCR 531 relied on Para 15 negligent driving of the driver Jayakumar, the goods vehicle
2004 (1) SCR 274 relied on Para 20 capsized. As a result of which the claimant suffered fracture and
injuries. The claimant remained under treatment for quite some
2004 (4) Suppl. SCR 587 relied on Para 21 time and the injuries that he sustained in the accident rendered
2008 (8) SCR 500 relied on Para 22 F F him permanently disabled. In the claim petition filed by him
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5 before the Motor Accident Claims Tribunal, Pathanamthitta (for
of 2013. short, ‘the Tribunal’), he claimed compensation of Rs.
3,00,000/-. The owner and insurer were impleaded as
From the Judgment & Order dated 23.03.2011 of the High respondent no. 2 and respondent no. 3 respectively in the claim
Court of Kerala at Ernakulam in R.P. No. 106 of 2010 in petition.
M.A.C.No. 713 of 2003. G G
5. The insurer filed its written statement and opposed the
M.K. Dua for the Appellant. claimant’s claim insofar as it was concerned. The insurer set
K. Radhakrishnan, Kiran Bhardwaj for the Respondents. up the plea that the vehicle was a goods vehicle and the risk
The Judgment of the Court was delivered by of the passengers travelling in the goods vehicle was not
covered under the policy of insurance. It was stated in the
R.M. LODHA, J. 1. Leave granted. H H written statement that nearly 50 unauthorised passengers were
MANAGER, NATIONAL INSURANCE CO. LTD. v. 5 6 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
travelling at the time of accident; they were not traveling in the A A Therefore, the argument of the insurance company that no
vehicle in pursuance of the contract of employment, such as goods were being carried in the vehicle at the time of
loading and unloading nor they were travelling as the owner of accident and therefore, the petitioner was only a gratuitous
the goods or the representative of the owner of the goods and passenger cannot be countenanced at all. Even otherwise,
hence the insurer could not be saddled with any liability. the first proviso to Section147(1) will cast a liability on the
6. The Tribunal, after recording the evidence and hearing B insurer to indemnify the owner in respect of the injury
B
the parties, on 23.07.2002, passed an award in favour of the sustained by the employee of the insured arising out of
claimant holding that he was entitled to a total compensation and in the course of his employment.”
of Rs. 3,00,000/-. The liability of the insurer was made joint and 9. It is appropriate to quote Section 147 of the 1988 Act
several with the owner and driver. as was obtaining on the date of accident, i.e., 16.10.1993,
7. Being not satisfied with the award of the Tribunal, the C which reads as follows :
C
insurer filed an appeal before the Kerala High Court. The “147. Requirements of policies and limits of liability.—
Division Bench of that Court by relying upon decisions of this (1) In order to comply with the requirements of this
Court in New India Assurance Co. Ltd. v. Asha Rani and Chapter, a policy of insurance must be a policy which—
Others 1 and National Insurance Co. Ltd. v. Cholleti (a) is issued by a person who is an authorized insurer; and\
Bharatamma and Others2 allowed the appeal of the insurer
D D (b) insures the person or classes of persons specified in
vide judgment and order dated 09.11.2010. The Division Bench
held that insurer was not liable as gratuitous passengers the policy to the extent specified in sub-section (2)—
travelling in a goods vehicle were not covered under the policy (i) against any liability which may be incurred by him in
and the claimant shall be entitled to recover the awarded respect of the death of or bodily injury to any person or
amount from the owner or driver of the vehicle. damage to any property of a third party caused by or
8. The claimant sought review of the order dated E E arising out of the use of the vehicle in a public place;
09.11.2010 and, as noted above, by the impugned order that (ii) against the death of or bodily injury to any passenger
review application has been allowed. While allowing the review of a public service vehicle caused by or arising out of the
application, the Division Bench held as under: use of the vehicle in a public place:
“It has already been noticed that the petitioner was Provided that a policy shall not be required—
admittedly a spare driver of the vehicle. It may be true that F F
(i) to cover liability in respect of the death, arising out of
he was not driving the vehicle at the relevant point of time; and in the course of his employment, of the employee of
but he was directed to go to the worksite by his employer a person insured by the policy or in respect of bodily injury
as a spare driver in the vehicle. Therefore, by no stretch sustained by such an employee arising out of and in the
of imagination, it can be said that the petitioner was not course of his employment other than a liability arising
travelling in the vehicle in the course of his employment and G G under the Workmen’s Compensation Act, 1923 (8 of
as directed by his employer. Section 147(1)(b)(i) takes 1923), in respect of the death of, or bodily injury to, any
within its fold any liability which may be incurred by the such employee—
insurer in respect of the death or bodily injury to any person.
(a) engaged in driving the vehicle, or
1. (2003) 2 SCC 223.
(b) if it is a public service vehicle engaged as a conductor
2. (2008) 1 SCC 423 H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 5 6 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
travelling at the time of accident; they were not traveling in the A A Therefore, the argument of the insurance company that no
vehicle in pursuance of the contract of employment, such as goods were being carried in the vehicle at the time of
loading and unloading nor they were travelling as the owner of accident and therefore, the petitioner was only a gratuitous
the goods or the representative of the owner of the goods and passenger cannot be countenanced at all. Even otherwise,
hence the insurer could not be saddled with any liability. the first proviso to Section147(1) will cast a liability on the
6. The Tribunal, after recording the evidence and hearing B insurer to indemnify the owner in respect of the injury
B
the parties, on 23.07.2002, passed an award in favour of the sustained by the employee of the insured arising out of
claimant holding that he was entitled to a total compensation and in the course of his employment.”
