1   

     REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1928 OF 2011

(Arising out of SLP(C)No.24188 of 2008)

United India Insurance Co. Ltd. … Appellants   

Vs.

?K.M.  Poonam  & Ors.   

…  

Respondents

WITH CIVIL APPEAL NOS. 1929, 1930, 1931 OF 2011 (@ SLP(C)NOS.24212, 24210, 24211)

CIVIL APPEAL NOS. 1932, 1933, 1934 & 1935 OF 2011 (@ 24209, 24215, 24207 and 24213 OF 2008)

2

J U D G M E N T

ALTAMAS KABIR, J.

1. Despite service of notice, none of the respondents in  

these Special Leave Petitions have entered appearance or  

are represented today to contest the same.  All these  

Special  

Leave  

Petitions involve a common question of law as to whether  

an Insurance Company can be held to be liable for payment  

of  compensation  to  passengers  travelling  in  a  public  

transport  in  breach  of  the  conditions  of  the  permit  

granted to the owner of the vehicle for operating the  

same.  They are, therefore, taken up for consideration  

together.  Delay, if any, in filing the Special Leave

3 Petitions is condoned.   

2. Leave granted.  

3. Since the facts in all these appeals are the same,  

the  facts  in  SLP(C)No.24188  of  2008,  United  Insurance  

Company Ltd. Vs. K.M. Poonam & Ors., are referred to in  

this judgment.

4. The  

Respondent  No.5,  Shri  Surdeep  Gusain,  obtained  an  

insurance policy insuring his Jeep No. UP-06-6244 with a  

sitting capacity of six persons, including the driver,  

for the period covering 23rd July, 2004 to 22nd July, 2005.  

In  other  words,  besides  the  driver,  the  vehicle  was  

entitled to carry a maximum number of five passengers.

4 5. On 18th August, 2004, the aforesaid vehicle carrying  

fifteen passengers from Village Nansu to Dharkot Thapli,  

while being driven by Bharat Singh Rawat, the father of  

the respondents herein, fell into a ditch resulting in  

his death and the death of the majority of the passengers  

while  causing  serious  injuries  to  the  remaining  

passengers.   The  Respondent  Nos.1  to  4  as  the  legal  

representatives of the deceased filed an application for  

compensation before the Motor Accident Claims Tribunal,  

Pauri.   On  the  basis  of  the  pleadings  filed  by  the  

parties, the following issues were framed :-

1 Whether on 18.8.2004 the deceased Bharat Singh was  

driving the vehicle No.UP.-06/6244 on Jakheti-Nansu

5 Road and due to the mechanical fault in the vehicle  

the jeep met an accident due to which Bharat Singh  

died ?

1 Whether the aforesaid accident occurred due to the  

negligence of the deceased?

1 Whether on the date of accident the alleged vehicle  

was  being  plied  according  to  the  conditions  of  

insurance policy and permit?

1 Whether  the  complainants  are  entitled  for  any  

relief?  If yes, how much and from whom?  

6. In order to support their claim, the claimants filed  

the First Information Report, which was lodged by the

6 owner of the jeep, Shri Surdeep Singh, on 19th August,  

2004, at Patti Patwari Kafolsue, wherein it was stated  

that he had given the vehicle to Bharat Singh and that it  

had met with an accident which killed seven persons on  

the spot and caused injuries to the others.  The jeep was  

badly  damaged,  but  the  cause  of  the  accident  was  not  

known.  On the basis of the said report, a case was  

lodged  

against  

Bharat  

Singh  

under  

Sections  

279,  

304-A,  

337  and  

338  

Indian Penal Code.  The witness of the Insurance Company,  

who was examined as OPW.1, deposed that fifteen persons  

were travelling in the jeep at the time of the accident,  

but there was no negligence on the part of the driver.  

