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Judgment
[1] This appeal and the cross objection arise out of the judgment of the Motor Accident Claims Tribunal dated 30.07.2019 passed in Title Suit (MAC) No.04 of 2018.
[2] Brief facts are as under:
One Md. Islam Uddin also known as Jamal Uddin was traveling as a pillion rider on a motorcycle. On 02.11.2016 the motorcycle slipped causing fatal injuries to the pillion rider. His widow, unmarried daughters and two minor sons therefore, filed above mentioned motor accident claim petition seeking compensation of Rs. 20,92,000/- from the driver-owner and insurer of the motorcycle involved in the accident. The deceased was doing labour work. The claimants claimed that he was earning Rs.15,000/- per month. He was stated to be aged about 45 years. The Claims Tribunal held that accident occurred on account of the negligent of the motor cyclist. The Tribunal believed the monthly income of the deceased at Rs.6,000/-. Out of the yearly income of Rs.72,000/- the Tribunal set apart 1/3rd for the personal expenditure of the deceased, leaving 2/3rd for the dependants. Such datum figure of Rs.48,000/- per annum was multiplied by multiplier of 14 to award a sum of Rs.6,72,000/- towards loss of dependency benefits which was added by compensation under conventional heads totaling to Rs.70,000/- and a further sum of Rs.10,000/- towards medical expenses. The Tribunal thus arrived at total compensation of Rs.7,52,000/-.
[3] The Tribunal however, absolved the insurance company from satisfying such award on the ground that as a pillion rider, his risk was not covered by the insurance policy. In this respect, the Tribunal referred to the decision of the Supreme Court in case of National Insurance Co. Ltd. Vrs. Swaran Singh and others; reported in (2004) 3 SCC 297.
[4] This judgment and award was challenged by the original claimant in the present appeal. The owner has filed cross objection to the extent the insurance company is absolved and the sole liability is attached on the owner.
[5] In the present appeal the main question is of the liability of the insurance company which I would discuss first. It is now well settled through series of judgments of a Supreme Court that a insurance policy which is confined to the statutory liabilities which is often referred to as the act only policy, would not cover the risk of a pillion rider. In case of Oriental Insurance Company Limited Vrs. Sudhakaran K. V. and others; reported in (2008) 7 SCC 428 the Supreme Court referring to several judgments on the point concluded as under:
"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."
[6] However, it is also well settled that it is always open for the owner of a motor vehicle to expand the insurance policy to cover risks beyond the statutory liabilities by paying extra premium. In this context, it is held that if the insurance policy in question is a comprehensive policy or a package policy, the liability of the insurance company to cover the risk of the pillion rider would also arise. This term package policy has been referred to in the decision of the learned Single Judge of Madras High Court dated 28.02.2019 in case of United India Insurance Company Ltd. Vrs. Sathish Kumar and another in C.M.A No.2696/2018 & C.M.P No. 20384/2018. Relevant portions of which as under:
"G.R.3 Policy Forms:
Policies insuring Motor Vehicles are to be issued only as per the Standard Form(s) given in Section 6 of the Indian Motor Tariff.
A. Types of Policies:
There are two types of Policies:
(i)Liability Only Policy: This covers Third party Liability for bodily injury and/or death and Property damage. Personal Accident Cover for Owner-Driver is also included.
(ii)Package Policy: This covers loss or damage to the Vehicle insured in addition to (i) above. Restricting the scope of cover under Section-I (loss of or damage to the Vehicle insured) of the Package Policy without any reduction in Tariff rates is permitted. Excepting this, no alteration or extension of any of the covers, Terms, Conditions,
Exclusions, etc. of any of the Policies/Endorsements laid down in this Tariff is permitted without prior approval of the TAC."
[7] In case of National Insurance Company Limited Vrs. BalaKrishnan and another; reported in (2013) 1 SCC 731 the Supreme Court examined this distinction between an Act Policy and comprehensive/package policy. The Supreme Court referred to the report of the Tariff Advisory Committee in respect to the comprehensive/package policy. Following observations may be noted:
"20. Thus, it is quite vivid that the Bench in Bhagyalakshmi case had made a distinction between the "Act policy" and "comprehensive policy/package policy". We respectfully concur with the said distinction. The crux of the matter is what would be the liability of the insurer if the policy is a "comprehensive/package policy". We are absolutely conscious that the matter has been referred to a larger Bench, but, as is evident, the Bench has also observed that it would depend upon the view of the Tariff Advisory Committee pertaining to enforcement of its decision to cover the liability of an occupant in a vehicle in a "comprehensive/package policy" regard being had to the contract of insurance.
