NATIONAL INSURANCE COMPANY LTD.versusBALAKRISHNAN & ANOTHER

                   [2012] 12 S.C.R. 565


         NATIONAL INSURANCE COMPANY LTD.                       A
                             v.
               BALAKRISHNAN & ANOTHER
              (Civil Appeal No. 8163 of 2012)
                   NOVEMBER 20, 2012
                                                               B
   [K. S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]

      Motor Vehicles Act, 1988 - ss.140, 147 and 166 -
Compensation claim - Insurance policy - Nature of - "Act
policy" and "comprehensive/ package policy" - Distinction C
between - Managing Director of company met with accident
while travelling in a car registered in name of the company
and sustained bodily injuries - He filed compensation claim
- Car in question insured with appellant-insurer- Dispute over
liability of appellant-insurer - Held: In the instant case, the o
insurance policy in question mentions the policy to be a
"comprehensive policy" but there has to be a scanning of the
terms of the entire policy to arrive at the conclusion whether
it is really a "package policy• to cover the liability of an
occupant in a car - While a "comprehensive/ package policy" E
would cover the liability of the insurer for payment of
compensation for the occupant in a car, an "Act Policy"
stands on a different footing - An "Act Policy'' cannot cover a
third party risk of an occupant in a car - Matter remitted to
tribunal to scrutinize the policy in question - If said policy F
found to be a "Comprehensive/Package Policy~ liability be
fastened on the insurer - Insurance.

    Respondent no.1, Managing Director of respondent
no.2-company, met with an accident while travelling in a
car registered in the name of respondent no.2 and              G
sustained bodily injuries. The car in question was
insured with the appellant. Respondent no.1 claimed
compensation before the Motor Accident Claim Tribunal

                            565                                H
    566      SUPREME COURT REPORTS            [2012] 12 S.C.R.


A under Sections 140, 147 and 166 of the Motor Vehicles
  Act, 1988. The tribunal held that the appellant-insurer was
  liable to indemnify as the owner of the vehicle was the
  company, and the injured was travelling in the car as a
  third party and accordingly granted compensation.
B
       The appellant-insurer filed appeal before the High
  Court contending that respondent no.1 was the legal
  owner of the car though the vehicle was insured in the
  name of the respondent no.2-company and, therefore,
  the liability was to the limited extent as stipulated in the
C policy. The High Court, however, treated respondent
  no.2-company to be the owner of the vehicle and repelled
  the stand that the Managing Director was the owner, and
  further held that as he was only an occupant of the car,
  the insurance company was liable to indemnify the owner
D for the claim put forth by the victim. The High Court
  opined that if no premium is paid to cover the owner, the
  insurer is not liable to make good the loss but if another
  person travels with the owner and suffers injuries, the
  insurer is liable to pay the compensation. Being of this
E view, the High Court dismissed the appeal and hence, the
  present appeal by the insurer.

          Partly allowing the appeal, the Court

       HELD: 1.1. A "comprehensive/package policy" would
F cover the liability of the insurer for payment of
  compensation for the occupant in a car. An "Act Policy"
  stands on a different footing from a "Comprehensive/
  Package Policy". The Insurance Regulatory and
  Development Authority (IRDA), which is presently the
G statutory authority, has clarified the position by issuing
  circulars. As IRDA has commanded the insurance
  companies statin'g that a "Comprehensive/ Package
  Policy" covers the liability, there cannot be any dispute
  in that regard. An "Act Policy" cannot cover a third party
H
     NATIONAL INSURANCE COMPANY LTD. v.                   567
                BALAKRISHNAN
risk of an occupant in a car. But, if the policy is a            A
"Comprehensive/Package Policy", the liability would be
covered. [Para 21] [585-D-G]

     1.2. In the instant case, the question that emerges for
consideration is whether in the case at hand, the policy         8
is an "Act Policy" or "Comprehensive/Package Policy".
There has been no discussion either by the tribunal or
the High Court in this regard. The policy issued by the
insurer only mentions the policy to be a "comprehensive
policy" but this Court is inclined to think that there has       C
to be a scanning of the terms of the entire policy to arrive
at the conclusion whether it is really a "package policy"
to cover the liability of an occupant in a car. [Para 22)
[586-A-C]

     1.3. The matter is remitted to the tribunal to scrutinize   D
the policy in a proper perspective and, if necessary, by
taking additional evidence and if the conclusion is arrived
at that the policy in question is a "Comprehensive/
Package Policy", the liability would be fastened on the
insurer. [Para 23] [586-C-D]                                     E

     Yashpal Luthra and Anr. v. United India Insurance Co.
Ltd. and Another 2011 ACJ 1415 - approved.