7. The claimants also filed the driving licence of the  

deceased, Bharat Singh, which showed that the licence was

7 valid till 12.3.2007.   The photocopy of the registration  

certificate of the vehicle was also filed by the owner of  

the vehicle which established the fact that it was valid  

on the date of the accident and that taxes had been paid  

upto date and the fitness of the vehicle was valid from  

13.8.2004 to 12.8.2005. In addition, a photocopy of the  

Insurance Cover Note was also filed to indicate that the  

vehicle  

was duly  

insured  

from  

23.7.2004 to 22.7.2005. Accordingly, on the date of the  

accident, all the papers of the vehicle were valid, the  

vehicle  was  legally  insured  and  was  being  driven  by  

Bharat  Singh  holding  a  valid  and  effective  driving  

licence.  However, on behalf of the Insurance Company,  

the Appellant herein, it was stated that on the date of  

the accident, passengers in excess of the number covered

8 by  the  insurance  policy  were  being  carried  in  the  

vehicle.     

8. On the basis of the aforesaid evidence, the Motor  

Accident  Claims  Tribunal  held  that  even  if  a  larger  

number of passengers than was permitted under the terms  

of  the  insurance  policy  were  being  carried  in  the  

vehicle,  

it could  

not  be  

said  

that the  

Appellant Insurance Company would stand exonerated from  

its liability because the vehicle was insured for third  

party  coverage  for  unlimited  liability.   The  learned  

Tribunal,  accordingly,  answered  Issue  Nos.1  to  3  in  

favour of the claimants observing that carrying a larger  

number of passengers than was permitted in terms of the  

Insurance Policy, did not amount to breach of the terms

9 and conditions of the Policy and the Insurance Company  

would  still  be  liable  since  the  vehicle  was  legally  

insured.   

9. As far as the fourth issue is concerned, the first  

Respondent, Kumari Poonam, stated on oath that both her  

parents had died in the same accident and that her father  

as  

driver  

was  

earning  

Rs.4,000/- per month.  Although, the claimants did not  

file the income certificate of the deceased, the Tribunal  

initially assessed his annual income at Rs.25,000/- and  

applying  the  multiplier  of  16  arrived  at  a  figure  of  

Rs.4,03,200/- payable as compensation.  After deductions,  

the  total  amount  of  compensation  was  assessed  as  

Rs.1,86,200/-, along with interest @9% per annum.  On the

10 claimants’  cross-appeal  being  allowed,  the  Tribunal  

assessed his income to be Rs.36,000/- per annum and since  

the age of the deceased was taken as 43 years at the time  

of the accident, applying the multiplier of 15 indicated  

in the Table of Section 163A of the Motor Vehicles Act,  

1980,  the  total  compensation  was  re-assessed  as  

Rs.5,40,000/-.  After deducting one-third of the amount  

on  

account  

of  

personal  

expenses  

of  the  

deceased  

from the  

amount  

of  the  

compensation,  a  balance  amount  of  Rs.3,60,000/-  was  

arrived at,  from which a further one-third was deducted  

so that the amount of compensation to which the claimants  

were  entitled  was  finally  settled  at  Rs.2,40,000/-.  

Certain other claims were also included so that the total  

amount of compensation was assessed as Rs.2,47,000/-.  In

11 keeping with its decision on the first three issues, the  

Tribunal held that since the vehicle was insured with the  

Appellant  Insurance  Company,  it  was  liable  to  make  

payment of the said compensation.   The Tribunal directed  

the  Appellant  Insurance  Company  to  pay  the  aforesaid  

amount to the claimants within two months, failing which  

they would also be entitled to interest at the rate of 9%  

per  

annum  

from the  

date  of  

the  

claim  

petition.   

10. The  Insurance  Company  preferred  different  appeals  

against the aforesaid judgment and awards dated 28.1.2006  

of the Motor Accident Claims Tribunal, Pauri, which were  

taken up for consideration together and were dismissed by  

the High Court by a common judgment and order dated 25th

12 September, 2007.  Endorsing the views expressed by the  

Motor Accident Claims Tribunal, the High Court chose not  

to interfere with the impugned judgment and awards and  

confirmed the same.  However, while doing so, the High  

Court held that the claimants would be entitled to a sum  

of  Rs.2,75,800/-  towards  compensation  in  place  of  

Rs.1,86,200/- and the rate of interest was reduced from  

9%  per  

annum to  

7.5% per  

annum.  

