NATIONAL INSURANCE CO. LTD. versus ANJANA SHYAM AND ORS.

Citation: [2007] 9 S.C.R. 78 · Decided: 20-08-2007 · Supreme Court of India · Bench: A.K. MATHUR · Disposal: Case Partly allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
NATIONAL INSURANCE CO. LTD. 
v. 
ANJANA SHY AM AND ORS. 
AUGUST 20, 2007 
[A.K. MATHUR AND P.K. BALASUBRAMANY AN, JJ.] 
Motor Vehicles Act, 1988; Ss. 58, 72, 86, 146, 147, 149 and 166: 
Insurance of vehicle-Liability of Insurer to representative of the injured 
C and dead persons in an accident involving public transport vehicle-
Compensation-Awards passed by Tribunal exceeding the number of persons 
insured by assured-Execution of-Held: An insurance policy effected in 
terms of S. 147(/)(b}(ii) of the Act insure persons/class of persons against 
the death of/bodily injury to any passenger caused by or arising out of the 
D use of public transport vehicle in public place-Jns1,Uer if failed to establish 
fundamental breach of conditions of the insurance policy to enable it to 
disclaim liability has the obligation to satisfy the decree/award made by the 
Court/Tribunal in terms of S.147(2)(a) and S. 149(1) of the Act-However, 
it could recover from the owner of the vehicle the excess amount paid in 
order to satisfy such award/decree-Jn terms of Section 147(/)(b)(iiJ., only 
E such number of passengers as shown in the certificate of registration, could 
be insured-Affording of insurance for more number of passengers than 
permitted would be illegal since it would amount to overloading of the 
vehicle-Hence, insurance taken out for permitted number of passengerj 
could alone determine liability of Insurer, and it cannot be ~tended to cover 
F passengers who got injured or died in the accident but not insured-Since 
there is no means of ascertaining the passengers which are permitted to be 
carried out by .the permit and covered by the Insurance Policy, the insurance 
company is directed to deposit the higher of the awards and consequently 
higher of the amounts awarded as compensation to the extent of number of 
passengers covered by the Policy-Tribunal is directed to pass appropriate 
G orders for distribution of the money so deposited proportionately to all 
claimants and claimant could recover the balance from the owner of the 
vehicle. 
Words and Phrases: 
H 
78 
+ 
NA TI ON AL INSURANCE CO. LTD. v. ANJANA SHY AM 
79 
'Any passenger'-Meaning of in the context of Motor Vehicles Act, A 
1988 .. 
A bus owned by the Tehsil Cooperative Union and insured with the 
appellant-an Insurance Company met with an accident. The vehicle had a 
carrying capacity of 42 passengers including the driver and the conductor. 
Allegedly, at the time of the accident, the bus was overloaded having about 90 B 
passengers in it As a result of the accident, 26 persons, including the driver, 
died and 63 persons got injured. The legal representatives of the deceased 
and the injured approached Motor Accident Claims Tribunal claiming 
compensation by filing applications under Section 166 of the Motor Vehicles 
Act, 1988. The Tribunal passed various awards on the claims and made the C 
insurance company liable for paying the amounts covered by all the awards 
exceeding the number of passengers covered by the insurance company. 
Feeling aggrieved, the insurance company filed appeals challenging the 
awards. In these appeals, an application was also made seeking impleadment 
of the State, as the authorities had failed to check the overloading of the bus 
and it was due to the negligence of the authorities that the accident had D 
occurred and thus the State must be found to be liable for contributory 
negligence. The High Court taking the view that overloading of the bus, which 
had a permit to ply with only 42 passengers, did not amount to violation of the 
route permit or any other law for which the State Government could be held 
to be contributorily negligent and it is the insurance company which was liable E 
to pay the amounts as awarded by the Tribunal. Hence the present appeals. 
Appellant-insurance company contended that it had insured 42 
passengers, therefore, its liability cannot be enlarged; that there is nothing 
in the Motor Vehicles Act which justifies the imposing of the liability on the 
insurance company in respect of persons who were not at all covered by the F 
insurance policy and in respect of whom there was no obligation on the owner 
of the vehicle to take coverage of i·nsurance in terms of Section 147 of the 
Act; and that though the relevant provisions of the Act are for the benefit of 
third parties or passengers of a transport vehicle injured in an accident, but 
the same did not contain any provision which could 

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