     United India Insurance Co. Ltd., Shim/a v. Tilak Singh
and Others (2006) 4 SCC 404; 2006 (3) SCR 758 New India          F
Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223: 2002
(4) Suppl. SCR 543; Oriental Insurance Co. Ltd. v. Jhuma
Saha (Smt) and Others (2007) 9 sec 263: 2007 (1) SCR
979; Dhanraj v. New India Assurance co. Ltd. (2004) 8 SCC
553: 2004 (4) Suppl. SCR 711; National Insurance Co. Ltd.        G
v. Laxmi Narain Dhut (2007) 3 SCC 700: 2007 (3) SCR 579;
Oriental Insurance Company Ltd. v. Meena Variyal and Others
(2007) 5 sec 428: 2007 (4) SCR 641; National Insurance
Co. Ltd. v. Swaran Singh (2004) 3 sec 297: 2004 (1) SCR
180; Oriental Insurance Company Ltd. v. Sudhakaran K. V.         H
    568       SUPREME COURT REPORTS              [2012] 12 S.C.R.


A and Others (2008) 7 SCC 428: 2008 (9) SCR 367; New India
  Assurance Company Limited v. Sadanand Mukhi and Others
  (2009) 2 SCC 417: 2008 (17) SCR 1313; United India
  Insurance Co. Ltd. v. Davinder Singh (2007) 8 SCC 698:
  2007 (11) SCR 337; Bhagyalakshmi and Others v. United
B Insurance Company Limited and Another (2009) 7 SCC 148:
  2009 (7) SCR 1031 and Amrit Lal Sood and Another v.
  Kaushalya Devi Thapar and Others (1998) 3 SCC 744: 1998
  (2) SCR 284 - referred to.

                         Case Law Reference:
c
     2006 (3) SCR 758              referred to      Paras 8,12

     2002 (4) Suppl. SCR 543       referred to      Paras 8,10,
                                                    12,14

D    2007 (1) SCR 979              referred to      Paras 9,14

     2004 (4) Suppl. SCR 711       referred to      Para 9

     2007 (3) SCR 579              referred to      Paras 10,14

     2007 (4) SCR 641              referred to      Para 11
E
     2004 (1) SCR 180              referred to      Para 12

     2008 (9 ) SCR 367             referred to      Para 13

     2008 (17) SCR 1313            referred to      Para 14
F
     2007 (11) SCR 337             referred to      Para 14

     2009 (7) SCR 1031             referred to      Para 15

     1998 (2) SCR 284              referred to      Para 15
G    2011 ACJ 1415                 approved         Para 17

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    8163 of 2012.

          From the Judgment & Order dated 02.03.2011 of the High
H
                                                                    "
     NATIONAL INSURANCE COMPANY LTD. v.                     569
                BALAKRISHNAN
Court of Madras bench at Madurai in CMA (MD) No. 1624 of            A
2008.

    Dr. Meera Agarwal, R.C. Misra, M.A. Krishna Moorthy for
the appearing parties.

    The judgment of the Court was delivered by                      B

    DIPAK MISRA, J. 1. Leave granted.

