REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   3335           OF 2009 (Arising out of SLP (C) No.10136 of 2007)

Bhagyalakshmi and others … Appellants

Versus

United Insurance Co. Ltd. and another etc.  … Respondents

J U D G M E N T

S.B. SINHA, J.  

Leave granted.

1. Liability of an insurance company for death of a person travelling in a  

private car arises for consideration in this appeal.

2. Before, however, adverting to the said question, we may notice the  

fact of the matter.  

M.N.  Lingappa  (hereinafter  referred  to  as  ‘the  deceased’)  while  

travelling  in  a  private  car  owned  by  one  Shri  K.N.  Narayanajoshi,

respondent No.7 herein met with an accident and succumbed to the resulting  

injuries.  Appellants are his heirs and legal representatives.   

They  filed  an  application  for  grant  of  compensation  of  

Rs.1,50,00,000/- (Rupees one crore fifty lakhs) before the Motor Accident  

Claims Tribunal, Tumkur (for short ‘the Tribunal’) in terms of Section 166  

of the Motor Vehicles Act, 1988 (for short ‘the Act’).  

3. The  learned  Tribunal  by  its  order,  awarded  a  compensation  of  

Rs.98,64,428/-.   

4. Respondent No. 1 preferred an appeal thereagainst  before the High  

Court of Karnataka at Bangalore.  The claimants also filed cross-objections.

5. The core question that arose for consideration before the High Court  

was as to whether the insurance policy covered the risk of the passenger  

travelling in the car.  The High Court by its impugned judgment answered  

the said question in favour of the 1st respondent.  

6. Mr. P.S. Patwalia, learned senior counsel appearing on behalf of the  

appellants would contend :-

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i) The  insurance  policy  being  a  comprehensive  one,  the  High  

Court committed a serious error in opining that the risk of a  

passenger travelling in the car was not covered thereunder.  

ii) Having regard to the fact that the second proviso appended to  

Section 95(1)(b) of the Motor Vehicles Act, 1939 was deleted  

by the Parliament  in the 1988 Act, the liability of a passenger  

in a private vehicle must also be included in the policy in terms  

of the provisions of the 1988 Act.   

7. Mr.  P.R.  Sikka,  learned  counsel  on  behalf  of  respondent  No.1-

Insurance Company would contend that the respondent having not paid the  

requisite amount of premium, the High Court judgment is unassailable.

8. The policy in question was in respect of a private car.  It was valid for  

the  period  6.10.1995  and  5.10.1996,  the  relevant  clauses  whereof  are  as  

under :

“SECTION  II  -  LIABILITY  TO  THIRD PARTIES

1. Subject to the limits of liability as laid down in  the  schedule  hereto  the  company will  indemnify  the insured in the event of an accident caused by or  arising  out  of  the  use  of  the  vehicle  against  all  sums which the insured shall become legally liable  to pay in respect of:

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i) death of or bodily injury to any person including  occupants  carried  in  the  vehicle  (provided  such  occupants are not carried for hire or reward) but  except  so  far  as  it  is  necessary  to  meet  the  requirements of Motor Vehicles Act, the Company  shall not be liable where such death or injury arises  out of and in the course of the employment of such  person by the insured.

(ii)  Damage  to  property  other  than  property  belonging to the insured or held in trust or in the  custody or control of the insured.”

9. We may notice  the  nature  of  the  policy,  which  is  Private  Car  ‘B’  

Policy:   

“ PRIVATE CAR ‘B’ POLICY

Whereas the insured by a proposal and declaration  dated as stated in the Schedule which shall be the  basis  of  this  contract  and  is  deemed  to  be  incorporated  herein  has  applied  to  the  Company  for  the  insurance  contained  and  has  paid  the  premium  mentioned  in  the  schedule  as  consideration  for  such  insurance  in  respect  of  accidental  loss  or  damage  occurring  during  the  period of insurance.

NOW THIS POLICY WITNESSETH:

That  subject  to  the  Terms  Exceptions  and  Conditions  contained  herein  or  endorsed  or  expressed hereon;

SECTION I.  LOSS OR DAMAGE  

The Company will indemnify the insured against  loss  or  damage  to  the  vehicle  insured  hereunder  and / or its accessories whilst thereon

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a. By fire explosion self ignition or lightning.

b. By burglary housebreaking or theft.

c. By riot and strike.

d. By earthquake (fire and shock damage).

e. By  Flood,  Typhoon,  Tempest,  Hurricane,  Storm,  Inundation, Cyclone, Hailstorm, and Frost.

f. By accidental external means.

g. By malicious act.

h. By terrorist activity.

i. whilst  in  transit  by  road,  rail,  inland,  waterway  lift,  elevator or air.

j. By landslide rockslide.

