Holding

The 1994 amendment to Section 147 limits insurance coverage to third parties, the owner of the goods and his authorized representative, thereby excluding gratuitous passengers; the insurer is not liable and the vehicle owner bears the liability.

Summary

The case concerned a claim for compensation by the family of a 16‑year‑old who died as a gratuitous passenger in a goods vehicle insured by National Insurance Co. Ltd. The Motor Accident Claims Tribunal and the Punjab & Haryana High Court had held the insurer liable, relying on the earlier Satpal Singh decision. On appeal, the Supreme Court examined whether the 1994 amendment to Section 147 of the Motor Vehicles Act, 1988, which inserted the words “including the owner of the goods or his authorized representative carried in the vehicle,” extended coverage to gratuitous passengers. The Court held that the amendment was intended only to bring the owner and his authorized representative within the insurance cover, leaving gratuitous passengers excluded, as no premium was paid for such risk. Consequently, the insurer’s liability was rejected and the vehicle owner was held responsible for the compensation. The Court directed the insurer to pay the awarded amount to the claimant and to recover the same from the vehicle owner, invoking Section 168 of the Act.

Issues considered

Does the 1994 amendment to Section 147 of the Motor Vehicles Act, 1988 extend insurance coverage to gratuitous passengers in a goods vehicle?
How should the phrase “any person” in Section 147 be interpreted in light of the amendment?
Is the insurer liable for compensation to a gratuitous passenger, or does liability rest with the vehicle owner?
What principles of statutory interpretation, including the mischief rule, apply to this provision?

Legislation cited

Motor Vehicles Act, 1939s. 95
Motor Vehicles Act, 1988s. 147, s. 168
Motor Vehicles (Amendment) Act, 1994s. 147

Subjects

Motor Vehicles ActSection 147Insurance liabilityGratuitous passengerStatutory interpretationMischief ruleThird‑party risk

Judgment

A MIS. NATIONAL INSURANCE CO. LTD. T'
V.

BALJIT KAUR AND ORS.

JANUARY 6, 2004

B [V.N. KHARE, CJ, S.B. SINHA
AND DR. AR. LAKSHMANAN, JJ.]
}' ;

Motor Vehicles Act, 1988-Seciion 147 (as amended in 1994) and Section
168-lnsurance policy in respect of goods vehicle-Liability of insurer with
c respect to gratuitous passengers-Held: By amendment in 1994 to Section
147 intention of the legislature was not to provide for liability of insurer with
respect to gratuitous passenger-A/so this was neither contemplated at the
time contract of insurance was entered into, nor premium was paid to that
extent-Hence the owner of the vehicle-insured liable.
D
Interpretation of statutes:

Rule of-Court of law should avoid interpretation that would negate
true import or render the words of any provision as superfluous.

E Mischief Rule-Doctrine of suppression-Applicability of-Discussed

The question which arose for consideration in these appeals was
whether an insurance policy in respect of a goods vehicle would also cover
gratuitous passengers, in view of the legislative amendment in 1994 to
Section 147 of the Motor Vehicles Act, 1988 inserting words "injury to
F any person, including owner of the goods or his authorized representative
carried in the vehicle". _..
Son of Respondent No. I was travelling in a goods vehicle insured
with the appellant-insurance company. He died in an accident as a result
of rash and negligent driving by respondent No. 2-driver of the vehicle in
G 1999. Respondent No.I filed claim petition for compensation. Appellant
contended that it was not liable with respect to passengers transported in
goods vehicle. Tribunal relying upon the .ratio in Satpal Singh 's case that
insurance policy covering third party risk does not exclude gratuitous y·
passengers in any type or class of vehicle, granted compensation. High
H 274
NATIONAL INSURANCE CO.LTD. 1·. BALJIT KAUR 275
Court upheld the order and further directed that if respondent No. 3- A
owner committed any breach, insurer could recover the compensation
from him.