     2. The singular issue that arises for consideration in this
appeal is whether the first respondent, the Managing Director C
of the respondent No. 2, a company registered under the
Companies Act, 1956, is entitled to sustain a claim against the
appellant-insurer for having sustained bodily injuries. Succinctly
stated, the facts are that the respondent No. 1 met with an
accident about 8.30 p.m. on 23.3.2001 while travelling in the
Lancer car bearing registration No. TN 49 K 2750 belonging 0
to the respondent No. 2, as it dashed against a bullock cart
near Muthandipatti Pirivu Road-I. He knocked at the doors of
the Motor Accident Claim Tribunal (for short "the the tribunal")
in MACOP No. 357 of 2004 under Sections 140, 147 and 166
of the Motor Vehicles Act, 1988 (for brevity "the Act") claiming E
compensation of Rs.20,00,000/- jointly and severally from the
appellant as well as the company on the foundation that the
vehicle in question was insured with the appellant-company. Be
it noted, the amount was calculated on the basis of pecuniary
and non-pecuniary damages.                                         F

     3. The insurer resisted the claim on the grounds that the
claimant had suppressed the fact that he was the Managing
Director of the company and hence, the application deserved
to be thrown overboard; that even if the petition was entertained   G
the insurance company could not be held liable to indemnify
the respondent as the appellant was himself the owner being
the Managing Director and under no circumstances he could
be treated as a third party; that the policy taken by the company
did not cover an occupant in the vehicle but only covered the       H
    570      SUPREME COURT REPORTS                 [2012] 12 S.C.R.

A owner for a limited quantum and hence, the claim was not
  allowable as sought for.
         4. The tribunal, in its award dated 19.4.2007, addressed
   to the issues of rash and negligent driving of the driver, injuries
B sustained by the insured and the liability of the insurance
   company. On the basis of the material brought on record, it
   came to ho!d that the accident had occurred due to rash and
   negligent driving of the driver of the 1st respondent; that the
   claimant was injured in the accident; that regard being had to
   the injuries sustained he was entitled to get Rs.8,63,200/- as
C compensation with interest@ 7.5% per annum from the date
   of the petition till the date of deposit; and that the insurance
   company was liable to indemnify as the owner of the vehicle
   was the company, and the injured was travelling in the car as
   a third party.
D
         5. Being dissatisfied with the award passed by the tribunal,
  the insurer preferred C.M.A. (M.D.) No. 1624 of 2008 before
  the Madurai Bench of Madras High Court and in appeal it was
   urged that the victim, the Managing Director, who was running
E the hospital in the name of his deceased father, was the legal
  owner of the car though the vehicle was insured in the name of
  the company and, therefore, the liability was to the limited extent
  as stipulated in the policy. It was also canvassed, in any case,
  he was a non-fare paying passenger in the car for which no
F extra premium was paid and hence, the liability could not be
  fastened on the insurer. The High Court treated the company
  to be the owner of the vehicle and repelled the stand that the
  Managing Director was the owner, and further held that as he
  was only an occupant of the car the insurance company was
  liable to indemnify the owner for the claim put forth by the victim.
G It is worthy to note that the High Court opined that if no premium
  is paid to cover the owner, the insurer is not liable to make
  good the loss but if another person travels with the owner and
  suffers injuries the insurer is liable to pay the compensation.
  Being of this view, the High Court dismissed the appeal. Hence,
H the present appeal by the insurer.
      NATIONAL INSURANCE COMPANY LTD. v.                    571
         BALAKRISHNAN [DIPAK MISRA, J.)
      6. We have heard the learned counsel for the parties and A
perused the record. As has been indicated at the beginning,
the seminal issue is whether the appellant-company is liable to
make good the compensation determined by the tribunal to the
victim in the accident. On a scrutiny of the award passed by the
trihunal which has been given the stamp of approval by the High B
Court, it is manifest that the 1st respondent was the Managing
Director of the respondent No. 2 and the vehicle was registered
in the name of the company but the Managing Director had
signed on behalf of the company in the R. C. book of the cor
that was involved in the accident. The High Court has returned c
a finding that the company and the Managing Director are two
different legal entities and hence, the Managing Director cannot
be equated with the owner. On that foundation, the claimant has
been treated as a passenger and, accordingly, liability has
been fastened on the insurer. The learned counsel appearing D
 for the insurer would contend that assuming he is the owner
 being a signatory in the R.C. book, the liability of the company
is limited upto Rs.2,00,000/- and unaer no circumstances a non-
fare paying passenger would be covered under the policy. In
oppugnation, the learned counsel for the respondent-claimant
                                                                   E
 has proponed that barring the insurer and the insured, all others
are third parties and, therefore, he is covered by the policy. It
 is also urged by him that as he had travelled as an occupant in
a private car he is a third party vis-a-vis the insurer and hence,
it is bound to indemnify the owner as the risk of the third party F
 is covered.

