Holding

The appeal is allowed; the insurer is not liable because the policy did not cover the risk of death or bodily injury to the owner.

Summary

The owner of a Maruti van, who was also the insured, died while driving the vehicle after it collided with a tree. The heirs filed a claim under Section 166 of the Motor Vehicles Act, 1988, seeking compensation from the insurer, Oriental Insurance Co. Ltd. The insurer contended that the policy was a third‑party policy and did not cover the owner’s death, and therefore it was not liable. The Motor Vehicle Accident Claims Tribunal held the insurer liable, finding that an additional premium for the owner’s risk had been paid, but the High Court dismissed the insurer’s appeal. The Supreme Court examined Section 147(1)(b) of the Act, which limits a policy’s coverage to third‑party risks unless an extra premium is paid for the owner’s risk. It concluded that no such premium was paid, so the policy covered only third‑party liability and the insurer could not be held liable to the owner’s heirs. Consequently, the appeal was allowed and the insurer’s liability was rejected.

Issues considered

Whether a third‑party motor insurance policy, without an additional premium for the owner’s risk, obliges the insurer to indemnify the owner’s heirs under Section 166 of the Motor Vehicles Act.
Whether Section 147(1)(b) of the Motor Vehicles Act confines the jurisdiction of the Motor Vehicle Accident Claims Tribunal to third‑party claims in such circumstances.

Legislation cited

Motor Vehicles Act, 1988s. 147(1)(b), s. 166
Workmen's Compensation Act, 1923

Subjects

Motor Vehicles ActSection 147Section 166third‑party insuranceinsurer liabilityowner's deathadditional premiumpersonal accident insurance

Judgment

_.
ORIENTALINSURANCECO.LTD. A
v.
JHUMA SAHA AND ORS.

JANUARY 16,2007

[S.B. SINHAAND MARKANDEYKATJU, JJ.] B

Motor Vehicles Act, 1988:

s.147(l)(b) read with s.166-Third party insurance-Vehicle met
with accident-Resulting in death of owner driving the vehicle-Held, ·
additional premium for entire risk of death or bodily injury to owner not
c
having been paid, S-l 47(J)(b) which covers risk of a third party only
would be attracted-Insurer cannot be fastened with any liability toward
owner.
__,
...
An insured vehicle, which was being driven by its owner, dashed D
_/
. against a tree and as a result of the said accident the owner died. The claim
-I
petition under section 166 of the Motor Vehicles Act, 1988 was resisted
-4
by the insurer on the ground that since the insurance policy was a third
party in nature and did not cover the owner, the claimants were not entitled.
to any compensation. The Tribunal rejected the contention. The appeal of E
the insurer was held by the High Court as not maintainable.

In the appeal it was contended for the insurer-appellant that in
view of s.147 of the Act, the jurisdiction of the Tribunal was confined to
a third party claim, and, as such, the impugned judgment could not be
,Y sustained. F

Allowing the appeal, the Court

HELD : 1.1. The additional premium was not paid in respect of the
entire risk of death or bodily injury of the owner of the vehicle, and, G
therefore, s.147(l)(b) of the Motor Vehicles Act, 1988, which in no
uncertain terms covers the risk of a third party only, would be attracted
--{
..;.J in the instant case. The accident did not involve any motor vehicle other
than the one which the owner was driving.
•\\
[Paras 13 and 10) (984-A, 983-B)
'·'.1.. H
979
\

980 SUPREME COURT REPORTS [2007] 1 S.C.R

A Dhanjraj v. New India Assurance Co. Ltd. & Anr., [2004] 8 SCC 553,
relied on.

1.2. Liability of the insurer-Company is to the extent of indemnification
of the insured against the respondent or a injured person, a third person
or in respect of damages of property. Thus, if the insured cannot be
B fastened with any liability under the provisions of Motor Vehicles Act, the
question of the insurer being liable to indemnify insured, therefore, does
not arise. [Para 11] [983-C-D]

National Insurance Co. Ltd, Chandigarh v. Nicol/eta Rohtagi and
C Ors., (2002) 7 SCC 456, cited.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 280 of2007.

From the Final Judgment and Order dated 28.10.2003 of the Gauhati
High Court in C.R.P. No. 69/2003.
D
Santosh Paul, Abhishek K. Rao, Kaveri Mohan and M.J. Paul for the ~·
Appellant.

Sarada Devi for the Respondents.
E
The Judgment of the Court was delivered by

S.B. SINHA, J. : Leave granted.

2. This appeal is directed against judgment and order dated 28.10.2003
F .....>,
passed by the Gauhati High Court in C.R.P. No. 69 of 2003 whereby and
whereunder the appeal preferred by the appellant herein was dismissed.

