Holding

A goods vehicle is not a passenger vehicle for the purposes of Section 95(1)(b) proviso (ii) unless it is used systematically to carry passengers for hire or reward, and therefore the insurer is not liable for such passengers.

Summary

The Supreme Court examined several appeals concerning the liability of insurers under Section 95 of the Motor Vehicles Act, 1939 for passengers travelling in goods carriages. The petitioners, owners of goods vehicles and claimants, argued that the insurance policy should cover death or injury of passengers, including owners, hirers, or gratuitous passengers. The respondents, the insurance companies, contended that the Act's proviso (ii) limits compulsory coverage to passengers carried for hire or reward or by reason of a contract of employment, and that a goods vehicle is not a passenger vehicle unless used systematically for such carriage. The Court held that a goods vehicle cannot be deemed a passenger vehicle on the basis of occasional use and that the correct test is whether there is systematic carriage of passengers. Consequently, the insurer was not liable to indemnify for the deaths in question. The appeals filed by the insurance companies were allowed, while those of the claimants and vehicle owners were dismissed, and the related petitions were also dismissed.

Issues considered

The scope of proviso (ii) to Section 95(1)(b) of the Motor Vehicles Act, 1939 regarding passengers carried for hire or reward.
Whether a goods carriage can be classified as a passenger vehicle for insurance liability purposes.
The test to determine if a passenger is carried for hire or reward – systematic carriage versus occasional use.
The applicability of compulsory insurance coverage to owners, hirers, and gratuitous passengers in goods vehicles.

Legislation cited

Motor Vehicles Act, 1939s. 95(1)(b), s. 95(1)(b) proviso (ii)
Motor Vehicles Act, 1988s. 147

Subjects

Motor Vehicles Actinsurance liabilitygoods carriagepassenger hire rewardproviso interpretationsystematic carriagecompulsory insurance

Judgment

A SMT. MALLA WWA ETC.
v
THE ORIENTAL INSURANCE CO. LTD. AND ORS.

NOVEMBER 27, 1998

B [M.K. MUKHERJEE, G.T. NANAVATI AND B.N. KIRPAL, JJ.]

Motor Vehicles Act, 1939.

S. 95(1) (b), proviso (ii)-Goods carriages-Carrying persons like goods
C owners, hirers or gratuitous passengers-Accident-Death of passenger-
Liability f'Jf insurer-Held, goods carriage cannot be considered as a
passengelvehic/e on the basis of single use or use on some stray occasions-
For purpose of construing proviso (ii) the correct test to determine whether
a passenger was carried for hire or reward would be whether there has been
D a systematic carrying of passengers-A vehicle so used can only be said to
be a vehicle in which passengers are carried for hire or reward.

In two different cases arising out of motor accident claims, pertaining
to death of persons travelling in goods carriages, the Karnataka High Court
held that the insurance company was not liable to pay compensation in
E respect of death or bodily injury to any person travelling in a goods carriage
as passenger whether as a hirer of otherwise. It also held that under the
insurance policy, there being no extra coverage in respect of a passenger
like an owner or hirer or a gratuitous passenger travelling in the vehicle,
the insurance company was not liable to pay compensation to the claimants
either on the ground of fault liability or on the ground ofno fault liability.
F On the other hand, a Full Bench of the Rajasthan High Court held that in
case of passengers carried for hire or reward by reason of or in pursuance
of a contract of employment in any vehicle, the insurance company was liable,
this would include owner of the goods as well as his employee. In some other
cases the High Courts concerned held that a passenger travelling in a goods
G vehicle would be a passenger carried for hire or reward within the meaning
of proviso (ii) to s.95(1) of the Motor Vehicles Act, 1939 and, therefore, the
insurance company would be liable to indemnify the insured except in cases
of breaches of specified conditions. The present owners appeals were filed
by the claimants, the of vehicles and the Insurance Company against the
H judgments of the High Courts concerned.
152
SMT. MALLA WWA ETC v. THE 0.1. C. LTD. 153
The appeals were listed before a two-judge Bench which noticed the A
divergent views of the High Courts on the interpretation of s.95 of the Act.
The Bench was of the view that the decision of this Court in Pushpabai
Parshottam Udeshi v. MIS Ranjit Ginning and Pressing Co. Pvt. Ltd. AIR
(1977) SC 1735 would also require reconsideration, and that the matter be
heard by a Bench of thre~ Judges. Accordingly, the matter came to be heard B
by a Bench of three Judges.

