Holding

The Court held that the 1939 Act excludes insurer liability for gratuitous passengers, whereas the 1988 Act, by deleting the proviso clause, subjects the insurer to liability for such passengers and owners/representatives, but the issue must be reconsidered by a larger Bench.

Summary

The Supreme Court examined the liability of an insurer under the Motor Vehicles Act, 1939 and the Motor Vehicles Act, 1988 for compensation to gratuitous passengers and owners or representatives of goods vehicles. It held that under the 1939 Act, Section 95(1)(b) excludes the insurer from such liability, but the corresponding Section 147 of the 1988 Act, by deleting the proviso clause, imposes liability on the insurer for those persons. The Court noted that the Satpal Singh decision, which applied the 1988 Act, did not consider several relevant provisions such as the definition of "goods carriage" and Section 149(2). Consequently, the Court referred the matter to a larger Bench for reconsideration. The order therefore placed the case before the Chief Justice for constituting a larger Bench.

Issues considered

Whether Section 95(1)(b) of the Motor Vehicles Act, 1939 makes the insurer liable for compensation to gratuitous passengers and owners of a goods vehicle.
Whether Section 147 of the Motor Vehicles Act, 1988, by deleting the proviso clause, imposes liability on the insurer for such passengers and owners/representatives.
Whether the decision in New India Assurance Co. v. Satpal Singh (2000) requires reconsideration in view of omitted provisions of the 1988 Act, including the definition of "goods carriage" and Section 149(2).
Whether the insurer can invoke the defence under Section 149(2) of the 1988 Act to avoid liability when a goods carriage is used to carry passengers.

Legislation cited

Motor Vehicles Act, 1939s. 95
Motor Vehicles Act, 1988s. 147, s. 149(2), s. 2(14), s. 2(8)
Workmen's Compensation Act, 1923

Subjects

insurance liabilitymotor vehicles actgratuitous passengersgoods carriageSection 95Section 147larger benchstatutory interpretation

Judgment

A NEW INDIA ASSURANCE CO. LTD.
v.
ASHA RANI AND ORS.

AUGUST 17, 2001

B [A.P. MISRA AND U.C. BANERJEE, JJ.)

Motor Vehicles Act, 1939/Motor Vehicles Act, 1988 (Prior to its
amendment in 1994)-Section 95/Section 147.

C Compensation-Liability of insurance company-On account of death
or bodily injury of the gratuituous passengers, including owner of the goods
or his representatives travelling in a goods vehicle-Interpretation of Section
95(1) (ii) of 1939 Act-Insurance company held not liable to compensate-
Interpretation of Section 147 of 1988 Act in Satpal Singh's case-Insurance
company held liable to compensate on the basis of deletion of clause (ii) to
D proviso to Section 95(/)(b) of 1939 Act-However, the relevant provisions
of the 1988 Act not placed before the Court in Satpal Singh's case-Hence,
mailer referred to larger Bench.

Under the Motor Vehicles Act 1939, the insurance company was not
E liable to pay compensation either to the gratuitous passengers or the owners
of the goods vehicle.

In these appeals, the insurance company submitted that in New India
Assurance Company v. Satpal Singh and Ors., 120001 l SCC 227 the
insurance company was liable to pay compensation to either the owners of
F the goods or his representative or the gratuitious passengers under section
147 of the 1988 Act. It also sought reference of the matter to a larger Bench
as the relevant provisions of the 1988 Act were not placed before the Court
in Satpal Singh's case. It submttied that mere deletion of Section 95(1) (b)
-
proviso (ii) under the 1939 Act would make no difference to hold the liability
to fall on the insurance company.
G
Referring the matter to larger Bench, the Court

HELD: I. While interpreting Section 95(1) of the Motor Vehicles Act
1939 it was held that the insurance company was not liable to pay
compensation either to the gratuitous passengers or to the owners of the
I-I 686
NEW INDIA ASSURANCE CO. LTD. v. ASHA RANI 687

goods. Subsequently, while interpreting Section 147 of the Motor Vehicles A
Act 1988 it was held that the insurance company was liable both for the
gratuitous passengers and the owners or his representative of the goods.
This was based on the fact of deietion of clause (ii) of the proviso of the
Section 95(1) of the 1939 Act. (696-C,. A)

Mallawwa (Smt.) and Ors. v. Oriental Insurance Co. Ltd. and Ors., B
(1999) l SCC 403 and New India Assurance Company v. Satpal Singh and
Ors., (2000) l SCC 227, referred to.

