THE HIGH COURT OF SIKKIM : GANGTOK
(Civil Appellate Jurisdiction)
th
DATED : 28 NOVEMBER, 2024
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SINGLE BENCH : KSHI MADAN RAI, JUDGE
THE HON‟BLE MRS. JUSTICE MEENA
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MAC App. No.02 of 2024
Appellants : The Branch Manager,
National Insurance Company Limited and Another
versus
Respondents : Diku Maya Sharma and Another
Appeal under Section 173 of the Motor Vehicles Act, 1988
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Appearance
Mr. Madan Kumar Sundas and Mr. Sushant Subba, Advocates for
the Appellants.
Mr. Umesh Ranpal, Advocate with Ms. Rubusha Gurung, Advocates
for the Respondents.
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JUDGMENT
Meenakshi Madan Rai, J.
1. The instant Appeal arises from MACT Case No.13 of
2013, dated 21-11-2023, of the Learned Motor Accidents Claims
Tribunal, Gangtok, Sikkim (hereinafter , vide which
, “MACT”)
- (Rupees forty-three
compensation computed at ₹ 43,78,080/
lakhs, seventy-eight thousand and eighty) only, was granted to the
Claimants-Respondents No.1 and 2 herein, being the mother and
brother, respectively, of the deceased.
2. The facts that led to the filing of the Claim Petition
under Section 166 of the Motor Vehicles Act, 1988 (hereinafter,
, was that the deceased, Bhanu Sharma, aged about
“MV Act”)
thirty-four years, an employee of the Rural Development
Department, Government of Sikkim, with a monthly consolidated
salary 70/- (Rupees twenty nine thousand, five hundred
of ₹ 29,5
MAC App. No.02 of 2024 2
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
and seventy) only, was travelling in a private Maruti Alto 800,
owned and driven by his brother Indra Mani Sharma. The vehicle
insured with the Appellant Company, met with an accident on 20-
01-2023, at a place called Gokul Dara siblings were
“ ” when the
travelling from Gerethang to Jorethang. The cause of the accident
was due to the rash and negligent driving on the part of Indra Mani
Sharma, who held a valid driving licence at the time of the
accident. The insurance policy, Exhibit 16 was valid from 17-06-
2022 to the midnight of 16-06-2023, covering 20-01-2023, the
date of the accident.
3. The Claimants-Petitioners contested the Claim Petition
on grounds that, there was no evidence to indicate rash and
negligent driving as the cause of the accident. They averred inter
alia in their written statement that the vehicle insurance policy
“
was only liability policy i.e. third party policy and the owner of the
said vehicle ,353/- (Rupees two
had paid total premium of ₹ 2
thousand, three hundred and fifty three) only, for the year
17/06/2022 to 16/06/2023 . The deceased as the co-occupant
”
and natural brother of the deceased owner, being a gratuitous
passenger was not covered by the policy.
4. The Learned MACT settled a singular issue for
determination, Whether the Petitioners/Claimants are entitled to
“
the compensation claimed? If so, who is liable to compensate for
the same? The Learned MACT then observed that when a Petition
”
under Section 166 of the MV Act is instituted, it becomes
incumbent upon the Claimants to establish rash and negligent
driving. Evidently, the Petitioner No.2/Claimant No.2 was examined
as a witness for the Petitioners to establish their case. The lone
MAC App. No.02 of 2024 3
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
issue was determined in favour of the Claimants/Respondents
taking notice of the FIR Exhibit 2 (in three pages) filed before the
Nayabazar Police Station, on 20-01-2023 under Sections 279, 337
and 338 of the Indian Penal Code, 1860, to reach a finding of rash
and negligent driving, apart from the evidence of the Claimants.
While computing the compensation the MACT held that, although
the Respondents contended that the said policy was a liability only
policy, the contents would indicate that it covers a third party risk.
That, the deceased being a passenger in the accident vehicle was a
third party as has been succinctly explained in the case of
National
1
vs. and in the case of this
Insurance Co. Ltd. Faqir Chand and Others
Court in vs.
The Branch Manager, National Insurance Company Limited
2
, accordingly it was held that the
Master Suraj Subba and Another
Insurance Company could not be absolved from paying
compensation to the family of the deceased.
5. Before this Court, it was argued by Learned Counsel for
the Appellants Insurance Company that the policy is a liability only
policy. The deceased being the brother of the vehicle owner, he is
not a third party and consequently not covered by the insurance
policy. That, in fact the insurance covers only property damage of
third party and not any other damage, therefore, the Insurance
Company was not liable to pay any compensation
6. On the other hand, it was asserted by Learned Counsel
for the Respondents-Claimants that the deceased being the brother
of the vehicle owner fell within the ambit of a third party, as he
was neither the insurer nor the insured. While contending that the
deceased was a third party, the decision of this Court in
Passi Lamu
1
AIR 1995 J&K 91
2
MAC App. No.01 of 2023 decided on 02-08-2013
MAC App. No.02 of 2024 4
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
vs.
Sherpa and Another The Branch Manager, New India Assurance Co.