Respondent No. 2-driver and respondent No. 3-owner of the vehicle
contended that in Asha Rani's case and Konda Reddy 's case which
. overruled Satpal Singh 's case, the effect of the legislative amendment in B
1994 to Section 147 was not in question as they dealt with the position
.fi prevailing prior to the amendment of Section 147; therefore, the law laid
down by these decisions that insurer would not be liable to gratuitous
passenger traveling in goods vehicle would not be considered as binding
law; that since the accident occurred in 1999, this Court would c.onsider C
afresh the impact to the 1994 amendment; and that the insertion of words
"including owner of the goods or his authorized representative carried in
the vehicle" in Section 147 would result in the inference that gratuitous
passengers would be covered by the scope of the pro.vision and any other
construction would render the effect of the words "any person" as
completely redundant. D
Partly allowing the appeals, the Court

HELD: I.I. By reason of the 1994 Amendment to Section 147 of the
Motor Vehicles Act, 1988 "including the owner of the goods or his
authorized representative carried in the vehicle" was added. The liability E
of the owner of the vehicle to insure it compulsorily, thus, by reason of
the amendment only the owner of the goods or his authorized
representative carried in the vehicle besides the third parties would now
be covered by the policy of insurance in respect of a goods vehicli;. The
intention of the Parliament, therefore, could not have been that the words
F
'any person' occurring in Section 147 would cover all persons who were
traveling in a goods carriage in any capacity whatsoever, especially
) gratuitous passengers, who were neither contemplated at the time the
contract of insurance was entered into, nor any premium was paid to the
extent of the benefit of insurance to such category of people. If such was
the intention .there was no necessity for the Parliament to carry out an G
amendment inasmuch as the expression 'any person' contained in sub-
~ . clause (i) of clause (b) of sub-section (I) of Section 147 would have included
1 ~ the owner of the goods or his authorized representative besides the
passengers who are gratuitous or otherwise. It cannot be accepted that
the words "any person" as used in Section 147 of the Motor Vehicles Act, H
276 SUPREME COURT REPORTS (2004] I S C.R.

A would be rendered otiose by an interpretation that removed gratuitous T \
passengers from the ambit of the same. Furthermore, in spite of the
amendment of 1994, the effect of the provision contained in Section 147
with respect to persons other than the owner of the goods or his authorized
representative remains the same. 1281-H; 282-B, G; 283-AI

B New India Assurance Co. v. Satpal Singh, 1200011 SCC 237, overruled.

New India Assurance Co. Ltd v. Asha Rani, 1200312 SCC 223; Oriental t\
Insurance Co. Ltd. v. Devireddy Kondo Reddy, 120031 2 SCC 339 and
National Insurance Co. Ltd. v. Ajit Kumar and Ors., JT (20031 7 SC 520,
referred to.
c
1.2. The appellant-insurance company is directed to satisfy the
awarded amount in favour of the claimant if not already satisfied and
recover the same from the owner of the vehicle in the interest of justice.
For the purpose of such recovery, it would not be necessary for the insurer
D to file a separate suit but it may initiate a proceeding before the executing
court as if the dispute between the insurer and the owner was the subject
matter of determination before the tribunal and the issue is decided against
the owner and in favour of the insurer. These directions are issued having ''
regard to the scope and purport of Section 168 of the Motor Vehicles Act,
1988 in terms whereof it is not only entitled to determine the amount of
E claim as put forth by the claimant for recovery thereof from the insurer,
owner or driver of the vehicle involved in the accident inasmuch as can
be resolved by the tribunal in such a proceeding. [283-C-EI

