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Reportabl e

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NOS.     1345-1346     OF     2009   

Oriental Insurance Company Ltd.          ...Appellant

Versus

Surendra Nath Loomba and Others       ...Respondents

WITH

CIVIL     APPEAL     NOS.     1347-1348     OF     2009   

Surendra Nath Loomba          ...Appellant

Versus

Oriental Insurance Company Ltd. & ors.      ...Respondents

J     U     D     G     M     E     N     T       

Dipak     Misra,     J.   

In the present batch of appeals, two preferred by the  

Oriental Insurance Company Limited and two preferred by  

claimant, the assail is to the common judgment passed by  

the High Court of Uttarakhand at Nainital in A.O. No. 201 of

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2003 and A.O. No. 284 of 2003 wherein the award dated  

19.5.2003 passed by the Motor Accidents Claims Tribunal,  

Dehradun (for short ‘the tribunal’) in M.A.C.T. Petition No.  

10 of 1999 was challenged by the insurer and the claimant  

from different spectrums.

2. The facts which are requisite to be stated are that on  

9.10.1998 about 4.30 a.m. claimant, Surendra Nath  

Loomba, was travelling in a Maruti Esteem Car bearing  

Registration No. DL 8C-5096 belonging to the respondent  

No. 3, Savita Matta, and driven by the respondent No. 2, Raj  

Loomba, the son of the claimant.  Near the President Body-

guard House, Rajpur Road, the vehicle dashed against a  

tree and in the accident the windscreen (front) of car was  

smashed and its pieces got inserted into the eyes of the  

claimant as a consequence of which he lost his both eyes.  

As set forth, at the time of the accident the claimant was  

working as a Senior Manager in Punjab National Bank and  

his gross salary was Rs.18,949.86 per month and various  

perquisites were also attached to the service.   Keeping in  

view his salary and other perquisites he filed an application  

under Section 166 of the Motor Vehicles Act, 1988 before  

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the tribunal putting forth a claim of Rs.62,00,000/- with  

18% interest as compensation.  

3. The respondent No. 2, Raj Loomba, filed his written  

statement contending, inter alia, that at the time of accident  

the vehicle was insured with the Oriental Insurance  

Company Limited and hence, it being the insurer was liable  

to pay the compensation.

4. The insurance company resisted the claim of the  

claimant on the ground that the driver of the vehicle did not  

have a valid driving licence; that the proceedings had been  

initiated in a collusive manner; and that even if the accident  

as well as the injuries were proven the insurer was not  

liable to indemnify the owner as the claimant was travelling  

as a gratuitous passenger.

5. The tribunal on the basis of material brought on  

record came to hold that as the insurer had issued  

Certificate of Insurance in respect of the vehicle in question  

and it was valid during the period when the accident  

occurred, it was liable to pay the compensation; that the  

opposite party No. 1 had a valid driving licence and the  

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accident had occurred and there was no collusion between  

the parties; and that the victim was entitled to get a total  

sum of Rs.20,97,984/- towards compensation with 9%  

interest per annum regard being had to the pecuniary and  

non-pecuniary losses.  Be it noted, the tribunal, while  

computing the amount, had deducted certain sum under  

certain heads which need not be stated in detail.

6. Aggrieved by the aforesaid award the insurance  

company preferred A.O. No. 201 of 2003 and the injured  

claimant preferred A.O. No. 284 of 2003 before the High  

Court.  The High Court, by the common impugned order,  

reduced the amount of compensation to Rs.16,42,656/- and  

concurred with the conclusion arrived at by the tribunal as  

regards the liability.    Thus, the appeal preferred by the  

insurance company was allowed in part and the appeal  

preferred by the claimant was dismissed.  Hence, the  

present batch of appeals by the insurance company as well  

as by the claimant.

7. First, we shall deal with the appeals preferred by the  

insurance company It is worth noting that the Certificate of  

Insurance was filed before the tribunal which clearly  

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showed that the vehicle was insured with the appellant-

company.  Dr. Meera Agarwal, learned counsel for the  

appellant-insurer would submit that it was only an “Act  

Policy”  and, therefore, the liability of the insurer does not  

arise.  She has commended us to the decisions in United  

India Insurance Co. Ltd., Shimla v. Tilak Singh and  

Others1, Oriental Insurance Company Ltd. v. Jhuma  

Saha (Smt.)2, Oriental Insurance Company Ltd. v.  

Sudhakaran K.V. and others3 and New India Assurance  

Company Ltd. v. Sadanand Mukhi and others4.

8. Learned counsel for the respondents would contend  

that whether the policy is an “Act Policy”  or a  

“Comprehensive/Package Policy”  or whether any extra  

premium was paid to cover the passenger, is not reflected  

from the Certificate of Insurance as the policy was not  

brought on record by tendering the same before the  

tribunal.

