NEW INDIA ASSURANCE COMPANY LTD vs PROMILA W/o Sh Trahru alias Kesav
- Court
- High Court of Himachal Pradesh
2026:HHC:47519
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
High Court of H.P.
FAO No.311 of 2023
Reserved on: 05.10.2026
Date of decision: 29.10.2026
Uploaded on: 29.10.2026
________________________________________________________
New India Assurance Company Limited
...Appellant
Versus
Promila Devi and others
…Respondents
________________________________________________________
Coram
Hon'ble Mr. Justice Sushil Kukreja, Judge
1
Whether approved for reporting? Yes
____________________________________________________
For the appellant: Mr. Raman Sethi, Advocate.
For the respondents: Mr. Surender Verma, Advocate,
respondents No.1 & 2.
Mr. Kanishk Rohal, Advocate, vice
Mr.Vinay Sharma,Advocate, for respondent
No.3.
Mr. Vinod Thakur & Mr. Mohar Singh,
Advocates, for respondent No.4.
Sushil Kukreja, Judge
The instant appeal is maintained by the appellant-
New India Assurance Company, under Section 173 of the Motor
Vehicles Act (for short ‘MV Act’), against the award dated
16.08.2023, passed by the learned Motor Accident Claims
Tribunal, Sundernagar, District Mandi, H.P., in case No.53/2017,
1
Whether reporters of Local Papers may be allowed to see the judgment?
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with a prayer to set aside the impugned award. The parties shall
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be referred to as they were before the learned Tribunal below.
2. Briefly stated the facts, giving rise to the present
appeal, are that the petitioners (respondents No.1 and 2 herein)
filed a claim petition under Section 166 of the Act, whereby they
sought compensation in the sum of Rs.50,00,000/- on account of
death of Trahru alias Kesav, who was husband of petitioner No.1
and father of petitioner No.2. It was averred by the petitioners that
on 30.12.2016, Trahru alias Kesav was sitting in a car bearing
registration No.HP-12A-4088, being driven by respondent No.1-
Dharma in a rash and negligent manner, which was struck by him
with the Dhank at place Beh-Ki-Dhar , at about 8:00 PM and it
rolled down in the fields, as a result of which, Trahru alias Kesav
suffered head injuries and died on the spot. As per the petitioners,
at the time of his death, the deceased was 44 years old and he
was a painter and was earning Rs.15,000/- per month. Hence,
they sought compensation to the tune of Rs.50,00,000/-.
3. In the reply filed on behalf of respondent No.1/driver,
all the averments made in the claim petition were denied. It has
been denied that he was driving the vehicle in a rash and
negligent manner.
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4. Respondent No.2/owner of the offending vehicle, in his
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reply to the claim petition, raised preliminary objections qua
maintainability and suppression of material facts. On merits, it
was averred that vehicle No.HP-12A-4088 was sold to Shri
Sarwan Kumar on 11.11.2014 and the possession of the vehicle
alongwith all relevant documents have also been handed over to
the purchaser. It was further averred that the replying respondent
was not aware about the alleged accident.
5. In the reply filed by respondent No.3/Insurance
Company, preliminary objections to the effect that the driver was
not holding a valid and effective driving licence and the vehicle
was being driven in violation of the terms and conditions of the
policy. On merits, it was averred that the amount claimed was
highly excessive.
6. On the basis of the pleadings of the parties, the
learned Tribunal below framed the following issues on
26.09.2019:-
“1. Whether the death of Shri Trahru alias Kesav was
caused due to rash and negligent driving of vehicle
bearing registration No.HP-12A-4088 by Shri Dharam
on 30.12.2016 at about 8.)) PM at Beh-Ki-Dhar, Tehsil
Sundernagar, District Mandi, HP, as alleged? ...OPP
2. If issue No.1 is proved in affirmative, whether the
petitioners are entitled to compensation, if so to what
amount and from whom? ...OPP
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3. Whether the driver of respondent No.1 was not
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holding a valid and effective driving licence to drive
the car at the time of accident. ? ...OPR-3
4. Whether the offending vehicle was being plied in
violation of the terms and conditions of insurance
policy? ...OPR-3
5. Relief.”
7. After parties led their evidence, the claim petition was
partly allowed and the respondents were held jointly and severally
liable to pay the compensation to the petitioners in the sum of
Rs.13,93,100/- alongwith interest @ 6% per annum from the date
of filing of the petition till realization/deposit of the amount and
respondent No.3, being the insurer, was directed to deposit the
amount of compensation.
8. Feeling aggrieved/dissatisfied, the appellant-
insurance company preferred the instant appeal against award
dated 16.08.2023 passed by the learned Tribunal below, with a
prayer to set-aside the impugned award.