     7. As per the command of Section 146 of the Act, the
owner of a vehicle is obliged to obtain an insurance for the
vehicle to cover the third party risk. Section 147 deals with the
requirements of policies and limits of liability. Section 147 (1) G
which is relevant fo; the present purpose is reproduced below:-

            " 147. Requirement of policies and limits of
     liability. - (1) In order to comply with the requirements of
     this Chapter, a policy of insurance must be a policy which     H
                                                                          .

    572        SUPREME COURT REPORTS                 [2012] 12 S.C.R.


A         (a) is issued by a person who is an authorised insurer; and

          (b) insurers 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
B         respect of the death of or bodily [injury to any person,
          including owner of the goods or his authorised
          representative carried in the vehicle] or damage to any
          properfy of a third party caused by or arising out of the use
          of the.vehicle in a public place ;
c
           (ii) against the death of or bodily injury to any passenger
           of a public service vehicle caused by or arising out of the
          /Jse of the vehicle in a public place;

D
      IProvided that a policy shall not be required -
      i(i) to cover liability in respect of the death, arising out of
       and in the course of his employment, of the employee of
       a1' person insured by the policy or in respect of bodily injury
       sustained by such an employee arising out of and in the
E      course of his employment other than a liability arising
       under the Workmen's Compensation Act, 1923 (8 of
       1923) in respect of the death of, or bodily injury to, any such
       employee -

          (a) engaged in driving the vehicle, or
F
          (b) if it is a public service vehicle, engaged as a conductor
          of the vehicle or in examining tickets on the vehicle or
          (c) if it is a goods carriage, being carried in the vehicle,
G         or
          (ii) to cover any contractual liability.

          Explanation. - For the removal of doubts, it is hereby
          declared that the death of or bodily injury to any person or
H         damage to any property of a third party shall be deemed
                                           •


          NATIONAL INSURANCE COMPANY LTD. v.                    573
             BALAKRISHNAN [DIPAK MISRA, J.]
        to have been caused by or to have arisen out of, the use       A
        of a vehicle in a public place notwithstanding that the
        person who is dead or injured or the property which is
        damaged was not in a public place at the time of the
        accident, if the act or omission which led to the accident
        occurred in a public place."                                   B

       On a scanning of the aforesaid provision, it is evident that
  the policy of insurance must be a policy which complies with
  the conditions enumerated under Section 147 (1) (a) & (b). It
  also provides where a policy is not required and also stipulates     C
  to cover any contractual liability.

      8. In United India Insurance Co. Ltd., Shim/a v. Ti/ak
  Singh and Others, 1 this Court referred to the concurring opinion
  rendered in a three-Judge Bench decision in New India
  Assurance Co. Ltd. V. Asha Ram' and ruled thus:-                     D

        "In our view, although the observations made in Asha Rani
        case were in connection with carrying passengers in a
        goods vehicle, the same would apply with equal force to
        gratuitous passengers in any other vehicle also. Thus, we      E
        must uphold the contention of the appellant Insurance
        Company that it owed no liability towards the injuries
        suffered by the deceased Rajinder Singh who was a pillion
        rider, as the insurance policy was a statutory policy, and
        hence it did not cover the risk of death of or bodily injury   F
        to a gratuitous passenger."

  It is worthy to note that in the said case the controversy related
  to gratuitous passenger carried in private vehicle.
       9. In Oriental Insurance Co. Ltd. v. Jhuma Saha (Smt)           G
  and Others, 3 the controversy related to fastening of liability on
  the insurer for the death of the owner of a registered vehicle,
. 1.   c2oooi 4 sec 404.
· 2.   c2003) 2 sec 223.
 3.    c2001i s sec 263.                                               H
    574       SUPREME COURT REPORTS                 [2012] 12 S.C.R.

