Rama Rao, J.
1. The appellant is the third respondent in the original petition filed under section 110A of the Motor Vehicles Act, 1939, for compensation of Rs. 20,000. Petitioners Nos. 1 to 4 filed a petition for award of compensation of Rs. 20,000 in respect of an accident that took place in October 31, 1969, near Kanuru village of Machilipatnam- Vijayawada road when lorry A.P.K. 6572 of the first respondent wherein the deceased was travelling hit against a lorry APK 8545 stationed at Kanuru. It is stated that the driver of the lorry APK 6572 plying towards Vijayawada road offered a lift to the deceased and the second respondent, while driving the lorry rashly and negligently, hit at lorry APK 8545 and due to the impact, the deceased received severe injuries and died in the Government hospital, Vijayawada. The first petitioner is the wife and petitioners Nos. 2 and 4 are the children of the deceased. The first respondent is the owners of the lorry and the second respondent is the driver of the lorry and the third respondent, the appellant herein, is Premier Insurance Com. Ltd., Vijayawada. The first respondent filed a written statement stating that the accident is not due to rash and negligent driving of the driver and the petitioners are not entitled to the compensation sought for. The third respondent, while adopting the same plea with regard to rash and negligent driving, also pleaded that the terms and conditions of the insurance policy do not cover the liability due to an accident and the loss of life of the deceased, Rosaiah, who was not an employee of the insured and who was travelling gratuitously on the date and time of the accident in the lorry at the instance of the driver, the second respondent, who is not expected to take outside passenger, which is contrary to the terms and conditions of the policy. On the above pleadings, the Tribunal came to the conclusion that the accident is the consequence of rash and negligent driving of the lorry by the second respondent. It is also found that the claim for Rs. 20,000 made by the petitioner is reasonable . Regarding the plea taken by the insurance company denying their liability, it is held that the insurance policy is not placed before the court and it is not known what are the terms and conditions of the policy and, therefore , they are not entitled to take this plea. Finally , it is held that the petitioners are entitled to the compensation of Rs.20,000 as claimed by them and to recover the same against respondents Nos. 1 to 3.
2. This appeal is at the instance of the third respondent, Premier Insurance Co. Ltd., Vijayawada. The learned counsel for the appellant contended that the compulsory insurance policy does not cover the passengers taken on free lift and further the policy does not contemplate liability in respect of unauthorised passengers as the policy is not intended for such contingency and in any event the claimant cannot have cause of action against the insurance company in the absence of private of contract and the owner of the vehicle alone has cause of action on the basis of policy. The learned counsel for the respondent contended that the compulsory insurance policy ensures to the benefit of the claimants and in any event the insurance company cannot deny the liability in the absence of production of policy which defines the terms of coverage. it may be recalled that the learned counsel for the appellant confined himself to the above legal contentions only and did not assail the findings arrived at by the Tribunal regarding the rash and negligent driving and the quantum of compensation.
3. It is necessary to have a grip over the reach of sections 95 and 96 of the Motor Vehicles Act, 1939, to appreciate the contentions raised by the learned counsel.
'95. Requirements of policies and limits of liability.- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which -
(a) is issued by a person who is an authorised insurer or by a co- operative society allowed under section 108 to transact the business of an insurer ; and
(b) insurers the persons or classes of persons specified in the policy to the extend specified in sub-section (2) -
(i) against any liability which may be incurred by him in respect of the death of, or bodily injury to, any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of , or bodily injury to , any passenger of a public service vehicle caused by, or arising out of the use of, the vehicle in public place:
Provided that a policy shall not be required -
(i) to cover liability in respect of the death, arising out of and in the course of his employment , of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the cause of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923) , in respect of the death of, or bodily injury to , any such employee- (a) engaged in driving the vehicle ; or
(b) if it is a public service vehicle, engaged as a conductor of the vehicle, or in examining tickets on the vehicle; or
(c) if it is a goods vehicle, being carried in the vehicle; or
(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by person of or in pursuance of a contract of employment , to cover liability in respect of the death of, or bodily injury to, persons being carried in or upon or entering or mounting or alighting from the vehicles at the time of the occurrence of the event out of which a claim arises, or
(iii) to cover any contractual liability.'
4. 96. Duty of insurance to satisfy judgment against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under sub-section (4) of section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 95 (being a liability covered by the terms of the policy) is obtained against any person insures by the policy, then , notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provision of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor , in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.'
5. Sections 95 and 96 are key provision touching on the insurance policy covering risks. The compulsory insurance and the coverage for third party risks are provided t ensure the third party to get damages in the event of accident and resultant injuries or otherwise without reference to the financial condition of the driver or owner of the vehicle. The policy can have an extended coverage in addition to compulsory insurance. Section 96 enables the claimants to claim to damages against the insurance company and, in such an event, the liability is fastened upon the insurance company thought there is no privity of contract between the claimant and the insurance company.
