Holding

The Motor Vehicles Act, 1988 does not impose any statutory liability on the insurer of a goods carriage for passengers, so the insurer is not liable for compensation.

Summary

Certain goods vehicles insured by Oriental Insurance Company were involved in accidents that killed unauthorised or gratuitous passengers. Claims were filed under the Motor Vehicles Act, 1988 and the Motor Accident Claims Tribunal held the insurer liable for compensation. The High Court upheld that decision, relying on New India Assurance Co. v. Satpal Singh. The Supreme Court examined the definitions of "goods carriage" in the 1988 Act versus "goods vehicle" in the 1939 Act and noted the omission of a clause requiring insurance for passengers in a goods carriage. It held that the Act imposes no statutory liability on the owner or insurer for passengers in a goods carriage, and therefore the insurer is not liable. The Court set aside the Tribunal and High Court judgments, allowing the appeals without costs.

Issues considered

Whether Section 147 of the Motor Vehicles Act, 1988 imposes liability on the insurer of a goods carriage for death of unauthorised or gratuitous passengers.
Whether the ratio in New India Assurance Co. v. Satpal Singh is applicable to cases governed by the 1988 Act.
Whether the proviso to Section 147 creates a statutory requirement for insurance coverage for passengers in a goods carriage.

Legislation cited

Motor Vehicles Act, 1939s. 95(1), s. 96(2)(b)
Motor Vehicles Act, 1988s. 140, s. 145(c), s. 147, s. 2(14), s. 2(35), s. 2(40), s. 2(47)
Motor Vehicles (Amendment) Act, 1994
Workmen's Compensation Act, 1923

Subjects

Motor Vehicles Actgoods carriageinsurer liabilitygratuitous passengercompensationstatutory interpretationold vs new Act

Judgment

ORIENTAL INSURANCE COMPANY LTD. A
v.

-
~
DEVIREDDY KONDA REDDY AND ORS. ETC. ETC.

JANUARY 24, 2003

[SHIVARAJ V. PATIL AND ARIJIT PASAYAT, JJ.) B
_...
Motor Vehicles Act, 1988

Ss.2(14), 2(35),2(40),2(47) and 147-"Goods carriage"-Carrying
unauthorised and gratuitous passengers-Accident-Death of passengers- c
Compensation-Liability of insurer-Held, insurer not liable.

Certain goods vehicles, which were insured with the appellant
insurance company, met with accidents resulting in death of several
persons who were either unauthorised or gratuitous passengers in the said D
vehicles. Legal representatives of the deceased persons laid claim before
the Motor Accidents Claim Tribunal under Motor Vehicles Act, 1988 The
Tribunal held the insurer liable to indemnify the award passed. The
appeals filed by the insurer were dismissed by the Single Judge as well as
the Division Bench of the High Court, relying on the decision in Satpal
Singh 's case*. Aggrieved, the insurer filed the present appeals. E

It was contended for the appellant-insurance company that the ratio
in Satpal Singh 's case had no application to the instant case.

Allowing the appeals, the Court
F
.-L
HELD: 1.1. The provisions of Motor Vehicles Act, 1988 do not enjoin
any statutory liability on the owner of a goods carriage to get his vehicle
insured for any passenger travelling therein, and the insurer would have
no liability therefor. The Tribunal and the High Court were not justified
in holding the insurer liable to satisfy the award. [542-D-E] G
New India Assurance Company Limited v. Asha Rani and Ors., (2002)
8 Supreme 594, followed.

~ 1.2. Jn Satpal Singh 's case the Court proceeded on the footing that
537 H
538 SUPREME COURT REPORTS [2003] 1 S.C.R.

A provision of Section 95(1) of Motor Vehicles Act, 1939 were in pari materia
with Section 147(1) of Motor Vehicles Act 1988 as it stood prior to the
)r·
amendment in 1994. On a closer reading of the expressions "goods
vehicle", "public service vehicle", "stage carrier" and "transport vehicle" ....
occurring in Sections 2(8), 2(25), 2(29) and 2(33) of the old Act with the
corresponding provisions i.e. Section 2(14), 2(35) 2(40) and 2(47) of the
B Act, it is clear that there are conceptual differences. It is of significance
that proviso appended to Section 95 of the old Act contained clause(ii)
which does not find place in the new Act. (539-H; 540-A-B; 541-F)

*New India Assurance Company v. Satpal Singh and Ors., (2000) l
c sec 237, referred to.
1.3. The difference in the language of "goods vehicle" as appearing
in the 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
D the expression "in addition to passengers" as contained in definition of
"goods vehicle" in the old Act. The position becomes further clear because
the expression used in the Act is "goods carriage", i.e., solely for the
carriage of goods". Carrying of passengers in a goods carriage is not
contemplated in the Act. (541-H; 542-A)

E CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 981-990
of 2002.

From the Judgment and Order dated 18.6.2001 of the High Court of
A.P. in LPA 172/01, 175-181/01, 195/01)
F Joy Basu and B.K. Satija with him, for the Appellants.
,J.._ "'
M. Vijaya Bhaskar and D. Mahesh Babu with him, for the Respondents.

The Judgment of the Court was delivered by
G ARIJIT PASAYAT, J. These appeals are directed against the common
judgment rendered by a Division Bench of the Andhra Pradesh High Court.
By the said judgment, it upheld view of learned Single Judge that compensation ).-..
is payable by the insurer even if the deceased persons in respect of whom
claims are made were gratuitous passengers. Both the learned Single Judge
H and the Division Bench relied on the decision of this Court in New India
ORIENTAL INSURANCE COMPANY LTD. v. D.K. REDDYIARIJITPASAYAT. J.l 539
Assurance Company v. Satpa/ Singh and Ors., (2000] I SCC 237 for coming A
-,i: to this conclusion.