3
was relied upon. Secondly, it was contended that the only
Ltd.
ground urged before the Learned MACT by the Appellant was that
of the deceased not being a gratuitous passenger and the issue of
the deceased not falling within the ambit of a third party was never
raised therein. Thus, as held by this Court in
The Branch Manager,
4
vs. new
National Insurance Company Limited Yoel Subba and Others
grounds cannot be raised in Appeal. Besides, the insurance policy
is revelatory of the fact that a third party premium was paid by the
insured, thereby covering the deceased, who fell within the ambit
of third party and accordingly the Judgment and Award of the
Learned MACT be upheld and the Appeal dismissed.
7. Having given due consideration to the submissions
advanced, this Court is to determine, whether the Claimants are
entitled to the compensation as granted by the MACT.
8. Before embarking on determining this question, it is
essential to look into the exposition of the Supreme Court in
5
vs. ,
National Insurance Company Limited Balakrishnan and Another
where it was considering whether the Appellant Insurance
Company was liable to make good the compensation determined
by the Tribunal to the victim Respondent No.1, who sustained
injuries in a motor vehicle accident, considering that he was the
Managing Director of the Respondent No.2. He sought to be
compensated by the Respondent No.2 and the Appellant. The
vehicle was insured with the Appellant. The Appellant Insurance
Company resisted the claim on the ground that the Claimant had
3
MAC App. No.07 2023 decided on 14-05-2024
4
MAC App. No.09 of 2023 decided on 21-05-2024
5
(2013) 1 SCC 731
MAC App. No.02 of 2024 5
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
suppressed the fact that he was the Managing Director of the
Company and was thereby not tenable. Besides, the Respondent
No.1 himself was the owner of the vehicle and could not therefore
be treated as a third party. The policy taken by the Company did
not cover an occupant in the vehicle but only the owner for a
limited quantum. The Supreme Court delved into detailed
references in a litany of cases concerning compensation in MACT
cases and the parameters and categories under which
compensation was sustainable. The Supreme Court went on to
consider as follows;
21.
“ …………………… The High Court of Delhi
in Yashpal Luthra v. United India Insurance Co.
Ltd. , after recording the evidence
[2011 ACJ 1415 (Del)]
of the competent authority of the Tariff Advisory
Committee (TAC) and the 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.
22. The relevant portion of the circular which
has been reproduced by the High Court is as follows:
(Yaspal Luthra case , ACJ pp. 1419-
[2011 ACJ 1415 (Del)]
20, para 20)
R D
“INSURANCE EGULATORY AND EVELOPMENT
A
UTHORITY
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 the 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:
Liability to Third Parties
„Section II—
(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
MAC App. No.02 of 2024 6
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
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 the
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. 1 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 aforementioned circulars and
any non-compliance with 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)
…….……………………………………………………….
24. 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 issued by all insurance companies. The
High Court had issued notice to the Tariff Advisory
MAC App. No.02 of 2024 7
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
Committee and 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”. …………………………….
25. It is also worthy to note that the High
Court, after referring to individual circulars issued by
various insurance companies, eventually stated [2011
ACJ 1415 (Del)] thus: (Yashpal Luthra case [2011 ACJ
1415 (Del)], ACJ p. 1424, para 27)
“ 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 the Motor Accidents
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.”
…….……………………………………………………….
27. 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
been filed which is a policy issued by the insurer. It
only mentions the policy to be a “comprehensive
p
olicy” 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.”
[emphasis supplied]
9. On the anvil of what has been expounded hereinabove
and considering that the accident pertains to a private car and that
it is mentioned in Exhibit 16 that the insurance policy is a private
“
car liability only policy , it transpires that there has been no
”
discussion before the Learned MACT by production of any witness
as to whether it is an Act Policy or Comprehensive/Package
“ ” “
Policy Sans reasoning or evidence led by the Insurance
”.
Company, it would a travesty of justice to either party to reach a
finding, without an explanation pertaining to the nature of the
MAC App. No.02 of 2024 8
The Branch Manager, National Insurance Company Limited and Another vs. Diku Maya Sharma and Another
policy. In such circumstances, I am inclined to observe that the
entire policy needs to be explained to arrive at a conclusion as to
whether it is a Comprehensive/Package Policy or an Act Policy.
10. The finding of the Learned MACT in the impugned
Judgment is accordingly set aside.
11. The matter is remitted to the Learned MACT to
examine and assess the policy in its proper perspective and to
consider whether Exhibit 16 is a Comprehensive/Package Policy
“ ”
or an Act Policy by recording necessary evidence of a witness of
“ ”
the Insurance Company. Based on such evidence the Learned
MACT may compute the compensation or otherwise.
12. The MACT Case be restored to its original number in
the Register of the Learned MACT. All efforts be made to complete
the entire exercise within a period of four weeks from today
considering that the compensation claimed is under a benevolent
legislation for the benefit of the legal heirs of the victim who are
now deprived of the income of their loved one.
13. The MAC App. No.02 of 2024 stands disposed of
accordingly.
14. Parties shall appear before the Learned Motor Accidents
Claims Tribunal, Gangtok, Sikkim, on 03-12-2024.
15. Copy of this Judgment be sent to the Learned MACT
forthwith for information and compliance, along with its records.
( Meenakshi Madan Rai )
Judge
28-11-2024
Approved for reporting : Yes
ds