At this stage, it is apposite to note that when the decision in Bhagyalakshmi was rendered, a decision of High Court of Delhi dealing with the view of the Tariff Advisory Committee in respect of "comprehensive/package policy" had not come into the field. We think it apt to refer to the same as it deals with certain factual position which can be of assistance. The High Court of Delhi in Yashpal Luthra and Anr. V. United India Insurance Co. Ltd. and Another, after recording the evidence of the competent authority of the Tariff Advisory Committee (TAC) and Insurance Regulatory and Development Authority (IRDA), reproduced a circular dated 16.11.2009 issued by IRDA to CEOs of all the insurance companies restating the factual position relating to the liability of insurance companies in respect of a pillion rider on a two-wheeler and occupants in a private car under the comprehensive/package policy.
The relevant portion of the circular which has been reproduced by the High Court is as follows:-
"INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY Ref: IRDA/NL/CIR/F&U/073/11/2009
Dated: 16.11.2009
To,
CEOs of all general insurance companies
Re: Liability of insurance companies in respect of occupants of a Private car and pillion rider on a two-wheeler under Standard Motor Package Policy (also called the Comprehensive Policy‟).
Insurers‟ attention is drawn to wordings of Section II(1) (ii) of Standard Motor Package Policy (also called the Comprehensive Policy‟) for private car and two-wheeler under the (erstwhile) India Motor Tariff(IMT). For convenience the relevant provisions are reproduced hereunder:-
"Section II - Liability to Third Parties
Subject to the limits of liabilities 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 insured vehicle against all sums which the insured shall become legally liable to pay in respect of -
(i) death 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 employment of such person by the insured.‟
It is further brought to the attention of insurers that the above provisions are in line with the following circulars earlier issued by the TAC on the subject:
(i) Circular M.V. No. l of 1978 - dated 18.3.1978 (regarding occupants carried in Private Car) effective from 25.3.1977.
(ii) MOT/GEN/10 dated 2.6.1986 (regarding pillion riders on a two-wheeler) effective from the date of the circular.
The above circulars make it clear that the insured‟s liability in respect of occupant(s) carried in a private car and pillion rider carried on a two-wheeler is covered under the Standard Motor Package Policy. A copy each of the above circulars is enclosed for ready reference.
The Authority vide circular No. 066/IRDA/F&U/Mar-08 dated 26.3.2008 issued under File and Use Guidelines has reiterated that pending further orders the insurers shall not vary the coverage, terms and conditions wording, warranties, clauses and endorsements in respect of covers that were under the erstwhile tariffs. Further the Authority, vide circular No. 019/IRDA/NL/F&U/Oct-08 dated 6.11.2008 has mandated that insurers are not permitted to abridge the scope of standard covers available under the erstwhile tariffs beyond the options permitted in the erstwhile tariffs. All general insurers are advised to adhere to the afore-mentioned circulars and any non-compliance of the same would be viewed seriously by the Authority. This is issued with the approval of competent authority.
Sd/-
(Prabodh Chander) Executive Director"
[emphasis supplied]
The High Court has also reproduced a circular issued by IRDA dated 3.12.2009. It is instructive to quote the same:-
"INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY
Ref.: IRDA/NL/CIR/F&U/078/12/2009
Dated: 3.12.2009
To,
All the CEOs of All general insurance companies (except ECGC, AIC, Staff Health, Apollo)
Re: Liability of insurance companies in respect of occupant of a private car and pillion rider in a two-wheeler under Standard Motor Package Policy (also called the Comprehensive Policy).
Pursuant to the Order of the Delhi High Court dated 23.11.2009 in Yashpal Luthra V. United India Insurance Co. Ltd., the Authority convened a meeting on 26.11.2009 of the CEOs of all the general insurance companies doing motor insurance business in the presence of the counsel appearing on behalf of the Authority and the leaned amicus curiae.
Based on the unanimous decision taken in the meeting by the representatives of the general insurance companies to comply with the IRDA circular dated 16.11.2009 restating the position relating to the liability of all the general insurance companies doing motor insurance business in respect of the occupants in a private car and pillion rider on a two wheeler under the comprehensive/package policies which was communicated to the court on the same day i.e. 26.11.2009 and the court was pleased to pass the order (dated 26.11.2009) received from the Court Master, Delhi High Court, is enclosed for your ready reference and adherence. In terms of the said order and the admitted liability of all the general insurance companies doing motor insurance business in respect of the occupants in a private car and pillion rider on a two-wheeler under the comprehensive/package policies, you are advised to confirm to the Authority, strict compliance of the Circular dated 16.11.2009 and order dated 26.11.2009 of the High Court. Such compliance on your part would also involve:
i) withdrawing the plea against such a contest wherever taken in the cases pending before the MACT, and issue appropriate instructions to their respective lawyers and the operating officers within 7 days;
ii) with respect to all appeals pending before the High Courts on this point, issuing instructions within 7 days to the respective operating officers and the counsel to withdraw the contest on this ground which would require identification of the number of appeals pending before the High Courts (whether filed by the claimants or the insurers) on this issue within a period of 2 weeks and the contest on this ground being withdrawn within a period of four weeks thereafter;
iii) With respect to the appeals pending before the Hon'ble Apex Court, informing, within a period of 7 days, their respective Advocates on Record about the IRDA Circulars, for appropriate advice and action. Your attention is also drawn to the discussions in the CEOs meeting on 26.11.2009, when it was reiterated that insurers must take immediate steps to collect statistics about accident claims on the above subject through a central point of reference decided by them as the same has to be communicated in due course to the Hon‟ble High Court. You are, therefore, advised to take up the exercise of collecting and collating the information within a period of two months to ensure necessary and effective compliance of the order of the court. The information may be centralized with the Secretariat of the General Insurance Council and also furnished to us.