of Rs. 3,00,000/-. The liability of the insurer was made joint and 9. It is appropriate to quote Section 147 of the 1988 Act
several with the owner and driver. as was obtaining on the date of accident, i.e., 16.10.1993,
7. Being not satisfied with the award of the Tribunal, the C which reads as follows :
C
insurer filed an appeal before the Kerala High Court. The “147. Requirements of policies and limits of liability.—
Division Bench of that Court by relying upon decisions of this (1) In order to comply with the requirements of this
Court in New India Assurance Co. Ltd. v. Asha Rani and Chapter, a policy of insurance must be a policy which—
Others 1 and National Insurance Co. Ltd. v. Cholleti (a) is issued by a person who is an authorized insurer; and\
Bharatamma and Others2 allowed the appeal of the insurer
D D (b) insures the person or classes of persons specified in
vide judgment and order dated 09.11.2010. The Division Bench
held that insurer was not liable as gratuitous passengers the policy to the extent specified in sub-section (2)—
travelling in a goods vehicle were not covered under the policy (i) against any liability which may be incurred by him in
and the claimant shall be entitled to recover the awarded respect of the death of or bodily injury to any person or
amount from the owner or driver of the vehicle. damage to any property of a third party caused by or
8. The claimant sought review of the order dated E E arising out of the use of the vehicle in a public place;
09.11.2010 and, as noted above, by the impugned order that (ii) against the death of or bodily injury to any passenger
review application has been allowed. While allowing the review of a public service vehicle caused by or arising out of the
application, the Division Bench held as under: use of the vehicle in a public place:
“It has already been noticed that the petitioner was Provided that a policy shall not be required—
admittedly a spare driver of the vehicle. It may be true that F F
(i) to cover liability in respect of the death, arising out of
he was not driving the vehicle at the relevant point of time; and in the course of his employment, of the employee of
but he was directed to go to the worksite by his employer a person insured by the policy or in respect of bodily injury
as a spare driver in the vehicle. Therefore, by no stretch sustained by such an employee arising out of and in the
of imagination, it can be said that the petitioner was not course of his employment other than a liability arising
travelling in the vehicle in the course of his employment and G G under the Workmen’s Compensation Act, 1923 (8 of
as directed by his employer. Section 147(1)(b)(i) takes 1923), in respect of the death of, or bodily injury to, any
within its fold any liability which may be incurred by the such employee—
insurer in respect of the death or bodily injury to any person.
(a) engaged in driving the vehicle, or
1. (2003) 2 SCC 223.
(b) if it is a public service vehicle engaged as a conductor
2. (2008) 1 SCC 423 H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 7 8 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
of the vehicle or in examining tickets on the vehicle, or A A not followed by a policy of insurance within the prescribed
(c) if it is a goods carriage, being carried in the vehicle, time, the insurer shall, within seven days of the expiry of
or the period of the validity of the cover note, notify the fact
to the registering authority in whose records the vehicle to
(ii) to cover any contractual liability. which the cover note relates has been registered or to such
Explanation.—For the removal of doubts, it is hereby other authority as the State Government may prescribe.
declared that the death of or bodily injury to any person or B B
(5) Notwithstanding anything contained in any law for the
damage to any property of a third party shall be deemed time being in force, an insurer issuing a policy of insurance
to have been caused by or to have arisen out of, the use under this section shall be liable to indemnify the person
of a vehicle in a public place notwithstanding that the or classes of persons specified in the policy in respect of
person who is dead or injured or the property which is any liability which the policy purports to cover in the case
damaged was not in a public place at the time of the C C
of that person or those classes of persons.”
accident, if the act or omission which led to the accident
occurred in a public place. 10. By the Motor Vehicles (Amendment) Act, 1994 (for
short, ‘1994 Amendment Act’), Section 147 came to be
(2) Subject to the proviso to sub-section (1), a policy of amended. The expression “including owner of the goods or his
insurance referred to in sub-section (1), shall cover any authorised representative carried in the vehicle” was added in
liability incurred in respect of any accident, up to the D D
Section 147. The amended Section 147 has been considered
following limits, namely— by this Court in various decisions, some of which we intend to
(a) save as provided in clause (b), the amount of liability refer a little later.
incurred; 11. In New India Assurance Company v. Satpal Singh
(b) in respect of damage to any property of a third party, a and Others3, this Court with reference to the provisions in the
limit of rupees six thousand: E E Motor Vehicles Act, 1939 and the provisions in 1988 Act,
Provided that any policy of insurance issued with any particularly Section 147, held that under the 1988 Act an
limited liability and in force, immediately before the insurance policy covering third party risk was not required to
commencement of this Act, shall continue to be effective exclude gratuitous passengers in a vehicle no matter that the
for a period of four months after such commencement or vehicle is of any type or class. It was also held that the earlier
till the date of expiry of such policy whichever is earlier. F F decisions of this Court rendered under the 1939 Act vis-à-vis
gratuitous passengers were of no avail while considering the
(3) A policy shall be of no effect for the purposes of this
liability of the insurance company in respect of any accident
Chapter unless and until there is issued by the insurer in
which occurred or would occur after the 1988 Act came into
favour of the person by whom the policy is effected a
force.
certificate of insurance in the prescribed form and
containing the prescribed particulars of any condition G G 12. The correctness of the judgment in Satpal Singh3 was
subject to which the policy is issued and of any other doubted, inter alia, in Asha Rani1 . It was felt that Satpal Singh3
prescribed matters; and different forms, particulars and needed re-look insofar as cases covered under the 1988 Act
matters may be prescribed in different cases. prior to its amendment in 1994 were concerned. A three-Judge
Bench in Asha Rani1 noticed Section 147 of the 1988 Act prior
(4) Where a cover note issued by the insurer under the
provisions of this Chapter or the rules made thereunder is H H 3. (2000) 1 SCC 237.
MANAGER, NATIONAL INSURANCE CO. LTD. v. 7 8 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
of the vehicle or in examining tickets on the vehicle, or A A not followed by a policy of insurance within the prescribed
(c) if it is a goods carriage, being carried in the vehicle, time, the insurer shall, within seven days of the expiry of
or the period of the validity of the cover note, notify the fact
to the registering authority in whose records the vehicle to
(ii) to cover any contractual liability. which the cover note relates has been registered or to such
Explanation.—For the removal of doubts, it is hereby other authority as the State Government may prescribe.
declared that the death of or bodily injury to any person or B B
(5) Notwithstanding anything contained in any law for the
damage to any property of a third party shall be deemed time being in force, an insurer issuing a policy of insurance
to have been caused by or to have arisen out of, the use under this section shall be liable to indemnify the person
of a vehicle in a public place notwithstanding that the or classes of persons specified in the policy in respect of
person who is dead or injured or the property which is any liability which the policy purports to cover in the case
damaged was not in a public place at the time of the C C
of that person or those classes of persons.”
accident, if the act or omission which led to the accident
occurred in a public place. 10. By the Motor Vehicles (Amendment) Act, 1994 (for
short, ‘1994 Amendment Act’), Section 147 came to be
(2) Subject to the proviso to sub-section (1), a policy of amended. The expression “including owner of the goods or his
insurance referred to in sub-section (1), shall cover any authorised representative carried in the vehicle” was added in
liability incurred in respect of any accident, up to the D D
Section 147. The amended Section 147 has been considered
following limits, namely— by this Court in various decisions, some of which we intend to
(a) save as provided in clause (b), the amount of liability refer a little later.