The  

other  

parts of  

the  

impugned  

judgment  

and award were confirmed by the High Court.  Aggrieved  

thereby, the Insurance Company has filed these several  

appeals.  

11. Learned counsel appearing for the appellant submitted  

that having regard to the provisions of Section 149 of  

the Motor Vehicles Act, 1988, the liability, if any, of

13 the Insurance Company for payment of compensation would  

have to be limited to the number of passengers validly  

permitted to be carried in the vehicle covered by the  

insurance  policy  and  did  not  extend  to  the  number  of  

passengers  carried  in  excess  of  the  permitted  number.  

Learned counsel submitted that the said question had been  

considered by a two-Judge Bench of this Court in National  

Insurance Co. Ltd. Vs. Anjana Shyam & Ors. [(2007) 7 SCC  

445] decided on 20th August, 2007. While considering the  

provisions of Section 147(1)(b)(ii) and (2) and Section  

149(1)(2)  and  (5)  of  the  1988  Act  in  relation  to  an  

insurer’s  liability,  their  Lordships  came  to  the  

conclusion that the insurer’s liability was limited by  

the  insurance  taken  out  for  the  number  of  permitted

14 passengers and did not extend to paying amounts decreed  

in respect of other passengers.  Taking recourse to a  

harmonious construction of the relevant provisions, their  

Lordships  held  that  the  total  amount  of  compensation  

payable  should  be  deposited  by  the  Insurance  Company  

which  could  be  proportionately  distributed  to  all  the  

claimants,  who  could  recover  the  balance  of  the  

compensation amounts awarded to them from the owner of  

the vehicle.   

12. Reliance was also placed on another two-Judge Bench  

decision of this Court in National Insurance Co. Ltd. Vs.  

Challa Bharathamma & Ors., 2004 AIR SCW 5301, in which,  

while taking note of the earlier decisions rendered by a

15 two-Judge  Bench  of  this  Court  in  New  India  Assurance  

Company Vs. Satpal Singh & Ors. [(2000) 1 SCC 237] and a  

three-Judge Bench in  New India Assurance Co. Ltd. Vs.  

Asha  Rani  &  Ors.,  [(2003)  2  SCC  223],  and  also  the  

decision  of  another  two-Judge  Bench  of  this  Court  in  

National Insurance Company Ltd. Vs.  Nicolletta Rohtagi,  

[(2002) 7 SCC 456], Their Lordships held that when an  

insurer  

proved  

not  to  

be  

liable  

to  pay  

compensation in terms of Section 149(2) of the 1988 Act,  

it  could  not  be  made  liable  for  payment  of  the  

compensation  awarded.  However,  their  Lordships  also  

observed that having regard to the beneficial object of  

the Act, it would be proper for the insurer to satisfy  

the  award  and  to  recover  the  amount  from  the  owner,  

without  taking  recourse  to  a  separate  suit,  from  the

16 Executing Court itself.   

13. Learned counsel for the Insurance Company submitted  

that having regard to the aforesaid decisions of this  

Court, the liability of making payment of compensation  

would be to the extent of six passengers only, though it  

could be directed to pay the balance amount of the total  

compensation awarded, with liberty to recover the balance  

amount from the owner of the vehicle.         

14. The  law  relating  to  the  insurer’s  liability  for  

payment  of  compensation  to  gratuitous  passengers  in  a  

vehicle after the enactment of the Motor Vehicles Act,  

1988,  which  replaced  the  Motor  Vehicles  Act,  1939,

17 initially  came  up  for  consideration  in  Satpal  Singh’s  

case  (supra)  wherein  this  Court  was  called  upon  to  

consider the change in the provisions relating to third  

party risk, as was contained in Section 95 of the 1939  

Act as against the provisions of Section 147 of the 1988  

Act.  Their Lordships held that as per the proviso to  

Section 95(1) when read with its Clause (ii), it would be  

clear  

that the  

policy  

of  

insurance  was  not  required  to  cover  the  liability  in  

respect of the death of or bodily injury to persons who  

were gratuitous passengers of that vehicle.  In contrast,  

under Section 147 of the 1988 Act, the insurance policy  

was required to insure 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

18 by him in respect of the death of or bodily injury to any  

person, including owner of the goods or his authorized  

representative carried in the vehicle or damage to any  

property of a third party caused by or arising out of the  

use of the vehicle in a public place and also 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.  