Allowing the appeals of the Insurance Company and dismissing those
of the claimants and the vehicle owners, this Court

HELD: I.I. Keeping in mind the classification of vehicles by the Motor
Vehicles Act, 1939, the requirement of registration with particulars including C
the class to which it belonged, requirement of obtaining a permit for using
the vehicle for different purposes and compulsory coverage of insurance
risk, it would not be proper to consider a goods vehicle as a passenger
vehicle on the basis of a single use or use on some stray occasions at that
vehicle for carrying passengers for hire or reward. [161-G-H; 162-AI D
1.2. For the purpose of construing a provision like proviso (ii) to
Section 95(i) (b) of the Act, the correct test to determine whether a passenger
was carried for hire or reward, would be whether there has been a systematic
carrying of passengers. Only if the vehicle is so used then that vehicle can
be said to be a nhicle in which passengers are carried for hire or reward. E
(162-A-B)

1.3. The legislature, after providing generally in Clause (b) of Sub-
section (l) of s.95, in wide terms so as to include 'any person' and every
motor 'vehicle' within its sweep, carved out certain exceptions by adding a
proviso to that clause. Proviso (ii) in clear terms restricted the scope of the F
main provision by confining its application to the vehicle which is 'a vehicle
in which passengers are carried for hire or reward or by reason of or in
pursuance of a contract of employment'. In the first instance, the vehicle had
to be a vehicle of that class in which passengers were carried. Further, the
compulsory coverage was not intended for all passengers and, therefore; it G
was provided that "passengers are carried for hire or reward or by reason
of or in pursuance of a contract of employment. Thus the confinement of the
operation of the main provision w115)n respect of vehicles and also passengers.
The decision in Pushpabai* is con"sistent with the above interpretation of
Section 95 as it stood before and· after its Amendment by Act 56 of 1969.
(157-F-G-H; 158-A-BJ H
154 SUPREME COURT REPORTS (1998] SUPP. 3 S.C.R.

A New India Assurance Co Ltd. v. Kanchan Bewa & Ors., (1994) ACJ
138, approved.

*Pushpabai Parshottam Udeshi & Ors. v. Mis Ranjit Ginning & Pressing
Co. Pvt. Ltd. & Anr., AIR (1977) SC 1735, affirmed.

B CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3659of1993 Etc.

From the Judgment and Order dated 3.3.92 of the Karnataka High Court
in M.F.A. No. 1867of1991.

S.C. Dhanda, H.K. Puri, Uijal Banerjee, Rajesh Srivastava, B.R. Sabharwal,
C Sunil Kapoor, M.K. Dua, S.K. Paul, Salil Paul, Atul Chitale, Ravikesh Sinha,
Abhijit P. Mehd, B.V. Desai, N.G.J.R. Luwang, Ms. Shashi Sohari, P.I. Mehta,
(S.K.Jain). (RR-8), (B.D. Sharma) (RR-6, 1, 5), P.K. Seth, S.K. Gupta, K.K.
Gupta, S.C. Birla, Ms. Sushma Suri, Sudhir Kr. Gupta, Ms Suchitra Atul
Chitale, K.R. Nagaraja, Ms. Indra Sawhney and Ms. Meenakshi Arora for the
D Appearing parties.