A Maruti van. The Court obseived that the accident did not involve
  any other motor vehicle than the one which he was driving and
  as the liability of the insurer Company is to the extent of
  indemnification of the insured against the respondent or an
  injured person, a third person or in respect of damages of
B property, the insured cannot be fastened with any liability under
  the provisions of the Motor Vehicles Act, and, therefore, the
  question of the insurer being liable to indemnify the insured
  does not arise. Thereafter, the Bench referred to the decision
  in Dhanraj v. New India Assurance co. Ltd. 4 and ruled thus:-
c         "The additional premium was not paid in respect of the
    entire risk of death or bodily injury of the owner of the vehicle.
    If that be so, Section 147 (b) of the Motor Vehicles Act which
    in no uncertain terms covers a risk of a third party only would
    be attracted in the present case."
D
         10. In National Insurance Co. Ltd. v. Laxmi Narain Dhut5,
    after elaborately referring to the analysis made in Asha Rani
    (supra), the Bench stated thus:-
          "Section 149 is part of Chapter XI which is titled "Insurance
E         of Motor Vehicles against Third-Party Risks". A significant
          factor which needs to be noticed is that there is no
          contractual relation between the insurance company and
          the third party. The liabilities and the obligations relatable
          to third parties are created only by fiction of Sections 147
F         and 149 of the Act."
    In the said case, it has been opined that although the statute
    is a beneficial one qua the third party, yet that benefit cannot
    be extended to the owner of the offending vehicle.
G
        11. In Oriental Insurance Company Ltd. v. Meena Variyal
    and Others•, the facts were that a Regional Manager of the
    4.   c2004) s sec 553.
    5.   (2007) 3 sec 100.
H s. c2001) 5 sec 428.
       NATIONAL INSURANCE COMPANY LTD. v.                        575
          BALAKRISHNAN [DIPAK MISRA, J.]
  company, which was the owner of the vehicle, was himself               A
  driving a vehicle of the company and met with an accident and
  eventually succumbed to the injuries. It was contended by the
  insurer before this Court that the policy did not cover the
  employee of the owner who was driving the vehicle while
  attending the business of the employer-company and the                 B
  deceased was not a third party in terms of the policy or in terms
  of the Act. It was also urged that the same would be the position
  even if the deceased was only travelling in the car in his
· capacity as a Regional Manger of the owner-company and the
  vehicle was being driven by the driver. This Court observed that       c
  a contract of insurance is ordinarily a contract of indemnity and
  when a car belonging to an owner is insured with the insurance
  company an·d it is being driven by a driver employed by the
  insured, when it meets with an accident, the primary liability
  under law for payment of compensation is that of the driver.           D
  Once the driver is liable, the owner of the vehicle becomes
  vicariously liable for payment of compensation. It is this vicarious
  liability of the owner that is indemnified by the insurer. Dealing
 with the said liability, the Bench analysed the language
  employed under Section 147 (1) of the Act and observed as              E
 follows:-

     "The object of the insistence on insurance under Chapter
     XI of the Act thus seems to be to compulsorily cover the
     liability relating to their person or properties of third parties
     and in respect of employees of the insured employer, the F
     liability that may arise under the Workmen's Compensation
     Act, 1923 in respect of the driver, the conductor and the
     one carried in a goods vehicle carrying goods. On this
     plain understanding of Section 147, we find it difficult to
     hold that the Insurance Company, in the case on hand, was G
     liable to indemnify the owner, the employer Company, the
     insured, in respect of the death of one of its employees,
     who according to the claim, was not the driver. Be it noted
     that the liability is not one arising under the Workmen's
     Compensation Act, 1923 and it is doubtful, on the case H
    576        SUPREME COURT REPORTS               (2012) 12 S.C.R.


A         put forward by the claimant, whether the deceased could
          be understood as a workman coming within the Workmen's
          Compensation Act, 1923. Therefore, on a plain reading of
          Section 147 of the Act, it appears to be clear that the
          Insurance Company is not liable to indemnify the insured
B         in the case on hand."