2.1. It is incumbent upon a Court of law to eschew that interpretation
of a statute that would serve to negate its true import, or to render the
F wo~ds of any provision as superfluous. 1280-Af
2.2. A statutory liability enjoined upon an owner of the vehicle to
compulsorily insure it so as to cover the liability in respect of a person '·
who was travelling in a vehicle pursuant to a contract of employment in
G terms of proviso (ii) appended to Section 95 of the 1939 Act does not occur
in Section 147 of the 1988 Act. The changes effected in the 1988 Act vis-
a-vis the 1939 Act as regard definitions of 'goods vehicle', 'public service
vehicle' and 'stage carriage' have also a bearing on the subject inasmuch
as the concept of any goods carriage carrying any passenger or any other
person was not contemplated. In a situation of this nature, the doctrine
H of suppression of mischief rule shall apply. Such an amendment was made
NATIONAL INSURANCE CO. LTD."· BALJIT KAUR [V.N. KHARE, CJ.] 277
,..., by the Parliament consciously. 1280-F-GI A
Smt. PEK Kal/iani Amma and Others v. K. Devi and Ors., AIR (1996)
SC 1963; Bengal Immunity Co. Ltd v. State of Bihar and Ors. AIR (1955)
SC 661 and Goodyear India ltd v. State of Haryana and Anr., AIR (1990)
SC 781, relied on.
B
Heydon's case 3 Co Rep 7A, 76 ER 637, referred to.

Halsbury's laws of England Volume 44(1), fourth reissue, para 1474
pp 906-07, referred to.

CIVJL APPELLATE JURISDICTION: Civil Appeal No. I6 of2004. c
From the Judgment and Order dated 3.7.200I of the Punjab and Haryana
High Court in F.A.O. No. 1852 of 200 I.

WITH
D
Civil Appeal Nos. 17, 18, 20, 27, 28, 26, 25, 24, 23, 22, 21 of2004 .
-
.
>' Kishore Rawat, M.K. Dua,, Joy Basu, B.K. Satija, S.L. Gupta, Baldev
Shanna, Sunder Prakash Jain, Sant Lal Nagar, Subrata Das, Goodwill Indeevar,
Ms. Suresh Kumari, Dinesh Verma, A.P.. Mohanty, Ms. Kavita Wadia, Ankur
Talwar, Aron Aggarwal, Anurag Kumar Agarwal and Varinder Kumar Shanna E
for the appearing parties.

The Judgment of the Court was delivered by

V.N. KHARE, CJ. Leave granted.
F
The question that arises for consideration in these appeals is whether an
+ insurance policy in respect of a goods vehicle would also cover gratuitous
)
passengers, in view of the legislative amendment in 1994 to Section 147 of
the Motor Vehicles Act, 1988.

The first respondent herein preferred a claim petition for compensation G
before the Motor Accident Claims Tribunal, Ludhiana (hereinafter referred to
as 'the Claims Tribunal'), in view of the death of her sixteen year old son,
• -,. Sukhwinder Singh, due to the allegedly reckless driving by the second
respcmdent and driver of the goods vehicle, bearing Number PB-IOU-8937,
on February 19, 1999. It was found by the Claims Tribunal that the victim,
H
278 SUPREME COURT REPORTS [2004] I S.C.R.

A who was returning in the truck from a marriage ceremony, died as a result ~•
of the rash and negligent driving by the driver of the goods vehicle, the
second respondent herein. It was an admitted fact that the said vehicle was
insured with the appellant insurance company.

The Claims Tribunal relying upon the decision of this Court in New
B India Assurance Co. v. Satpal Singh, (2000] I SCC 237, accepted the clai~
petition, and rejected the contention of the appellant insurance company that
the concerned vehicle being a goods vehicle, it would not have to incur any
liability with respect to passengers transported in the vehicle. It further
directed the appellant to pay an amount of Rs. 1,32,000 as compensation,
C with interest at the rate of 9% from the date of application. The High Court
upheld the verdict of the Claims Tribunal on appeal, with the further direction
that in the event the owner, the third respondent herein, had committed any
bre::ch, the appellant insurer would be entitled to recover the amount of
compensation from him.