The Judgment of the Court was delivered by

NANA VA TI, J. These appeals were earlier placed for hearing before a
Division Bench consisting of our learned Brothers Bharucha and Majmudar,
E JJ. on 20.2.1996. Upon hearing the counsel, the Division Bench passed the
following order :

"What we are concerned with in these matters is the correct
interpretation of Section 95 of the Motor Vehicles Act, 1939. The
question arises, specifically, in the context of the death of ..ne owner
of goods being carried in a goods vehicle, and the question is whether
F
the insurer of the goods' vehicle is liable to pay the compensation
awarded to his legal heirs. We note that there are divergent views
expressed by the High Courts. Apart from that, in our view, a decision
of a bench of two learned Judges in Pushpabai Parshottam Udeshi
& Ors. v. Mis. Ranjit Ginning & Pressing Co. Pvt. Ltd. & Anr., AIR
G (1977) SC 1735, needs to be reconsidered in greater detail. In these
circumstances, it is appropriate that these matters should be heard
and disposed of by a bench of three learned Judges."

Accordingly, they have been placed before us for final disposal. In Civil

I
Appeal Nos. 3659of1993 and 880/86, the deceased were owners of goods and
H as such were carried in the goods vehicles which had met with accidents. In
SMT. MALLAWWAETCv. THE 0.1.C. LTD. [NANAVATI,J.] 155
C.A. Nos. 1478/87, 6001/90, 6002190, 2098/96, 5872/94, SLP (C) Nos. 10745, A
10747 and I 0748 of 1995 the· deceased were travelling in goods vehicles as
passengers on payment of fare. In SLP (C) No. 9727 of 1989 the deceased was
a gratuitous passenger.

In CA Nos. 3659 of 1993 the facts are that on 6.11.90 while Suresh was
travelling in a goods carriage vehicle from Belgaum to Bagewadi, died as it B
met with an accident. His widow Mallawa, therefore, filed a claim petition
claiming compensation. The claimant also made an application under Section
140 of the Motor Vehicles Act, 1988 for interim compensation. The Motor
Accident Claims Tribunal, Belgaum, awarded Rs. 25,000 under Section 140 and
directed the insurance company to pay that amount. The insurance company C
filed an appeal before the Karnataka High Court against that interim award.
The High Court set aside the order holding that under a motor vehicle
insurance policy issued by an insurance company in conformity with Section
147 of the 1988 Act, the insurance company is not liable to pay compensation
in respect of death or bodily injury to any person travelling in goods carriage
as passenger whether as a hirer or otherwise. It also held that under the D
insurance policy there is no extra coverage in respect of a passenger like an
owner or hirer travelling in the vehicle and, therefore also, the insurance
company is not liable to pay compensation to the claimants either on the
ground of fault liability or on the ground of no fault liability. Aggrieved by
the judgment of the High Court, the claimant has filed this appeal. In Civil E
Appeal No. 880 of 1986, one Poonam Chand when he was travelling with his
goods in a vehicle died as that vehicle met with an accident. The Motor
Accident Claim Tribunal, Kota, dismissed the claim petition on the ground
that the accident had not occurred as a result of rash and negligent driving
of the vehicle by its driver. It also held that the insurance company was
exempted from any liability as the deceased was travelling in a goods vehicle F
contrary to the Motor Vehicle Rules. Aggrieved by that order, the claimants
filed an appeal to the High Court of Rajasthan. It was first heard by a Single
Judge who referred it along with other connected appeals, to a larger Bench
for deciding the question of liability of the insurance company under Sections
95 and 96 of the Act in respect of death or bodily injury caused to persons G
travelling in a goods vehicle with goods or without goods and pursuant to
the contract of service with the owner's vehicle or otherwise. The Full Bench
. held that (I) in case of a gratuitous passenger going on a joy-ride or on his
own responsibility, insurance company is not liable; (2) in case of passengers
carried for hire or reward or by reason of or in pursuance of a contract of
employment in any vehicle, the Insurance Company is liable (this would H
156 SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R.