       12. After so stating, the Bench adverted to the decisions
  in National Insurance Co. Ltd. v. Swaran Singh 7, Laxmi Narain
  Dhut (supra), Asha Rani (supra) and Tilak Singh (supra) and
  opined that a policy in terms of Section 147 of the Act does
C not cover persons other than third parties. Eventually, it ruled
  thus:-

          "The victim was the Regional Manager of the Company that
          owned the car. He was using the car given to him by the
D         Company for use. Whether he is treated as the owner of
          the vehicle or as an employee, he is not covered by the
          insurance policy taken in terms of the Act-without any
          special contract-since there is no award under the
          Workmen's Compensation Act that is required to be
E         satisfied by the insurer. In these circumstances, we hold
          that the appellant Insurance Company is not liable to
          indemnify the insured and is also not obliged to satisfy the
          award of the Tribunal/Court and then have recourse to the
          insured, the owner of the vehicle."
F        13. In Oriental Insurance Company Ltd. v. Sudhakaran
    K. V. and Others8, a two-Judge Bench, while dealing with the
    issue whether a pillion rider on a scooter would be a third party
    within the meaning of Section 147 of the Act, after referring to
    number of authorities, stated thus:-
G
          ''The contract of insurance did not cover the owner of the
          vehicle, certainly not the pillion-rider. The deceased was

    1.    (2004) 3 sec 2s1.
H   8.    c2008) 1 sec 428.
              NATIONAL INSURANCE COMPANY LTD. v.                       577
                 BALAKRISHNAN [DIPAK MISRA, J.]
             travelling as a passenger, stricto sensu may not be as a A
             gratuitous passenger as in a given case she may not (sic)
             be a member of the family, a friend or other relative. In the
             sense of the term which is used in common parlance, she
             might not be even a passenger. In view of the terms of the
....         contract of insurance, however, she would not be covered B
             thereby.
                   )()()( )()()( )()()( )()()( )()()(


                   . The law which emerges from the said decisions, is:
             (i) the liability of the insurance company in a case of this c
             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 D
             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."

             14. In New India Assurance Company Limited v. E
       Sadanand Mukhi and Others, 9 the son of the owner of the
       insured while driving the motor cycle met with an accident and
       died. The accident allegedly took place as a stray dog came
       in front of the vehicle. The stand of the insurance company was
       that in view of the relationship between the deceased and the F
       owner of the vehicle being father and son the deceased was
       not a third party. The Bench relied on the decisions in Tilak
       Singh (supra), Jhuma Saha (supra), Meena Variya/ (supra),
       Laxmi Narain Dhut (supra) and United India Insurance Co.
       Ltd. v. Davinder Singh 10 and came to hold that the insurance G
       company was not liable to indemnify the owner.


       9.   (2009) 2 sec 417.
       1o. (2007) a sec 698 ..                                                 H
    578      SUPREME COURT REPORTS                 [2012] 12 S.C.R.


A       15. At this juncture, we may refer with profit to a two-Judge
   Bench decision in Bhagyalakshmi and others v. United
   Insurance Company Limited and Another11 wherein the
   learned Judges took note of the contention of the learned
   senior counsel for the claimant-appellant which was to the effect
B that after the deletion of the second proviso appended to
  ·Section 95(1)(b) of the Motor Vehicles Act, 1939 in the 1988
   Act, the liability of a passenger in a private vehicle must also
   be included in the policy in terms of the provisions of the 1988
   Act. The Bench reproduced the policy, referred to Section 64-
C B of the Insurance Act, 1938, took note of the role of the Tariff
   Advisory Committee and referred to the decisions in Amrit Lal
   Sood and Another v. Kaushalya Devi Thapar and Others, 12
   Asha Rani (supra), Tilak Singh (supra), Jhuma Saha (supra)
   and Sudhakaran K. V. and Others (supra) and observed thus:-

0         "Before this Court, however, the nature of policies which
          came up for consideration were Act policies. This Court
          did not deal with a package policy. If the Tariff Advisory
          Committee seeks to enforce its decision in regard to
          coverage of third-party risk which would inClude all persons
          including occupants of the vehicle and the insurer having
          entered into a contract of insurance in relation thereto, we
          are of the opinion that the matter may require a deeper
          scrutiny."
        On a perusal of the aforesaid paragraph, it is clear as
F crystal that the decisions that have been referred to in
  Bhagyalakshmi (supra) involved only "Act Policies". The Bench
  felt that the matter would be different if the Tariff Advisory
  Committee seeks to enforce its decision in regard to coverage
  of third party risk which would include an occupant in a vehicle.
G It is worth noting that the Bench referred to certain decisions
  of Delhi High Court and Madras High Court and thought it
  appropriate to refer the matter to a larger Bench. Be it noted,