D It may be noticed at the outset that the Judgment rendered in SQtpal
Singh case (supra) has been subsequently reversed by a three-judge Bench of
this Court in New India Assurance Co. Ltd. v. Asha Rani, (2003] 2 SCC 223,
which was followed in the case of Oriental Insurance Co. Ltd. v. Devireddy "\,
Kanda Reddy, (2003] 2 SCC 339.

E Reference in this connection may also be made to National Insurance
Co. Ltd. v. Ajit Kumar and Ors., JT (2003] 7 SC 520.,

In the case of New India Assurance Co. Ltd. v. Asha Rani (Supra), it
was held that the previous decision in Satpal Singh Case, was incorrectly
rendered, and that the words "any person" as used in Section 147 of the
F Motor Vehic:les Act, 1988, would not include passengers in the goods vehicle,
but would rather be confined to the legislative intent to provide for third +-
party risk. The question in the subsequent judgment in Oriental Insurance
Co. Ltd. v. Devireddy Kanda Reddy (supra), involved, as in the present case,
the liability of the insurance company in the event of death caused to a
G gratuitous passenger traveling in a goods vehicle. The Court held that the
Tribunal and the High Court were not justified in placing reliance upon
Satpal Singh case (supra), in view of its reversal by Asha Rani (supra), and
that, accordingly, the insurer would not be liable to pay compensation to the
family of the victim who was traveling in a goods vehicle. ' .
>r' •

H It was contended by the learned counsel appearing on behalf of the
NATIONAL INSURANCE CO. LTD.''· BALJIT KAUR (V.N. KHARE, CJ.] 279

second and third respondents, the driver and owner of the vehicle respectively, A
that the decision in Asha Rani case (supra) and Kanda Reddy case (supra)
were delivered with respect to the position prevailing prior to the amendment
of Section 147 by the Motor Vehicles (Amendment) Act, 1994. As such, the
effect of the legislative amendment was not in question in the above cases,
and therefore, the law laid down by these decisions would not be considered B
as binding law in view of coming into force of the said amendment. Since
the accident in the present instance occurred in 1999, this Court would now
have to consider afresh the impact of the 1994 amendment, and could not
consider itself circumscribed by the aforementioned decisions in the Asha
Rani case (supra) and Kanda Reddy case (supra) which both involved motor
accidents predating the said amendment. C
It is the submission of the respondent vehicle owner and driver that the
insertion, by way of legislative amendment, of the words "including owner
of the goods or his authorized representative carried in the vehicle" in Section
147 would result in the inference that gratuitous passengers would as well be
covered by the scope of the provision. Any other construction, it was urged D
by the·learned counsel for the second and third respondents, would render the
effect of the words "any person" as completely redundant.

The material portion of the provision contained in Section 14 7 of the
Motor Vehicles Act, 1988, as amended by the Motor Vehicles (Amendment)
Act, 1994 reads as follows: E
"l4i. Requirements ofpolicies and limits of liability- (I) in order
to comply with the requirements of this Chapter, a policy of insurance
must be a policy which-
(a) ............ . F
(b) insures the person or classes of persons specified in the policy to
the extent specified in sub-section (2)
(i) against any liability which may be incurred by him in respect of
the death of or bodily injury to any person, including owner of G
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;
(ii) • • *"
(emphasis added) H
280 SUPREME COURT REPORTS [2004] I S.C.R.

A Admittedly, it is incumbent upon a Court of law to eschew that
interpretation of a statute that would serve to negate its true import, or to
render the words of any provision as superfluous. Nonetheless, we find no
merit in the above submissions proffered by the learned counsel for the
respondent. The effect of the 1994 amendment on Section 147 is unambiguous.
B Where earlier, the words "any person" could be held not to include the owner
of the goods or his authorized representative travelling in the goods vehicle,
Parliament has now made it clear that such a construction is no longer possible.
~·
The scope of this rationale does not, however, extend to cover the class of '
cases where gratuitous passengers for whom no insurance policy was
envisaged, and for whom no insurance premium was paid, employ the goods
C vehicle as a medium of conveyance.

