Holding

The Motor Vehicles Act, 1988 does not impose liability on the insurer for passengers travelling in a goods carriage, so the insurer is not liable for the compensation award.

Summary

The case involved a tractor classified as a "goods carriage" that was carrying a passenger who died in an accident. The deceased's dependents filed a claim under the Motor Vehicles Act, 1988 seeking compensation from the insurer, New India Assurance Co. Ltd. The Motor Accident Claims Tribunal and the Allahabad High Court held the insurer liable, relying on the earlier Satpal Singh decision. On appeal, the Supreme Court examined the definitions of "goods vehicle" in the 1935 Act and "goods carriage" in the 1988 Act, concluding that the latter is intended solely for the carriage of goods and expressly excludes passengers. Consequently, the Court ruled that the Act imposes no statutory obligation on the vehicle owner to insure passengers in a goods carriage, and the insurer is not liable for the compensation award. The Court overruled the Satpal Singh precedent, citing the later Asha Rani line of cases. The High Court judgment was set aside and the appeals were allowed.

Issues considered

Whether the insurer is liable to pay compensation for the death of a passenger travelling in a goods carriage under the Motor Vehicles Act, 1988.
Whether the definition of "goods carriage" under the 1988 Act excludes the carriage of passengers, thereby negating statutory insurance liability.

Legislation cited

Motor Vehicles Act, 1988s. 145(c), s. 147, s. 2(14), s. 2(35), s. 2(40), s. 2(47)
Workmen's Compensation Act, 1923

Subjects

Motor Vehicles Actgoods carriageinsurance liabilitypassenger deathcompensationSupreme CourtSatpal Singh overruledAsha Rani precedent

Judgment

·A NEW INDIA ASSURANCE CO. LTD.
"I v. i
'' VEDWATl AND ORS.

FEBRUARY 20, 2007

B [DK ARITIT PASA YAT AND S.H. KAPADIA, JJ.]

Motor Vehicles Act, 1988:
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-.
ss. 2(14), 2(35), 2(40) and 22(47)-"Goods carriage"-Tractor-
c Carrying a passenger-Accident-Death of passenger-Claim by dependents
from Insurance Company-Held, provisions of the Act do not enjoin any
statutory liability on the owner to get his vehicle ensured for any passenger
•
travelling in .a goods carriage, and insurer would have no liability therefor-
Motor Vehicles Act, 1935-ss. 2(8), 2(55), 2(29) and 2(33).
D
A tractor carrying a passenger met with an accident and, as a result,
the passenger died. The dependents filed a claim petition and the Motor
-'1
Accident Claims Tribunal relying on Satpal Singh 's case* held the insurer
liable to pay the compensation. After unsuccessfully challenging the award .....
before the High Court, the insurer filed the present appeals.
E
Allowi11g the appeals, the Court

HELD:l.l. The present case is covered by the Motor Vehicles Act, 1988.
The difference in the language of "goods vehicle" as appearing in s. 2(8) of
the Motor Vehicles Act, 1935 and "goods carriage" in s.2(14) of the Motor
+-
F Vehicles Act, 1988 is of significance. A bare reading of the provisions niakes
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
becomes further clear because the expression used is "good carriage" is
solely for the carriage of goods. Carrying of passengers in a goods carriage
G
is not contemplated in the Act. There is no reference to any passenger in
"goods carriage". The inevitable conclusion, therefore, is that provisions of
the Act do not enjoin any statutory liability on the owner of a vehicle to get
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....

his vehicle insured for any passenger travelling in a goods carriage and the

H 918 -
NEW INDIA ASSURANCE CO. LTD. v. VEDWATI [PASAYAT, J.] 919

r insurer would have no liability therefor. (Para 7, 13, 14) [920-H; 923-A-D) A

1.2. In Asha Rani's case** it has been held that Satpal Singh's case
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 award. The impugned order of the High Court is not sustainable and is
accordingly set aside. (Para 15-17) (923-E-G) B

*New India Assurance Company v. Satpal Singh & Ors., (2000) l SCC
237, stands overruled.

**New India Assurance Company Ltd. v. Asha Rani and Ors., (2002) 8 C
Supreme 594; Oriental Insurance Co. Ltd. v. Devireddy Kanda Reddy and
Ors., (2003) 2 SCC 339'; National Insurance Co. Ltd. v. Ajit Kumar and Ors.,
(201>3) 9 SCC 668 2; National Insurance Co. Ltd. v. Baljit Kaur and Ors.,
(2004) 2 SCC P and National Insurance Co. Ltd. v. Bommithi Subbhayamma
and Ors., [2005) 12 SCC 243, relied on.
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 860 of2007.

From the final Judgment and Order dated 29.11.2001 of the High Court
•· of Judicature at Allahabad in F.A. from Order No. 1773/2001.

WITH E
C.A. No 861 of2007.

A.K. Raina, R.K. Bhartiya and Anil Kumar Jha for the Appellant.

K.K. Mohan and K.N. Rai for the Respondents. F
The Judgment of the Court was delivered by

DR. ARIJIT PASAYAT, J. I. Leave granted.

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2. Challenge in these appeals is to the judgment rendered by a Division
Bench of the Allahabad High Court dismissing the appeal filed by the appellant G
-- -.\' (hereinafter referred to as the 'Insurer'). By the impugned judgment the High
I. [2003) I SCR 537.

2. [2003] 3 Supp. SCR 321.

3. [2004] I SCR 274. H
920 SUPREME COURT REPORTS (2007) 2 S.C.R.