    11. (2009) 7 sec 148.
H 12. (1998) 3 sec 744.
     NATIONAL INSURANCE COMPANY LTD. v.                    579
        BALAKRISHNAN [DIPAK MISRA, J.]
in the said case, the Court was dealing with comprehensive A
policy which is also called a package policy. In that context, in
the earlier part of the judgment, the Bench had stated thus:-
    "The policy in question is a package policy. The contract
    of insurance if given its face value covers the risk not only
    of a third party but also of persons travelling in the car B
    including the owner thereof. The question is as to whether
    the policy in question is a comprehensive policy or only an
    Act policy."
      16. Thus, it is quite vivid that the Bench had made a
distinction between the "Act policy" and "comprehensive policy/ C
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 D
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.
      17. At this stage, it is apposite to note that when the E
decision in Bhagya/akshmi (supra) 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: F
The High Court of Delhi in Yashpa/ Luthra and Anr. V. United
India Insurance Co. Ltd. and Another13, after recording the
evidence of the competent authority of Tariff Advisory Committee
(TAC) and Insurance Regulatory and Development Authority
(IRDA), reproduced a circular dated 16.11.2009 issued by IRDA G
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

13. 2011ACJ1415.                                                  H
    580        SUPREME COURT REPORTS                   [2012] 12 S.C.R.


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:-
          "IRDA.
B         Ref: IRDA/NUCIR/F&U/073/11/2009
          16.11.2009

          To
          CEOs of all general insurance companies
c         Re: Liability of insurance companies in respect of
          occupants of a Private car and pillion rider on a two-
          wheeler under Standard tyiotor Package Policy (also called
          Comprehensive Policy). ·
D         Insurers' attention is drawn to wordings of Section (II) 1 (ii)
          of Standard Motor Package Policy (also called
          Comprehensive Policy) for private car and two-wheeler
          under the (erstwhile) India Motor Tariff. For convenience the
          relevant provisions are reproduced hereunder:-
E         'Section II - Liability to Third Parties
          1. 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 aJI sums which the
F         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
G         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
H         provisions are in line with the following circulars earlier
      NATIONAL INSURANCE COMPANY LTD. v.                       581
         BALAKRISHNAN [DIPAK MISRA, J.]
     issued by the TAC on the subject:                                A
     (i) Circular M.V. No. I of 1978 - dated 18th March, 1978
     (regarding occupants carried in Private Car) effective from
     25th March, 1977.
     (ii) MOT/GEN/10 dated 2nd June, 1986 (regarding pillion
                                                                      8
     riders in a two-wheeler) effective from the date of the
     circular.
     The above circulars make it clear that the insured liability
     in respect of occupant(s) carried in a private car and pillion
     rider carried on two-wheeler is covered under the Standard       c
     Motor Package Policy. A copy each of the above circulars
     is enclosed for ready reference.
    The Authority vide circular No. 066/IRD,AJF&U/Mar-08
    dated March 26, 2008 issued under File & Use Guidelines
    has reiterated that pending further orders the insurers shall     D
    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~oa
    dated November 6, 2008 has mandated that insurers are             E
    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                    F
    seriously by the Authority. This is issued with the approval
    of competent authority.
                                                           Sd/-
                                             (Prabodh Chander)
                                             Executive Director"      G
                                            [emphasis supplied]
     18. The High Court has also reproduced a circular issued
by IRD dated 3.12.2009. It is instructive to quote the same:-

                                                                      H
      582        SUPREME COURT REPORTS                    [2012] 12 S.C.R.

. A         "IRDA
            IRDA/NUCIR/F&U/078/12/2009
            3.12.2009.

