S.147 MV Act | Insurance Company Not Liable To Compensate Person Travelling In Goods Vehicle Prior To 1994 Amendment: Gujarat High Court

"…the present appellant insurance company is exonerated from the liability fasten upon it as the deceased was travelling in goods vehicle and it is clearly breach of the policy and therefore, the insurance company is not held liable…Considering the ratio laid down by Hon'ble Apex Court and considering the fact that the date of accident is of 9.1.1994 i.e. prior to the date of amendment in Section 147 of the Motor Vehicles Act which has come into force in November 1994 and therefore, the present appeal deserves to be allowed."

It is to be noted that after the 1994 amendment in the MV Act, Section 147 mandated a policy of insurance against the death or bodily injury to any passenger of a transport vehicle, including goods vehicle; (except gratuitous passengers of a goods vehicle) caused by the use of that motor vehicle in a public place.

The Single Judge Bench was hearing the instant appeal against the judgement of the Motor Accident Claims Tribunal which had allowed the claim petition partly by awarding INR 4.1 lacs of compensation and holding both insurance companies liable to the extent of 50%.

The Insurance Company relied on New India Assurance Company Limited vs. Asha Rani and others 2003 (2) SCC 223 to contest that the order was bad in law. Further, in the policy of the vehicle involving the tempo, extra premium was not paid by the owner of the vehicle for covering the passengers. As a result, extra coverage was not provided.

Turning to the Asha Rani judgement, the High Court reiterated:

"Section 2(35) of 1988 Act does not include passengers in goods carriage..."

Further, in respect of Section 147 of the 1988 Act, it was explained:

"Proviso appended thereto categorically states that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in a goods vehicle would be limited to the liability under the Workmen's Compensation Act. It does not speak of any passenger in a 'goods carriage'."

Additionally, as per the judgement, the owner of a passenger carrying vehicle must pay the premium for covering the risks of the passengers which was not paid in the instant case.

Therefore, it was held that the Claimants were entitled to get compensation from the other insurance company and the remaining 50% from the owner and driver of the tempo via appropriate proceedings. The amount deposited by the instant insurance company with the Tribunal was ordered to be refunded.

Case No.: C/FA/1736/2007

Case Title: ORIENTAL INSURANCE CO. LTD. v/s MERAMAN DANA HARIJAN & 6 other(s)

Citation: 2022 LiveLaw (Guj) 363

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