incurred; 11. In New India Assurance Company v. Satpal Singh
(b) in respect of damage to any property of a third party, a and Others3, this Court with reference to the provisions in the
limit of rupees six thousand: E E Motor Vehicles Act, 1939 and the provisions in 1988 Act,
Provided that any policy of insurance issued with any particularly Section 147, held that under the 1988 Act an
limited liability and in force, immediately before the insurance policy covering third party risk was not required to
commencement of this Act, shall continue to be effective exclude gratuitous passengers in a vehicle no matter that the
for a period of four months after such commencement or vehicle is of any type or class. It was also held that the earlier
till the date of expiry of such policy whichever is earlier. F F decisions of this Court rendered under the 1939 Act vis-à-vis
gratuitous passengers were of no avail while considering the
(3) A policy shall be of no effect for the purposes of this
liability of the insurance company in respect of any accident
Chapter unless and until there is issued by the insurer in
which occurred or would occur after the 1988 Act came into
favour of the person by whom the policy is effected a
force.
certificate of insurance in the prescribed form and
containing the prescribed particulars of any condition G G 12. The correctness of the judgment in Satpal Singh3 was
subject to which the policy is issued and of any other doubted, inter alia, in Asha Rani1 . It was felt that Satpal Singh3
prescribed matters; and different forms, particulars and needed re-look insofar as cases covered under the 1988 Act
matters may be prescribed in different cases. prior to its amendment in 1994 were concerned. A three-Judge
Bench in Asha Rani1 noticed Section 147 of the 1988 Act prior
(4) Where a cover note issued by the insurer under the
provisions of this Chapter or the rules made thereunder is H H 3. (2000) 1 SCC 237.
MANAGER, NATIONAL INSURANCE CO. LTD. v. 9 10 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]

to its amendment in 1994 and after its amendment in 1994 and A A authorised representative carried in the vehicle” which was
held in paragraph 9 of the Report (Pgs. 231-232) as follows : added to the pre-existing expression “injury to any person”
“In Satpal case [(2000) 1 SCC 237] the Court assumed is either clarificatory or amplification of the pre-existing
that the provisions of Section 95(1) of the Motor Vehicles statute. On the other hand it clearly demonstrates that the
Act, 1939 are identical with Section 147(1) of the Motor legislature wanted to bring within the sweep of Section 147
Vehicles Act, 1988, as it stood prior to its amendment. But B B and making it compulsory for the insurer to insure even in
a careful scrutiny of the provisions would make it clear that case of a goods vehicle, the owner of the goods or his
prior to the amendment of 1994 it was not necessary for authorised representative being carried in a goods vehicle
the insurer to insure against the owner of the goods or his when that vehicle met with an accident and the owner of
authorised representative being carried in a goods vehicle. the goods or his representative either dies or suffers bodily
On an erroneous impression this Court came to the injury. The judgment of this Court in Satpal case therefore
C C must be held to have not been correctly decided and the
conclusion that the insurer would be liable to pay
compensation in respect of the death or bodily injury impugned judgment of the Tribunal as well as that of the
caused to either the owner of the goods or his authorised High Court accordingly are set aside and these appeals
representative when being carried in a goods vehicle the are allowed. It is held that the insurer will not be liable for
accident occurred. If the Motor Vehicles Amendment Act paying compensation to the owner of the goods or his
of 1994 is examined, particularly Section 46, by which the D D authorised representative on being carried in a goods
expression “injury to any person” in the original Act stood vehicle when that vehicle meets with an accident and the
substituted by the expression “injury to any person including owner of the goods or his representative dies or suffers
owner of the goods or his authorised representative any bodily injury.”
carried in the vehicle”, the conclusion is irresistible that 13. S.B. Sinha, J. in his supplementary judgment in Asha
prior to the aforesaid Amendment Act of 1994, even if the E E Rani1, while concurring with the above, observed as follows (Pg.
widest interpretation is given to the expression “to any 235):
person” it will not cover either the owner of the goods or “26. In view of the changes in the relevant provisions in the
his authorised representative being carried in the vehicle. 1988 Act vis-à-vis the 1939 Act, we are of the opinion that
The objects and reasons of clause 46 also state that it the meaning of the words “any person” must also be
seeks to amend Section 147 to include owner of the goods F F attributed having regard to the context in which they have
or his authorised representative carried in the vehicle for been used i.e. “a third party”. Keeping in view the
the purposes of liability under the insurance policy. It is no provisions of the 1988 Act, we are of the opinion that as
doubt true that sometimes the legislature amends the law the provisions thereof do not enjoin any statutory liability
by way of amplification and clarification of an inherent on the owner of a vehicle to get his vehicle insured for any
position which is there in the statute, but a plain meaning passenger travelling in a goods vehicle, the insurers would
being given to the words used in the statute, as it stood G G
not be liable therefor.
prior to its amendment of 1994, and as it stands
27. Furthermore, sub-clause (i) of clause (b) of sub-section
subsequent to its amendment in 1994 and bearing in mind
(1) of Section 147 speaks of liability which may be incurred
the objects and reasons engrafted in the amended
by the owner of a vehicle in respect of death of or bodily
provisions referred to earlier, it is difficult for us to construe
injury to any person or damage to any property of a third
that the expression “including owner of the goods or his H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 9 10 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]

to its amendment in 1994 and after its amendment in 1994 and A A authorised representative carried in the vehicle” which was
held in paragraph 9 of the Report (Pgs. 231-232) as follows : added to the pre-existing expression “injury to any person”
“In Satpal case [(2000) 1 SCC 237] the Court assumed is either clarificatory or amplification of the pre-existing
that the provisions of Section 95(1) of the Motor Vehicles statute. On the other hand it clearly demonstrates that the
Act, 1939 are identical with Section 147(1) of the Motor legislature wanted to bring within the sweep of Section 147
Vehicles Act, 1988, as it stood prior to its amendment. But B B and making it compulsory for the insurer to insure even in
a careful scrutiny of the provisions would make it clear that case of a goods vehicle, the owner of the goods or his
prior to the amendment of 1994 it was not necessary for authorised representative being carried in a goods vehicle
the insurer to insure against the owner of the goods or his when that vehicle met with an accident and the owner of
authorised representative being carried in a goods vehicle. the goods or his representative either dies or suffers bodily
On an erroneous impression this Court came to the injury. The judgment of this Court in Satpal case therefore
C C must be held to have not been correctly decided and the
conclusion that the insurer would be liable to pay
compensation in respect of the death or bodily injury impugned judgment of the Tribunal as well as that of the
caused to either the owner of the goods or his authorised High Court accordingly are set aside and these appeals
representative when being carried in a goods vehicle the are allowed. It is held that the insurer will not be liable for
accident occurred. If the Motor Vehicles Amendment Act paying compensation to the owner of the goods or his
of 1994 is examined, particularly Section 46, by which the D D authorised representative on being carried in a goods
expression “injury to any person” in the original Act stood vehicle when that vehicle meets with an accident and the
substituted by the expression “injury to any person including owner of the goods or his representative dies or suffers
owner of the goods or his authorised representative any bodily injury.”