15. On  

an  

interpretation of the aforesaid provisions of Section 147  

of the 1988 Act, it was held that under Sub-section (2)  

there is no upper limit for the insurer regarding the  

amount of compensation awarded in respect of death or  

bodily  injury  of  a  victim  of  the  accident.  It  was,  

therefore, apparent that the limit contained in the old  

Act  having  been  removed  the  policy  should  insure  the

19 liability  incurred  and  cover  injury  to  any  person,  

including  the  owner  of  the  goods  or  his  authorized  

representative, carried in the vehicle.  Their Lordships  

concluded that as a result of the provisions of the new  

Act, the earlier decisions rendered under the 1939 Act  

were no longer relevant and an insurance policy covering  

third party risk was not required to exclude gratuitous  

passengers in a vehicle, no matter that the vehicle was  

of any type or class.   

16. The said view which had followed an earlier three-

Judge Bench decision of this Court in Mallawwa & Ors. Vs.  

Oriental Insurance Co. Ltd. & Ors. [(1999) 1 SCC 403],  

came  up  for  consideration  once  again  in  a  batch  of

20 appeals filed by different insurance companies, including  

the present Appellant Company,  in the decision of this  

Court reported in  [(2001) 6 SCC 724] under the lead case  

of  New India Assurance Co. Ltd. Vs.  Asha Rani & Ors.  

Upon considering the various decisions which had preceded  

the judgment in Satpal Singh’s case (supra) the two-Judge  

Bench was of the view that some of the striking features  

of  the  

new  Act  

had  not  

been  

brought  

to  the  

notice  

of  the  

Court  

which  

could  have  a  bearing  on  the  conclusion  arrived  at  in  

Satpal  Singh’s  case,  i.e.,  that  on  account  of  the  

definition of “goods vehicle” and “goods carriage” under  

the new Act, goods carriages were no longer used to carry  

any passenger.  Their Lordships were also of the view  

that the defence available to the Insurance Company under

21 Section 149(2) of the 1988 Act would stand obliterated on  

account of the law as declared in  Satpal Singh’s case.  

Their Lordships felt that under the new Act, it would be  

a breach of condition in case the vehicle was used for a  

purpose  other  than  for  which  permit  had  been  issued.  

Apart  from  the  above,  the  effect  of  the  deletion  of  

Clause (ii) to the Proviso to Section 95(1)(b) in the new  

Act also  

required  

reconsideration. The matter was, therefore, referred to  

the  Hon’ble  Chief  Justice  to  have  the  various  issues  

reconsidered by a larger Bench.      

17. The aforesaid questions were, thereafter, gone into  

by a Bench of three-Judges, where the issues decided in  

Satpal  Singh’s  case  were  revisited.   In  the  decision

22 reported in New India Assurance Co. Ltd. Vs. Asha Rani &  

Ors. [(2003) 2 SCC 223] the three-Judge Bench considered  

the provisions of Section 95 of the 1939 Act and Section  

147 of the 1988 Act in detail and also the amendments  

effected to Section 147(1)(b)(i) by the Amendment Act 54  

of 1994 and came to the conclusion that in Satpal Singh’s  

case (supra), this Court had proceeded on the assumption  

that the  

provisions of Section 95(1) of the Motor Vehicles Act,  

1939, were identical to the provisions of Section 147(1)  

of the Motor Vehicles Act, 1988 as it stood before its  

amendment.  It was held that Section 147 of the new Act  

deals with the requirements of the policy and limits of  

liability incurred to third party risks, but the Proviso  

thereto makes an exception to the main provision, which

23 reads as follows :

“Provided that a policy shall not be required—

(i) to cover liability in respect of the death, arising  out  of  and  in  the  course  of  his  employment,  of  the  employee of a person insured by the 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, or bodily  injury to, any such employee—

(a)  engaged  in  driving  the  vehicle,  or

(b)  if  it  is  a  public  service  vehicle  engaged  as  

conductor of the vehicle or in examining tickets on the  vehicle, or

(c)  if  it  is  a  goods  carriage,  being  carried  in  the  vehicle, or

(ii) to cover any contractual liability.”

