Holding

The insurer is not liable for compensation; liability rests with the owner of the offending vehicle.

Summary

The claimant, a gratuitous passenger, was injured in an accident on 1 June 1996 while traveling in a goods carriage. The owner of the vehicle had not taken an insurance policy covering such passengers, and the insurer (National Insurance Co.) argued it was not liable for compensation. The Supreme Court examined the definitions of "goods vehicle" and "goods carriage" under the Motor Vehicles Act, 1988 and its amendment, and the relevant provisions on compulsory insurance. It held that the Act does not impose a statutory duty on the owner to insure passengers in a goods carriage, and consequently the insurer bears no liability; the compensation must be recovered from the owners of the offending vehicles. The appeal was allowed, setting aside the High Court order.

Issues considered

Whether the insurer is liable to pay compensation to a gratuitous passenger travelling in a goods carriage under the Motor Vehicles Act, 1988.
Whether the owner of a goods carriage is required to obtain an insurance policy covering such passengers.
Interpretation of the definitions of "goods vehicle"/"goods carriage" and the applicability of Sections 145, 147, 95, and 96 of the Motor Vehicles Act.

Legislation cited

Motor Vehicles Act, 1988s. 140, s. 145(c), s. 147, s. 95(1)
Motor Vehicles (Amendment) Act, 1994
Workmen's Compensation Act, 1923

Subjects

Motor Vehicles Actinsurance liabilitygratuitous passengergoods carriagecompensationthird party riskowner liability

Judgment

(2008] 3 S.C.R. 646

•
...-
A NATIONAL INSURANCE CO. LTD.
v.
PREMA DEVI & ORS.
(Civil Appeal No. 1667 of 2008)

FEBRUARY 29, 2008
B
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]
• .._
Motor Vehicles Act. 1988 ~Liability to pay compensation
- For the victim of accident traveling in goods carriage as a
c gratuitous passenger - No policy taken by the owner of the
vehicle for covering such passenger - Held: Liability to pay
the compensation is on the owner of offending vehicle and
not on the Insurance Company
New India Assurance Co. Ltd. v. Vedwati and Ors. 2007
D (3) SCALE 397 - relied on.
~ ~
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1667
of 2008

From the final Judgment and Order dated 05.11.2003 of
E the High Court of Judicature at Allahabad, Lucknow Bench,
Lucknow in FAFO No. 618 of 2003.

Atul Nanda, Rameeza Hakeem, Rajesh Kumar, Sandeep

F
Bajaj and P.N. Puri for the Appellant.

A.K. De., V.P. Tripathi, Goodwill lndeevar, K. Sarada Devi
-
and Shail Kumar Dwivedi for the Respondents.

The Judgment of the Court was delivered by

Dr. ARIJIT PASAYAT, J. 1. Leave granted.
G 2. Challenge in this appeal is to the order passed by a
learned Single Judge of the Allahabad High Court, Lucknow
Bench dismissing the appeal filed by the appellant.
'
3. Background facts in a nutshell are as follows:

H 646
NATIONAL INSURANCE CO. L\TD. v. PREMA DEVI & 647

-.- .. ORS. [DR ARIJIT PASAYAT, J.]

The accident in the instant case took place on 1.6.1996 . A
The claimant was travelling in a goods carriage, as a gratuitous
passenger. Undisputedly she was not traveling in the goods
carriage in the capacity of owner of goods or representative of
owner of goods being transported in the goods carriage. This
aspect was also accepted by the claimant in the claim petition. B
4. Stand of the appellant was that the owner of the goods
,... ~
carriage had not taken any policy for such passenger and there
was no requirement under law for obtaining a policy for
passenger.
c
5. Learned counsel for the appellant submitted that the
claimant could not claim indemnification by the appellant and
the owners of the offending vehicles were to indemnify the award.
6. Learned counsel for the claimant and the owners of the
offending vehicles supported the order of the High Court. D

" '"' 7. In New India Assurance Co. Ltd. v. Vedwati and Ors.
(2007 (3) SCALE 397), it was held as under:
"6. This Court had occasion to deal with cases of
passengers traveling in goods vehicles which met accident E
resulting in death of such person or bodily injury. Such
cases belong to three categories i.e. (1) those covered by
the old Act, (2) those covered by the Act; and (3) those
... covered by amendment of the Act in 1994 by the Motor
.>
Vehicles (Amendment) Act. 1994 (hereinafter referred to F
as the 'Amendment Act').
7. The present appeals belong to the second category.
8. In Satpal Singh's case (supra) this Court proceeded on
. the footing that provisions of Section 95(1) of the old Act G
are in pari materia with Section 147(1) of the Act as it
stood prior to the amendment in 1994 .
.. " 9. On a closer reading of the expressions "goods vehicle".
"public service vehicle", '.'state carrier" and "transport
vehicle" occurring in Sections 2(8), 2(25), 2(29) and 2(33) H
648 SUPREME COURT REPORTS (2008] 3 S.C.R.

