Divisional Manager vs Shamaraya and others. Miscellaneous First Appeal 31781/2010 and connected appeals decided on 22 December 2020.
Judgment Link: http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/354715/1/MFA31781-10-22-12-2020.pdf
Relevant paragraphs: 20…under the ‘Act Policy/Statutory Policy/liability only policy’, the occupants of the car/jeep or pillion rider on motorcycle the risk is not covered as they are not to be categorized as third parties. But under the ‘Comprehensive Policy/Package Policy/ liability only policy’, the risk of occupants of the car/jeep or pillion on motorcycle are covered as the insured(owner) has entered into contract of insurance with the Insurer for covering risk at higher degree by making payment of extra premium above the horizon of covering risk under the ‘Statutory Policy’. Therefore, it is dictum in the above cited judgments if extra premium is not paid covering the risk of the occupants of the car/jeep or pillion on motorcycle, the Insurance Companies are not liable to indemnify the owner by making payment of compensation.
22. Chapter X of the M.V.Act stipulates regarding liability on the Insurance Companies ‘without fault’ in certain cases. Therefore, Chapter X of the M.V.Act is dealing with liability of payment of compensation on the principle “no fault liability’. Chapter XI of the M.V.Act deals with insurance of motor vehicles against third party risks. The provisions in Chapter XI and XII of the M.V.Act deals with procedures regarding award of compensation, liability on the owner and insurance companies etc. Section 145 of the M.V.Act gives the definitions. Clause (g) only stipulates the “third party” includes the Government (before amendment Act 2019). Section 146 of the M.VAct deals with necessity for insurance against third party risk. Section 147 of the M.V.Act stipulates regarding requirements of policies and limits of liability. Therefore, there are no definitions in the M.V.Act defining the term ‘Act Policy/Statutory Policy/liability only policy’ and ‘Comprehensive Policy/Package Policy’. These terminology are evolved and generated through the wordings used in the M.V.Act. Therefore, these terminologies are used which arose out of practice of purchase of insurance policies keeping in view the degree of covering risk. Covering risk of third party is mandatorly made by the statute. Unless a vehicle is made insured compulsorily so far as covering risk of third party, that vehicle shall not be used on the public places or even in private premises for plying. Therefore every insured shall purchase insurance policy compulsorily covering risk of third parties before making use the said vehicle for plying either in public place or in private place. Therefore, the terminology of ‘Act Policy/Statutory Policy/liability only policy’ is being used. Therefore, the contract of insurance between the insured and insurer in case of covering risk of third parties is compulsorily made and for this the owner of the vehicle has to pay a minimum amount of premium compulsorily as this type of insurance policy is called as ‘Act policy/Statutory Policy/liability only policy’. Whereas, if the owner intends to cover higher degree of risk above the covering risk of third parties so as to include covering risk of occupants in the car/jeep or pillion rider on the motorcycle or damaged caused to the vehicle the owner has to pay higher amount of premium covering the risk comprehensively. Therefore, above the degree of covering the risk of third parties, if the owner intends to cover risk on higher degree as above stated it is because of on own volition of insurer and insured. Therefore, the degree of covering risk of covering third party only or covering higher degree of risk that depends upon payment of extra premium. Therefore if extra premium is paid on the own volition of the insured (owner) then it covers higher degree of risk, otherwise not.
Compiled by S. Basavaraj, Advocate, Daksha Legal.
Daksha Legal 