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

 

Court: Supreme Court of India.

Case Type: Civil Appeal.

Case No.: 5385 of 2001.

Date of Judgement: 17/08/2001.

Petitioner: New India Assurance Co. Ltd.

Respondent: Asha Rani & Ors.

Bench: 

• Justice A.P. Mishra.
• Justice U.C. Banerjee.

Cases Referred:

• Motor Vehicles Act, 1939 (hereinafter referred to as Old Act).
• Motor Vehicles Act, 1988. (hereinafter referred to as New Act).

Statutes Referred:

• New India Assurance Company vs Satpal Singh and Ors. (2000) 1 SCC 227.
• Mallawwa (Smt.) & Ors. Vs. Oriental Insurance Co. Ltd. & Ors., (1999) 1 SCC 403.
• Oriental Insurance Co. Ltd. vs. Smt. Irawwa and Ors. AIR 1992 Karnataka 321.
• National Insurance Co. Ltd. Vs. Dundamma, 1992 ACJ 1.
• Santra Bai and Ors. vs. Prahlad and Ors. 1985 ACJ.
• New India Assurance Company Ltd. Vs. Kanchan Bewa and Ors. II (1994) ACC 117 (FB).
• Pushpabai Purshottam Udeshi and Ors. Vs M/s. Ranjit Ginning & Pressing Co. (P) Ltd. And Anr. (1977) 2 SCC 745.

Facts:

• In 1988, the old Motor Vehicles Act, 1939 was replaced by the new Motor Vehicles Act, 1988.
• Section 147 of the New Act is the corresponding section to Section 95 of the Old Act.
• Clause (ii) of Section 95 (1) (b) under the Old Act was deleted in the New Act (after the amendment in 1994), and clause (iii) of the Old Act was re-numbered as (ii) in the New Act.
• In the Old Act, the definition of ‘goods vehicle’ contained the phrase ‘or in addition to passengers’. Under the definition of ‘goods carriage’, the words’ or in addition to passengers’ were not included in the New Act.
• A decision of this Court in New India Assurance Company vs Satpal Singh and Ors. (2000) 1 SCC 227 held that :
• The result is that under the new Act, an insurance policy covering third-party risk is not required to exclude gratuitous passengers in a vehicle, no matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act vis-à-vis gratuitous passengers are of no avail while considering the liability of the insurance company in respect of any accident which occurred or would occur after the new Act came into force.
• The set of appeals, in this case, fell into three categories:

1. Cases covered by the Motor Vehicles Act,1939.
2. Cases covered by the Motor Vehicles Act 1988 before the amendment brought about in 1994.
3. Cases covered by the Motor Vehicles Act 1988 after the 1994 amendment.

• The Court delivered judgements for cases falling under categories (i) and (iii).
• The Court passed the following order for cases falling under category (ii).

Issues:

• Is the insurer liable to pay compensation to the dependants of the deceased passenger if the deceased passenger was travelling in a goods vehicle and the vehicle met with an accident?
• Was the decision in Satpal Singh (supra) valid?

Contentions by the Petitioner:

• In Satpal Singh (supra), the Court held that the insurance company is able to pay compensation in all cases where the deceased or injured persons are gratuitous passengers, including the owner or his representative of the goods while travelling in a goods carriage under Section 147 of the New Act. This point critically affects insurance companies.
• The point mentioned above must be placed before a larger Bench for reconsideration.
• The relevant provisions of the New Act were not placed before the Court, and if they had been placed, the resultant outcome would have been different.
• The exclusion of the words’ or in addition to passengers’ in the definition of ‘goods carriage’ was a clear indication that passengers were not supposed to travel in a goods carriage.
• The defence which was available to insurance companies under sub-section (2) of Section 149 of the New Act is nullified because of the decision in Satpal Singh (supra).

Obiter Dicta:

• There is a clear difference between the definition of ‘goods vehicle’ under the Old Act and the definition of ‘goods carriage’ under the new Act. There is no definition of ‘goods vehicle’ under the New Act.
• The question of the liability of the insurance company in respect of gratuitous passengers travelling in a goods vehicle has been in issue before various High Courts under the old Act, which has led to conflicting judgments.
• The Court felt that some of the striking and important features of the New Act, which would have had a bearing on the conclusions, were not brought to the Court’s notice in Satpal Sing(Supra).

Judgement:

• The decision in Satpal Singh (supra) requires consideration by a larger Bench.
• The matter was placed before the Honorable Chief Justice of India for constituting a larger Bench.

Rationale:

• Sub-section (2) of Section 149 of the New Act mentions that no amount is payable by the insurer if any condition mentioned in the various sub-clauses of sub-section (2) is proved to exist.
• The Court felt that some of the striking and important features of the New Act, which would have had a bearing on the conclusions, were not brought to the Court’s notice in Satpal Sing(Supra).

Conclusion:

• On 3rd December 2002, a 3 Judge Bench consisting of Chief Justice G.B. Pattanaik, Justice H.K. Sema and Justice S.B. Sinha held that the Supreme Court’s decision in Satpal Singh (supra) was incorrect and should be overruled.

Prepared by Mihir Poojary.