3. The deceased was the owner of an insured vehicle bearing
Registration No. TR 03-2304, a maruti van. While he was driving the said
G vehicle, allegedly, in order to save a goat which was running across the
road, the steering of the vehicle failed and it dashed with a tree on the road
side. He suffered injuries. He later on succumbed thereto.
~

4. On the aforementioned premise a claim petition under Section 166 of
H the Motor Vehicles Act, 1988 was filed.
ORIENTAL INSURANCE CO. LTD. v. JHUMASAHA[SINHA,J.] 981

5. The insurer resisted the claim petition when served with a notice, A
inter alia, contending as under :

"That as per Motor Vehicle Acts and Rules the owner is not
entitled to get any compensation if he drives the vehicle and falls
in an accident- As the Insurance Policy is a third party in nature-
The contract between the insured and insurer is that if any accident
B
occurred out of the use of Motor Vehicle then only third party is
entitled to get compensation. The insurer and insured is the first
and second party and other than the all are third party. But in this
case as per the version of the petition the deceased was the owner
of the vehicle and was driving the vehicle and he met with an c
acddent. Though the deceased had valid driving licence still he is
not the third party as per Rules and Acts. Hence the petitioners are
not entitled to get any compensation ... "

6. The said contention of the appellant, however did not find favour
D
with the Motor Vehicle Accident Claims Tribunal which, inter alia, held that
1
f the vehicle being insured and an additional premium for the death of the
driver or conductor having been paid, the liability was covered by the
Insurance Policy.

7. In the appeal preferred by_ the appellant before the High Court, E
however, the contention of the respondents herein that in view of the
decision of this Court in National Insurance Co. Ltd Chandigarh v.
Nicolletta Rohtagi and Ors., [2002] 7 SCC 456, the appeal was not
maintainable, was accepted.

7
F
8. Before us a short question has been raised by the learned counsel
appearing on behalf of the appellant stating that in view of Section 147 of
the Motor Vehicles Act, 1988, the jurisdiction of the Tribunal was confined
to a third party claim and, thus, the impugned judgment cannot be sustained.

9. Section 147(1)(b) of the Motor Vehicles Act, with which we are G
concerned, reads as under :

•.;.J
"147. Requirements of policies and limits of liability :

(l) In order to comply with the requirements of this Chapter, a H
982 SUPREME COURT. REPORTS [2007] 1 S.C.R.

A policy of insurance must be a policy which-

(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
B 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 a~y property .of the 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 use of
the vehicle in a public place;'

Provided that a policy shall not be required-
D
(i) to cover liability in respect of the death, arising out of and in
the course of his employment, of the employee of a person
insured by the policy or in respect of bodily injury sustained
by such an employee arising out of and in 'the course of his
employment other than a liability arising under the Workmen's
E
Compensation Act, 1923(8of1923) 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, or

(i) to cover any contractual liability.
G
Explanation- For the removal of doubts, it is hereby declared that
the death of or bodily injury to any person or damage to any
property of a third party shall be deemed· to have been caused by
or to have arisen out of, the use of a vehicle in a public place
H notwithstanding that the person who is dead or injured or the
ORIENTALINSURANCECO.LTD. v. JHUMASAHA[SINHA,J.] 983
... property which is damaged was not in a public place at the time of A
the accident, if the act or omission which led to the accident
occurred in a public place."

10. The deceased was the owner of the vehicle. For the reasons stated
in the claim petition or otherwise, he himself was to be blamed for the
accident. The accident did not involve motor vehicle other than the one
B
which he was driving, the question which arises for consideration is that the
:I
deceased himself being negligent, the claim petition under Section 166 of the
Motor Vehicles Act, 1988 would be maintainable.

11. Liability of the insurer-Company is to the extent of indemnification c
of the insured against the respondent or a injured person, a third person or
in respect of damages of property. Thus, if the insured cannot be fastened
with any liability under the provisions of Motor Vehicle Act, the question
•·. of the insurer being liable to indemnify insured, therefore, does not arise.
D
12. In Dhanraj v. New India Assurance Co. Ltd. & Anr., [2004] 8 SCC
I 553, it is stated as follows :

"8. thus, an insurance policy covers the liability incurred by
the insured in respect of death of or bodily injury to any person
(including an owner of the goods or his authorised representative)
E
carried in the vehicle or damage to any property of a third party
caused by or arising out of the use of the vehicle. Section 147 does
not require an insurance company to assume risk for death or
bodily injury to the owner of the vehicle.
F
,._.;·
10. In this case, it has not been shown that the policy covered
any risk for injury to the owner himself. We are unable to accept
the contention that the premium of Rs. 4989 paid under the heading
"Own damage" is for covering liability towards personal injury.
"Under the heading "Own damage", the words "premium on vehicle G
and non-electrical accessories" appear. It is thus clear that this
premium is towards damage to the vehicle and not for injury to the
,, "'~
person of the owner. An owner of a vehicle can only claim provided
a personal accident insurance has been taken out. In this case there
is not such insurance."
H
....'
984 SUPREME COURT REPORTS [2007] l S.C.R.

A 13. 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.

14. In that view of the matter, the impugned judgment cannot be
B sustained. The appeal is allowed.

RP. Appeal allowed.