            To
 B          .All 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
 c           Comprehensive Policy).
             Pursuant to the Order of the Delhi High Court dated
             23.11.2009 in MAC APP No. 176/2009 in the case of
             Yashpal Luthra v. United India and Ors., the Authority
             convened a meeting on November 26, 2009 of the CEOs
 D
             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 curie.
             Based on the unanimous decision taken in the meeting by
  E
             the representatives of the general insurance companies to
             comply with the IRDA circular dated 16th November, 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
  F          on a two wheeler under the comprehensive/package
             policies which was communicated to the court on the same
             day i.e. November 26, 2009 and the court was pleased to
             pass the order (dt. 26.11.2009) received from the Court
              Master, Delhi High Court, is enclosed for your ready
  G           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
  H           confirm to the Authority. strict compliance of the circular
NATIONAL INSURANCE COMPANY LTD. v.                      583
   BALAKRISHNAN [DIPAK MISRA, J.]
dated 16th November. 2009 and orders dt. 26.11.2009 of A
the High Court. Such compliance on your part would also
involve:
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   B
operating officers within 7 days;
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 C
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;                                            D
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 E
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 referenGe
decided by them as the same has to be communicated in
due course to the Honourable High Court. You are therefore F
advised to take up the exercise of collecting and collating
the information within a period of two months to ensure
necessary & 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.     G
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/- H
    584      SUPREME COURT REPORTS                 [2012] 12 S.C.R.


A                                                (Prabodh Chander)
                                                 Executive Director"

                                                  [emphasis added]
        19. It is extremely important to note here that till 31st
B December, 2006 the Tariff Advisory Committee and, thereafter,
  from 1st January, 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
c 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 2nd June,
D 1986, the Tariff Advisory Committee had issued instructions to
  all Ifie 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
  !ldmitted that the "comprehensive policy" is presently called a
E "package policy": It is the admitted position, as the decision
  would show, the earlier circulars dated 18th March, 1978 and
  2nd June, 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
F conditions contained in the policy. The competent authority of
  the IRDA was also examined before the High Court who stated
  that the circulars dated 18th March, 1978 and 2nd June, 1986
  of the Tariff Advisory Committee were incorporated in the Indian
  Motor Tariff effective from 1st July, 2002 and they continue to
G be operative and binding on the insurance companies.
  Because of the aforesaid factual position, the circulars dated
  16th November 2009 and 3rd December, 2009, that have been
  reproduced hereinabove, were issued.

H
       NATIONAL INSURANCE COMPANY LTD. v.                     585
          BALAKRISHNAN [DIPAK MISRA, J.]

      20. It is also worthy to note that the High Court, after      A
 referring to individual circulars issued by various insurance
 companies, eventually stated thus:-
     "ln view of the aforesaid, it is clear that the comprehensive/
      package policy ofa two wheeler covers a pillion rider and
     comprehensive/package policy of a private car covers the B
     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 C
     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 cas_e_."
       21. In view of the aforesaid factual position, there is no D
..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 E
 the !RDA, 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 F
 the "Act Policy" which admittedly cannot cove~ 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 the case of Bhagya/akshmi (supra) and,
therefore, the matter was referred to a larger Bench. We are G
 disposed to think that there is no necessity to refer the present
 matter to a larger Bench as the !RDA, 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.                          H
    586      SUPREME COURT REPORTS                  [2012] 12 S.C.R.

A         22. In view of the aforesaid legal position, the question that
    emerges for consideration is whether in the case at hand, the
    policy is an "Act Policy" or "Comprehensive/Package Policy".
    There has been no discussion either by the tribunal or the High
    Court in this regard. True it is, before us, Annexure P-1 has
B   been filed which is a policy issued by the insurer. It only
    mentions the policy to be a "comprehensive policy" but we are
    inclined to think that there has to be a scanning of the terms of
    the entire policy to arrive at the conclusion whether it is really
    a "package policy" to-cover the liability of an occupant in a car.
C      23. In view of the aforesaid analysis, we think it apposite
  to set aside the finding of the High Court and the tribunal as
  regards the liability of the insurer and remit the matter to the
  tribunal to scrutinize the policy in a proper perspective and, if
  necessary, by taking additional evidence and if the conclusion
D is arrived at that the policy in question is a "Comprehensive/
  Package Policy", the liability would be fastened on the insurer.
  As far as other findings recorded by the tribunal and affirmed
  by the High Court are concerned, they remain undisturbed.
         24. Consequently, the appeal is allowed to the extent
E   indicated above and the matter is remitted to the tribunal for
    the purpose of adjudication as directed hereinabove. There
    shall be no order as to costs.

    B.B.B.                                     Appeal partly allowed.