We find ourselves unable, furthermore, to countenance the contention
of the respondents that the words "any person" as used in Section 147 of the
Motor Vehicles Act, would be rendered otiose by an interpretation that
D removed gratuitous passengers from the ambit of the same. It was observed
.by this Court in the case concerning New India Assurance Co. Ltd. v. Asha
-; Rani (supra) that the true purport of the words "any perstm" is to be found
in the liability of the insurer for third party risk, which was sought to be "ii,
provided for by the enactment.

E It is pertinent to note that a statutory liability enjoined upon an owner
of the vehicle to compulsorily insure it so as to cover the liability in respect
of a person who was travelling in a vehicle pursuant to a contract of
employment in terms of proviso (ii) appended to Section 95 of the 1939 Act
does not occur in Section 14 7 of the 1988 Act. The changes effected in the
F 1988 Act vis-a-vis the 1939 Act as regard definitions of 'goods vehicle',
'public service vehicle' and 'stage carriage' have also a bearing on the subject
inasmuch as the concept of any goods carriage carrying any passenger or any ~
other person was not contemplated.

In a situation of this nature, the doctrine of suppression of mischief
G rule as adumbrated in Heydon 's case [3 Co Rep 7a, 76 ER 637] shall
apply. Such an amendment was made by the Parliament consciously.
Having regard to the definition of 'goods carriage' vis-a-vis 'public service
vehicle', it is clear that whereas the goods carriage carrying any passenger
is not contemplated under the 1988 Act as the same must be used solely
H for carrying the goods.
NATIONAL INSURANCE CO LTD. i-. BALJIT KAUR [V.N. KHARE. CJ.] 281

• VY In Halsbury's Laws of England; Volume 44(1), fourth reissue, para A
1474, pp 906-07, it is stated :

"Parliament intends that an enactment shall remedy a particular
mischief and it is therefore presumed lhat Parliament intends that the
cou1t, when considering, in relation to the facts of the instant case,
which of the opposing constructions of the enactment corresponds to B
its legal meaning, should find a construction which applies the remedy
provided by it in such a way as to suppress that mischief. The
doctrine originates in Heyd on 's case where the Barons of the
Exchequer resolved that for the sure and true interpretation of all
statutes in general (be they penal or beneficial, restrictive or enlarging C
of the common law), four things are to be discerned and considered:

(I) what was the common law before the making of the Act;

(2) what was the mischief and defect for which the common law did
not provide;
(3) what remedy Parliament has resolved and appointed to cure the
D
disease of the commonwealth; and
~ (4) the true reason of the remedy,

and then the office of all the judges is always to make such constructicn
as shall : E
(a) suppress the mischief and advance the remedy; and
(b) suppress subtle inventions and evasions for the continuance of
the mischief pro privato commodo (for private benefit); and
(c) add force and life to the cure and remedy according to the true F
intent of the makers of the Act pro publico (for the public good)."

) Heydon's Rule has been applied by this Court in a large number of
cases in order to suppress the mischief which was intended to be remedied
. as against the literal rule which could have otherwise covered the field. [See
for example, Smt. PEK Ka/!iani Amma and Ors. v. K. Devi and Ors,, AIR G
(1996) SC 196~; Be11ga/ /1111111111ity Co. Ltd v. State of Bihar and Ors., AIR
[1955] SC 661; and Goul~vear lmlia Lid. v. Stale ofHwyana and Anr., AIR
J ~ (1990) SC 781.

By reason of the 1994 Amendment wl)at was added is "including the
owner of the goods or his authorised representative carried in the vehicle". H
282 SUPREME COURT REPORTS (2004] I S.C.R.

