Ramesh Kumar vs National Insurance Co. Ltd. & Ors

Author- S.Victoriya, Government Law College, Vellore, Tamil Nadu

KEYWORDS

Motor Vehicle Act 1988, Gratuitous Passengers, Insurance Liability, Compensation, Supreme Court of India.

CASE DETAILS

       i)            Judgement Cause Title / Case Name

Ramesh Kumar vs. National Insurance Co. Ltd. & Ors.

     ii)            Case Number

Appeal (civil) 5010 of 1999

   iii)            Judgement Date

17 August 2001

    iv)            Court

Supreme Court of India

      v)            Quorum / Constitution of Bench

Quorum

    vi)            Author / Name of Judges

A.P. Misra / A.P. Misra & U C. Banerjee

  vii)            Citation

AIR 2001 SUPREME COURT 3363

viii)            Legal Provisions Involved

Motor Vehicle Act 1988

FACTS OF THE CASE

Procedural Background of the Case

  1. Initially, the claim request was rejected by the National Insurance Company after the death of Ramesh Kumar. The representatives of Ramesh Kumar went to the Motor Accident Claims Tribunal to get a remedy.
  2. The Motor Accident Claims Tribunal thoroughly assessed the evidence like testimonies and medical reports. The MACT awarded compensation of rupees 1,50,000 to Ramesh Kumar’s representatives. This award was declared based on the applicability of the insurance policy and the determination of negligence.
  3. The National Insurance Company goes for the Appeal to the High Court of Bombay. The court upheld the award given by the MACT and confirmed the compensation.
  4. The company made another appeal to the Supreme Court of India.

Factual Background of the Case

  1. Ramesh Kumar is the breadwinner of his family. One day he took out an insurance policy to help his family after his death from the National Insurance Company.
  2. After some days, Ramesh Kumar travelled in a goods vehicle as a Gratuitous Passenger due to his work. Unfortunately, the goods vehicle takes a sudden turn to avoid cows on the road.
  3. This sudden turn caused the vehicle to uncontrollable and create a rigorous accident. In this bad movement, Ramesh Kumar lost his own life on the spot itself.
  4. The representatives of Ramesh Kumar want to claim the insurance policy for their life expenditures.
  5. However, the claim request was rejected by the National Insurance Company due to the policy which does not cover the death of a gratuitous passenger in a goods vehicle.

LEGAL ISSUES RAISED

  1. Whether insurance companies are liable to pay compensation for the death or bodily injury of the gratuitous passengers travelling in a goods vehicle under Section 95 of the Motor Vehicle Act[1]?
  2. Whether insurance companies liable to pay compensation for the death or bodily injury of the non-owner gratuitous passenger travelling in a goods vehicle under Section of the Motor Vehicle Act[2]?

PETITIONER / APPELLANT’S ARGUMENTS

  • The petitioner argued that the company is not liable for the goods vehicle travellers under section 95 (2) (b) of the Motor Vehicle Act 1988. In this section, the insurer is not liable for the damage of property or death or bodily injury which exceeds the limit of rupees 7,50,000.
  • Liability of the Owner: The court ruled that the insurance company is not liable for the gratuitous passengers who face death or bodily injury. But the owner of the vehicle is liable for those passengers. Therefore, the owner of the vehicle should refund the reward given by the insurance company. And also, compensate the claimants within 3 months[3].
  • Unauthorized use of a vehicle: The vehicle that met an accident is driven by a person who doesn’t have a driver’s license. The Supreme Court ruled that the unauthorized use of vehicles is a violation of policy terms. The company can deny the liability because of this violation[4].
  • The Supreme Court ruled that the Company is not liable if the vehicle is used by an unauthorized person for an unauthorized purpose under the terms of the policy[5].
  • Failure to Establish Negligence: The claimants failed to establish the negligence of the driver which caused the accident with sufficient evidence in the court. The Supreme Court ruled that the claimants have the burden of proof to establish the negligence of the driver[6].