2. Some of the relevant provisions of the Motor Vehicles Act 1988
were not brought to the notice of the Court which have a bearing to the C
conclusion arrived at in Satpal Singh's case. Firstly there is difference
between the definition of 'goods vehicle' under Section 2(8) of the Motor
Vehicles Act, 1939 and 'goods carriage' under section 2(14) of the Motor
Vehicles Act 1988 (prior to amendment in 1994). Under the 1939 Act the
'goods vehicle' could be used for the carriage of goods 'or in addition to
passengers' while in definition of 'goods carriage' the words 'or in addition D
to passengers' stand deleted meaning thereby that goods carriage cannot
carry any Passenger. Secondly under Section 149(2) of the Motor Vehicles
Act, 1988, it would be a breach of condition in case vehicle is used for a
purpose other than for which permit has been issued. Thus where a permit
is issued for a 'goods carriage' it would not include passengers and in case
they travel it would be contrary to the mandate of the statute and thus in view E
of Section 149(2) no liability could be passed on to the insurance company.
In the view of the aformentioned observations, Satpal Singh's case requires
reconsideration, by a larger Bench. (698-B-E(

Mallawwa (Smt.) and Ors. v. Oriental Insurance Co. Ltd. and Ors.,
(1999( l SCC 403, distinguished.

New India Assurance Company v. Satpal Singh and Ors., (2000) I SCC
227; National Insurance Co. Ltd. v. Dundamma, (1992) ACJ I; Oriental
Insurance Co. Ltd. v. Smt. lrawwa and Ors., AIR (1992) Kant 321; Santra Bai
and Ors. v. Prahlad and Ors., (1985) ACJ 762; New India Assurnace G
Company Ltd. v. Kanchan Bewa and Ors., II (1994) ACC 117 and Pushpabi
Purshottam Udeshi and Ors. v. Mis. Ran) it Ginning and Pressing Co. (P) Ltd.
and Anr., (19771 2 SCC 745, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5385 of
m1. H
688 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A From the Judgment and Order dated 10.5.2000 of the Delhi High Court
in FAQ 256/99.

WITH

C.A. Nos. 16793-96of1996, C.A. No. 229of1999, C.A. Nos. 5386-5410
B of2001, C.A. Nos. 5411-16 of2001, C.A. No. 5417 of2001, C.A. Nos. 5418-
27 of2001, C.A. No. 4458of1999, C.A. No. 5223 of2000, C.A. Nos. 5428-32
of2001, C.A. No. 697/99, C.A. No. 5433-44 of2001, C.A. No. 6237of19~7,
C.A. Nos. 272-77of1999, C.A. No. 5445-50 & 5450A of2001, C.A. Nos. 5451-
52 of2001, C.A. Nos. 5453-56 of2001 and C.A. No. 3843 of2000.

C Jitender Sharma, P.P. Malhorta, Rama Jois, S Advocates, K.K. Jain,
Pramod Dayal, Anand Padmanabhan, Ms. Lipika Sharma, Shailendra Sharma,
Ms. Rekha Palli, T.C. Sharma, Romy Chacko, Rajiv Mehta, Anil Sinha, Naresh
K. Sharma, Umesh Bhagwat, S.N. Bhat, N.P.S. Panwar, D.P. Chaturvedi, Arvitid
Kumar, Ms. Laxmi Arvind, Sunil Gupta, Ms. Binu Tamta, Rajesh Saxena, Anil
D Kumar Sangal, Anurag Pandey, V.D. Khanna, M.T. George, Dr. Sushi! Balwada,
Surya Kant, Javed Mahmud Rao, C.S. Ashri, J.R. Midha, S. Ghosh, C.P.
Pandey and Ajit Pudussory for the appearing parties.