A The liability of the owner of the vehicle to insure it compulsorily, thus, by
reason of the aforementioned amendment included only the owner of the
goods or his authorised representative carried in the vehicle besides the third
parties. The intention of the Parliament, therefore, could not have been that
the words 'any person' occurring in Section 147 would cover all persons who
were travel.ling in a goods carriage in any capacity whatsoever. If such was
B the intention there was no necessity of the Parliament to carry out an
amendment inasmuch as expression 'any person' contained in sub-clause (i) )" ;
of clause (b) of sub-section (I) of Section I47 wou Id have included the
owner of the goods or his authorised representative besides the passengers
who are gratuitous or otherwise.
c The observations made in this connection by the Court in Asha Rani
case (supra) to which one of us, Sinha, J, was a party, however, bear repetition:

"26. In view of the changes in the relevant provisions in the I988
Act vis-a-vis the I 939 Act, we are of the opinion that the meaning of
D the words "any person" must also be attributed having regard to the
context in which they have been used i.e. "a third party". Keeping
in view the provisions of the 1988 Act, we are of the opinion that as
the provisions thereof do not enjoin any statutory liability on the
owner of a vehicle to get his vehicle insured for any passenger traveling
in a goods vehicle, the .insurers would not be liable therefor."
E
In Asha Rani (supra), it has been noticed that sub-clause (i) of clause
(b) of sub-section (I) of Section 147 of the 1988 Act speaks of liability
which may be incurred by the owner of a vehicle in respect of death of or
bodily injury to any person or damage to any prope1ty of a third party caused
by or arising out of the use of the vehicle in a public place. Furthermore,
F an owner of a passenger-carrying vehicle must pay premium for covering the
risks of the passengers !ravelling in the vehicle. The.premium in view of the
1994 Amendment would only cover a third pa11y as also the owner of the
goods or his authorised representative and not any passenger carried in a
goods vehicle whether for hire or reward or otherwise.
G
It is therefore, manifest that in spite of the amendment of 1994, the
effect of the provision contained in Section 147 with respect to persons other
than the owner of the goods or his authorized representative rem a ins the ~ •
same. A!though the owner of the goods or his authorized representative
would now be covered by the policy of insurance in respect of a goods
H vehicle, it was not the intention of the legislature to provide for the liability
NATIONAL INSURANCE CO.LTD.,._ BALJIT KAUR [V.N. KHARE. CJ.] 283

~ 'Y of the insurer with respect to passengers, especially gratuitous passengers, A
who were neither contemplated at the time the contract of insurance was
entered into, nor any premium was paid to the extent of the benefit of
insurance to such category of people.

The upshot of the aforementioned discussions is that instead and in
place of the insurer the owner of the vehicle shall be liable to satisfy the B
decree. The question, however, would be as to whether keeping in view the
~..._, fact that the law was not clear so long such a direction would be fair and
equitable. We do not think so. We, therefore, clarify the legal position
which shall have prospective effect. The Tribunal as also the High Court had
proceeded in terms of the decisions of this Court in Satpal Singh (supra). C
The said decision has been overruled only in Asha Rani (supra).

We, therefore, are of the opinion that the interest of justice will be sub-
served if the appellant herein is directed to satisfy the awarded amount in
favour of the claimant if not already satisfied and recover the same from the
owner of the vehicle. For the purpose of such recovery, it would not be D
necessary for the insurer to file a separate suit but it may initiate a proceeding
before the executing comt as if the dispute between the insurer and the owner
was the subject matter of determination before the tribunal and the issue is
decided against the owner and in favour of the insurer. We have issued the
aforementioned directions having regard to the scope and purpo11 of Section
168 of the Motor Vehicles Act, 1988 in terms whereof it is not only entitled E
to determine the amount of claim as put forth by the claimant for recovery
thereof from the insurer, owner or driver of the vehicle jointly or severally
but also the dispute between the insurer on the one hand and the owner or
driver of the vehicle involved in the accident inasmuch as can be resolved by
the tribunal in such a proceeding. F
For the aforementioned reasons, the appeals are partly allowed to the
aforementioned extent and subject to the directions aforementioned. But
there shall be no order as to costs.

N.J. Appeals partly allowed.