Subject to a deduction for depreciation at the rates  mentioned below in respect of parts replaced :

1.  For  all  rubber,  nylon,  plastic  parts,  tyres  and  tubes, batteries  

- 50%

2. For all parts made of glass - Nil

3. For all other parts  Age of Motor Car             0% of depreciation Upto 6 months Nil Between 6 months and 1 year 5% Between 1 year and 2 years  10% Between 2 years and 3 years 15% Between 3 years and 4 years 25% Between 4 years and 5 years 35% Between 5 years and 6 years 40% Between 10 years 50%  

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The  company  shall  not  be  liable  to  make  any  payment in respect of :-

a) Consequential loss, depreciation, wear and tear,  mechanical and electrical break down, failures or  breakages;

b) Damage to tyres and tubes unless the Motor Car  is damaged at the same time when the liability of  the company shall be limited to 50% of the cost of  replacement, and  

c)  any accidental  loss or  damage suffered whilst  the  insured  or  any  person  driving  with  the  knowledge and consent of the insured is under the  influence of intoxicating liquor or drugs.  

In the  event  of  the Motor  car  being disabled by  reason of loss or damage covered under this Policy  the  Company  will  bear  the  reasonable  cost  of  protection and removal to the nearest repairers and  of redelivery to the insured but not exceeding in all  Rs. 1000/- in respect of any one accident.

The insured may authorise the repair of the Motor  car  necessitated  by  damage  for  which  the  Company may be liable under this Policy provided  that :

a)  the  estimated  cost  of  such  repair  does  not  exceed Rs.500/-;

b)  the  Company  is  furnished  forthwith  with  a  detailed estimate of the cost; and

c)  the  insured  shall  give  the  Company  every  assistance to see that such repair is necessary and  the charge reasonable.”

10. Indisputably the amount of premium paid was Rs.605/-.  It is in two  

parts.   Part  I  refers  to  ‘Own  Damage’  –  premium  on  vehicle  and  non-

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electrical accessories wherefor a sum of Rs.400/- was paid, apart from the  

basic premium for the liability ‘fire and thief’  amounting to Rs.160/-   In  

addition a sum of Rs.15/- was paid towards ‘Increased Third Party Property  

Limit’.  

11. Whereas the contention of Mr. Patwalia is that as the liability to third  

party covers death of or bodily injury to any person including occupants  

carried in the vehicle,  the contention of Mr.  Sikka is  that  only a sum of  

Rs.15/- having been paid towards third party limit, the policy cannot be said  

to have covered the life of passenger traveling in the car.

12. The business of insurance is governed by the Insurance Act, 1938 (for  

short ‘the 1938 Act’),  Section 64-VB whereof reads as under :-

“Section  64VB  -  No  risk  to  be  assumed  unless  premium is received in advance  

(1) No insurer shall assume any risk in India  in  respect  of  any  insurance  business  on  which  premium  is  not  ordinarily  payable  outside  India  unless and until  the premium payable is received  by him or is guaranteed to be paid by such person  in such manner and within such time as may be  prescribed  or  unless  and  until  deposit  of  such  amount as may be prescribed, is made in advance  in the prescribed manner.

(2) For the purposes of this section, in the  case of risks for which premium can be ascertained  in  advance,  the  risk  may be assumed not  earlier  

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than the date on which the premium has been paid  in cash or by cheque to the insurer.

Explanation.--Where the premium is  tendered by  postal money order or cheque sent by post, the risk  may be assumed on the date on which the money  order is booked or the cheque is posted, as the case  may be.

(3)  Any  refund  of  premium  which  may  become  due  to  an  insured  on  account  of  the  cancellation of a policy or alteration in its  terms  and conditions or  otherwise shall  be paid by the  insurer directly to the insured by a crossed or order  cheque  or  by  postal  money  order  and  a  proper  receipt  shall  be obtained by the insurer from the  insured,  and  such  refund  shall  in  no  case  be  credited to the account of the agent.

(4)  Where  an  insurance  agent  collects  a  premium on a policy of insurance on behalf of an  insurer, he shall deposit with, or despatch by post  to,  the  insurer,  the  premium so  collected  in  full  without  deduction  of his  commission  within  twenty-four hours of the collection excluding bank  and postal holidays.