The Judgment of the Court was delivered by

E MISRA, J. The aforesaid sets of appeals were listed under category two
out of the three categories. The arguments were heard, compositively for all
the three categories. We have delivered judgment today for category one and
three, while we are passing this order for the appeals falling under category
•
two. The appeals falling under first category were those which fell under the
Motor Vehicles Act, 1939 (hereinafter referred to as 'Old Act'). The appeals
F falling under second category are those which falls under Motor Vehicles Act
1988 (hereinafter referred to as 'new Act'), prior to its 1994 amendment, while
the appeals falling under category three were those falling under the new Act
but those after the 1994 amendment.

G Learned counsel for the insurance company submits, that in New India
Assurance Compay v. Satpal Singh and Ors., [2000] I SCC 227 this Court held
that insurance company is liable to pay compensation in all cases where the
...
deceased or injured persons are gratuitous passengers including owner or his
representative of the goods while travelling in a goods carriage under Section
147 of the new Act. He seeks reference of this point to a larger Bench as it
H vitally affects Insurance Company and as relevant provisions of the new Act
NEW INDIA ASSURANCE CO.LTD. v. ASHA RANI [MISRA. J.] 689

were not placed before this Court and if it were placed, a different conclusion A
would have come.

This Court in Satpal Singh (Supra) held:

"The result is that under the new Act an insurance policy covering
third-party risk is not required to exclude gratuitous passengers in a B
vehicle, no matter that the vehicle is of any type or class. Hence the
decisions rendered under the old Act vis-a-vis gratuitous passengers
are of no avail while considering the liability of the insurance company
in respect of any accident which occurred or would occur after the
new Act came into force."
c
To Section 95 of the old Act the corresponding section is Section 147
of the new Act, which deals with liability to pay the compensation. The
relevant portion of Section 95 under the old Act and Section 147 of the new
Act is quoted hereunder:
D
"Section 95: Requirements of policies and limits of liability-(!)
In order to comply with the requiremen~s of this Chapter, a policy of
insurance may be a policy which,-

(a) is issued by a person who is an authorised insurer [or by a co-
operative society allowed under section I 08 to transact the business E
of an insurer], and

(b) insures the person or classes of persons specified in the policy
to the extent specified in sub-section (2}-

(i) against any liability which may be incurred by him in respect of F
the death of or bodily injury to any person or damage to any
property of a third party caused by or arising out of the use of
the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a
public serviCe vehicle caused by or arising out of the use of the
vehicle in a public place; G
Provided that a policy shall not be required -

(i) to cover liability in respect of the death, arising out of and in the
course of his employment, of the emp.loyees of a person insured by
the policy or in respect of bodily injury sustained by such an employee H
690 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A arising out of and in the course of his employment [other than a
liability arising under the Workmen's Compensation Act, 1923,) in
respect of the death of, or bodily injury to, any such employee -
"f"
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle, engaged as a conductor of the
B vehicle or in examining tickets on th~ vehicle, or
•....
(c) if it is a goods vehicle, being carried in the vehicle; or .....
(ii) except where the vehicle is a vehicle in which passengers are
carried for hire or reward or by reason of or in pursuance of contract
c of employment, to cover liability in respect of the death of or bodily
injury to persons being carried in or upon or entering or mounting or
alighting from the vehicle at the time of the occurrence of the event
out of which a claim arises, or

(iii) to cover any contractual liability;
D
Explanation - For the removal of doubts, it is hereby declared
that the death of or bodily injury to any person, or damage to any
property of a third party shall be deemed to have been caused by or
to have arisen out of the use of a vehicle in a public place
..
notwithstanding that the person who is dead or injured to the property
E which is damaged was not in a public place at the time of the accident,
if the act or omission which led to the accident occurred in a public
place.