6. The learned counsel of the appellant relied upon the decision of the Madras High Court in C. Narayanan v. Madras State Palm Gur Sammelan, : AIR1974Mad281 . this decision is concerned with the claim of a person under the insurance policy travelling otherwise the n in pursuance of the contract of employment. The issue is whether a person, who travels in a lorry without authority and not in the course of employment, will be entitled to any compensation when the lorry met with an accident due to the negligence of the driver. The Division Bench of the Madras High Court consisting of Kailasam and Maharajan JJ. and Kailasam J., speaking for the court, held that when the person is not employed and is traveling without any authorisation, there is no provision in the Act to protect such a person. In such a situation, the insurer or the owner of the vehicle cannot be fastened with any liability for the injuries sustained by the person who was travelling without authority in the lorry and sustained injuries due to the negligence of the driver. It is further held that an passengers carried by a lorry will not be covered by the insurance policy unless he is proved to be a passengers travelling by reasons of or in pursuance of a contract o f employment.
7. The next decision relied upon by the learned counsel is Pushpabhai Parshottam Udeshi v. Ranjit Ginning and Pressing Co. P. Ltd., : 3SCR372 . In this case, a person was travelling in a vehicle on his own responsibility and for his own purpose and absolutely gratis and the issue that campus of consideration is whether carried for hire or reward. In the context of considering this issue, it was held by Kailasam J. as follows (p. 1746):
'Sections 95(a) and 95(b)(i) of the Motor Vehicles Act adopted the provisions of the English Road Traffic Act, 1960, and excluded the liability of the insurance company regarding the risk to the passengers. Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death, or bodily injury to ,any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place. The plea that the words `third party' are wide enough to cover all persons except the persons and the insurance is negatived as the insurance cover is noted available to the passengers made clear by the proviso to sub-section which provides that a policy shall not be required:... therefore, it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire or reward. As under section 95 the risk to a passengers in a vehicle who is not carried for hire or reward is not required to be insured, the plea of the counsel for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act.'
8. The Supreme Court held that where a passenger is not carried for hire or reward, statutory liability cannot be fastened upon the insurer under section 95 of the Act. The Supreme Court further held that the insurance and coverage beyond statutory compulsion, the claimants is vested with the right to claim damages against the insurance company in addition to damages followings form statutory insurance. The learned counsel invited our attention to the decision of the Gujarat High Court in Ambaben v. Usmanbhai Amirmiya Sheikh : AIR1979Guj9 (FB). The Full Bench of the Gujarat High Court held that the policy contemplated by section 95(1)(b) of the Act does not cover the risks to persons other than those who were carried for hire or reward at the time of occurrence of event which gives rise to the claim against the insurer and passengers other than those who were bona fide employees of the owner or hirer of the vehicle not exceeding six in number , carried in pursuance of or by reasons of a contract of employment. It is further held that where free lifts are given by the drivers of goods vehicle or public service vehicle and if an event occurs which gives rise to a claim against the owner of the vehicles and against the insurer, such passengers who are not carried for hire or reward would have nothing to fall back upon except the claim against the owner of the vehicle. Section 95(1)(b) of the Motor Vehicles Act mandates the compulsory insurance of there party risk in respect of deaths of, or bodily injury to, any person caused by or arising out of the use of the vehicle in public place. The wide amplitude of the expression 'any person' occurring in the main provision is denuded by the proviso pertaining to the beneficiaries under statutory insurance.
9. Chapter VIII of the Motor Vehicles Act is a comprehensive code comprising the compulsory insurance and third party risks, the liability of the owner and insurance company and the procedure for settlement of the claims. Section 94 obligates the user of the motor vehicle to obtain a policy of insurance in consonance with the requirements of Chapter VIII. The object of this provision is to enable the third party to claim and recover damages for the insurance company without recourse to the financial capacity of the driver or owner of the vehicle. Section 95 stipulates the compulsory coverage of an insurance policy and the insurance company is under an obligation to satisfy the liability in respect of death of, or bodily injury to, a passengers if he is permitted to travel for hire or reward or pursuant to a contract of employment. in view of the proviso circumscribing the width of the expression ' any person ' occurring in section 95(1)(b), the liability is fastened in the event of carrying the passenger for hire or reward but not gratuitously and this is confined to compulsory insurance. The freedom to have a comprehensive coverage of insurance or specification of liabilities for diverse risks is not excluded. The extend coverage in addition to compulsory insurance is cisulised and the liability of the insurance company for extended coverage is hedged in by provisions specified in section 96(2) of the Act. The insurance company can be exonerated from the liability in respect of coverage other than statutory insurance in the event of deviation, lapses or infraction postulated in section 95(2). The liability under the Act liability under the Act Policy pursuant to section 94 and section 95 of the Act is circumscribed by the provisions of section 95. In the event of Passengers taken on for hire pr reward pursuant to employment, the insurance company will be mulcted with liability for damages within the pecuniary limits envisaged under section 95. The claim for damages in respect of Act policy is regulated by the provisions of section 95, and if the requirements beset in section 95 are satisfied, damages can be awarded. the right of the claimant to get damages pursuant to compulsory insurance under section 95 cannot be forfeited or whittled down by any other conditions in the policy which are alien to the requirements specified in section 95. The purport of section 96 is to fasten liability on the insurer in the claim petitions filed by the claimant despite the absence of privity between the claimants and the insurance company. The insurance policy is a bilateral arrangement between the insurance company and insured and the insurance company is liable to reimburse or satisfy the claim for damages to the insured only and section 96 is designed to provide a link between the claimant and the insurance company. The object of section 96 (1) is to avoid recurrence in the event of awards of damages to the claimant and section 96 enables the claimants to lodge the claims for damages for once against the owner and insurance company as well and recover on giving notice to the insurance company. The combined effect of the provisions of sections 94,95 and 96 is that the insurance company pursuant to Act policy is bound to cover certain risks on fulfillment of certain condition and other (sic) companies may choose to cover other risks by negotiation thought the company is not bound to cover the same under the statue. Section 96(2) catalogues circumstances and events and the breach of the same operates as a cushion to the insurance company and exonerates the company from liability.