A include owner of the goods as well as his employees); (3) the insurer shall''
'not be liable to cover liability in respect of employees of the insured for death
or bodily injury arising out of and in the course of his employment other than
the liability arising under the Workman's Compensation Act, 1993, if such
employee is (a) engaged in driving such vehicle or (b) if it is a public service
B vehicle, engaged as a conductor of the vehicle or (c) if it is a goods vepicle,
being carried in the vehicle; and (4) insurer shall not be liable to cover any
contractual liability. Thereafter, the learned Single Judge allowed the appeal
holding that the driver of the vehicle was negligent in driving it that the
proper amount of compensation would be Rs. 96,000 and that the insurance
company is liable to the extent of Rs. 50,000. Aggrieved by the judgment and
C order passed by the High Court the insurance company has filed this appeal.

C.A. Nos. 1478/87, 6001/90, 6002/90, 2098/96, 5872/94, SLP (C) Nos.
10745, 10747 and 10748of1995 have been filed by the New Indian Assurance
Company as it has been held in all those cases by the concerned High Courts
that a passenger travelling in a goods vehicle is a person carried for hire or
·n reward within the meaning of proviso( ii) to Section 95( 1) of the Act and,
therefore, the insurance company is liable to indemnify the insured except in
cases of breaches of specified conditions.

In SLP (C) No. 9727/89, the deceased was a gratuitous passenger in a
E goods vehicle which met with an accident on 5.5.84. The Tribunal held that
the owner of the vehicle alone liable to pay compensation. The Insurance
Company was held not liable to pay it. Aggrieved by that part of the judgment
and order the owner of the vehicle filed an appeal before the Karnataka High
Court. The High Court held the insurance company not liable as the deceased
was a gratuitous passenger and no additional premium was paid by the owner
F of the vehicle for covering risk of such passenger. As her appeal was summarily
dismissed she has filed this appeal.

In all these cases, the accidents had taken place between 1971 and 1985
and therefore we have to consider the position of law as it stood then. Section
95 of the 1939 Act before it was amended by Act 56 of 1969 was as under:
G
"95. Requirements of policies and limits of liability-(!) In order to
comply with the requirements of this Chapter, a policy of insurance
must be a policy which-
(a) is issued by a person who is an authorised insurer or by a co-
H operative society allowed under section I08 to transact the
SMT.MALLAWWAETCv. THE 0.1.C.LTD.[NANAVATl,J.] 157
business of an insurer; and A
(b) insures the person or classes of persons specified in the policy
to the extent specified in sub-section (2) against any liability
which may be incurred by him or them in respect of the death
of or bodily injury to any person caused by or arising out of the
use of the vehicle in a public place : B
Provided that a policy shall not except as may be otherwise
provided under sub-section (3) 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 policy or in respect of bodily injury sustained by C
such an employee arising out of and in the course of his
employment other than a liablity arising under the Workmen's
Compensation Act, 1923, (8of1923), in respect of the death of,
or bodily injury to, any such employee -

(a) engaged in driving the vehicle, or D
(b) if it is public service vehicle, engaged as a conductor of the
vehicle or in examining tickets on the 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 E
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
or mounting of alighting from the vehicle at the time of the
occurrence of the event out of which a claim arises, or
F
(iii) to cover any contractual liability.