9. I have heard the learned counsel for the appellant as
well as learned counsel for respondents and also carefully
examined the entire record.
10. Learned counsel for the appellant/Insurance Company
contended that the Insurance Policy was an Act Policy, which did
not cover the risk of death or bodily injuries to the occupant of the
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car. He further contended that the liability of the Insurance
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Company can be determined only on the basis of premium
collected and in the absence of additional premium, the Insurance
Company is not liable to pay any compensation towards claim of
the occupant of the car. He further submitted that since the
insurance policy in question was not a comprehensive policy and
being only an Act Policy, the appellant-insurance company is not
liable to indemnify the owner in respect of any liability towards
death/injury caused to the occupant of the private car.
11. On the other hand, learned counsel for respondents
supported the award passed by the learned Tribunal below and
contended that the learned Tribunal below has correctly fastened
the liability to pay the compensation on the insurance company.
12. Perusal of the material on record reveals that the
learned Tribunal below has fastened the liability on the insurance
company by observing that the insurance policy Ext. R-3 being
Liability Only Policy covers the risk of inmates/occupants of the
vehicle in question. It further observed that the insurance
company has failed to prove that the deceased was carried in the
offending vehicle for any hire or reward. It may be pertinent to
mention here that while adjudicating the present case, the
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Tribunal below has taken into consideration the insurance policy
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Ext. R-3, which was valid w.e.f. 03.09.2015 to 02.09.2016 whereas
perusal of the material on record shows that the date of accident
in question was 30.12.2016. While deciding issue No.4 also, the
Tribunal below has held that copy of insurance policy Ext. R-3
shows that the offending vehicle was duly insured w.e.f.
03.09.2015 to 02.09.2016, therefore, the vehicle had valid
insurance on the date of the accident. Since the date of accident
in question was 30.12.2016, therefore, the insurance policy
Ext.R-3 could not have been taken into consideration as the same
was having no relevance while deciding the instant case. It is the
insurance policy Ext. RW1/C, which was in force on the date of
the accident being valid from 19.09.2016 to 18.09.2017 and the
same had to be taken into consideration while adjudicating the
present petition.
13. It is not in dispute that the deceased had been an
occupant/passenger of the vehicle and it has been held by the ld.
Tribunal below that his death was exclusively caused due to the
rash and negligent driving of the vehicle in question by its driver.
14. Now the pertinent question, which requires
consideration before this court is as to whether the occupant/
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passenger of a private car is a third party within the meaning of
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MV Act and in case, the occupant of the car is not treated as third
party, if the insurance company is liable to indemnify the owner.
15. Respondent No.4/owner has not disputed that the
policy Ext. RW1/C issued by the appellant/insurance company is
only ‘Private Car Liability Policy’ i.e. an Act Policy. It is not his case
that policy issued by the appellant is comprehensive policy
covering the occupant/passenger of the car in question. It is well
settled that in an Act Policy, the occupant of the private car is not
covered and Insurance Company is not liable to pay
compensation for the bodily injuries or towards the death of
occupant of the private car. Whether the occupant of the private
car is covered under the Act Policy or not was considered by the
Hon'ble Apex Court in the Judgment reported in 2006 (4) SCC
404, United India Insurance Co. Ltd. Shimla Vs. Tilak Singh
and others , wherein the Hon'ble Apex Court has held that the
policy of insurance must be policy insuring the insured against any
liability incurred by him in respect of death or bodily injury to a
third party and rejected the contention that the words "third party"
were wide enough to cover all persons except the insured and the
insurer.
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The relevant portion of this judgment is extracted as follows :-
High Court of H.P.
“15. In Pushpabai Purshottam Udesh and Ors. v.
M/s. Ranjit Ginning and Pressing Co. (P) Ltd. and Anr.,
[1977] 2 SCC 745 the insurance company had raised the
contention that the scope of statutory insurance under
section 95(1)(a) read with 95(1)(b)(i) of the Motor Vehicles
Act, 1939 does not cover the injury suffered by a
passenger and, since there was a limited liability under the
insurance policy, the risk of the insurance company would
be limited to the extent it was specifically covered. After
referring to the English Road Traffic Act, 1960, and
Halsbury's Laws of England (Third Edition) this Court
came to the conclusion that section 95 of the 1930 Act
required that the policy of insurance must be policy
insuring the insured against any liability incurred by him in
respect of death or bodily injury to a third party and
rejected the contention that the words "third party" were
wide enough to cover all persons except the insured and
the insurer. This Court held as under :
"Therefore it is not required that a policy of
insurance should cover risk to the passengers who
are not carried for hire or reward. As under Section
95 the risk to a passenger in a vehicle who is not
carried for hire or reward is not required to be
insured the plea of the counsel for the insurance
company will have to be accepted and the
insurance company held not liable under the
requirements of the Motor Vehicles Act.”