9. In Tilak Singh (supra) this Court referred to the  

concurring opinion rendered in a three-Judge Bench  

1 (2006) 4 SCC 404 2 (2007) 9 SCC 263 3 (2008) 7 SCC 428 4 (2009) 2 SCC 417

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decision in New India Assurance Co. Ltd. V. Asha Rani5  

and ruled thus:-

“In our view, although the observations  made in Asha Rani case were in connection  with carrying passengers in a goods vehicle,  the same would apply with equal force to  gratuitous passengers in any other vehicle  also.  Thus, we must uphold the contention  of the appellant Insurance Company that it  owed no liability towards the injuries  suffered by the deceased Rajinder Singh  who was a pillion rider, as the insurance  policy was a statutory policy, and hence it  did not cover the risk of death of or bodily  injury to a gratuitous passenger.”

It is worthy to note in the said case the controversy related  

to gratuitous passenger carried in a private vehicle.  

10. In Jhuma Saha (Smt.) (supra) this Court has stated  

thus: -

“The additional premium was not paid in  respect of the entire risk of death or bodily  injury of the owner of the vehicle.  If that be  so, Section 147 (b) of the Motor Vehicles Act  which in no uncertain terms covers a risk of  a third party only would be attracted in the  present case.”

5 (2003) 2 SCC 223

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11. In National Insurance Co. Ltd. v. Laxmi Narain  

Dhut6 after elaborately referring to the analysis made in  

Asha Rani (supra) the Bench ruled thus:-

“Section 149 is part of Chapter XI which is  titled “Insurance of Motor Vehicles against  Third-Party Risks”.  A significant factor  which needs to be noticed is that there is no  contractual relation between the insurance  company and the third party.  The liabilities  and the obligations relatable to third parties  are created only by fiction of Sections 147  and 149 of the Act”.

In the said case it has been opined that although the  

statute is a beneficial one qua the third party but that  

benefit cannot be extended to the owner of the offending  

vehicle.  The said principle was reiterated in Oriental  

Insurance Company Ltd. v. Meena Variyal and Other7,  

Sudhakaran K. V. (supra) and Sadanand Mukhi (supra).

12. It is apt to note here that this Court in  

Bhagyalakshmi and others v. United Insurance  

Company Limited and another8, after dealing with various  

facets and considering the authorities in Amrit Lal Sood  

6 (2007) 3 SCC 700 7 (2007) 5 SCC 428 8 (2009) 7 SCC 148

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and Another v. Kaushalya Devi Thapar and Others9,  

Asha Rani (supra), Tilak Singh  (supra), Jhuma Saha  

(supra),  Sudhakaran K. V. and Others (supra), has  

observed thus :-  

“Before this Court, however, the nature of  policies which came up for consideration  were Act policies. This Court did not deal  with a package policy. If the Tariff Advisory  Committee seeks to enforce its decision in  regard to coverage of third-party risk which  would include all persons including  occupants of the vehicle and the insurer  having entered into a contract of insurance  in relation thereto, we are of the opinion  that the matter may require a deeper  scrutiny.”

13. Recently this Bench in National Insurance Company  

Ltd. v. Balakrishnan & Another10, after referring to  

various decisions and copiously to the decision in  

Bhagyalakshmi (supra), held that there is a distinction  

between “Act Policy”  and “Comprehensive/Package Policy”.  

Thereafter, the Bench took note of a decision rendered by  

Delhi High Court in Yashpal Luthra and Anr. V. United  

India Insurance Co. Ltd. and Another11 wherein the High  

9 (1998) 3 SCC 744 10 Civil Appeal No.8163 of 2012 (Arising out of SLP(C) No. 1232/2012) decided on  20.11.2012 11 2011 ACJ 1415

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Court had referred to the circulars issued by the Tariff  

Advisory Committee (TAC) and Insurance Regulatory and  

Development Authority (IRDA).  This Court referred to the  

portion of circulars dated 16.11.2009 and 3.12.2009 which  

had been reproduced by the High Court and eventually held  

as follows: -

“19. It is extremely important to note here  that till 31st December, 2006 Tariff Advisory  Committee and thereafter from 1st January,  2007, IRDA functioned as the statutory  regulatory authorities and they are entitled  to fix the tariff as well as the terms and  conditions of the policies by all insurance  companies.  The High Court had issued  notice to the Tariff Advisory Committee and  the IRDA to explain the factual position as  regards the liability of the insurance  companies in respect of an occupant in a  private car under the “comprehensive/  package policy”.  Before the High Court the  Competent Authority of IRDA had stated  that on 2nd June, 1986 the Tariff Advisory  Committee had issued instructions to all the  insurance companies to cover the pillion  rider of a scooter/motorcycle under the  “comprehensive policy”  and the said  position continues to be in vogue till date.  He had also admitted that the  comprehensive policy is presently called a  package policy.  It is the admitted position,  as the decision would show, the earlier  circulars dated 18th March, 1978 and 2nd  June, 1986 continue to be valid and  effective and all insurance companies are  bound to pay the compensation in respect of  

