UNITED INDIA INSURANCE CO. LTD. versus K.M. POONAM & ORS.

Citation: [2011] 2 S.C.R. 1026 · Decided: 18-02-2011 · Supreme Court of India · Bench: ALTAMAS KABIR · Disposal: Disposed off

Judgment (excerpt)

A 
B 
[2011] 2 S.C.R. 1026 
UNITED INDIA INSURANCE CO. LTD. 
v. 
K.M. POONAM & ORS. 
(Civil Appeal No. 1928 of 2011) 
FEBRUARY 18, 2011 
[ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.] 
Motor Vehicles Act, 1988 - ss. 147 and 149 - Motor 
accident - Compensation - Liability of insurer - Insurance 
C policy taken by the owner of the vehicle covering six 
passengers including the driver - Vehicle while driven by 
father of the owner, met with an accident - Passengers in 
excess of the number covered by the insurance policy, 
travelling in the vehicle at the time of accident - Death/injury 
D to the passengers - Claim petitions - Liability of the insurer 
- Held: Is confined to the number of persons covered by the 
insurance policy only and liability to pay the other passengers 
is that of the owner of the vehicle - Persons travelling in the 
vehicle in excess of the permitted number of six passengers, 
E though entitled to be compensated by the owner of the vehicle, 
would still be entitled to receive the compensation amount 
from the insurer, who could recover it from the insured owner 
of the vehicle - There can be no pick and choose method to 
identify the five passengers, excluding the driver, in respect 
F of whom compensation would be payable by the Insurance 
Company - In the interest of justice, Insurance Company 
directed to deposit the total amount of compensation awarded 
to the claimants which would be disbursed to the claimants -
Insurance Company would be entitled to recover the amounts 
G paid by it, in excess of its liability, from the owner of the 
vehicle, by putting the decree into execution. 
H 
Respondent No. 5-owner of the vehicle obtained an 
insurance policy insuring his jeep with a sitting capacity 
1026 
UNITED INDIA INSURANCE CO. LTD. v. K.M. 
1027 
POONAM & ORS. 
of six persons including the driver, for a certain period. 
A 
During the said period, the father of respondent No. 5, 
drove the insured vehicle carrying fifteen passengers. 
The vehicle fell into the ditch resulting in the death of the 
respondent's father and the death of the majority of the 
passengers while causing serio1.,1s injuries to the 
B 
remaining passengers. The legal representatives of the 
deceased filed a claim petition. The Tribunal awarded 
compensation in favour of the claimants holding that 
carrying a larger number of passengers than was 
permitted in terms of the Insurance policy, did not amount c 
to breach of the terms and conditions of the Policy and 
the Insurance Company would still be liable since the 
vehicle was legally insured. The High Court upheld the 
order passed by the Tribunal, but enhanced the amount 
of compensation. Therefore, the appellants filed the 0 
instant appeals. 
Disposing of the appeals, the Court 
HELD: 1.1 In order to fix the liability of the insurer, 
the provisions of Section 147 have to be read with 
E 
Section 149 of the Motor Vehicles Act, 1988 which deals 
with the duty of the insurer to satisfy judgments and 
awards against persons insured in respect of third ~rty 
risks. The third party risk in the instant case involves 
purported breach of the conditions contained in the 
F 
insurance agreement executed by and between the 
insurer and the insured. [Paras 20 and 22] [1041-E-F; 
1040-F] 
1.2. The liability of the insurer is confined to the 
number of persons covered by the insurance policy and 
G 
not beyond the same. In the instant case, since the 
insurance policy of the owner of the vehicle covered six 
occupants of the vehicle in question, including the driver, 
the liability of the insurer would be confined to six 
H 
1028 
SUPREME COURT REPORTS 
[2011) 2 S.C.R. 
A persons only, notwithstanding the larger number of 
persons carried in the vehicle. Such excess 'number of 
persons would have to be treated as third parties, but 
since no premium had been paid in the policy for them, 
the insurer would not be liable to make payment of the 
a compensation amount as far as they are concerned. 
However, the liability of the Insurance Company to make 
payment even in respect of persons not covered by the 
insurance policy continues under the provisions of sub-
section (1) of Section 149 of the Act, as it would be entitled 
c to recover the same if it could prove that one of the 
conditions of the policy had been breached by the owner 
of the vehicle. In the instant case, any of the persons 
travelling in the vehicle in excess of the permitted number 
of six passengers, though entitled t

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