21.In our view, although the observation made in
Asha Rani’s case (supra) 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 must uphold the contention
of the appellant-insurance company that it owed no
liability toward 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 to gratuitous
passenger.”
16. In yet another case of Oriental Insurance Company
Limited vs Sudhakaran and Ors., reported in AIR 2008
Supreme Court 2729 the Hon'ble Supreme Court has dealt with
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the similar issue, the relevant portion of which is extracted as
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follows:-
“10. The only question which, therefore, arises for our
consideration is as to whether the pillion rider on a scooter
would be a third party within the meaning of Section 147 of
the Act. Indisputably, a distinction has to be made between
a contract of insurance in regard to a third party and the
owner or the driver of the vehicle.
11.This Court in a catena of decisions has categorically
held that a gratuitous passenger in a goods carriage would
not be covered by a contract of insurance entered into by
and between the insurer and the owner of the vehicle in
terms of Section 147 of the Act. [See New India Assurance
Co. Ltd. v. Asha Rani (2003) 2 SCC 223]
12. A Division Bench of this Court in United India
Insurance Co. Ltd., Shimla v. Tilak Singh and Ors. [(2006)
4 SCC 404] extended the said principle to all other
categories of vehicles also, stating as under:
"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 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 to a gratuitous passenger.
--- --- --- --- --- ----
19.The law which emerges from the said decisions,
is: (i) the liability of the insurance company in a case
of this nature is not extended to a pillion rider of the
motor vehicle unless the requisite amount of
premium is paid for covering his/her risk (ii) the legal
obligation arising under Section 147 of the Act
cannot be extended to an injury or death of the
owner of vehicle or the pillion rider; (iii) the pillion
rider in a two wheeler was not to be treated as a
third party when the accident has taken place owing
to rash and negligent riding of the scooter and not on
the part of the driver of another vehicle.”
17. In New India Assurance Company Ltd. vs.
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Sadanand Mukhi and others, (2009) 2 SCC 417, the Hon'ble
High Court of H.P.
Supreme Court held that Section 146 of the Act lays down the
requirements for insurance against third party risk and where a
third party risk is involved, an insurance policy is required to be
mandatorily taken out. It further held that the provisions of the Act
provide for two types of insurance, one statutory in nature and the
other contractual in nature and in case owner of the vehicle or
others are proposed to be covered, an additional premium is
required to be paid for covering their life and property. Relevant
portions of the judgment read as under:-
“11. Provisions relating to grant of compensation
occurring in Chapter XI and XII of the Act have been
enacted by the Parliament in order to achieve the purpose
and object stated therein. Section 146 of the Act lays down
the requirements for insurance against third party risk.
Where a third party risk is involved, an insurance policy is
required to be mandatorily taken out. The requirements of
policies and the limits of liability, however, have been
stated in Section 147 of the Act. Section 147(1)(b) of
the Act………...
The provisions of the Act, therefore, provide for two
types of insurance - one statutory in nature and the other
contractual in nature. Whereas the insurance company is
bound to compensate the owner or the driver of the motor
vehicle in case any person dies or suffers injury as a result
of an accident; in case involving owner of the vehicle or
others are proposed to be covered, an additional premium
is required to be paid for covering their life and property.”
18. In National Insurance Co. Ltd. vs. Balakrishnan
and Anr., (2013) 1 SCC 731, the Hon’ble Supreme Court while
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making a distinction between an "Act only policy" and
High Court of H.P.
"Comprehensive/package policy" made following observation:-
“26. In view of the aforesaid factual position, there
is no scintilla of doubt that a "comprehensive/package
policy" would cover the liability of the insurer for payment
of compensation for the occupant in a car. There is no
cavil that an "Act policy" stands on a different footing from
a "comprehensive/package policy". As the circulars have
made the position very clear and IRDA, which is presently
the statutory authority, has commanded the insurance
companies stating that a "comprehensive/package policy"
covers the liability, there cannot be any dispute in that
regard. We may hasten to clarify that the earlier
pronouncements were rendered in respect of the "Act
policy" which admittedly cannot cover a third-party risk of
an occupant in a car. But, if the policy is a
"comprehensive/package policy", the liability would be
covered. These aspects were not noticed in
Bhagyalakshmi [(2009) 7 SCC 148 : (2009) 3 SCC (Civ)
87 : (2009) 3 SCC (Cri) 321] and,therefore, the matter
was referred to a larger Bench. We are disposed to think
that there is no necessity to refer the present matter to a
larger Bench as IRDA, which is presently the statutory
authority, has clarified the position by issuing circulars
which have been reproduced in the judgment by the Delhi
High Court and we have also reproduced the same."