' ... -
A of the old Act with the corresponding provisions i.e. Section '
2(14), 2(35) 2(40) and 2(47) of the Act, it is clear thatthere
are conceptual differences. The provisions read as follows:
Old Act:

B "2 (8) "goods vehicle" means any motor vehicle constructed
or adapted for use for the carriage of goods, or any motor
vehicle not so constructed or adapted when used for the \
h
carriage of goods solely or in addition to passengers"
"2(25) "public service vehicle" means any motor vehicle
c used or adapted to be used for the carriage of passengers
for hire or reward and includes a motor cab contract
carriage, and stage carriage."
"2(29) "stage carriage" means a motor vehicle carrying or
adapted to carry more than six persons excluding the driver
D
which carries passengers for hire or reward at separate
~ ..
fares paid by or for individual passengers either for the
whole journey or for stages of the journey:"
"2(33) "transport vehicle" means a public service vehicle
E or a goods vehicle:"
The Act {New Act}:
"2(14) "goods carriage" any motor vehicle constructed or
adapted for use solel~ for the carriage of goods or any ...
F motor vehicle not to constructed or adapted when used
for the carriage of goods:"
"2(35) "public service vehicles" means any motor vehicles
used or adapted to be used for the carriage of passengers
for hire or reward, and includes a maxicab a motorcab,
G contract and stage carriage:"
"2(40) "stage carriage" means a motor vehicle constructed
or adapted to carry more than six passengers excluding "
the driver for (SIC) or reward at separate fares paid by or
for individual passengers either for the whole journey or
H
NATIONAL INSURANCE CO. LTD. v. PREMA DEVI & 649
ORS. [DR. ARIJIT PASAYAT, J.)
- '
"' " for stages of the journey:" A
"2(47) "transport vehicle" means a pubic services vehicle
a goods carriage an educational institution bus or a private
service vehicle:"
(Underlined for emphasis) 8
10. "Liability" as defined in Section 145(c) of the Act reads
~ • as follows:
"Liability", wherever used in relation to the death of
or bodily injury to any person, includes liability in c
respect thereof under Section 140."
11. Third party risks in the background of vehicles which
are subject-matter of insurance are dealt with in Chapter
VIII of the old Act and Chapter XI of the Act. Proviso to
Section 147 of the Act (sic) is to be (sic) with Section 96 D
"~ of the old Act. Proviso to Section 147 of the Act reads as
follows:
Provided that a policy shall not be required
(i) to cover liability in respect of the death arising out E
of and in the course of his employment of the
employee of a person insured by the policy or in
respect of bodily injure sustained by such an
).
employee arising out of and in the course of his
employment other than a liability arising under the F
Workmen's Compensation Act. 1993 (8 of 1923) in
respect of the death of or bodily injury to, any such
employee-
(a) engaged in driving the vehicle, or
G
(b) if it is a public service vehicle engaged as
conductor of the vehicle or in examining tickets on
~

'" the vehicles, or
(c) if it is a good carriage, being carried in the vehicle,
or H
650 SUPREME COURT REPORTS [2008) 3 S.C.R.

A (ii) to cover any contractual liability." '
t
..
12. It is of significance that proviso appended to Section
95 of the old Act contained Clause (ii) which does not find
place in the Act. The same reads as follows:-
B "except where the vehicle is a vehicle in which
passengers are carried for hire or reward or by
reason of or in pursuance of a contract of employment ~
to cover liability in respect of the death of or bodily ....
injury to persons being carried in or upon or entering
c or mounting or alighting from the vehicle at the time
of the occurrence of the event out of which a claim
arises."
13. The difference in the language of "goods vehicle" as
appear in the old Act and "goods carriage" in the Act is of
D significance. A bare reading of the provisions makes it
clear that the legislative intent was to prohibit goods vehicle >- ~
from carrying any passenger. This is clear from the
expression "in addition to passengers" as contained in
definition of "good vehicle" in the old Act. The position
E becomes further clear because the expression used is
"good carriage" is solely for the carriage of goods. Carrying
of passengers in a goods carriage is not contemplated in
the Act. There is no provision similar to Clause (ii) of the
proviso appended to Section 95 of the old Act prescribing
F requirement of insurance policy. Even Section 147 of the
Act mandates compulsory coverage against death of or
bodily injury to any passenger of "public service vehicle".
The proviso makes it further clear that compulsory
coverage in respect of drivers and conductors of public
service vehicle and employees carried in goods vehicle
G
would be limited to liability under the Workmen's
Compensation Act, 1923 (in short 'WC Act"). There is no
reference to any passenger in "goods carriage". 4
"
14. The inevitable conclusion, therefore, is that provisions
H of the Act do not enjoin any statutory liability on the owner
NATIONAL INSURANCE CO. LTD. v. PREMA DEVI & 651
ORS. [DR. ARIJIT PASAYAT, J.)
of a vehicle to get his vehicle insured for any passenger A
travelling in a goods carriage and the insurer would have
no liability therefor.
15. Our view gets support from a recent decision of a
three-Judge Bench of this Court in New India Assurance
Company Limited v. Asha Rani and Ors. (2002 (8) B
Supreme 594] in which it has been held that Satpal Singh's
case (supra) was not correctly decided. That being the
position, the Tribunal and the High Court were not justified
in holding that the insurer had the liability to satisfy the
awa~. C
16. This position was also highlighted in Oriental Insurance
Co. Ltd. v. Devireddy Konda Reddy and Others (2003(2)
SCC 339). Subsequently also in National Insurance Co.
Ltd. v. Ajit Kumar and Others (2003(9) SCC 668), in D
National Insurance Co. Ltd. v. Baljit Kaur and Others
(2004 (2) SCC 1) and in National Insurance Co. Ltd. v.
Bommithi Subbhayamma and Others (2005 (12) SCC
243), the view in Asha Rani's case (supra) was reiterated."
8. Above being the position, the impugned order of the E
High Court is not sustainable and is set aside. It is open to the
claimant to recover the amount awarded from the owners of the
offending vehicles.
~;.

9. The appeal is allowed with no order as to costs.
F
K.K.T. Appeal allowed.