carried in the vehicle”, the conclusion is irresistible that 13. S.B. Sinha, J. in his supplementary judgment in Asha
prior to the aforesaid Amendment Act of 1994, even if the E E Rani1, while concurring with the above, observed as follows (Pg.
widest interpretation is given to the expression “to any 235):
person” it will not cover either the owner of the goods or “26. In view of the changes in the relevant provisions in the
his authorised representative being carried in the vehicle. 1988 Act vis-à-vis the 1939 Act, we are of the opinion that
The objects and reasons of clause 46 also state that it the meaning of the words “any person” must also be
seeks to amend Section 147 to include owner of the goods F F attributed having regard to the context in which they have
or his authorised representative carried in the vehicle for been used i.e. “a third party”. Keeping in view the
the purposes of liability under the insurance policy. It is no provisions of the 1988 Act, we are of the opinion that as
doubt true that sometimes the legislature amends the law the provisions thereof do not enjoin any statutory liability
by way of amplification and clarification of an inherent on the owner of a vehicle to get his vehicle insured for any
position which is there in the statute, but a plain meaning passenger travelling in a goods vehicle, the insurers would
being given to the words used in the statute, as it stood G G
not be liable therefor.
prior to its amendment of 1994, and as it stands
27. Furthermore, sub-clause (i) of clause (b) of sub-section
subsequent to its amendment in 1994 and bearing in mind
(1) of Section 147 speaks of liability which may be incurred
the objects and reasons engrafted in the amended
by the owner of a vehicle in respect of death of or bodily
provisions referred to earlier, it is difficult for us to construe
injury to any person or damage to any property of a third
that the expression “including owner of the goods or his H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 11 12 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
party caused by or arising out of the use of the vehicle in A A compulsory coverage in respect of drivers and conductors
a public place, whereas sub-clause (ii) thereof deals with of public service vehicle and employees carried in goods
liability which may be incurred by the owner of a vehicle vehicle would be limited to liability under the Workmen’s
against the death of or bodily injury to any passenger of a Compensation Act, 1923 (in short “the WC Act”). There is
public service vehicle caused by or arising out of the use no reference to any passenger in “goods carriage”.
of the vehicle in a public place. B B 14.1. Then in paragraphs 10 and 11 of the Report (Pg.
28. An owner of a passenger-carrying vehicle must pay 343), this Court held in Devireddy Konda Reddy4 as under :
premium for covering the risks of the passengers. If a “10. The inevitable conclusion, therefore, is that provisions
liability other than the limited liability provided for under the of the Act do not enjoin any statutory liability on the owner
Act is to be enhanced under an insurance policy, additional of a vehicle to get his vehicle insured for any passenger
premium is required to be paid. But if the ratio of this travelling in a goods carriage and the insurer would have
C C
Court’s decision in New India Assurance Co. v. Satpal no liability therefor.
Singh [(2000) 1 SCC 237] is taken to its logical conclusion,
although for such passengers, the owner of a goods 11. Our view gets support from a recent decision of a
carriage need not take out an insurance policy, they would three-Judge Bench of this Court in New India Assurance
be deemed to have been covered under the policy Co. Ltd. v. Asha Rani [(2003) 2 SCC 223] in which it has
wherefor even no premium is required to be paid. D D been held that Satpal Singh case [(2000) 1 SCC 237]
was not correctly decided. That being the position, the
14. Asha Rani1 has been relied upon in Oriental Insurance Tribunal and the High Court were not justified in holding
Co. Ltd. v. Devireddy Konda Reddy and Others4 wherein it that the insurer had the liability to satisfy the award.”
was held as under (Pgs. 342-343):
15. In Cholleti Bharatamma2, this Court was concerned
“….The difference in the language of “goods vehicle” as with the question about the liability of the insurance company
E E
appearing in the old Act and “goods carriage” in the Act to indemnify the owner of the vehicle in respect of death of
is of significance. A bare reading of the provisions makes passengers travelling in goods vehicle. The Court considered
it clear that the legislative intent was to prohibit goods the applicability of Section 147 as it originally stood under 1988
vehicle from carrying any passenger. This is clear from the Act and after its amendment in 1994. In relation to the accident
expression “in addition to passengers” as contained in the that occurred on 16.12.1993 i.e., prior to the 1994 amendment
definition of “goods vehicle” in the old Act. The position F F
in SLP(C) 7237-39/2003, this Court set aside the judgment of
becomes further clear because the expression used is the High Court and allowed the appeal of the insurance
“goods carriage” is solely for the carriage of “goods”. company by observing as follows (Pg. 430):
Carrying of passengers in a goods carriage is not
contemplated in the Act. There is no provision similar to “14. The date of accident being 16-12-1993, the
clause (ii) of the proviso appended to Section 95 of the amendment carried out in the year 1994 in Section 147
G G of the Motor Vehicles Act would not be applicable.
old Act prescribing requirement of insurance policy. Even
Section 147 of the Act mandates compulsory coverage 15. The Motor Accidents Claims Tribunal, Nalgonda, by a
against death of or bodily injury to any passenger of “public judgment and award dated 13-11-1997 awarded various
service vehicle”. The proviso makes it further clear that sums overruling the defence of the appellant herein that
they were unauthorised passengers. The High Court,
4. (2003) 2 SCC 339. H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 11 12 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
party caused by or arising out of the use of the vehicle in A A compulsory coverage in respect of drivers and conductors
a public place, whereas sub-clause (ii) thereof deals with of public service vehicle and employees carried in goods
liability which may be incurred by the owner of a vehicle vehicle would be limited to liability under the Workmen’s
against the death of or bodily injury to any passenger of a Compensation Act, 1923 (in short “the WC Act”). There is
public service vehicle caused by or arising out of the use no reference to any passenger in “goods carriage”.
of the vehicle in a public place. B B 14.1. Then in paragraphs 10 and 11 of the Report (Pg.
28. An owner of a passenger-carrying vehicle must pay 343), this Court held in Devireddy Konda Reddy4 as under :
premium for covering the risks of the passengers. If a “10. The inevitable conclusion, therefore, is that provisions
liability other than the limited liability provided for under the of the Act do not enjoin any statutory liability on the owner
Act is to be enhanced under an insurance policy, additional of a vehicle to get his vehicle insured for any passenger
premium is required to be paid. But if the ratio of this travelling in a goods carriage and the insurer would have
C C
Court’s decision in New India Assurance Co. v. Satpal no liability therefor.