10. A reference is made to the decision in M. Suryanarayana v. G. Satyavati (1979) 1 AP LJ 401. In this case, the owner of the goods was also travelling in lorry. Rash and negligent driving on the part of the driver was found. the Division Bench consisting of Gangadhara Rao and Amareswari JJ. and Amareswari J., speaking for the court, held that the contract of employment found in section 95 covers not only a contract with the owner of the insured vehicle, but also persons who are on the vehicle pursuant to a contract of employment with the owner of the goods carried in it. The owner of the goods was travellings in the vehicle with the permission of the driver and the cleaner. This case turned upon the issue whether the master is vicariously liable for the act of his servant acting in the course of employment, and whether there is a prohibition in law to carry persons in the lorry and dealing with clauses 4 and 5 of rule 213, sub-rule (5), of the Motor Vehicle Rules, it was held that there is no prohibition in law to carry less than six persons in the lorry. it was held that the contract of employment contemplated in section 95 covers not only a contract with the owner of the insured vehicle but also persons who are on the vehicle pursuant to a contract of employment with the owner of the goods carried in it. This case turned upon the issue whether the compulsory insurance covers the owner or the goods who has been traveling with the express permission and conset of the driver. It was held that the insurance company is liable on two ground, viz., that the owner of the goods was traveling in the lorry pursuant to the employment and also there is no prohibition under the Motor Vehicles Rules. This case is far removed from the facts arising in the instant case. A reference is also made to the decision of this court in New India Assurance Co. Ltd. v. Sheik Jaffer (1982) 1 AP LJ 316; (1984) 56 Comp Cas 79 (AP). In this case, the passengers were carried for hire or reward. the passengers were permitted to travel in the lorry on payment of charges and it concluded that they were carried for hire or reward. The insurance company contended that there is a specific condition in the policy that the vehicle should not be used for a purpose not allowed by the permit under which the vehicle was plied and in violation of the permit, the passengers were permitted to travel on payment of hire or reward. On these facts, construing section 95 and also section 96(2) of the Motor Vehicles Act, Jeevan Reddy J. held that the person have been travelling contrary to the specific condition in the policy and also the permit and in the process of arriving at this conclusion, distinguished the Division Bench decision of this court in Suryanarayana v. Satyavati (1979) 1 AP LJ 401, observing that the passengers travelling on payment of wages do not come within the purview of the category of persons or employees mentioned in rule 213. The consideration pertaining to Act policy and the statutory liability under section 95 of the Act were not considered. This decision securely rested upon the immunity of the insurance company under section 96(2) pertaining to extended coverage but the liability of the company pursuant to Act policy under section 95 is glossed over. This conclusion is not in consonance with the provisions of the statue and the ratiocination propounded by the Supreme Court in Pushpabhai Parshottam Udeshi v. Ranjit Ginning and Pressing Co. P. Ltd., : 3SCR372 and we are unable to agree with the view taken by Jeevan Reddy J.
11. The court below having found that there was rash and negligent driving passed an award against the insurance company on the sole ground that the policy is not produced by the company. In view of the finding by the court below that the passengers were travelling gratuitously, the liability cannot be fastened upon the company on the basis of Act policy or compulsory insurance envisaged under section 95 of the Act. It is true that a persual of the policy is necessary to consider whether the policy covers the liability in respect of passengers by lift or without payment of hire or reward and other risks. Therefore, the judgment of the court below is set aside and the matter is remitted to the court below for consideration in the light of the observation here in before.
12. Appeal allowed,. No costs.