United India Insurance Co. Ltd. - Appellant Versus Hamu Ram & Ors. - Respondent

Core ratio / Key holding

Headnote

MOTOR VEHICLES ACT, 1988 — Section 147(1)(b)(i) — Insurance Policy — Act Policy — Gratuitous Passenger — Liability of Insurer.

PRECEDENT — Binding Nature — High Court Judgment — Overruled Supreme Court Precedent — Unconsidered Supreme Court Judgments.

Issues for determination

• Whether the Insurance Company is liable to indemnify for the death or bodily injuries to passengers carried for hire and reward in a private vehicle, where the policy is an 'act policy' only?
• Whether a gratuitous passenger in a private car is included in the expression 'any person' or 'third party' within the meaning of Section 147(1)(b)(i) of the Motor Vehicles Act, 1988?

Ratio decidendi

• A policy of insurance under Section 147 of the Motor Vehicles Act, 1988, which is an 'act policy' only, does not statutorily require the insurer to cover the risk of gratuitous passengers in a private car.
• The expression "any person" in Section 147(1)(b)(i) of the Motor Vehicles Act, 1988, does not include gratuitous passengers in a private car.
• The term "third party" within the meaning of Section 147(1)(b)(i) of the Motor Vehicles Act, 1988, does not include gratuitous passengers in a private car.
• If a High Court judgment relies on a Supreme Court judgment that has subsequently been overruled, or does not consider various other Supreme Court judgments on the same point, it cannot be considered a binding precedent.

Important points

• Held that the Jonga Jeep was being used for carrying passengers for hire and reward, which violated the policy condition restricting use for private and professional purposes.
• Clarified that an 'act policy' under the Motor Vehicles Act, 1988, does not statutorily require coverage for gratuitous passengers in a private car.
• Declared that the expressions "any person" and "third party" in Section 147(1)(b)(i) of the Motor Vehicles Act, 1988, do not include gratuitous passengers in a private car.
• Held that a High Court judgment relying on an overruled Supreme Court precedent or ignoring relevant Supreme Court judgments is not binding.
• Set aside the Tribunal's finding holding the Insurance Company liable, while maintaining the compensation award against the owner and/or driver.

Keywords