It was also noticed that as far as employees of the  

owner of the motor vehicle were concerned, an insurance

24 policy was not required to be taken in relation to their  

liability, other than arising in terms of the provisions  

of the Workmen’s Compensation Act, 1923.  On the other  

hand, Proviso (ii), included under Section 95 of the 1939  

Act, imposed a liability upon the owner of the vehicle to  

take out an insurance policy to cover the liability in  

respect  of  a  person  who  was  travelling  in  a  vehicle  

pursuant  

to  a  

contract  

of  

employment.  The same was consciously omitted from the  

provisions of the 1988 Act.  It was further held that the  

applicability of the decision in Mallawwa’s case (supra)  

to the facts of the case before Their Lordships would  

have to be considered keeping that aspect of the matter  

in view.  Proceeding further, their Lordships observed  

that  Section  2(35)  of  the  1988  Act  does  not  include

25 passengers in goods carriages whereas Section 2(25) of  

the 1939 Act did, since even passengers could be carried  

in  a  goods  vehicle.   Noting  the  difference  in  the  

definitions of “goods vehicle” in the 1939 Act and “goods  

carriage”  in  the  1988  Act,  Their  Lordships  held  that  

carrying  of  passengers  in  a  goods  carriage  was  not  

contemplated under the 1988 Act.  On the basis of the  

aforesaid findings, the three-Judge Bench over-ruled the  

decision of this Court in  Satpal Singh’s case, holding  

that the law had not been laid down correctly therein.   

18. The aforesaid issue once again surfaced in the case  

of National Insurance Co. Ltd. Vs. Swaran Singh [(2004) 3  

SCC 297], where the provisions of Section 149 and also

26 Section 147 fell for consideration.  While considering  

the liability cast upon an insurer under Section 149(1)  

and the limited grounds of liability in the insurance  

contract  and  third  party  claims  as  envisaged  in  the  

Proviso to Section 149(4), this Court also had occasion  

to  refer  to  Section  147  relating  to  the  statutory  

liability  and  any  contractual  liability  under  the  

insurance contract and whether the contractual exclusion  

of  liability  in  respect  of  third  party  claim  was  

permissible.   The  three-Judge  Bench  held  that  such  a  

condition in the insurance policy, whereby the right of  

the third party is taken away would be void and that  

except  under  the  situation  provided  for  by  Section  

149(2)(b), the insurer would not be entitled to avoid its

27 statutory liability, since its rights of recovery were  

preserved  against  the  insured  under  the  Proviso  to  

Section 149(4) of the 1988 Act.   

19. While  the  aforesaid  judgment  was  delivered  on  5th  

January, 2004, on the very next day, another three-Judge  

Bench  of  this  Court  rendered  a  decision  in  National  

Insurance Co. Ltd. Vs. Baljit Kaur [(2004) 2 SCC 1], in  

the context of the provisions of Section 147(1)(b) of the  

1988 Act after its amendment in 1994.  While referring to  

the earlier decision in the reference decided in  Asha  

Rani’s case (supra), their Lordships held that inspite of  

the amendment effected to Section 147(1)(b) in 1994, the  

position remained the same in respect of persons other

28 than  the  owner  of  the  goods  and  his  authorized  

representative being carried in the goods vehicle.  It  

was held that it was not the intention of the legislature  

to provide for the liability of the insurer with respect  

to passengers, especially gratuitous passengers who were  

neither  contemplated  at  the  time  the  contract  of  

insurance was entered into, nor was any premium paid to  

the  

extent  

of  the  

benefit  

of  

insurance to such category of people.  It was, therefore,  

felt that the interest of justice would be subserved if  

the Insurance Company satisfied the awarded amount and  

recovered the same from the owner of the vehicle and for  

the  said  purpose  it  would  not  be  necessary  for  the  

Insurance  Company  to  file  a  separate  suit,  but  to  

initiate a proceeding before the executing Court as if

29 the dispute between insurer and the owner was the subject  

matter of the determination before the Tribunal which had  

decided in favour of the insurer and against the owner of  

the vehicle.    