(5) The Central Government may, by rules,  relax the requirements of sub-section (1) in respect  of particular categories in insurance policies.”

13. Part II-B of the 1938 Act provides for Tariff Advisory Committee and  

Control of Tariff Rates.  Section 64-UC provides for power of the Advisory  

Committee to regulate rates, advantages etc.  Sub-section (4) of Section 64-

UC makes the decision of the Advisory Committee final.  Sub-section (5) of  

Section 64-UC provides that where an insurer is guilty of breach of any rate,  

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advantage, term or condition fixed by the Advisory Committee, he shall be  

deemed to have contravened the provisions of the Act.   

14. The policy in question is a package policy.  The contract of insurance  

if given its face value covers the risk not only of a third party but also of  

persons travelling in the car including the owner thereof.   

15. The  question  is  as  to  whether  the  policy  in  question  is  a  

comprehensive policy or only an Act policy.   

We may, however, notice that in National Insurance Co. Ltd. v. Jugal  

Kishore, [ (1988) 1 SCC 626 ], this Court opined :-

“6.  We  have  accordingly  perused  the  photostat  copy of the policy to ascertain whether risk for any  amount  higher  than  the  amount  of  Rs  20,000  contemplated by clause (b) aforesaid was covered.  Our attention was invited by learned counsel for  the  respondents  to  the  circumstance  that  at  the  right-hand corner on the top of p.1 of the policy  the words “Commercial  Vehicle Comprehensive”  were printed. On this basis and on the basis that  the premium paid was higher than the premium of  an “act only” policy it  was urged by the learned  Counsel for the respondents that the liability of the  appellant  was  unlimited  and  not  confined  to  Rs  20,000  only.  We  find  it  difficult  to  accept  this  submission.  Even though it  is  not  permissible  to  use a vehicle unless it is covered at least under an  “act only” policy it is not obligatory for the owner  of a vehicle to get it comprehensively insured. In  case, however, it is got comprehensively insured a  higher  premium than for  an “act  only” policy is  payable depending on the estimated value of the  

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vehicle. Such insurance entitles the owner to claim  reimbursement  of  the  entire  amount  of  loss  or  damage suffered up to the estimated value of the  vehicle  calculated  according  to  the  rules  and  regulations framed in this behalf.  Comprehensive  insurance  of  the  vehicle  and  payment  of  higher  premium on this score, however, do not mean that  the limit of the liability with regard to third party  risk becomes unlimited or higher than the statutory  liability fixed under sub-section (2) of Section 95  of the Act. For this purpose a specific agreement  has  to  be  arrived  at  between  the  owner  and  the  insurance company and separate premium has to  be paid on the amount of liability undertaken by  the insurance company in this behalf. Likewise, if  risk of any other nature for instance, with regard to  the driver or passengers etc. in excess of statutory  liability, if any, is sought to be covered it has to be  clearly  specified  in  the  policy  and  separate  premium paid therefor. This is the requirement of  the  tariff  regulations  framed  for  the  purpose.  Coming to the photostat copy of the policy in the  instant case it would be seen that Section 2 thereof  deals with liability to third parties. Sub-section (1)  minus the proviso thereto reads as hereunder:

“(1)  Subject  to  the  Limits  of  Liability  the  Company will indemnify the insured against all  sums  including  claimant’s  cost  and  expenses  which the insured shall become legally liable to  pay in respect of—

(i)  death  or  bodily  injury  to  any  person  caused by or arising out of the use (including  the  loading  and  or  unloading)  of  the  motor  vehicle

(ii)  damage  to  property  caused by the  use  (including the loading and/or unloading) of the  motor vehicle.” “

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16. There, however, the schedule of the policy indicated the limits of the  

liability of the amount paid.  However, in the present case the schedule of  

the  policy  does  not  indicate  the  limits  of  liability.   It  does  not  indicate  

exclusion  of  any person.   It  takes  any person including ‘insured’.   Such  

person indisputably would come within the purview of the liability to third  

party to which we have referred to heretobefore.  

There being no limitation with regard to coverage,  in terms of  the  

provisions of the Act, no upper limit is fixed.  Liability of the insurer, thus  

unlike the old Act, may not be limited.   

17. In Oriental Insurance Co. Ltd. v. Rajni Devi, [ (2008) 5 SCC 736 , this  

Court has held :-  

“7. It is now a well-settled principle of law that in  a case where third party is involved, the liability of  the  insurance  company  would  be  unlimited.  Where, however, compensation is claimed for the  death  of  the  owner  or  another  passenger  of  the  vehicle, the contract of insurance being governed  by  the  contract  qua  contract,  the  claim  of  the  insurance company would depend upon the terms  thereof.  The  Tribunal,  in  our  opinion,  therefore,  was  not  correct  in  taking  the  view  that  while  determining the amount of compensation, the only  factor which would be relevant would be merely  the use of the motor vehicle.”