19. Thus under an Act Policy, the insurance company is
liable to compensate third parties but not the occupant of the
vehicle unless specifically included in the policy. An Act Policy is
designed to cover third-party liabilities arising from death or bodily
injury caused by the use of the vehicle, excluding the driver and
occupants unless additional coverage is explicitly included. The
judgment supra emphasized that the term "third party" under
Section 147 of the Act does not automatically extend to occupants
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who are not paid passengers or part of a hire service. Therefore,
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unless the insurance policy is a Comprehensive or Package Policy
explicitly covering occupants, the liability remains with the vehicle
owner. By delineating the boundaries between Act Policies and
Comprehensive Policies, the court has provided a clearer
framework for determining insurer liabilities in accidents involving
private vehicles.
20. In the instant case, perusal of the insurance policy
Ext.RW1/C reveals that only third party premium in the sum of
Rs.2,205/- was paid and no additional premium was paid to cover
the risk of death or bodily injuries to the occupants of the car. The
policy was issued for ‘Private Car Liability Policy’ i.e. Act Policy
and the deceased was an occupant of the car. In view of
principles that emerged in the judgments referred to above, since
the occupant of a private car does not fall within the definition of
third party and he is only a gratuitous passenger, as such, the
appellant-insurance company is not liable to pay any
compensation to the petitioners as no additional premium was
paid to cover the risk of death or bodily injuries to the occupant of
the car. Therefore, the learned Tribunal below ought to have
exonerated the Insurance Company from the liability of paying
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compensation, but it has erroneously come to the conclusion that
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the insurance company is liable to indemnify the owner.
21. In view of what has been discussed hereinabove, the
appeal filed by the appellant-insurance company is allowed and
the finding of the learned Tribunal below to the extent that the
insurance company was held liable to indemnify the award, is set-
aside. Consequently, the impugned award, dated 16.08.2023,
passed by the learned Tribunal below stands modified only to the
extent that the appellant-insurance company is exonerated from
paying the compensation amount. Respondent No.4 herein, who
is the owner of vehicle in question is liable to satisfy the award
and to pay the compensation to the petitioners (respondents No.1
& 2 herein). The remaining terms of the impugned award including
the interest component shall remain the same.
22. Before parting, in the considered opinion of this Court,
the award passed by the Tribunal below clearly reflects total
non-application of mind by the concerned Judicial Officer. As
observed earlier, while adjudicating the present case, the Tribunal
below has taken into consideration the insurance policy Ext. R-3,
which has no relevance in the present case as the same was valid
w.e.f. 03.09.2015 to 02.09.2016, whereas, the date of accident in
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question was 30.12.2016. It is quite shocking that the Judicial
High Court of H.P.
Officer has adjudicated the case while taking into consideration
the insurance policy Ext.R-3, which had no relevance. This reflects
not only lack of application of mind to the facts of the case but is
also against the settled judicial norms. The Judicial Officer now-a-
days is the District & Sessions Judge heading District Judiciary
and also dealing with MACT cases. Needless to state that the
District judiciary is the bedrock of our judicial system and is
positioned at the primary level of entry to the doors of justice. The
Officer is not even aware about the difference between the
Act/Liability only Policy and the Comprehensive/Package Policy
and has not even cared to see the insurance policy Ext. RW1/C,
which was in force during the relevant period and given the finding
that the insurance policy Ext.R-3 (which was not in force during the
relevant period) is the Liability only Policy and certainly covers the
risk of inmates/occupants of the Jeep ( sic ) without ascertaining as to
whether the owner had paid the additional premium to cover the risk
of death or bodily injuries to the occupant of the vehicle or not. The
Officer has not cared to go through the judgments passed by the
Hon’ble Supreme Court (cited supra ) in this respect. It is not
expected from the head of District Judiciary to pass such kind of
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award/order which lacks even elementary knowledge of the MV
High Court of H.P.
Act. This approach of the Judicial Officer in adjudicating the
petition without application of mind is highly objectionable and
deserves to be deprecated. Judicial orders cannot be allowed to
be passed in a mechanical manner. Such tendency must be
deprecated and cannot be allowed to perpetuate. Under these
circumstances, it would be appropriate, if the concerned judicial
officer undergoes refresher course and further periodical training
at Judicial Academy in MACT matters, under the supervision of
the Director, H.P. State Judicial Academy.
23. Registrar General of this Court is directed to place one
copy of this judgment on the service record of this Judicial
Officer and send one copy of this judgment to Director, H.P. State
Judicial Academy, for taking necessary action.
The appeal stands disposed of in the above terms, so
also the pending application(s), if any.
( Sushil Kukreja )
Judge
October 29, 2026
(V. Himalvi)
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