Singh [(2000) 1 SCC 237] is taken to its logical conclusion,
although for such passengers, the owner of a goods 11. Our view gets support from a recent decision of a
carriage need not take out an insurance policy, they would three-Judge Bench of this Court in New India Assurance
be deemed to have been covered under the policy Co. Ltd. v. Asha Rani [(2003) 2 SCC 223] in which it has
wherefor even no premium is required to be paid. D D been held that Satpal Singh case [(2000) 1 SCC 237]
was not correctly decided. That being the position, the
14. Asha Rani1 has been relied upon in Oriental Insurance Tribunal and the High Court were not justified in holding
Co. Ltd. v. Devireddy Konda Reddy and Others4 wherein it that the insurer had the liability to satisfy the award.”
was held as under (Pgs. 342-343):
15. In Cholleti Bharatamma2, this Court was concerned
“….The difference in the language of “goods vehicle” as with the question about the liability of the insurance company
E E
appearing in the old Act and “goods carriage” in the Act to indemnify the owner of the vehicle in respect of death of
is of significance. A bare reading of the provisions makes passengers travelling in goods vehicle. The Court considered
it clear that the legislative intent was to prohibit goods the applicability of Section 147 as it originally stood under 1988
vehicle from carrying any passenger. This is clear from the Act and after its amendment in 1994. In relation to the accident
expression “in addition to passengers” as contained in the that occurred on 16.12.1993 i.e., prior to the 1994 amendment
definition of “goods vehicle” in the old Act. The position F F
in SLP(C) 7237-39/2003, this Court set aside the judgment of
becomes further clear because the expression used is the High Court and allowed the appeal of the insurance
“goods carriage” is solely for the carriage of “goods”. company by observing as follows (Pg. 430):
Carrying of passengers in a goods carriage is not
contemplated in the Act. There is no provision similar to “14. The date of accident being 16-12-1993, the
clause (ii) of the proviso appended to Section 95 of the amendment carried out in the year 1994 in Section 147
G G of the Motor Vehicles Act would not be applicable.
old Act prescribing requirement of insurance policy. Even
Section 147 of the Act mandates compulsory coverage 15. The Motor Accidents Claims Tribunal, Nalgonda, by a
against death of or bodily injury to any passenger of “public judgment and award dated 13-11-1997 awarded various
service vehicle”. The proviso makes it further clear that sums overruling the defence of the appellant herein that
they were unauthorised passengers. The High Court,
4. (2003) 2 SCC 339. H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 13 14 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
however, by reason of the impugned judgment, relying on A A 18. The High Court, however, relying upon Satpal Singh
or on the basis of a decision of this Court in Satpal Singh [(2000) 1 SCC 237] opined:
[(2000) 1 SCC 237] directed as under:
“This issue raised in this appeal is covered by the
“The learned counsel for the Insurance Company decision of the Supreme Court in New India
submitted that the issue involved in these appeals Assurance Co. Ltd. v. Satpal Singh wherein Their
is squarely covered by the decision of the Supreme B B Lordships held that under the Motor Vehicles Act,
Court in New India Assurance Co. Ltd. v. Satpal 1988 all insurance policies covering third-party risks
Singh [(2000) 1 SCC 237], wherein Their Lordships are not required to exclude gratuitous passengers
held that under the Motor Vehicles Act, 1988 all in the vehicles though the vehicle is of any type or
insurance policies covering third-party risks are not class. Following the same, the appeal is dismissed.
required to exclude gratuitous passengers in the No order as to costs.”
C C
vehicle though vehicle is of any type or class.
In view of the proposition of law laid down by the 19. It is now well settled that the owner of the goods means
Supreme Court in the decision stated supra, these only the person who travels in the cabin of the vehicle.
appeals are dismissed. No costs.” 20. In this case, the High Court had proceeded on the
16. Following the aforementioned principles, the impugned basis that they were gratuitous passengers. The admitted
D D
judgment cannot be sustained which is set aside. The plea of the respondents themselves was that the deceased
appeals are allowed accordingly.” had boarded the lorry and paid an amount of Rs 20 as
15.1. With reference to the accident that took place on transport charges. It has not been proved that the
24.12.1993 (prior to 1994 amendment) in SLP(C) Nos. 7241- deceased was travelling in the lorry along with the driver
43/2003, this Court in Cholleti Bharatamma2 in paragraphs or the cleaner as the owner of the goods. Travelling with
E E the goods itself does not entitle anyone to protection under
17,18,19,20 and 21 (Pgs. 430-431) held as under :
Section 147 of the Motor Vehicles Act.
“17. In the aforementioned case, accident took place on
24-12-1993. The respondents herein filed a claim petition 21. For the reasons aforementioned, this appeal is
claiming compensation for the death of one Kota allowed.”
Venkatarao who had allegedly paid a sum of Rs 20 for
F F 16. In the present case, Section 147 as originally existed
travelling in the lorry. The Tribunal held:
in 1988 Act is applicable and, accordingly, the judgment of this
“In the absence of rebuttal evidence from the Court in Asha Rani1 is fully attracted. The High Court was clearly
deceased and some others who travelled in the in error in reviewing its judgment and order delivered on
said vehicle in the capacity of owner of the luggage 09.11.2010 in review petition filed by the claimant by applying
which was carried by them at the time of accident,
it cannot be said that it is a violation of the policy, G G Section 147(1)(b)(i). The High Court committed grave error in
holding that Section 147(1)(b)(i) takes within its fold any liability
since it is not fundamental breach so as to afford which may be incurred by the insurer in respect of the death or
to the insurer to eschew the liability altogether as bodily injury to any person. The High Court also erred in holding
per the decision in B.V. Nagaraju v. Oriental that the claimant was travelling in the vehicle in the course of
Insurance Co. Ltd. [(1996) 4 SCC 647 : AIR 1996 his employment since he was a spare driver in the vehicle
SC 2054]” H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 13 14 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
however, by reason of the impugned judgment, relying on A A 18. The High Court, however, relying upon Satpal Singh
or on the basis of a decision of this Court in Satpal Singh [(2000) 1 SCC 237] opined:
[(2000) 1 SCC 237] directed as under:
“This issue raised in this appeal is covered by the
“The learned counsel for the Insurance Company decision of the Supreme Court in New India
submitted that the issue involved in these appeals Assurance Co. Ltd. v. Satpal Singh wherein Their
is squarely covered by the decision of the Supreme B B Lordships held that under the Motor Vehicles Act,
Court in New India Assurance Co. Ltd. v. Satpal 1988 all insurance policies covering third-party risks
Singh [(2000) 1 SCC 237], wherein Their Lordships are not required to exclude gratuitous passengers
held that under the Motor Vehicles Act, 1988 all in the vehicles though the vehicle is of any type or
insurance policies covering third-party risks are not class. Following the same, the appeal is dismissed.
required to exclude gratuitous passengers in the No order as to costs.”