Since the point involved is one of law, the factual position which is
almost undisputed needs to be noted in brief. Certain persons were travelling
in goods vehicles which were subject-matter of insurance with th~ appellant-
Oriental Insurance Company Limited (hereinafter referred to as "the Insurer"). B
The vehicles met with accidents resulting in death of several persons who
were either unauthorized or gratuitous passengers in the said vehicles. Their
legal representatives lodged claims under Motor Vehicles Act, 1988
(hereinafter referred to as 'the Act'). Though the accidents took place on
different dates, the Motor Accident Claims Tribunal, Anantapur, (hereinafter C
referred to as 'the Tribunal') took up the cases together as according to it the
points of dispute were identical. It held that the deceased persons accompanied
the goods which were transported by the goods carriages in question.
Accordingly, it held that the insurer was liable to indemnify the award passed.
In appeals filed by the insurer, learned Single Judge concurred with view of
the Tribunal relying on Satpal Singh 's case (supra). As noted above, the D
Division Bench dismissed the appeals against learned Single Judge's
judgments. The said common judgment as noted above is under challenge in
these appeals.

Learned counsel for the insurer-appellant submitted that Section I 49
(2) of the Act is etymologically different from proviso (ii) to Section 96 E
(2)(b) of the Motor Vehicles Act, 1939 (hereinafter referred to as the 'old
Act') and, therefore, the ratio in Satpal Singh 's case (supra) has no application.
In response, learned counsel appearing for the claimants submitted that in
Satpa/ Singh 's case (supra) such a stand has been negatived and it has been
held that insurer is liable to pay compensation to gratuitous passengers. F
This Court had occasion to deal with cases of passengers travelling in
goods vehicles which met accident resulting in death of such person or bodily
injury. Such cases belong to three categories i.e. (I) 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 G
referred to as the 'Amendment Act').

The present appeals belong to the second category.

In Satpal Singh 's case (supra) this Court proceeded on the footing that
provision of Section 95( I) of the old Act are in pari materia with Section H
540 SUPREME COURT REPORTS [2003) 1 S.C.R.

A 147(1) of the Act, as it stood prior to the amendment in 1994.
On a closer reading of the expressions "goods vehicle", "public service
vehicle'', "stage carrier" and "transport vehicle" occurring in Sections 2(8),
2(25), 2(29) and 2(33) of the old Act with the corresponding provisions i.e.
Section 2(1:4), 2(35), 2(40) and 2(47) of the Act, it is clear that there are
B conceptual differences. The provisions read as follows:

Old Act:

"2(8) "goods vehicle" means any motor vehicle constructed or adapted
for use for the carriage of goods, or any motor vehicle not so
C constructed or adapted when 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,
and includes a motorcab, contract carriage, and stage carriage;"
D
"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;"

New Act:

"2(14) "goods carriage" any motor vehicle constructed or adapted for
F l!Se solely for the cprriage of goods, or any motor vehicle not SO
constructed or adapted when used for the carriage of goods;"

"2(35) "public service vehicle" means any motor vehicle 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
"2(40) "stage carriage" means a motor vehicle constructed or adapted
to carry more than six passengers excluding the driver for hire or
reward at separate fares paid by or for individual passengers, either
for the whole journey or for stages of the journey;"

H "2(47) "transport vehicle" means a public service vehicle, a goods
. ORIENT ALINSURANCE COMPANY LTD. v. D.K. REDDY [ARIJ!T PASAYAT, I.] 54 J

carriage, an educational institution bus or a private service vehicle;" A
(Underlined for emphasis)

"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 respect thereof under Section 140;" B
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 needs to be juxtaposed with Section 95
of the old Act. Proviso to Section 147 of the Act reads as follows:
c
"Provided that a policy shall not be required-

)I._ (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
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 D
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
E
(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 goods carriage, being carried in the vehicle, or

(ii) to cover any contractual liability."
F
_.!- It is of significance that proviso appended to Section 95 of the old Act
contained clause(ii) which does not find place in the new Act. The same
reads as follows:-

"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 G
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."

The difference in the language of "goods vehicle" as appearing in the ol<l Act H
542 SUPREME COURT REPORTS [2003] I S.C.R.
•
A 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 passengers" as contained in definition of "goods vehicle" in the ...'
old Act. The position becomes further clear because the expression used is
"goods carriage'', i.e. "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
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
c compulsory coverage in respect of drivers and conductors of public service
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". )I

The;: inevitable conclusion, therefore, is that provisions of the Act do
D not enjoin any statutory liability on the owner of a vehicle to get his vehicle
insured for any passenger travelling in a goods carriage and the insurer would
have no liability therefor.

Our view gets support from a recent decision of a three-judge Bench
of this Court in New India Assurance Company limitedv. Asha Rani & Ors.,
E [2002] (8)] Supreme 594] in which it has been held that Satpa/ Singh 's case
(supra) was not correctly decided. That being the position the Tdbunal and
the High Court were not justified in holding that the insurer had the liability
tq satisfy the award.

The appeals are accordingly allowed by setting aside judgments of
F Tribunal and High Court but in the peculiar circumstances without any order ~
as to costs.

R.P. Appeal allowed.