What is important to be noted is that the legislature, after providing generally
in Clause (b) of Sub-section (I) in wide terms so as to include 'any person'
and every motor 'vehicle' within its sweep, carved out certain exception by
adding a proviso to that clause. By proviso (ii), it restricted the generality of G
the main provision by confining the requirement to cases 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". In absence of the proviso
the main provision would have included all classes of vehicle including goods
vehicles and all passengers whether carried for hire or reward or by reason
of or in pursuance of a contract of employment or otherwise. That is the H
158 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A reason why there is a reference to different classes of vehicles in proviso (i).
It refers to "vehicle", "public service vehicle" and "goods vehicle''. The
words "any person" in the main provision would have included the employee
of the person insured, and therefore an exception was made by enacting
proviso (i) so as to restrict liability of the insurer in respect of his employees.
Both those exceptions wtre made as the legislature did not want to widen the
B liability of the insurer and the insured by making it more than what it was
under the English Act, upon w~ich Section 95 was based. As rightly pointed
out by this Court in Pushpabai Purshottam Udeshi and Ors. v. Mis Ranjit
Ginning and pressing Co. and Anr., AIR (1977) SC 1735. The requirement of
compulsory coverage was limited then. We quote below what this court has
C stated in that behalf :
"19. As Section 95 of the Motor Vehicles Act, 1939 as amended
by Act 56 of 1969 is based on the English Act it is useful to refer to
that. Neither the Road Traffic Act, 1960 or the earlier 1930 Act required
users of motor vehicles to be insured in respect of liability for death
or bodily injury to passengers in the vehicle being used except a
D
vehicle in which passengers were carried for hire or reward or by
reason of or in pursuance of a contract of employment. In fact sub
section 203(4) of the 1960 Act provided that the policy shall not be
required to cover liability in respect of death of or bodily injury to
persons being carried in or upon, or entering or getting on to or
E alighting from, the vehicle at the time of occurrence of the event out
of which the claims arise. The proviiions of the English Act being
explicit the risk to passengers is not covered by the insurance policy.
The provisions under the English Road Traffic Act, 1960 were
introduced by the amendment of section 95 of the Indian Motor
Vehicles Act. The law as regards general exclusions of passengers is
F
stated in Halsbury's Laws of England, Third Edition, VI. 22, at p. 368
para 765 as follows :-
"Subject to certain exceptions a policy is not required to cover
liability in respect of the death of or bodily injury to, a person being
carried in or upon, or entering or getting or alighting from, the vehicle
G at the time of the occurrence of the event out of which the claim
arises."
20. It is unnecessary to refer to the subsequent development of
the English law and as the subsequent charges have not been adopted
in the Indian statute. Suffice it to say that the Motor Vehicles
H (Passenger Insurance) Act, 1971 made insurance cover for passenger
SMT. MALLA WW A ETCv. THE 0.1. C. LTD. [NANAVATI, J.] 159
liability compulsory by repealing paragraph (a) and the proviso of sub A
section 203(4). But this Act was repealed by Road Traffic Act, 1972
though under section 145 of 1972 Act the coming into force of the
provisions of Act 1971 covering passenger liability was delayed under
December 1, 1972, (Vide Binghams Motor Claims Cases, 7th Ed., p.704).
21. Section 95(a) and 95(b)(l) of the Motor Vehicles Act adopted B
the provisions of the English Road Traffic Act, 1960 and excluded the
liability of the insurance company regarding the risk to the passengers.
Section 95 provides that a policy of insurance must be a policy which
insures the persons against any liability which may be incurred by him
in respect of death 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 C
vehicle in a public place. The plea that the words "third party" are
wide enough to cover all persons except the person and the insurer
is negatived as the insurance cover is not available to the passengers
is made clear by proviso to sub-section which provides that a policy
shall not be required : D
"(ii) except where the vehicle is a vehicle in which passengers are
carried for hire or reward or by a reason of 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 E
out of which a claim arises."
Again turning back to proviso (ii), we find that it in clear terms restricted
the scope of the main provision by confining its application to that vehicle
which is 'a vehicle in which passengers are carried for hire or reward or by
reason of or in pursuance of a contract of employment'. In the first instance, F
the vehicle had to be a vehicle of that class in which passengers were carried.
If that was not intention of the Legislature, it would not have used the
phraseology "the vehicle is a 'vehicle in which passengers are carried" and
would have simply provided that "except where passengers are carried for
hire or reward .. " So also the compulsory coverage was not intended for all
passengers and, therefore, it was provided that "passengers are carried for G
hire or reward or by reason of or in pursuance of a contract of employment.
Thus, the confinement of the operation of the main provision was in respect
of vehicles and also passengers. And that was consistent with the English
Law ,m which Section 95 was based.
As stated earlier, Section 95 was amended by Act 56of1969. Clause (b) H
160 SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R.