C C
vehicle though vehicle is of any type or class.
In view of the proposition of law laid down by the 19. It is now well settled that the owner of the goods means
Supreme Court in the decision stated supra, these only the person who travels in the cabin of the vehicle.
appeals are dismissed. No costs.” 20. In this case, the High Court had proceeded on the
16. Following the aforementioned principles, the impugned basis that they were gratuitous passengers. The admitted
D D
judgment cannot be sustained which is set aside. The plea of the respondents themselves was that the deceased
appeals are allowed accordingly.” had boarded the lorry and paid an amount of Rs 20 as
15.1. With reference to the accident that took place on transport charges. It has not been proved that the
24.12.1993 (prior to 1994 amendment) in SLP(C) Nos. 7241- deceased was travelling in the lorry along with the driver
43/2003, this Court in Cholleti Bharatamma2 in paragraphs or the cleaner as the owner of the goods. Travelling with
E E the goods itself does not entitle anyone to protection under
17,18,19,20 and 21 (Pgs. 430-431) held as under :
Section 147 of the Motor Vehicles Act.
“17. In the aforementioned case, accident took place on
24-12-1993. The respondents herein filed a claim petition 21. For the reasons aforementioned, this appeal is
claiming compensation for the death of one Kota allowed.”
Venkatarao who had allegedly paid a sum of Rs 20 for
F F 16. In the present case, Section 147 as originally existed
travelling in the lorry. The Tribunal held:
in 1988 Act is applicable and, accordingly, the judgment of this
“In the absence of rebuttal evidence from the Court in Asha Rani1 is fully attracted. The High Court was clearly
deceased and some others who travelled in the in error in reviewing its judgment and order delivered on
said vehicle in the capacity of owner of the luggage 09.11.2010 in review petition filed by the claimant by applying
which was carried by them at the time of accident,
it cannot be said that it is a violation of the policy, G G Section 147(1)(b)(i). The High Court committed grave error in
holding that Section 147(1)(b)(i) takes within its fold any liability
since it is not fundamental breach so as to afford which may be incurred by the insurer in respect of the death or
to the insurer to eschew the liability altogether as bodily injury to any person. The High Court also erred in holding
per the decision in B.V. Nagaraju v. Oriental that the claimant was travelling in the vehicle in the course of
Insurance Co. Ltd. [(1996) 4 SCC 647 : AIR 1996 his employment since he was a spare driver in the vehicle
SC 2054]” H H
MANAGER, NATIONAL INSURANCE CO. LTD. v. 15 16 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
although he was not driving the vehicle at the relevant time but A A Others5, this Court was confronted with a similar situation. A
he was directed to go to the worksite by his employer. The High three-Judge Bench of this Court in paragraph 21 of the Report
Court erroneously assumed that the claimant died in the course (Pg. 8) held as under :
of employment and overlooked the fact that the claimant was “21. The upshot of the aforementioned discussions is that
not in any manner engaged on the vehicle that met with an instead and in place of the insurer the owner of the vehicle
accident but he was employed as a driver in another vehicle shall be liable to satisfy the decree. The question, however,
B B
owned by M/s. P.L. Construction Company. The insured (owner would be as to whether keeping in view the fact that the
of the vehicle) got insurance cover in respect of the subject law was not clear so long such a direction would be fair
goods vehicle for driver and cleaner only and not for any other and equitable. We do not think so. We, therefore, clarify
employee. There is no insurance cover for the spare driver in the legal position which shall have prospective effect. The
the policy. As a matter of law, the claimant did not cease to be Tribunal as also the High Court had proceeded in terms
a gratuitous passenger though he claimed that he was a spare C C
of the decision of this Court in Satpal Singh. The said
driver. The insured had paid premium for one driver and one decision has been overruled only in Asha Rani. We,
cleaner and, therefore, second driver or for that purpose ‘spare therefore, are of the opinion that the interest of justice will
driver’ was not covered under the policy. be subserved if the appellant herein is directed to satisfy
17. The High Court misconstrued the proviso following sub- the awarded amount in favour of the claimant, if not already
section (1) of Section 147 of the 1988 Act. What is D D satisfied, and recover the same from the owner of the
contemplated by proviso to Section 147 (1) is that the policy vehicle. For the purpose of such recovery, it would not be
shall not be required to cover liability in respect of death or necessary for the insurer to file a separate suit but it may
bodily injury sustained by an employee arising out of and in the initiate a proceeding before the executing court as if the
course of his employment other than a liability arising under the dispute between the insurer and the owner was the
Workmen’s Compensation Act, 1923. The claimant was E E subject-matter of determination before the Tribunal and the
admittedly not driving the vehicle nor he was engaged in driving issue is decided against the owner and in favour of the
the said vehicle. Merely because he was travelling in a cabin insurer. We have issued the aforementioned directions
would not make his case different from any other gratuitous having regard to the scope and purport of Section 168 of
passenger. the Motor Vehicles Act, 1988, in terms whereof, it is not
18. The impugned judgment is founded on misconstruction only entitled to determine the amount of claim as put forth
F F
of Section 147. The High Court was wrong in holding that the by the claimant for recovery thereof from the insurer, owner
insurance company shall be liable to indemnify the owner of the or driver of the vehicle jointly or severally but also the
vehicle and pay the compensation to the claimant as directed dispute between the insurer on the one hand and the
in the award by the Tribunal. owner or driver of the vehicle involved in the accident
inasmuch as can be resolved by the Tribunal in such a
19. The next question that arises for consideration is G G proceeding.”
whether in the peculiar facts of this case a direction could be
issued to the insurance company to first satisfy the awarded 21. The above position has been followed by this Court in
amount in favour of the claimant and recover the same from the National Insurance Co. Ltd. v. Challa Bharathamma & Ors.6,
owner of the vehicle (respondent no. 2 herein). 5. (2004) 2 SCC 1.