20. The law as regards the liability of insurers towards  

third parties killed or injured in accidents involving  

different types of motor vehicles, has been crystallized  

in  the  several  decisions  of  this  court  referred  to  

hereinabove.  The kind of third party risk that we are  

concerned with in this case involves purported breach of  

the  conditions  contained  in  the  insurance  agreement  

executed by and between the insurer and the insured.  

30 21.  From the decision in  Baljit Kaur’s case (supra),  

which was later also articulated in  Anjana Shyam’s case  

(supra) what emerges is that a policy of insurance, in  

order  to  be  valid,  would  have  to  comply  with  the  

requirements of Chapter XI of the Motor Vehicles Act,  

1988,  which  deals  with  insurance  of  motor  vehicles  

against  third  party  risks.   Section  146  of  the  Act  

stipulates  that  no  person  shall  use,  except  as  a  

passenger, or cause or allow any other person to use, a  

motor vehicle in a public place, unless there is a valid  

policy of insurance in relation to the use of the vehicle  

complying  with  the  requirements  of  the  said  Chapter.  

Section 147 of the Act is an extension of the provisions  

of Section 146 and sets out the requirements of policies

31 and  the  limit  of  their  liability.   Section  147(1)(a)  

provides that a policy of insurance must be issued by a  

person who is an authorized insurer.  Section 147(1)(b)  

provides  that  a  policy  of  insurance  must  be  a  policy  

which insures the person or class of persons specified in  

the policy to the extent specified in sub-section (2).  

Sub-section (2) of Section 147 indicates that subject to  

the  

proviso  

to  sub-

section  

(1)  

which  

excludes  

the  

liability of the insurer in certain specific cases, a  

policy of insurance referred to therein must cover any  

liability  incurred  in  respect  of  any  accident,  inter  

alia, for the amount of liability incurred.   

22. However,  in  order  to  fix  the  liability  of  the  

insurer, the provisions of Section 147 have to be read

32 with Section 149 of the Act which deals with the duty of  

the  insurer  to  satisfy  judgments  and  awards  against  

persons  insured  in  respect  of  third  party  risks.  

Although, on behalf of the Insurance Company it has been  

sought to be contended that no third party risks were  

involved in the accident and that the persons travelling  

in the ill-fated vehicle were gratuitous passengers, the  

Insurance Company cannot get away from the fact that the  

vehicle  was  insured  for  carrying  six  persons  and  the  

liability  of  the  Insurance  Company  was  to  pay  

compensation  to  the  extent  of  at  least  six  of  the  

occupants of the vehicle, including the driver.   

23. Sub-section (1) of Section 149 of the Motor Vehicles

33 Act, 1988, makes it amply clear that once a certificate  

of insurance is issued under sub-section (3) of Section  

147,  then  notwithstanding  that  the  insurer  may  be  

entitled to avoid or cancel the policy, it shall pay to  

the person entitled to the benefit of the decree any sum  

not exceeding the sum assured, payable thereunder, as if  

he was the judgment debtor, in respect of the liability,  

together  

with any  

amount  

payable  

in  

respect  

of costs  

and  any  

sum  

payable  

in  respect  of  interest  on  that  sum  by  virtue  of  any  

enactment relating to interest on judgments.  Sub-section  

(2), however, places a fetter on the payment of any sum  

by the insurer under sub-section (1) in respect of any  

judgment or award unless, the insurer had notice of the  

proceedings in which the said judgment or award is given

34 and an insurer to whom such notice is given shall be  

entitled to be made a party thereto and to defend the  

action  on  the  grounds  enumerated  therein  involving  a  

breach of a specified condition of the policy.

24. The liability of the insurer, therefore, is confined  

to the number of persons covered by the insurance policy  

and  not  

beyond  

the  

same.  

