8 July 2024


High Court of Bombay

Sheela Vs. The Branch Manager, The National Insurance Co. Ltd. and Ors.



Motor Vehicles

A comprehensive policy would cover liability of insurer for payment of compensation for occupant in car

In both the appeals, the Appellant - owner of the offending vehicle challenges the legality and correctness of the award in Claim Petition passed by the Motor Accident Claims Tribunal. The injured/claimants filed claim petition for compensation under Section 166 of the Motor Vehicles Act, 1988 claiming compensation towards various heads. The Appellant - owner and Rspondent No. 1 - Insurance Company resisted the claim on the ground that, there was no reason for the claimants to sit unauthorisedly in the private car and therefore, owner and Insurance Company are not liable. The Insurance Company has also taken the defence of fundamental breach of policy by the owner as the offending vehicle which was for private use of the owner, was used for the purposes of 'Hire or Reward'.

The learned Tribunal partly allowed the claim petitions, thereby fixing the liability on the owner and absolving the Insurance Company on the ground that, owner has committed fundamental breach of terms and conditions of the policy.

The impugned Judgment and award of the learned Tribunal is assailed in present appeals by the owner. The Appellant-owner placed reliance on the various Judgments of the Hon'ble Apex Court and submitted that, there was no wilful breach of the conditions of Insurance Policy by the owner and the Insurance Company has failed to prove that the said vehicle was used for 'Hire or Reward' purposes by the owner.

The Respondent No. 1 - Insurance Company does not dispute that at the relevant time, the offending vehicle was insured with Respondent No. 1 and the driver of the offending vehicle was having effective and valid driving licence, at the relevant time. It is also not disputed that, as per the terms of the Insurance Policy, the policy did not cover the use of vehicle for 'Hire or Reward' purposes. Evidently, apart from admission by the claimants that, he paid Rs. 20 towards ticket for travelling in the vehicle, there is no other evidence brought on record by the Insurance Company to show that, the owner was using the offending vehicle for the business of travelling passengers on 'Hire or Reward' basis. Only on stray admission by the claimants, who gave admission to show his authorized entry in the said vehicle cannot be said that the said vehicle was being used by the owner for hire purpose.

The Hon'ble Apex Court in the case of Jagtar Singh alias Jagdev Singh Vs. Sanjeev Kumar and others, while referring the Judgment of Delhi High Court in the case of Yashpal Luthra and others Vs. United India Insurance Co. Ltd. and others, quoted following para of the Judgment of Yashpal Luthra. It is observed therein 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 the Motor Accidents 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. There is no scintilla of doubt that a comprehensive policy would cover the liability of the insurer for payment of compensation for the occupant in car.

In the instant case, it is not disputed that, the offending vehicle was insured under Comprehensive Policy at the relevant time. In the light of the aforesaid ratio, the Insurance Company is liable to pay compensation to the occupants in the private car, as the Insurance Company has failed to prove by way of credible and substantive evidence that the owner/insured was knowingly and wilfully driving the offending vehicle for 'Hire or Reward'.

Respondent No. 1 - Insurance Company is liable severally to pay compensation to the claimants. In such circumstances, the Judgment and award of learned Trial Court with regard to fixing of liability on the insured/owner by absolving the Insurance Company is quashed and set aside and the Insurance Company is directed to pay compensation as has been awarded by the learned Tribunal to the claimants. Appeals allowed.


Jagtar Singh vs. Sanjeev Kumar and Ors. MANU/SC/1711/2017
; Yashpal Luthra and Anr. vs. United India Insur. Co. Ltd. and Anr. MANU/DE/3174/2009
; National Insurance Company Ltd. vs. Balakrishnan and Anr. MANU/SC/0987/2012

Tags : Compensation Direction Liability

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