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18. Mr. Patwalia has relied upon the decision of this Court in Amrit Lal  

Sood  v.  Kaushalya  Devi  Thapar,  [  (1998)  3  SCC 744 ], wherein  upon  

considering  the  meaning  of  the  terms,  ‘comprehensive  policy’  and  

‘comprehensive insurance’ it was held :-

“8. Thus under  Section II(1)(a) of the policy the  insurer has agreed to indemnify the insured against  all  sums which the  insured  shall  become legally  liable to pay in respect of death of or bodily injury  to  “any  person”.  The  expression  “any  person”  would undoubtedly include an occupant of the car  who  is  gratuitously  travelling  in  the  car.  The  remaining  part  of  clause  (a)  relates  to  cases  of  death or injury arising out of and in the course of  employment of such person by the insured. In such  cases  the  liability  of  the  insurer  is  only  to  the  extent  necessary  to  meet  the  requirements  of  Section  95  of  the  Act.  Insofar  as  gratuitous  passengers are concerned there is no limitation in  the policy as such. Hence under the terms of the  policy,  the  insurer  is  liable  to  satisfy  the  award  passed in favour of the claimant. We are unable to  agree with the view expressed by the High Court  in  this  case  as  the  terms  of  the  policy  are  unambiguous.”

19. Even  in  Oriental  Insurance  Co.  Ltd. v. Cheruvakkara  Nafeessu,  

[ (2001) 2 SCC 491], a Division Bench of this Court distinguished  Jugal  

Kishore (supra) and following Amrit Lal (supra) held as under :-:  

“9. The  reliance  of  the  learned  counsel  for  the  appellant  on  New  India  Assurance  Co.  Ltd. v.  Shanti  Bai and  National  Insurance  Co.  Ltd. v.  Jugal Kishore is of no help to him inasmuch as in  

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those  cases  the  effect  of  judgment  in  Amrit  Lal  Sood case has not been considered. In  Shanti Bai  case the  Court  was  dealing  with  the  effect  of  a  comprehensive policy vis-à-vis the liability of the  insurer in respect of third-party risk on the basis of  the estimated value of the vehicle and found that  the limit of liability with regard to third-party risk  does  not  become  unlimited  or  higher  than  the  statutory liability only on account of entering into  a comprehensive policy. It was pointed out that the  comprehensive  policy  only  entitles  the  owner  to  claim reimbursement of the entire amount of loss  or damage suffered up to the estimated value of the  vehicle which did not  mean the limit  of liability  with regard to third-party risk becoming unlimited  or higher than the statutory liability. In the case of  National Insurance Co. Ltd. v.  Jugal Kishore this  Court observed that the liability under the policy  could  not  exceed  the  statutory  liability  under  Section 95 of the Act only on the ground that the  insured  had  undertaken  comprehensive  insurance  of the vehicle. The payment of higher premium on  that score, however, did not mean that the limit of  liability  with  regard  to  third-party  risk  became  unlimited  or  higher  than  the  statutory  liability  fixed under  sub-section (2)  of  Section 95 of  the  Act.”

20. We may also notice that in New India Assurance Co. v. Satpal Singh,  

[ (2000) 1 SCC 237 ],this Court held as under :-  

“10. The  proviso  to  the  said  sub-section  is  not  relevant here as it pertains to death or bodily injury  to the employee mentioned therein. Sub-section (2)  provides that a policy of insurance shall cover any  liability incurred in respect of any accident, up to  the following limits, namely:

“(a)  save  as  provided  in  clause  (b),  the  amount of liability incurred;

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(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  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.”

Hence,  under  sub-section  (2),  there  is  no  upper  limitation for the insurer regarding the amount of  compensation  awarded  in  respect  of  death  or  bodily  injury  of  a  victim  of  the  accident.  It  is,  therefore, apparent that the limit contained in the  old Act has been removed and the  policy should  insure the liability incurred and cover injury to any  person  including  owner  of  the  goods  or  his  authorised  representative  carried  in  the  vehicle.  The  legislature  has  also  taken  care  of  even  the  policies  which  were  in  force  on  the  date  of  commencement  of  the  Act  by  specifically  providing that any policy of insurance containing  any  limit  regarding  the  insurer’s  liability  shall  continue to be effective for a period of four months  from commencement of the Act or till the date of  expiry  of  such policy,  whichever  is  earlier.  This  means, after the said period of four months, a new  insurance  policy  consistent  with  the  new Act  is  required to be obtained.”

