National Insurance Co. Ltd. vs. Dundamma & ors.

National Insurance Co. Ltd. vs. Dundamma & ors.
In the Karnataka High Court
1992 ACJ 1, 1992 75 Comp Cas 141 Kar.
National Insurance Co. Ltd.
Dundamma & ors.
Date of Judgement
6th June, 1991
Hon’ble Justice K J Shetty, Hon’ble Justice M Mirdhe, Hon’ble Justice M R Jois


The vehicle which was claimed to be insured was a goods vehicle and it’s not meant for carrying passengers therefore the insurance company claimed it is not liable to indemnify the respondents; thereby, making an appeal in the High court under Section 110 of the Motor Vehicles Act,1939. Section 95(1)(b) of the Motor Vehicles Act,1939 was also examined and interpreted crucially.

Statues & provisions involved:

  • Motor Vehicles Act, 1988
  • Fatal Accidents Act, 1855
  • Rule 161 of Karnataka Motor Vehicles Rules, 1963
  • Section 95(1)(b) of Motor Vehicles Act, 1939
  • Section 95 of Motor Vehicles Act, 1939


The vehicle associated with the accident is a goods vehicle bearing enrollment no. MYX 6827 having a place with respondent No. 3 in M.F.A. No. 2902 of 1987. On February 26, 1986, it was handling from Panditha Hally to Saligrama in Mandya locale, conveying 15 travelers. The lorry met with an accident over the span of the excursion. Because of the said accident, ten people kicked the bucket and five people were harmed.

The legal representatives of the people who kicked the bucket, as additionally, the people who were harmed in the mishap exhibited guarantee petitions before the Motor Accidents Claims Tribunal, Mandya, asserting compensation in regard of the demise or substantial injury, by and large, to the travelers. The plea of the litigant/appellant insurance agency with whom the vehicle was insured before the Tribunal was that the vehicle being referred to was a goods vehicle and it was not intended to convey travelers for contract or reward and, consequently, the hazard in regard of death or injury to people who were going in the merchandising vehicle was not shrouded as far as section 95 of the Act, as additionally as far as the approach given.

It was additionally argued by the insurance agency that even on the premise that in the lorry a couple of people were allowed to be conveyed by the grant except if an additional inclusion had been taken by the proprietor of the lorry covering the hazard to the travelers to the degree allowed to be conveyed in the vehicle, there would be no obligation with respect to the insurance agency. The Tribunal, nonetheless, overruled the complaints of the insurance agency on the ground that the people who were going in the vehicle were not needless travelers and made the award both against the proprietor of the lorry and its insurer.


Regardless of whether forcibly of clause (ii) of the said provision to section 95(1)(b) of the Motor Vehicles Act, 1939, the insurance agency is liable to offer compensation in appreciation of death or substantial injury to any individual going in a vehicle, however, it’s anything but a vehicle developed and adjusted and implied in law for conveying travelers for hire or reward, even to the degree of several travelers allowed to be carried in the vehicle however not for hire or reward, even without any additional coverage made sure about by the owner under the concerned policy in regard of such travelers?


Appellant’s Contention:

It was obligatory for the insurance company as per the section 95 to cover the risk only in respect of passengers who are carried for hire or reward in a vehicle it was not a vehicle in which passengers could be carried for hire or reward and, therefore, the risk was not covered by the force of section 95 of the Act but could have been covered owner if he would have paid extra premium and that to only if he would have carried a number of travelers or passengers allowed.

Respondent’s Contention:

The respondent’s contention was heavily relied on the case of in Channappa Chanavirappa Katti v. Laxman Bhimappa Bajantri,[i] where it was held that it was compulsory coverage of the risk under Section 95(1) of the said act as because he owner of the goods traveling in a goods vehicle could be regarded as a passenger traveling in the goods vehicle for hire or reward. At the point when the owner of the goods or products needs to pass on his merchandise in an open goods vehicle, procured by him and go with the merchandise for their security, in the ordinary course of things, it would not be feasible for him to determine already, the monetary steadiness of the client of the vehicle beforehand, the ability of the driver of the vehicle in driving it, or the roadworthy state of the vehicle as would guarantee safety.


It was held that the insurance company is not liable in conformity with Section 95 of the motor vehicles act by the force of clause (ii) of section 95(1)(b) of the act, in a vehicle which is not a vehicle constructed or adapted and meant in law for carrying passengers for hire or reward to compensate in respect of the death of, or bodily injury to, any person traveling in a vehicle, except in respect of the owners of the goods traveling in a goods vehicle having engaged the vehicle under an agreement with the owner for carrying goods for hire or reward, to the extent of the number of passengers/persons permitted to be carried in the vehicle.

Under rule 161 of the Karnataka Motor Vehicles Rules, 1963 such liability shall cover only up to the extent of the number of persons permitted to be carried in the goods vehicle.

Ratio decedendi:

The principle of stare decisis is applied and the justification behind it is that regarding the liability of the insurance company in respect of the owner of goods in view of the replacement of the 1939 Act by the 1988 Act there is no similar clause. The insurance company on whom liability could be foisted for the owner of the goods should have entered into an agreement prior 1st July 1989 for carrying goods. The term goods only refer to those defined under section 2(7) of the act.  The insurance company shall not be liable to pay compensation to the excess number of passengers or travelers as per rule 161 envisaged under the Karnataka Motor Vehicles Rules. 


The insurance company covers risk in respect of every goods vehicle as per the contents of the tariff and the conditions incorporated in the insurance policy with the clear knowledge and understanding that it does not cover the risk in respect of passengers or travelers in a goods vehicle is not covered under the policy. The conditions conform with the provisions must prevail the conditions incorporated in the policy are inconsistent with the provisions of the Act, certainly, the risk in respect of passengers or travelers in a goods vehicle will prevail. 

“The views of the authors are personal


[i] Channappa Chanavirappa Katti v. Laxman Bhimappa Bajaentri, AIR 1979 Kant 93.

Adya Samal
I’m Adya Aditi Samal, pursuing B.A. LL.B in Xavier Law School. I’m a self-motivated law student who believes in the idea that “there is always someone better than you”, and this makes me keep going. I love to learn new things because I feel learning refine you, redefines you. I’ve been an ardent admirer of world history, psychology and mythology all through my life. Finally, my heart found solace when I fell in love with criminal law and human rights law. The intrinsically intimate thread between society and law mesmerizes me every time. In my leisure, I write poems and short stories in Odia. And finally; I don’t eat to live but rather live to eat.