RESPONDENT’S ARGUMENTS

  • The respondent argued that the Company is liable for the death or bodily injury of gratuitous passengers according to section 147 of the Motor Vehicle Act which states that the policy must cover the death or bodily injury of any person who was involved in the accident including the owner of the vehicle.
  • The Supreme Court of India ruled that the claimants have the right to get compensation according to section 147 of the Motor Vehicle Act 1994. The company is liable for the third party involved in the road accident[7].
  • The court held that the company is liable for the death or bodily injury of all the persons including gratuitous passengers. The company should compensate the claimants within 8 weeks.
  • The court ruled in the above cases that the company is liable for the owner or representative or gratuitous passenger’s death or bodily injury while travelling in a goods vehicle[8].
  • The negligent act of the driver is within the scope of his duty. Therefore, the negligent manner is the base cause of the accident. The Court held that the negligent act within the scope of duty can impose the liability on the insurance company[9].

RELATED LEGAL PROVISIONS

  • Section 95 of Motor Vehicle Act 1988: The insurance company is not liable for the deceased or bodily injury or damage of property which exceeds the value of rupees 7,50,000[10].
  • Section 147 of the Motor Vehicle Act 1994: The insurance company is liable for the death or bodily injury of any person including the owner of the vehicle, representative of the vehicle and gratuitous passengers[11].

JUDGEMENT

RATIO DECIDENDI

    1. The Supreme Court of India ruled the insurance company is liable to compensate the victims of the accident by the policy terms. The Court emphasized the need for the immediate fulfilment of contractual obligations by the National Insurance Company.
    2. The Supreme Court of India held that the Company is liable for all the persons who died or got bodily injury during the accident. The company should compensate with rupees 15,00,000 to the claimants within 3 months.

GUIDELINES

  1. The Supreme Court of India ruled that every insurance company will ensure the clarification of every part of a policy to the client to avoid later confusion.
  2. The Supreme Court emphasized the role of insurance policy in society as a protecting shield for all people from the uncertain events of life. So, insurance companies should pay timely claims or compensation to the victims of accidents.

OBITER DICTA

  1. The Supreme Court laid down that the insurance companies must give the claims without delays.
  2. The companies should explain the coverage of third-party claims to their clients.
  3. The Court should monitor that the companies pay fair compensation to the claimants.

CONCLUSION & COMMENTS

          The Judgement of the case emphasized the need for timely compensation and the clear coverage of policy towards third-party damages. In an uncertain life, we can only give a secure life for our families through an insurance policy. The role of the Indian Judiciary in the Motor Vehicle Act Claims is great. As it is always prioritizing the welfare and well-being of people.

REFERENCES

Important Cases Referred

  • Mallawwa vs. Oriental Insurance Company Ltd. (1999) 1 SCC 403
  • National Insurance Co. vs. Swaran Singh (2004) 3 SCC 297
  • United India Insurance Co. Ltd. vs. Lehru (2003) 3 SCC 338
  • Oriental Insurance Co. Ltd. vs. Meena Variyal (2007) 5 SCC 428
  • National Insurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223
  • New India Assurance Company vs. Satpal Singh (2000) 1 SCC 237
  • Bharat Coking Coal Co. Ltd. vs. State of Bihar (2003) 8 SCC 154

Important Statutes Referred

  • Motor Vehicle Act 1988
  • Motor Vehicle Act 1994

[1] Indian Kanoon – http://indiankanoon.org/doc/1360358/ (23/01/2025)

[2] Id.

[3] Mallawwa vs. Oriental Insurance Company Ltd. (1999) 1 SCC 403

[4] National Insurance Co. vs. Swaran Singh (2004) 3 SCC 297

[5] United India Insurance Co. Ltd. vs. Lehru (2003) 3 SCC 338

[6] Oriental Insurance Co. Ltd. vs. Meena Variyal (2007) 5 SCC 428

[7] National Insurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223

[8]  New India Assurance Company vs. Satpal Singh (2000) 1 SCC 237

[9] Bharat Coking Coal Co. Ltd. vs. State of Bihar (2003) 8 SCC 154

[10] 3 Dr. S. K. Jain, Motor Vehicle Act 1988: A Comprehensive Commentary, § 95, 120 (LexisNexis, 2020)

[11] 3 Dr. S. K. Jain, Motor Vehicle Act 1988: A Comprehensive Guide, § 147, 150 (LexisNexis, 2020)

Share this :
Facebook
Twitter
LinkedIn
WhatsApp
Author picture