(2) Subject to the proviso to sub-section (I) a policy of insurance
shall cover any liability incurred in respect of any one accident up to
F the following limits, namely :-

[(a) where the vehicle is a goods vehicle, a limit of one lakh and fifty
thousand rupees in all, including the liabilities, if any, arising under
the Workmen's Compensation Act, 1923, in respect of the death of, or
bodily injury to, employees (other than the driver), not exceeding six
G in number, being carried in the vehicle;]

(b) 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, -
H (i) in respect of persons other than passengers carried for hire or J-
NEW INDIA ASSURANCE CO. LTD. v. ASHA RAN! [MISRA . .J.1 691

reward, a limit of fifty thousand rupees in all; A
(ii) in respect of passengers, a limit of fifteen thousand rupees for
each individual passenger;

(c) save as provided in clause (d) where the vehicle is a vehicle of any
other class, the amount of liability incurred; B
(d) irrespective of the class of the vehicle, a limit of rupees [six
thousand] in all in respect of damage to any property of a third party."

Section 147: Requirements of policies and limits of liability- (1) In
order to comply with the requirements of this Chapter, a policy of C
insurance must be a policy which, -

(a) is issued by a person who is an authorised insurer; or

(b) insures the person or classes of persons specified in the policy
to the extent specified in sub-section (2)- D
(i) against any liability which may be incurred by him in respect of
the death of or bodily [injury to any person, including owner of
the goods or his authorised representative carried in the
vehicle](brought in by amendment through Act No. 54of1994)
or damage to any property of a third party caused by or arising E
out of the use of the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a
public service vehicle caused by or arising out of the use of the
vehicle in a public place;

Provided that a policy shall not be required-
F

(i) to cover liability in respect of the death, arising out of and in the
course of his employment, of the employees of a person insured by
the policy or in respect of bodily injury sustained by such an employee
arising out of and in the course of his employment other than a G
liability arising under the Workmen's Compensation Act, 1923 (8 of
1923) in respect of the death of, or bodily injury to, any such
employee-

(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle, engaged as a conductor of the. H
692 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle; or

(ii) to cover any contractual liability.

Explanation - For the removal of doubts, it is hereby declared
B that the death of or bodily injury to any person or damage to any
property of a third party shall be deemed to have been caused by or
to have arisen out of, the use of a vehicle in a public place
notwithstanding that the person who is dead or injured or the property
which is damaged was not in a public place at the time of the accident,
c if the act or omission which led to the accident occurred in a public
place.

(2) Subject to the proviso to sub-section (I), a policy of insurance
referred to in sub-section (I), shall cover any liability incurred in
respect of any one accident, up to the following limits, namely :-
D (a) save as provided in clause (b), the amount of liability incurred;

(b) in respect of damage to any property of a third party, a limit of
rupees six thousand:

Provided that any policy of insurance issued with any limited
E liability and in force, immediately before the commencement of this
Act, shall continue to be effective for a period of four months after
such commencement or till the date of expiry of such policy whichever
is earlier."
By comparing these two sections, what emerges is that clause (ii) to the
F proviso of Section 95(1 )(b) under the old Act has been deleted and clause
(iii) has been re-numbered as (ii) in Section 14 7 of the new Act. Sub-Section
(2) of Section 95 is also modified under the new Act through sub-sections
(2) of Section 147, which refers to quantum of compensation to which we are
not concerned. The submission for the insurance company is, the earlier
G decision in Mallawwa (Smt.) & Ors. v. Oriental Insurance Co. Ltd. & Ors.,
[ 1999] I SCC 403 held insurance company not liable to pay the compensation
but it has been distinguished in Satpal Singh (Supra) that it was under the
old Act while the case in hand is under the new Act. The submission is, mere
deletion of sub-clause (ii) to the proviso of Section 95 (l)(b) under the old
Act by itself would make no difference to hold the liability to fall on the
H insurance company. This apart some of the distinguishing features in the new
NEW INDIA ASSURANCE CO. LTD. v. ASHA RANI [MISRA, J.] 693

Act, to which attention was not drawn would make a difference in drawing A
the conclusion.