21. However, with regard to goods carriage vehicle Satpal Singh (supra)  

was overruled in  New India Assurance Co. Ltd. v. Asha Rani, [ (2003) 2  

SCC 223 ], wherein it was observed :-  

“23. The applicability of the decision of this Court  in  Mallawwa v.  Oriental  Insurance Co.  Ltd.2 in  

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this case must be considered keeping that aspect in  view.  Section  2(35)  of  the  1988  Act  does  not  include  passengers  in  goods  carriage  whereas  Section  2(25)  of  the  1939  Act  did  as  even  passengers  could  be  carried  in  a  goods  vehicle.  The  difference  in  the  definitions  of  “goods  vehicle” in the 1939 Act and “goods carriage” in  the  1988  Act  is  significant.  By  reason  of  the  change in the definitions of the terminology,  the  legislature intended that a goods vehicle could not  carry any passenger, as the words “in addition to  passengers”  occurring  in  the  definition  of  goods  vehicle  in  the  1939  Act  were  omitted.  Furthermore,  it  categorically  states  that  “goods  carriage” would mean a motor vehicle constructed  or  adapted  for  use  “solely for  the  carriage  of  goods”.  Carrying  of  passengers  in  a  “goods  carriage”, thus, is not contemplated under the 1988  Act.”

22. Submission of Mr. Patwalia is that whereas carrying of passenger in a  

goods carriage vehicle is prohibited, it is not so in a private car.  Learned  

counsel  may  be  correct  but  we  must  notice  that  in  a  large  number  of  

decisions rendered by this Court it has been held that a passenger would not  

be a third party within the meaning of the provisions of the Act.  We may  

notice some of them.   

23. In  United India Insurance Co. Ltd. v.  Tilak Singh, [ (2006) 4 SCC  

404], it was held :-  

“21. 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  

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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.”

This Court in  Oriental Insurance Co. Ltd. v.  Jhuma Saha, [(2007) 9  

SCC 263 ] has held :-

 “10. The deceased was the owner of the vehicle.  For  the  reasons  stated  in  the  claim  petition  or  otherwise,  he  himself  was  to  be  blamed  for  the  accident.  The  accident  did  not  involve  motor  vehicle other than the one which he was driving.  The question which arises for consideration is that  the  deceased  himself  being  negligent,  the  claim  petition under Section 166 of the Motor Vehicles  Act, 1988 would be maintainable. 11. Liability  of  the  insurer  Company  is  to  the  extent of indemnification of the insured against the  respondent or an injured person, a third person or  in  respect  of  damages  of  property.  Thus,  if  the  insured cannot be fastened with any liability under  the  provisions  of  the  Motor  Vehicles  Act,  the  question of the insurer  being liable to indemnify  the insured, therefore, does not arise.”

In  Oriental  Insurance Co. Ltd. v.  Sudhakaran K.V., [(2008) 7 SCC  

428] this Court has opined  :-  

“17. This  Court  in  a  catena  of  decisions  has  categorically held that a gratuitous passenger in a  

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goods carriage would not be covered by a contract  of  insurance  entered  into  by  and  between  the  insurer  and the owner of the vehicle in terms of  Section 147 of the Act. (See New India Assurance  Co. Ltd. v. Asha Rani.”

It was held :-

“25. The  law  which  emerges  from  the  said  decisions,  is:  (i)  the  liability  of  the  insurance  company in a case of this nature is not extended to  a  pillion-rider  of  the  motor  vehicle  unless  the  requisite amount of premium is paid for covering  his/her risk; (ii) the legal obligation arising under  Section 147 of the Act cannot be extended to an  injury  or  death  of  the  owner  of  vehicle  or  the  pillion-rider; (iii) the pillion-rider in a two-wheeler  was  not  to  be  treated  as  a  third  party  when  the  accident  has  taken  place  owing  to  rash  and  negligent riding of the scooter and not on the part  of the driver of another vehicle.”

[See also  New India Assurance Company Ltd. v.  Sadanand Mukhi  

and others,  (2009) 1 SCALE 252  ].   

24. Before this Court, however, the nature of policies which came up for  

consideration were Act polices.   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  

contact of insurance in relation thereto, we are of the opinion that the matter  

may require a deeper scrutiny.   