A was substituted by a new clause. The relevant part read as under :
"(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
the death of or bodily injury to any person or damage to any
B
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
C vehicle in a public place;

The proviso remained as it was. The object of the Legislature in making that
amendment was to cover the risk in respect of passengers of public service
vehicles. The legislature, therefore, made a special provision in sub-clause(ii)
of clause (b); leaving the rest of sub-section (I) including the proviso as it
D was. If this background is kept in mind, it becomes apparent that the Legislature
did not want to make any change in the position of law except to provide
specifically for covering risk to passengers of public service vehicles. We
quote below the amended clause (b) for ready reference :

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

(i) against any liability which may be incurred by him in respect of
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;
F (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-
(i) to cover liability in respect of the death, arising out of and
G
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 liability arising under the Workmen's
Compensation Act, 1923 (8 of 1923), in respect of the death of
H or bodily injury to, any such employee-
SMT. MALLA WWA ETC v. THE 0.1. C. LTD. [NANA VA TI, J.] 161
(a) engaged in driving vehicle, or A
(b) if it is a public service vehicle, engaged as a conductor of the
vehicle or in examining tickets on the 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 B
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 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 c
(iii) to cover any contractual liability.

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 D
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, if the
act or omission which led to the accident occurred in a public place."

Though apparently, it looked as ifthe Legislature by introducing two E
sub-clauses in clause (b) had tried to make a distinction between
passengers and non-passengers, that was not really so. Though the
proviso appeared after sub-clause (ii) of clause (b ), it really remained
a proviso to the earlier clause (b) which after the amendment became
clause (b )(i). Neither the object of introducing sub-clause (ii) in cl&use
(b) nor the languagt of the proviso indicate that the proviso was to F
act as a proviso to sub-clause (ii) also. Even earlier, the passengers
of a public service vehicle were required to be covered compulsorily
as they answered the description of passengers carried for hire or
reward. The only effect of making a special provisions for passengers
of a public service vehicle was that proviso(ii) thereafter remained G
applicable ·vehicles other than public service vehicles.

For the purposes of Section 95, ordinarily a vehicle could have been
regarded as a vehicle in which passengers have carried if the vehicle was of
that class. Keeping in mind the classification of vehicles, by the Act, the
requirement of registration with particulars including the class to which it H
162 SUPREME COURT REPORTS (1998] SUPP. 3 S.C.R.

A belonged, requirement of obtaining a permit for using the vehicle for different
purposes and compulsory coverage of insurance risk, it would not be proper
to consider a goods vehicle as a passenger vehicle on the basis of a single
use or use on some stray occasions at that vehicle for carrying passengers
for hire reward. For the purpose of construing a provision like proviso (ii) to
B Section 95(1 )(b), the correct test to determine whether a passenger was carried
for hire or reward, would be whether there has been a systematic carrying of
passengers. Only if the vehicle is so used then that vehicle can be said to
be a vehicle in which passengers are carried for hire or reward. The High
Courts have expressed divergent views on the question whether a passenger
can be said to have been carried for hire or reward when he travels in a goods
C vehicle either on payment of fare or along with his goods. It is not necessary
to refer to those decisions which were cited at the Bar as we find that all the
relevant aspects were not taken into consideration while expressing one view
or the other. We may only refer to the decision of the Orissa High Court in
New India Assurance Co. Ltd. v. Kanchan Bewa & Ors., (1994) ACJ 138
D where Hansaria, J. speaking for the Full Bench observed as under :-

" 18. The aforesaid is not enough to take any view as to whether
goods vehicle can or cannot come within the fold or proviso(ii) with
which we are concerned. Our primary reason for differing, with respect,
with Rajasthan Full Bench is that allowing goods vehicle to be taken
E within the fold of proviso (ii) would introduce to uncertainties in law
as that would depend upon various factors to which we shall advert;
the result would be that the law would cease to be certain which it
has to be at least in a case of the present nature. We have said so
because reference to the definition of goods vehicle shows that the
first part of it does not deal with carrying of passengers. It is the
F second part which speaks about the same and that too when the
vehicle is used for such a purpose. The word 'use has been defined
in Chambers English Dictionary in its intransitive sense to mean 'to
be accustomed; (to; used chiefly in the past tense);' 'to be in the
habit of so doing'; 'to resort'. Reference to the meaning of this word,
G as given in Black's Law Dictionary, 5th edition, would show that even
one user may amount to 'use' or it may be that for a thing being said
to be 'used', it has to be 'employed habitually'.