20. In National Insurance Co. Ltd. v. Baljit Kaur and H H 6. (2004) 8 SCC 517.
MANAGER, NATIONAL INSURANCE CO. LTD. v. 15 16 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
although he was not driving the vehicle at the relevant time but A A Others5, this Court was confronted with a similar situation. A
he was directed to go to the worksite by his employer. The High three-Judge Bench of this Court in paragraph 21 of the Report
Court erroneously assumed that the claimant died in the course (Pg. 8) held as under :
of employment and overlooked the fact that the claimant was “21. The upshot of the aforementioned discussions is that
not in any manner engaged on the vehicle that met with an instead and in place of the insurer the owner of the vehicle
accident but he was employed as a driver in another vehicle shall be liable to satisfy the decree. The question, however,
B B
owned by M/s. P.L. Construction Company. The insured (owner would be as to whether keeping in view the fact that the
of the vehicle) got insurance cover in respect of the subject law was not clear so long such a direction would be fair
goods vehicle for driver and cleaner only and not for any other and equitable. We do not think so. We, therefore, clarify
employee. There is no insurance cover for the spare driver in the legal position which shall have prospective effect. The
the policy. As a matter of law, the claimant did not cease to be Tribunal as also the High Court had proceeded in terms
a gratuitous passenger though he claimed that he was a spare C C
of the decision of this Court in Satpal Singh. The said
driver. The insured had paid premium for one driver and one decision has been overruled only in Asha Rani. We,
cleaner and, therefore, second driver or for that purpose ‘spare therefore, are of the opinion that the interest of justice will
driver’ was not covered under the policy. be subserved if the appellant herein is directed to satisfy
17. The High Court misconstrued the proviso following sub- the awarded amount in favour of the claimant, if not already
section (1) of Section 147 of the 1988 Act. What is D D satisfied, and recover the same from the owner of the
contemplated by proviso to Section 147 (1) is that the policy vehicle. For the purpose of such recovery, it would not be
shall not be required to cover liability in respect of death or necessary for the insurer to file a separate suit but it may
bodily injury sustained by an employee arising out of and in the initiate a proceeding before the executing court as if the
course of his employment other than a liability arising under the dispute between the insurer and the owner was the
Workmen’s Compensation Act, 1923. The claimant was E E subject-matter of determination before the Tribunal and the
admittedly not driving the vehicle nor he was engaged in driving issue is decided against the owner and in favour of the
the said vehicle. Merely because he was travelling in a cabin insurer. We have issued the aforementioned directions
would not make his case different from any other gratuitous having regard to the scope and purport of Section 168 of
passenger. the Motor Vehicles Act, 1988, in terms whereof, it is not
18. The impugned judgment is founded on misconstruction only entitled to determine the amount of claim as put forth
F F
of Section 147. The High Court was wrong in holding that the by the claimant for recovery thereof from the insurer, owner
insurance company shall be liable to indemnify the owner of the or driver of the vehicle jointly or severally but also the
vehicle and pay the compensation to the claimant as directed dispute between the insurer on the one hand and the
in the award by the Tribunal. owner or driver of the vehicle involved in the accident
inasmuch as can be resolved by the Tribunal in such a
19. The next question that arises for consideration is G G proceeding.”
whether in the peculiar facts of this case a direction could be
issued to the insurance company to first satisfy the awarded 21. The above position has been followed by this Court in
amount in favour of the claimant and recover the same from the National Insurance Co. Ltd. v. Challa Bharathamma & Ors.6,
owner of the vehicle (respondent no. 2 herein). 5. (2004) 2 SCC 1.
20. In National Insurance Co. Ltd. v. Baljit Kaur and H H 6. (2004) 8 SCC 517.
MANAGER, NATIONAL INSURANCE CO. LTD. v. 17 18 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
wherein this Court in paragraph 13 (Pg. 523) observed as A A the amount deposited by the Insurance Company has
under: since been withdrawn by the first respondent, it would be
“13. The residual question is what would be the open to the Insurance Company to recover the same in the
appropriate direction. Considering the beneficial object of manner specified by the High Court. But if the same has
the Act, it would be proper for the insurer to satisfy the not been withdrawn the deposited amount may be refunded
award, though in law it has no liability. In some cases the B B to the Insurance Company and the proceedings for
insurer has been given the option and liberty to recover the realisation of the amount may be initiated against the
amount from the insured. For the purpose of recovering the owner of the vehicle. In the facts and circumstances of the
amount paid from the owner, the insurer shall not be case, however, there shall be no order as to costs.”
required to file a suit. It may initiate a proceeding before 23. We are informed that by an order dated 19.01.2007
the executing court concerned as if the dispute between C C in National Insurance Co. v. Roshan Lal and Another [SLP
the insurer and the owner was the subject-matter of (C) No. 5699/2006] in light of the argument raised before a two-
determination before the Tribunal and the issue is decided Judge Bench that the direction ought not to be issued to the
against the owner and in favour of the insurer. Before insurance company to discharge the liability under the award
release of the amount to the claimants, owner of the first and then recover the same from the owner, the matter has
offending vehicle shall furnish security for the entire amount been referred to the larger Bench by the following order:
which the insurer will pay to the claimants. The offending D D
“Having regard to the submissions urged before us, we are
vehicle shall be attached, as a part of the security. If of the view that this petition may be placed for
necessity arises the executing court shall take assistance consideration before a larger Bench. We notice that in
of the Regional Transport Authority concerned. The some of the decisions such a direction was made in cases
executing court shall pass appropriate orders in where the compensation had already been paid by the
accordance with law as to the manner in which the owner E E insurer, but there are observations therein which support
of the vehicle shall make payment to the insurer. In case the view that such a direction can be made in all cases
there is any default it shall be open to the executing court where the owner has insured his vehicle against third party
to direct realisation by disposal of the securities to be risks. In Baljit Kaur’s case (supra) which is a judgment
furnished or from any other property or properties of the rendered by three Hon’ble Judges, such a direction was
owner of the vehicle i.e. the insured. In the instant case, F F made in the special circumstances noticed by the Court
considering the quantum involved, we leave it to the in paragraph 21 of the report. There are observations in
discretion of the insurer to decide whether it would take Oriental Insurance Co. Ltd. Vs. Ranjit Saikia and Ors.
steps for recovery of the amount from the insured.” (2002) 9 SCC 390 which may support the contention of
22. In National Insurance Company Limited v. the petitioners before us.”
Kaushalaya Devi and Others7. In paragraph 15 of the Report G G 24. In National Insurance Company Ltd. v. Parvathneni
(pg. 250), the Court observed as follows: & Another [SLP(C)….CC No. 10993 of 2009], the following two
“15. For the reasons aforementioned, civil appeal arising questions have been referred to the larger Bench for
out of SLP (C) No. 10694 is allowed and civil appeal consideration:
arising out of SLP (C) No. 9910 of 2006 is dismissed. If (1) If an Insurance Company can prove that it does not
7. (2008) 8 SCC 246. H H have any liability to pay any amount in law to the claimants
MANAGER, NATIONAL INSURANCE CO. LTD. v. 17 18 SUPREME COURT REPORTS [2013] 2 S.C.R.