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the liability towards an occupant in a car  under the “comprehensive/package policy”  irrespective of the terms and conditions  contained in the policy.  The competent  authority of the IRDA was also examined  before the High Court who stated that the  circulars dated 18th March, 1978 and 2nd  June, 1986 of the Tariff Advisory Committee  were incorporated in the Indian Motor Tariff  effective from 1st July, 2002 and they  continue to be operative and binding on the  insurance companies.  Because of the  aforesaid factual position the circulars  dated 16th November 2009 and 3rd  December, 2009, that have been reproduced  hereinabove, were issued.

20. It is also worthy to note that the High  Court after referring to individual circulars  issued by various insurance companies and  eventually stated thus:-  

“In view of the aforesaid, it is clear that  the comprehensive/package policy of a  two wheeler covers a pillion rider and  comprehensive/ package policy of a  private car covers the occupants and  where the vehicle is covered under a  comprehensive/package policy, there  is no need for Motor Accident Claims  Tribunal to go into the question  whether the Insurance Company is  liable to compensate for the death or  injury of a pillion rider on a two- wheeler or the occupants in a private  car. In fact, in view of the TAC’s  directives and those of the IRDA, such  a plea was not permissible and ought  not to have been raised as, for  instance, it was done in the present  case.”

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21. In view of the aforesaid factual position  there is no scintilla of doubt that a  “comprehensive/package policy”  would  cover the liability of the insurer for payment  of compensation for the occupant in a car.  There is no cavil that an “Act Policy” stands  on a different footing than a  “Comprehensive/Package Policy”.  As the  circulars have made the position very clear  and the IRDA, which is presently the  statutory authority, has commanded the  insurance companies stating that a  “Comprehensive/Package Policy”  covers the  liability, there cannot be any dispute in that  regard.  We may hasten to clarify that the  earlier pronouncements were rendered in  respect of the “Act Policy” which admittedly  cannot cover a third party risk of an  occupant in a car.  But, if the policy is a  “Comprehensive/Package Policy”, the  liability would be covered.  These aspects  were not noticed in the case of  Bhagyalakshmi (supra) and, therefore, the  matter was referred to a larger Bench.  We  are disposed to think that there is no  necessity to refer the present matter to a  larger Bench as the IRDA, which is  presently the statutory authority, has  clarified the position by issuing circulars  which have been reproduced in the  judgment by the Delhi High Court and we  have also reproduced the same.

22. In view of the aforesaid legal position  the question that emerges for consideration  is whether in the case at hand the policy is  an “Act Policy”  or “Comprehensive/Package  Policy”.  There has been no discussion  either by the tribunal or the High Court in  this regard.  True it is, before us Annexure  P-1 has been filed which is a policy issued  by the insurer.  It only mentions the policy  

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to be a comprehensive policy but we are  inclined to think that there has to be a  scanning of the terms of the entire policy to  arrive at the conclusion whether it is really  a package policy to cover the liability of an  occupant in a car.”

14. We have quoted in extenso to reiterate the legal  

position.  In the case at hand, the policy has not been  

brought on record.  The learned counsel for the appellant-

insurer would submit that it is an “Act Policy”.  The learned  

counsel for the respondent would seriously dispute and  

submit that extra premium might have been paid or it may  

be a “Comprehensive/Package Policy”.  When Certificate of  

Insurance is filed but the policy is not brought on record it  

only conveys that the vehicle is insured.  The nature of  

policy cannot be discerned from the same.  Thus, we are  

disposed to think that it would be appropriate to remit the  

matter to the tribunal to enable the insurer to produce the  

policy and grant liberty to the parties to file additional  

documents and also lead further evidence as advised, and  

we order accordingly.  

15. It needs no special emphasis to state that whether the  

insurer would be liable or not would depend upon the  

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nature of the policy when it is brought on record in a  

manner as required by law.   

16. As far as quantum is concerned, though numbers of  

grounds were urged, yet the learned counsel for the parties  

did not really address on the same and, therefore, we do not  

think it necessary to dwell upon the same and treat it as  

just and proper compensation requiring no interference.   

17. In the result, the appeals preferred by the insurer,  

namely, Oriental Insurance Company Limited are allowed to  

the extent indicated hereinabove and to that extent the  

award is set aside and the matter is remitted to the tribunal  

and the appeals preferred by the claimant for enhancement  

of compensation are dismissed.  There shall be no order as  

to costs.

……………………………….J. [K. S. Radhakrishnan]

New Delhi;    ……………………………….J. November 20, 2012        [Dipak Misra]

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