19. Being concerned with a beneficial legislation like the one at hand, ·
we would have normally preferred liberal interpretation, but the question
H is whether, without any extra premium having been paid, the owner of
SMT. MALLA WW A ETCv. THE 0.1. C. LTD. [NANAVATI,J.) 163
a goods vehicle can claim indemnification from the insurer just because A
once in a year the goods vehicle had carried a passenger for hire or
reward along with· the goods. This would perhaps robe the third
proviso dealing with coverage of contractual liability lame ...

xxx xxx xxx
B
22. Thus, to find out whether an insurer would be liable to indemnify
an owner of a goods vehicle in a case of the present nature, the mere
fact that the passenger was carried for hire or reward would not be
enough; it shall have to be found out as to whether he was the owner
of the goods, or an employee of such an owner, and then whether
there were more than six persons in all in the goods vehicle and C
whether the goods vehicle was being habitually used to carry
passengers. The position would thus become very uncertain and
would vary from case to case. Production of such result would not
be conducive to the advancement of the object sought to be achieved
by requiring a compulsory insurance policy. D
23. There is another aspect of the matter which had led us to differ
from the Full Bench decision of Rajasthan High Court. The same is
what finds place in sub-section (2) of Section 95. That sub-section
specifies the limits ofliability and clause (a) deals with goods vehicle;
and in so far as the person travelling in goods vehicles is concerned, E
it has confined the liability to the employees only. This is an indicator,
and almost a sure indicator, of the fact that legislature did not have
in mind carrying of either the hirer of the vehicle or his employee in
the goods vehicle, otherwise, clause (a) would have provided a limit
of liability regarding such. persons also."
F
Though, the conclusion was arrived at after taking into consideration
the Orissa Motor Vehicle Rules, in our opinion the said view is correct, even
otherwise also. In view of what we have said, the contrary view expressed
by other High Courts has to be regarded as incorrect.

G
We will now consider whether the decision of this Court in Pushpabai's
case (supra) requires reconsideration. That was a case of a passenger travelling
in a motor car. He was not travelling for hire or reward. The vehicle was
neither a public service vehicle nor a goods vehicle, but it was a different
class of vehicle. It was in that context that this Court made the following
observation in paragraph 21 and 22 : H
164 SUPREME COURT REPORTS (1998) SUPP. 3 S.C.R.

A " ... The plea that the words "third party" are wide enough to cover
all persons except the person and the insurer is negatived as the
insurance cover is not available to the passengers is made clear by
the proviso to sub-section which provides that a policy shall not be
required:

B "(ii) except where the vehicle is a vehicle in which passengers are
carried for hire or reward or by a 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.
c
(22). Therefore it is not required that a policy of insurance should
cover risk to the passegners who are not carried for hire or reward.
As under section 95 the risk to a passenger in a vehicle who is not
carried for hire or reward is not required to be insured the plea of the
counsel for the insurance company will have to be accepted and the
D
insurance company held not liable under the requirements of the
Motor Vehicles Act."

What was held in that case, is, with respect consistent with our
interpretation of Section 95 as it stood before and after its Amendment by Act
E 56of 1969.

The 1939 Act is now replaced by the 1988 Act. Section 147 which
corresponds to old Section 95 has been substantially altered by the Legislature.
Therefore, the above interpretation of Section 95 of the 1939 Act will govern
the cases which have arisen under the 1939 Act. According to our interpretation
F of Section 95(1 )(b )(i) and the proviso, the appeals filed by the Insurance
Company are allowed. In SLP(C) Nos. 10745, 10747 and 10748of1995 filed by
the Insurance Company, 'leave' is granted and those appeals are also allowed.
The appeals filed by the claimants/owners of the vehicles are dismissed. SLP
(C) No. 9727 of 1989 filed by the owner of the vehicle is also dismissed.

GRP. Appeals allowed /dismissed. Petition dismissed.