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25. We may notice that the effect of package policy in relation to three  

wheelers, came up before the Delhi High Court in  United India Insurance  

Company,  (MAC  App.  No.980/2006  etc.  decided  on  31st May,  2007)  

wherein it has been opined :-

“33.  Tilak  Singh's  case  (Supra)  holds  that  the  proposition of law in Asha Rani's Case (Supra) in  relation  to  goods  vehicle  shall  apply  with  equal  force to 'gratuitous passenger' in any other vehicle  also.  As  noted  herein  above  Tilak  Singh's  case  (supra)  related to a statutory policy.  It  would be  pertinent to mention here that Tilak Singh's case  (supra) related to the death of a pillion rider on a  two wheeler scooter and his legal representatives  had  claimed  compensation  against  the  registered  owner  of  the  scooter  and  the  insurer.  The  two  wheeler scooter was insured for third party risk for  the  period  07/03/1989  to  06/03/1990  and  the  accident had taken place on 31.10.1989. The Court  found that the Insurance Policy covering the risks  did  not  contain  an  endorsement  of  IMT  70  covering liability to pillion riders and, therefore, in  that context held that the Insurer Company was not  liable  to  indemnify  the  insured  and  pay  compensation  to  the  legal  representatives  of  the  deceased.  I  may indicate  here that  IMT-70 is  no  longer  in  operation  and  as  per  Section  3  of  the  present  tariffs  even a  pillion  rider  is  covered by  Third  Party  risks  unless  he  happens  to  be  an  employee of the insured for which extra premium  is to be required to be paid.

34. To summarize, where the policy is a statutory  policy or an act only policy, a gratuitous passenger  in  a  private  vehicle  would  not  be  covered  for  a  bodily  injury  or  death  under  the  policy  of  

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insurance.  But,  nothing  prevents  the  insurance  company  from  issuing  a  wider  coverage  i.e.  assuming a greater risk liability. As in the instant  case,  where  the  policy  is  a  Package Policy for Private Cars, terms of the policy and the  applicable  conditions  as  notified  by  the  Tariff  Advisory Committee would have to be looked into  to  determine  the  risk  liability  assumed  by  the  insurer.”

26. The  question  as  to  whether  gratuitous  passengers  travelling  in  a  

private  car  or  pillion  riders  carried  on  two-wheelers  are  automatically  

covered under a package policy/comprehensive policy came up also before  

The Madras High Court recently in  Royal Sundaram Insurance Co. Ltd. v.   

V. A. Meenakshi and Ors.  (C.M.A No. 312 of 2009). The Division Bench  

of the Court, after observing the judgment of this court and various High  

Courts on the subject, dismissing the appeal filed by the insurance company  

and affirming the order of the Tribunal awarding compensation of Rs. 19.10  

Lakh to the legal representatives of the deceased passenger of the insured  

vehicle, held that:

“29.  Therefore  it  is  clear  from the Act itself,  the  words  of  the  policy  and the decision  in  Amritlal   Sood's case  (supra)  that  a  Comprehensive  Policy  covers  the  risk  of  a  gratuitous  passenger  to  the  extent  of  the  liability  incurred.  We  may  imagine  what  will  happen  in  a  case  where  the  owner  is  driving his car covered by a Comprehensive Policy.  He is accompanied by his wife and children.  There  is an accident as in this case. The wife and children  are  permanently  disabled  by  the  injuries.  If  we  

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agree with the appellant Insurance Company, those  pathetic  claimants will  not  get  any compensation.  The law never intended this to happen. That is why  the TAC explicitly came out with the clarificatory  Circular in 1978.  We cannot forget that the words  used are "third party" and "Comprehensive", so we  cannot deny this relief to the third party occupant in  a car covered by a Comprehensive Policy.”

[See  also  the  decisions  of  High  Court  of  Karnataka  in  National  

Insurance Company Limited  v.   Pattabhi  Ramaiah and Ors.  (M.F.A No.  5921  and  7045  of  2006  (M.V))  and  Delhi  High  Court  in United  India  

Insurance Co. Ltd.  v.  Alka Mangla and Ors. (AIR 2008 Delhi 201)].

27. We, therefore, are of the opinion that the matter requires consideration  

by a Larger Bench.  We order accordingly.  Let the papers be placed before  

the learned Chief Justice for appropriate orders.  

……………..………………J.  [ S.B. Sinha ]

……………………………..J. [(Dr.) Mukundakam Sharma]

New Delhi May 06, 2009

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