The first striking distinguishing feature pointed out is with reference to
the definition of the 'goods vehicle' as defined under the old Act and the
'goods carriage' as defined under the new Act. Section 2(8) of the old Act
defines 'goods vehicle': 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 carriage of goods solely
or in addition to passengers."
c
Under the new Act 'goods vehicle' is substituted by the words 'goods
carriage'. There is no definition of goods vehicle. It is defined under Section
2(14) of the New Act as hereunder:

"Section 2(14): "goods carriage" means any motor vehicle constructed
or adapted for use solely for the carriage of goods, or any motor D
vehicle not so constructed or adapted when used for the carriage of
goods."

The significant difference between the two definitions is that under the
old Act the definition includes "or in addition to passengers", while these E
words are deleted while defining the 'goods carriage' under the new Act. The
submission is, this exclusion itself is indicative that pas&engers are not to
travel in a goods carriage. The second distinguished feature pointed out is
with reference to Section 149 under the new Act. The submission is, by virtue
of sub-section (2) of Section 149 the defence which is permissible to the
insurer is obliterated, in view of the declaration of law in Satpal Singh (Supra). F
.The relevant portion of Section 149 sub-section (2) is quoted hereunder:

"149: Duty of insurers to satisfy judgments and awards against persons
insured in respect of third party-risks - (I) .....

(2) No sum shall be payable by an insurer under sub-section( 1) in G
respect of any judgment or award unless, before the commencement
of the proceedings in which the judgment or award is given the
insurer had notice through the Court or, as the case may be, the
Claims Tribunal of the bringing of the proceedings, or in respect of
such judgment or award so long as execution is stayed thereon
pending an appeal; and an insurer to whom notice of the bringing of H
694 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A any such proceedings is so given shall be entitled to be made a party
thereto and to defend the action on any of the following grounds,
namely:-

(a) that there has been a breach of a specified condition of the policy,
being one of the following conditions, namely:-
B
(i) a condition excluding the use of the vehicle -

(a) for hire or reward, where the vehicle is on the date of the contract
of insurance a vehicle not covered by a permit to ply for hire or
reward, or

C (b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle
is used, where the vehicle is a transport vehicle, or

(d) without side-car being attached where the vehicle is a motor cycle;
D or
(ii) a condition excluding driving by a named person or persons or
by any person who is not duly licensed, or by any person who
has been disqualified for holding or obtaining a driving licence
during period of disqualification; or
E (iii) a condition excluding liability for injury caused or contributed to
by conditions of war, civil war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by the
non-disclosure of a material fact or by a representation of fact which
was false in some material particular."
F
The submission is, Sub-section (2) declares that no sum is payable by the
insurer, if any of the grounds mentioned under various sub-clauses of the
sub-section (2) is proved to exist, For example, no sum is payable by the
insurer under sub-section (2) if there has been a breach of specified conditions
G of the policy, namely, where the vehicle on the relevant date is not covered
by a permit to ply for hire or reward and if it plies for the same, i.e., in case
the insured uses the vehicle for a purpose not allowed by the permit. If a
permit for a goods carriage is not meant for the passengers to be carried and
if passengers travel, the insurer would not be liable to pay the compensation.
This defence of the insurer would not be available which stands negated in
H view of the declaration of law in Satpal Singh (Supra).
NEW INDIA ASSURANCE CO. LTD. v. ASHA RANI [MISRA, .I.] 695
This apart, submission is also with reference to the deletion of sub- A
clause (ii) of proviso to Section 95 (J)(b) of the old Act that this by itself
would make no difference for drawing conclusion different from what wJs
declared by this Court in Ma/lawwa (Smt.) supra, if various earlier decisions
of courts and amendment under the old Act is taken into consideration.