A Court held that the respondent Nos. I to 6 (hereinafter referred to as the
'Claimants') were entitled to compensation and that the same was to be paid "i
by the insurer;

3. Background facts in a nutshell are as follows:

B A Claim.Petition was filed under Section 166 of the Motor Vehicles Act,
1988 (in short the 'Act') claiming compensation with the allegation that Paras
Ram Agnihotri (hereinafter referred to as the 'deceased') was returning from
his village Gokhia from Atarra in tractor No.MP 16A/2637 after delivering
certain goods there. The tractor overturned due to rash and negligent driving
C by the driver, with the result the deceased has lost his life. He was aged about
38 years and was working as priest and agricultural farmer from which he was
earning about Rs.7,000/- per month. Adjudicating the Claim Petition, the IVth
Additional D~strict Judge Banda-cum-Mot9r Accidents Claims Tribunal (in
short the 'MACT') did not accept the plea of the insurer that there was
violation of terms of the policy issued to Jagdish Prasad (hereinafter referred
D to as the 'insured'). The tractor could only be used for agricultural work.
Since the same was used for carrying passenger, the insurer was not
responsible to indemnify to any award and to pay any amount to the claimants.
The Tribunal rejected this plea and held that in view of this Court's judgment
in New India Assurance Company v. Satpal Singh & Ors. [2000) I SCC 237,
E passenger travelling in a goods vehicle graciously was also entitled to claim
compensation which was to be paid by the insurer. The High Court affirmed
the view by the impugned order.

4. In support of the appeals, learned counsel for the appellant submitted
that the view in Satpal Singh 's case (supra) has subsequently been overruled
F by this Court and therefore the view of the High Court is unsustainable.
+
5. In response, learned counsel for the claimants submitted that in any
event the liability of the insurer vis-a-vis the third party will not be altered.

6. This Court had occasion to deal with cases of passengers traveling
G in goods vehicles which met accident 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 as the 'Amendment Act').
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? ... --

H 7. The present appeals belong to the second category.
NEW INDIA ASSURANCE CO. LTD. v. VEDWATI [PASAYAI, J.] 921

8.In Satpal Singh 's case (supra) this Court proceeded on the footing A
t" that provisions of Section 95(1) of the old Act arc 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) of the old Act with the corresponding provisions B
i.e. Section 2(14), 2(35) 2(40) and 2(47) of the Act, it is clear that there are
conceptual differences. The provisions read as follows:

- -< Old Act:

"2 (8) "goods vehicle" means any motor vehicle constructed or adapted c
for use for the carriage of goods, or any motor vehicle not so
constructed or adapted whelil used for the carriage of goods solely or
in addition to passengers"

"2(25) "public service vehicle" means any motor vehicle used' or
adapted to be used for the carriage of passengers for hire or reward D
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 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:" E

"2(33) "transport vehicle" means a public service vehicle or a goods
vehicle:"

The Act (New Act):

·...Ii "2(14) "goods carriage" any motor vehicle constructed or adapted for F
; . use solely for the carriage of goods or any 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, contract and stage carriage:"
G

-----,.tl!I.-..,____..;-
"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 for stages of the journey:"
H
922 SUPREME COURT REPORTS (2007] 2 S.C.R.

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)

·10. "Liability" as defined in Section 145(c) of the Act reads as follows:
B '
"Liability", wherever used in relation to the death of or bodily injury
to any person, includes liability in 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 VlII of the old Act and Chapter
C XI of the Act. Proviso to Section 147 of the Act (sic) is to be (sic) with Section
96 of the' old Act. Proviso to Section 14 7 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 of and in the
course of his employment of the employee of a person insured by the
D policy or in respect of bodily injure sustained by such an employee
arising out of and in the course of his ~mployment other than a
liability arising under the 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
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(b) ifit 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

F (ii) to cover any contractual liability."
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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:-

"except where the vehicle is a vehicle in which passengers are carried
G
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 or mounting or
alighting from the vehicle at the time of the occurrence of the event
out of which a claim arises."
H
_.._._
'

NEW INDIA ASSljRANCE CO. LTD. v. VEDWATI [PASAYAT, J.] 923
13. The difference in the language of "goods vehicle" as appear in the A
+- old Act and "goods carriage" in the Act is of 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 passeng:ers" as contained in definition of "good vehicle" in
the old Act. The position becomes further clear because the expression used
is "good carriage" is solely for the carriage of goods. Carrying of passengers B
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
-1 prescribing 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 c
vehicle and employees carried in goods vehicle 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".

14. The inevitable conclusion, therefore, is that provisions of the Act
do not enjoin any statutory liability on the owner of a vehicle to get his D
.. vehicle insured for any passenger 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 Supreme 594, in which it has been held that Satpal Singh 's case
E
(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 award.

-\ 16. This position was also highlighted in Oriental Insurance Co. Ltd.
-. .. , v. Devireddy Konda Reddy and Ors., [2003) 2 SCC 339. Subsequently also in
F
National Insurance Co. Ltd. v. Ajit Kumar and Ors., [2003) 9 SCC 668, in
National Insurance Co. Ltd. v. Baljit Kaur and Ors., [2004) 2 SCC 1, and in

.. National Insurance Co. ltd. v. Bommithi Subbhayamma and Ors., [2005) 12
SCC 243, the view in Asha Rani's case (supra) was reiterated .
G
17. Above being the position, the impugned order of the High Court is
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~"\'"·
not sustainable and we accordingly set aside the same.

18. Appeals are allowed with no order as to costs.
-~ '
RP. Appeals allowed.
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