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
wherein this Court in paragraph 13 (Pg. 523) observed as A A the amount deposited by the Insurance Company has
under: since been withdrawn by the first respondent, it would be
“13. The residual question is what would be the open to the Insurance Company to recover the same in the
appropriate direction. Considering the beneficial object of manner specified by the High Court. But if the same has
the Act, it would be proper for the insurer to satisfy the not been withdrawn the deposited amount may be refunded
award, though in law it has no liability. In some cases the B B to the Insurance Company and the proceedings for
insurer has been given the option and liberty to recover the realisation of the amount may be initiated against the
amount from the insured. For the purpose of recovering the owner of the vehicle. In the facts and circumstances of the
amount paid from the owner, the insurer shall not be case, however, there shall be no order as to costs.”
required to file a suit. It may initiate a proceeding before 23. We are informed that by an order dated 19.01.2007
the executing court concerned as if the dispute between C C in National Insurance Co. v. Roshan Lal and Another [SLP
the insurer and the owner was the subject-matter of (C) No. 5699/2006] in light of the argument raised before a two-
determination before the Tribunal and the issue is decided Judge Bench that the direction ought not to be issued to the
against the owner and in favour of the insurer. Before insurance company to discharge the liability under the award
release of the amount to the claimants, owner of the first and then recover the same from the owner, the matter has
offending vehicle shall furnish security for the entire amount been referred to the larger Bench by the following order:
which the insurer will pay to the claimants. The offending D D
“Having regard to the submissions urged before us, we are
vehicle shall be attached, as a part of the security. If of the view that this petition may be placed for
necessity arises the executing court shall take assistance consideration before a larger Bench. We notice that in
of the Regional Transport Authority concerned. The some of the decisions such a direction was made in cases
executing court shall pass appropriate orders in where the compensation had already been paid by the
accordance with law as to the manner in which the owner E E insurer, but there are observations therein which support
of the vehicle shall make payment to the insurer. In case the view that such a direction can be made in all cases
there is any default it shall be open to the executing court where the owner has insured his vehicle against third party
to direct realisation by disposal of the securities to be risks. In Baljit Kaur’s case (supra) which is a judgment
furnished or from any other property or properties of the rendered by three Hon’ble Judges, such a direction was
owner of the vehicle i.e. the insured. In the instant case, F F made in the special circumstances noticed by the Court
considering the quantum involved, we leave it to the in paragraph 21 of the report. There are observations in
discretion of the insurer to decide whether it would take Oriental Insurance Co. Ltd. Vs. Ranjit Saikia and Ors.
steps for recovery of the amount from the insured.” (2002) 9 SCC 390 which may support the contention of
22. In National Insurance Company Limited v. the petitioners before us.”
Kaushalaya Devi and Others7. In paragraph 15 of the Report G G 24. In National Insurance Company Ltd. v. Parvathneni
(pg. 250), the Court observed as follows: & Another [SLP(C)….CC No. 10993 of 2009], the following two
“15. For the reasons aforementioned, civil appeal arising questions have been referred to the larger Bench for
out of SLP (C) No. 10694 is allowed and civil appeal consideration:
arising out of SLP (C) No. 9910 of 2006 is dismissed. If (1) If an Insurance Company can prove that it does not
7. (2008) 8 SCC 246. H H have any liability to pay any amount in law to the claimants
MANAGER, NATIONAL INSURANCE CO. LTD. v. 19 [2013] 2 S.C.R. 20
SAJU P. PAUL AND ANOTHER [R.M. LODHA, J.]
under the Motor Vehicles Act or any other enactment, can A A THE GOVERNMENT OF ANDHRA PRADESH AND
the Court yet compel it to pay the amount in question giving OTHERS
it liberty to later on recover the same from the owner of the v.
vehicle. CH. GANDHI
(2) Can such a direction be given under Article 142 of the (Civil Appeal No. 1427-1428 of 2013)
Constitution, and what is the scope of Article 142? Does B B FEBRUARY 19, 2013
Article 142 permit the Court to create a liability where there
is none?” [K.S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]
25. The pendency of consideration of the above questions
by a larger Bench does not mean that the course that was SERVICE LAW:
followed in Baljit Kaur5 and Challa Bharathamma6 should not C C
be followed, more so in a peculiar fact situation of this case. In Disciplinary proceedings - Penalty - Disciplinary
the present case, the accident occurred in 1993. At that time, proceedings initiated under unamended rule - Penalty
claimant was 28 years’ old. He is now about 48 years. The imposed in terms of amended rule - Held: In the case at
claimant was a driver on heavy vehicle and due to the accident hand, the disciplinary proceeding was initiated by serving a
he has been rendered permanently disabled. He has not been
D D charge-sheet for the purpose of imposition of a major penalty
able to get compensation so far due to stay order passed by - Employee had no vested right to be imposed a particular
this Court. He cannot be compelled to struggle further for punishment as envisaged under the unamended rules -
recovery of the amount. The insurance company has already Unamended r.9(vii) was only dealing with reduction or
deposited the entire awarded amount pursuant to the order of reversion, but stipulation of postponement of future
this Court passed on 01.08.2011 and the said amount has increments has come by way of amendment - The same
been invested in a fixed deposit account. Having regard to these E E
being a lesser punishment than the maximum, is imposable
peculiar facts of the case in hand, we are satisfied that the and the disciplinary authority has not committed any error by
claimant (Respondent No. 1) may be allowed to withdraw the imposing the said punishment, regard being had to the nature
amount deposited by the insurance company before this Court of charges - It does not violate any Constitutional protection -
along-with accrued interest. The insurance company (appellant) Andhra Pradesh Civil Services (Classification, Control and
thereafter may recover the amount so paid from the owner F F Appeal) Rules, 1991 - r. 9(vii)(b).
(Respondent No. 2 herein). The recovery of the amount by the
insurance company from the owner shall be made by following Service Law - Conditions of service - Amendment -
the procedure as laid down by this Court in the case of Challa Retrospective operaion - Held: There is a presumption
Bharathamma6. against the retrospective operation of a statute - A substituted
26. Appeal is allowed and disposed of as above with no G G provision is the resultant factor of the amendment in the Rules
order as to costs. and it shall guide the consequences that follow from the
amended Rules - In the instant case, the amended Rule
K.K.T. Appeal allowed.
despite having been substituted has no retrospective effect.

H 20