In other  

words,  

as  in  

the  

present  

case,  since  the  insurance  policy  of  the  owner  of  the  

vehicle covered six occupants of the vehicle in question,  

including the driver, the liability of the insurer would  

be  confined  to  six  persons  only,  notwithstanding  the  

larger number of persons carried in the vehicle.  Such  

excess  number  of  persons  would  have  to  be  treated  as  

third parties, but since no premium had been paid in the

35 policy for them, the insurer would not be liable to make  

payment of the compensation amount as far as they are  

concerned.    However,  the  liability  of  the  Insurance  

Company to make payment even in respect of persons not  

covered  by  the  insurance  policy  continues  under  the  

provisions of sub-section (1) of Section 149 of the Act,  

as it would be entitled to recover the same if it could  

prove  

that one  

of  the  

conditions of the policy had been breached by the owner  

of the vehicle.  In the instant case, any of the persons  

travelling  in  the  vehicle  in  excess  of  the  permitted  

number  of  six  passengers,  though  entitled  to  be  

compensated by the owner of the vehicle, would still be  

entitled  to  receive  the  compensation  amount  from  the  

insurer, who could then recover it from the insured owner

36 of the vehicle.           

25. As mentioned hereinbefore, in the instant case, the  

insurance policy taken out by the owner of the vehicle  

was in respect of six passengers, including the driver,  

travelling in the vehicle in question.  The liability for  

payment  of  the  other  passengers  in  excess  of  six  

passengers would be that of the owner of the vehicle who  

would be required to compensate the injured or the family  

of the deceased to the extent of compensation awarded by  

the Tribunal.  

26. Having arrived at the conclusion that the liability  

of the Insurance Company to pay compensation was limited

37 to six persons travelling inside the vehicle only and  

that the liability to pay the others was that of the  

owner, we, in this case, are faced with the same problem  

as  had  surfaced  in  Anjana  Shyam’s  case  (supra).   The  

number of persons to be compensated being in excess of  

the number of persons who could validly be carried in the  

vehicle,  the  question  which  arises  is  one  of  

apportionment of the amounts to be paid.  Since there can  

be  no  pick  and  choose  method  to  identify  the  five  

passengers,  excluding  the  driver,  in  respect  of  whom  

compensation would be payable by the Insurance Company,  

to meet the ends of justice we may apply the procedure  

adopted in Baljit Kaur’s case (supra) and direct that the  

Insurance  Company  should  deposit  the  total  amount  of

38 compensation awarded to all the claimants and the amounts  

so deposited be disbursed to the claimants in respect to  

their claims, with liberty to the Insurance Company to  

recover  the  amounts  paid  by  it  over  and  above  the  

compensation amounts payable in respect of the persons  

covered by the Insurance Policy from the owner of the  

vehicle, as was directed in Baljit Kaur’s case.   

27. In  

other  

words,  

the  

Appellant  Insurance  Company  shall  deposit  with  the  

Tribunal  the  total  amount  of  the  amounts  awarded  in  

favour of the awardees within two months from the date of  

this order and the same is to be utilized to satisfy the  

claims of those claimants not covered by the Insurance  

Policy along with the persons so covered.  The Insurance  

Company will be entitled to recover the amounts paid by

39 it, in excess of its liability, from the owner of the  

vehicle, by putting the decree into execution. For the  

aforesaid purpose, the total amount of the six Awards  

which are the highest shall be construed as the liability  

of  the  Insurance  Company.   After  deducting  the  said  

amount from the total amount of all the Awards deposited  

in terms of this order, the Insurance Company will be  

entitled  

to  

recover  

the  

balance  

amount  

from the  

owner of  

the  

vehicle  

as if it is an amount decreed by the Tribunal in favour  

of the Insurance Company. The Insurance Company will not  

be required to file a separate suit in this regard in  

order  to  recover  the  amounts  paid  in  excess  of  its  

liability from the owner of the vehicle.      

28. The Appeals are, accordingly, disposed of.  Having

40 regard to the nature of the case, the parties shall bear  

their own costs.   

…………………………………………J.

(ALTAMAS KABIR)

…………………………………………J.

(CYRIAC  JOSEPH)

New  Delhi Dated:  18.2.2011