IRDA requires a written confirmation from you on the action taken by you in this regard.
This has the approval of the Competent Authority.
Sd/-
(Prabodh Chander) Executive Director
[emphasis added]
It is extremely important to note here that till 31.12.2006 the Tariff Advisory Committee and, thereafter, from 1.1.2007, IRDA functioned as the statutory regulatory authorities and they are entitled to fix the tariff as well as the terms and conditions of the policies by all insurance companies. The High Court had issued notice to the Tariff Advisory Committee and the IRDA to explain the factual position as regards the liability of the insurance companies in respect of an occupant in a private car under the "comprehensive/ package policy". Before the High Court, the Competent Authority of IRDA had stated that on 2.6.1986, the Tariff Advisory Committee had issued instructions to all the insurance companies to cover the pillion rider of a scooter/motorcycle under the "comprehensive policy" and the said position continues to be in vogue till date. It had also admitted that the "comprehensive policy" is presently called a "package policy". It is the admitted position, as the decision would show, the earlier Circulars dated 18.3.1978 and 2.6.1986 continue to be valid and effective and all insurance companies are bound to pay the compensation in respect of the liability towards an occupant in a car under the "comprehensive/package policy" irrespective of the terms and conditions contained in the policy. The competent authority of the IRDA was also examined before the High Court who stated that the Circulars dated 18.3.1978 and 2.6.1986 of the Tariff Advisory Committee were incorporated in the Indian Motor Tariff effective from 1.7.2002 and they continue to be operative and binding on the insurance companies. Because of the aforesaid factual position, the Circulars dated 16.11.2009 and 3.12.2009, that have been reproduced hereinabove, were issued.
It is also worthy to note that the High Court, after referring to individual circulars issued by various insurance companies, eventually stated thus:-
"27. In view of the aforesaid, it is clear 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 Motor Accident 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. In fact, in view of the TAC‟s directives and those of the IRDA, such a plea was not permissible and ought not to have been raised as, for instance, it was done in the present case.
In view of the aforesaid factual position, there is no scintilla of doubt that a "comprehensive/package policy" would cover the liability of the insurer for payment of compensation for the occupant in a car. There is no cavil that an "Act Policy" stands on a different footing from a "Comprehensive/Package Policy". As the circulars have made the position very clear and the IRDA, which is presently the statutory authority, has commanded the insurance companies stating that a "Comprehensive/Package Policy" covers the liability, there cannot be any dispute in that regard. We may hasten to clarify that the earlier pronouncements were rendered in respect of the "Act Policy" which admittedly cannot cover a third party risk of an occupant in a car. But, if the policy is a "Comprehensive/Package Policy", the liability would be covered. These aspects were not noticed in Bhagyalakshmi and, therefore, the matter was referred to a larger Bench. We are disposed to think that there is no necessity to refer the present matter to a larger Bench as IRDA, which is presently the statutory authority, has clarified the position by issuing circulars which have been reproduced in the judgment by the Delhi High Court and we have also reproduced the same."
[8] What can be culled out from the said judgment thus is that if the insurance policy taken out by the owner of a two wheeler is only Act Policy, the risk of the pillion rider would not be covered. However, if such policy is a comprehensive/package policy, the liability of the insurance company to cover the risk would also extend to the pillion rider. In a present case, a copy of the policy is on record. The first page of the policy itself describes it as a package policy. That being the position, the insurance company would be liable to satisfy the award.
[9] With respect to the computation of the compensation, no serious arguments were advanced except for stating that the assessment of income Rs. 6000/- per month was on the lower side. However, I do not find any major error in the view of the Tribunal. The accident took place in the year 2016. The deceased was stated to be a daily worker. No other evidence of any nature except to the oral evidence was produced.
[10] In the result, appeal and the cross objection are allowed to the limited extent of declaring that the insurance company is liable to satisfy the award and pay the compensation as awarded by the Claims Tribunal. It is further directed that the insurance company shall deposit entire amount of compensation with proportionate cost and interest before the Claims Tribunal within a period of three months from today. Upon such deposit, 30% thereof shall be paid in favour of the claimants, remaining 70% shall be invested in any nationalized bank in a fixed deposit for a period of five years. The widow and the sons who are minor at the time of accident would receive periodic interest accruing on such fixed deposit in the portion of 60% in favour of widow and 20% each in favour of the sons. Upon completion of period of 5 years the invested amount would be disbursed in favour of the claimant in the same proportions.
[11] Appeal and cross objection are disposed of. Pending application(s), if any, also stands disposed of.