SMT. MALLAWWA ETC. versus THE ORIENTAL INSURANCE CO. LTD. AND ORS.

Citation: [1998] SUPP. 3 S.C.R. 152 · Decided: 27-11-1998 · Supreme Court of India · Bench: M.K. MUKHERJEE · Disposal: Disposed off

Judgment (excerpt)

A 
SMT. MALLA WWA ETC. 
v 
THE ORIENTAL INSURANCE CO. LTD. AND ORS. 
NOVEMBER 27, 1998 
B 
[M.K. MUKHERJEE, G.T. NANAVATI AND B.N. KIRPAL, JJ.] 
Motor Vehicles Act, 1939. 
S. 95(1) (b), proviso (ii)-Goods carriages-Carrying persons like goods 
C owners, hirers or gratuitous passengers-Accident-Death of passenger-
Liability f'Jf insurer-Held, goods carriage cannot be considered as a 
passengelvehic/e on the basis of single use or use on some stray occasions-
For purpose of construing proviso (ii) the correct test to determine whether 
a passenger was carried for hire or reward would be whether there has been 
D a systematic carrying of passengers-A vehicle so used can only be said to 
be a vehicle in which passengers are carried for hire or reward. 
In two different cases arising out of motor accident claims, pertaining 
to death of persons travelling in goods carriages, the Karnataka High Court 
held that the insurance company was not liable to pay compensation in 
E respect of death or bodily injury to any person travelling in a goods carriage 
as passenger whether as a hirer of otherwise. It also held that under the 
insurance policy, there being no extra coverage in respect of a passenger 
like an owner or hirer or a gratuitous passenger travelling in the vehicle, 
the insurance company was not liable to pay compensation to the claimants 
either on the ground of fault liability or on the ground ofno fault liability. 
F On the other hand, a Full Bench of the Rajasthan High Court held that in 
case of passengers carried for hire or reward by reason of or in pursuance 
of a contract of employment in any vehicle, the insurance company was liable, 
this would include owner of the goods as well as his employee. In some other 
cases the High Courts concerned held that a passenger travelling in a goods 
G vehicle would be a passenger carried for hire or reward within the meaning 
of proviso (ii) to s.95(1) of the Motor Vehicles Act, 1939 and, therefore, the 
insurance company would be liable to indemnify the insured except in cases 
of breaches of specified conditions. The present owners appeals were filed 
by the claimants, the of vehicles and the Insurance Company against the 
H judgments of the High Courts concerned. 
152 
SMT. MALLA WWA ETC v. THE 0.1. C. LTD. 
153 
The appeals were listed before a two-judge Bench which noticed the A 
divergent views of the High Courts on the interpretation of s.95 of the Act. 
The Bench was of the view that the decision of this Court in Pushpabai 
Parshottam Udeshi v. MIS Ranjit Ginning and Pressing Co. Pvt. Ltd. AIR 
(1977) SC 1735 would also require reconsideration, and that the matter be 
heard by a Bench of thre~ Judges. Accordingly, the matter came to be heard B 
by a Bench of three Judges. 
Allowing the appeals of the Insurance Company and dismissing those 
of the claimants and the vehicle owners, this Court 
HELD: I.I. Keeping in mind the classification of vehicles by the Motor 
Vehicles Act, 1939, the requirement of registration with particulars including C 
the class to which it belonged, requirement of obtaining a permit for using 
the vehicle for different purposes and compulsory coverage of insurance 
risk, it would not be proper to consider a goods vehicle as a passenger 
vehicle on the basis of a single use or use on some stray occasions at that 
vehicle for carrying passengers for hire or reward. [161-G-H; 162-AI 
D 
1.2. For the purpose of construing a provision like proviso (ii) to 
Section 95(i) (b) of the Act, the correct test to determine whether a passenger 
was carried for hire or reward, would be whether there has been a systematic 
carrying of passengers. Only if the vehicle is so used then that vehicle can 
be said to be a nhicle in which passengers are carried for hire or reward. E 
(162-A-B) 
1.3. The legislature, after providing generally in Clause (b) of Sub-
section (l) of s.95, in wide terms so as to include 'any person' and every 
motor 'vehicle' within its sweep, carved out certain exceptions by adding a 
proviso to that clause. Proviso (ii) in clear terms restricted the scope of the F 
main provision by confining its application to the vehicle which is 'a vehicle 
in which passengers are carried for hire or reward or by reason of or in 
pursuance of a contract of employment'. In the first instance, the vehicle had 
to be a vehicle of that class in which passengers were carried. Further, the 
compulsory coverage was not intended for all passengers and

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