We may usefully refer here the decision of the Kamataka High Court B
in Oriental Insurance Co. Ltd. v. Smt. lrawwa and Ors., AIR (1992) Kamataka
321. This judgment has very significantly brought the difference between
Section 147 of the new Act and Section 95 of the old Act with reference to
the definition clause. It reads:

"It may be seen that S.147 of the 1988 Act, like S.95 of the 1939 C
Act, apart from prescribing the compulsory coverage in respect of
third party risks, prescribed the compulsory coverage against death
of or bodily injury to any passenger in a "Public Service Vehicle"
caused by or arising out of the use of the vehicle in a public place.
The proviso to S.147 of the 1988 Act which is similar to the
corresponding Proviso to S.95(1) of the 1939 Act, makes it clear that D
compulsory coverage in respect of drivers of any motor vehicle,
conductors of public service vehicles and employees carried in a
goods vehicle shall be. limited to the liability under the Workmen's
Compensation Act. Under S.147(2) of the Act, while the liability in
respect of damage to any property of third party is limited to Rs. Six E
thousand as regards the liability in respect of passengers as also third
parties it is made equal to the liability incurred. Section 2(35) of the
1988 Act which defir:es 'Public Service Vehicle' is similar to S. 2(25)
of the I 939 Act and does not include a goods carriage. The difference
in the definition goods vehicle given in S.2(8) of the 1939 Act and the
'goods carriage' given in S.2(14) of the 1988 Act is significant. While F
the definition given in the 1939 Act gave an indication, goods vehicle
could carry some passengers, the definition in 1988 Act omits the
words "in addition to passengers" and states that goods carriage
means any motor vehicle constructed or adapted for use "solely for
the carriage of goods". Therefore, the question whether risk in respect G
of passengers carried in a goods vehicle should be covered by an
insurance policy does not arise at all under the 1988 Act."

This question of the liability of the insurance company in respect of
gratuitous passengers travelling in a"goods vehicle has been in issue before
various High Courts under the old Act which has led to the conflicting H
696 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A judgments. As we have recorded earlier, Satpal Singh (Supra) held, insurance
company liable both for the gratuitous passengers and the owners or his
representative of the goods, while interpreting Section 147 of the new Act.
This was based on the fact of deletion of Clause (ii) of the proviso of the
Section 95( I) of the old Act. It is relevant to refer to some of the decisions
B with brief background history both of the interpretation and incorporation of
the said sub-clause (ii) of Section 95 of the old Act and its exclusion, to see
whether the decision of Satpal Singh (Supra) requires reconsideration. It is
not in dispute in Ma/lawwa (Smt.) and Ors. v. Oriental Insurance Co. Ltd
and Ors., [1999] I SCC 403, this Court while interpreting Section 95(1) including
the said sub-clause (ii) held the insurance company not liable to pay
C compensation either to the gratuitous passengers or to the owners of the
goods.

The full Bench of the Kamataka High Court in National Insurance Co.
ltd v. Dundamma, (1992) ACJ I, while interpreting the said proviso (ii) held
that this proviso takes care of passengers in public service vehicle only
D because of the words used therein, namely, 'in which passengers are carried
for hire or reward'. However, in view of proviso (i) it was held that insurer
would be liable to pay compensation to the employees and the owner of a
goods vehicle.

Similar question came before the full Bench of the Rajasthan High
E Court, Jaipur Bench in Santra Bai and Ors. v. Prahlad and Ors., (I 985) ACJ
762. This decision contains a detailed discussion on the question, whether
the said proviso is confined to public service vehicle only or takes within its
hold goods vehicle also. It was held that the owner of the goods or his
employee, if he travels in the goods vehicle, has to be taken to be a person
F carried for reward, if not for hire. Then with reference to the definition of
'goods vehicle' and with reference to the words used in proviso (ii) it was
pointed out that the legislature has not used the term 'public service vehicle'
but used the words 'where the vehicle is a public vehicle in which passengers
are carried'. It was held, the word used therein would also include goods
vehicle and such goods vehicle can also carry passengers for hire or reward.
G Thereafter came the full Bench of the Orissa. Jn New India Assurance Company
ltd. v. Kanchan Bewa and Ors., II (I 994) ACC I I 7 (FB). This full Bench
considered the aforesaid two full Benches and came to the conclusion different
from what was held in the said two Benches. The Court held:

"The conclusion is irresistible unless a vehicle is a vehicle meant
H for carrying passengers for hire or reward or the said vehicle by
NEW INDIA ASSURANCE CO.LTD. v. ASHA RANI (MISRA, J.] 697

reason of or in pursuance of contract of employment is required to A
cover the liability in respect of death of or bodily injury to persons
being carried in or upon, the insurer will not be liable to pay
compensation. Admittedly, the owner of goods who has hired a goods
vehicle does not become a person travelling on the vehicle in
pursuance of a contract of employment and even if he is carrying his B
goods after hiring the vehicle, the vehicle does not become a vehicle
meant for carrying passengers for hire or reward and consequently,
would not come within the proviso (ii) to section 95( I )(b ). To come
under the first part of Section 95( 1)(b ), proviso (ii), the vehicle in
question must be a vehicle which is meant for carrying passengers for
hire or reward and consequently, a goods vehicle will not come within C
the proviso. We, therefore, state that proviso to Section 95(l)(b) did
not apply to the passengers carried for hire or reward in a goods
vehicle and it is restricted to such passengers carried in a public
service vehicle."

As aforesaid, in view of the said conflict in the decision, when the D
matter came before this Court it settled the issue in the case of Mallawwa
(Smt.) (Supra). This Court in this case approved the aforesaid full Bench
decision of the Orissa High Court. This Court held, while interpreting Section
95(1)(b)(i) and proviso (ii) under the old Act, only a vehicle which is used for
a systematically carrying of passengers can be said to be a vehicle in which
passengers are carried for hire or reward, hence persons travelling in goods E
vehicle, whether owners of the goods or passengers on payment of fare or
gratuitous passengers, could not be covered by proviso (ii) hence the insurer
of the goods vehicle is not liable to pay compensation. This decision also
considered and affinned the decision of this Court in the case of Pushpabai
Purshottam Udeshi and Ors. v. Mis. Ranjit Ginning & Pressing Co. (P) Ltd F
andAnr., [1977) 2.SCC 745.

Then came the new Act and the similar question is raised under it. We
find corresponding to Section 95 of the old Act is Section 147 of the new Act.
The only difference we find in Section 147(1) of the new Act from Section
95(1) of the old Act is that proviso (ii) which was under the old Act stands G
deleted and (iii) is re-numbered as (ii). There is also amendment to sub-section
(2) to Section 95 of the old Act in sub-section (2) of Section 147 of the new
Act which is in respect of quantum to which we are not concerned.

It is because of this deletion of clause (ii) to the proviso to Section 95
(I )(b) of the old Act has been interpreted in Satpal Singh (Supra) to bring H
698 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A liability on the insurer to pay both for the gratuitous passengers and the
owner or his representative of the goods travelling in a goods carriage. •. •
..,/-

. We feel as some of the striking features of the new Act were not
brought to the notice of this Court which we are recording hereunder may
have bearing to the conclusion which was arrived at in Satpa/ Singh (Supra),
B Viz., (a) Difference between the definition of 'Goods Vehicle' under the old
and 'Goods Carriage' under the new Act. Under the old Act 'goods vehicles'
is defined under Section 2(8) and under the new Act Section 2(14) defines
'goods carriage'. The significant difference is, under the old Act the 'goods
vehicle' could be used for the carriage of goods 'or in addition to passengers'
C while in definition of 'goods carriage' the words 'or in addition to passengers'
stand deleted. The submission is, now goods carriage cannot carry any
passenger. The other striking feature is with reference to Section 149(2) of the
new Act. It is submitted that the defence available to the insurer under it
would be obliterated in view of the declaration of law in Satpal Singh (Supra).
Under New Act, it would be a breach of condition in case vehicle is used for
D a purpose other than for which permit has been issued. Thus in a case a
permit is issued for a 'goods carriage' it would not include any passengers
and in case they travel it would be contrary to the mandate of the statute and
thus in view of Section 149(2) no liability could be passed on to the insurance
company. This apart, the effect of the deletion of sub-clause (ii) to the proviso
E to Sectio ; 95( I)(b) in the new Act also requires reconsideration.
Accordingly we feel it appropriate in view of what we have recorded
above, Satpa/ Singh (Supra) requires reconsideration by a larger Bench. Let
this matter be placed before Hon'ble the Chief Justice for constituting a larger
Bench.
F
N.J. Matter referred to larger Bench.