Rama Rao, J.
1. The appellant is the third respondent in the original petition filed under S. 110-A of the Motor vehicles Act for compensation of Rs. 20,000/- The petitioners 1 to 4 filed a petition for award of compensation of Rs. 20,000/- in respect of the accident that took place on 31-10-1969 near Kanuru village of Machilipatnam vijayawada road when lorry A.P.K. 6572 of the 1st respondent wherein the deceased was travelling hit against a lorry A.P. K. 8584 stationed at kanpur. It is stated that the driver of the lorry APK 6572 plying towards vijayawada offered a lift to the deceased and the 2nd respondent while driving the lorry rashly and negligently hit at lorry A.P.K. 8545 and due to the impact the deceased received severe injuries and he died in the Government hospital vijayawada. The 1st petitioner is the wife an petitioners 2 to 4 are the children of the deceased. The 1st respondent is the owner of th lorry and the 2nd respondent is the driver of the lorry and the 3rd respondent the appellant herein is premier Insurance co. Ltd . vijayawada. The 1st respondent filed the written statement stating that the accident is not due to rash and negligent driving of ht edriver and the petitioners are not entitled to the compensation sought for. The 3rd 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 for 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 2nd 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 2nd 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 as against respondents 1 to 3.
2. This appeal is at the instance of the 3rd respondent premier Insurance company Limited. Vijayawada the learned counsel for the appellant contended that the compulsory insurance policy does not coveor 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 privity of contract and 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 grip over the reach of Ss. 95 and 96 of the Motor vehciles Act 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 may be a policy which.......
(a) is issued by a person who is an authorised insurer or by a co-operative society allowed under S. 108 to transact the business of an insurer:
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-sec. (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 a 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 course of his employment other than a liability arising under the workmen's compensation Act, 1923 (8 of 23) 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 reason of or in pursuance of a contract of employment to cover liability in respect of the death of or badily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises or
(iii) to cover any contractual liability.
96. Duty of insurers to satisfy Judgments against persons insured in respect of third party risks - (1) If, after a certificate of insurance has been issued under sub-sec (4 ) of S. 95 in favour of the person by whom a policy has been effected judgment in respect of any such liability as is required tobe covered by a policy under Cl. (B) of subsec. (1) of S. 95 (Being a liability covered by the terms of the policy) is obtained agaisnt any person insured 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 provisions 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 interest on that sum by virtue of any enactment relating to interest on Jugments..............'
4. Sections 95 and 96 are key provisions touching the insurance policy covering risks the compulsory insurance and the coverage for third party risks are provided to ensure the third party to get damages in the event of accident and resultant injuries or other wise 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 damages against the insurance company after due notice to the company and in such an event the liability is fastened upon the Insurance company though there is no privity of contract between the claimant and insurance company.
5. The learned counsel for the appellant relied upon the decision of the madras High Court in C. Narayana v. M. S. P. G. Sammelan : AIR1974Mad281 . This decision is concerned with the claim of a person under the insurance policy travelling otherwise than in pursuance of a contract of employment the issue is whether a person who travels in a lorry wihtout 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 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 travelling 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 a passenger carried by alorry will not be covered by the Insurance policy unless he is proved to be a passenger travelling by reason of or in pursuance of a contract of employment the next decision relied upon by the learned counsel is pushpabai v. Ranjit G & E co. : 3SCR372 in this case the person was travelling in thevehicle on the own responsibility and for his own purpose and absolutely gratis and the issue that came up for considerations is whether the policy of insurance covers the risk to the passengers who ae not carried for hire or reward in the context of considertaion this issue. It was held by kailasam. J. As follows (at p. 1746):-
'Sections 95 (a) and 95 (b) (I) of hte Motor vehicles Act adoipted the provisions of the English Road traffic Act, 1960 and excluded the liability of the insurance company regarding the risk to the passengers S. 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 person and the isurer is negatived as the insurance cover is not 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 for hire or reward. As under S. 95 the risk to a passenger 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 insuance company held not liable under the requirements of the Motor vehicles Act'. The Supreme Court held that where 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 insurer is always at liberty to take policies covering risks which are not covered by compulsory insurance, In a policy comprehending compulsory insurance and coverage beyond statutory compulsion the claimant is deposited with the right to claim damages against the Insurance company in addition to damages following from statutory insurance. The learned counsel invited reference to the decision of the Gujarat High Court in Ambaben v. Usmanbhai Amirmiya : AIR1979Guj9 . The Full bench of Gujarat High Court held the policy contemplated by S. 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 reason of a contract or 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 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 S. 95 (1) (b) of the Motor vehicles Act mandates the compulsory insurance of the third party risk in respect of death or bodily injury to any person caused by or arising out of the use of the vehicle in a 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.
6. Chapter 8 of the Motor vehicles Act is a comprehensive code comprising the compulsory insurance and third party risks liability of the owner and Insurance company and the procedure for settlement of claims S. 94 obligates the user of the motor vehicle to obtain policy of insurance in consonance with the requirements of chap 8.
The object of this provision is to enable the third-party to claim and recover damages from the Insurance company without recourse to the financial capacity of the driver or owner of the vehicle section 95 stipulates the compulsory coverage of insurance policy and the insurance company is under an obligation to satisfy the liability in respect of death or bodily injury of a passenger if he is permitted ot travel for hire or reward or pursuant to a contract of employment In view of the proviso circumsribing the width of the expression 'any person', occurring in S. 95 (1) (b) the liability is fastened in the event of carrying the passenger for hire or reward but not gratuitiously and this is confined to compulsory insurance.
The freedom to have the comprehensive coverage fo insurance or specification excluded. The extended coverage in addition to compulsory insurance is visualised and the liability of the Insurance company for extended coverage is headged in by provisions specified in Sec. 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 deviations, lapses or infractions postulated in sec. 95 (2). The liability under Act policy pursuant to sec. 94 and section 95 of the Act is circumscribed by the provisions of sec. 95 In the event of passengers taken on for hire or reward or pursuant to employment the Insurance company will be mulcted with liability for damages in respect of Act policy is regulated by the provisions I. E., section 95 and if the requirements beset in sec. 95 are satisfied the damages can be awarded pursuant to compulsory insurance under sec. 95 cannot be forfeited or whittled down by any other conditions in the policy which are alien to the requirements specified in sec. 95.
The purport of sec. 96 is to fasten liability on the insurer in the claim petition filed by the claimant despite the absence of privity between the claimant and the insurance company. The Insurance policy is a bilateral arrangement between the Insurance company and the insured and the Insurance company is liable to reimburse or satisfy the claim for damages to the insured only and Sec. 96 is designed to provide a link between the claimant and the insurance company The object of sec. 96 (1) is to avoid recurrence of litigation in the event of awards of damages to the claimant and sec. 96 enables the claimant to lodge the claim 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 section 94, 95 and 96 is that the insurance company pursuant to Act policy is bound to Court certain risks on fulfilment of certain conditions and other (sic) company may choose to cover other risks by negotiation though the company is not bound to cover the same under the statute sec. 96 (2) catalogues circumstances and events and the breach of the same operates as cushion to the Insurance company and exonerates the company from liability.
7. Reference is made to the decision reported in M. Suryanarayana v. G. Satyavati (1979) (1) APLJ 401). In this case the owner of the goods was also travelling in the lorry. The 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 th goods was travelling 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 clause 4 and 5 of Rule 213 sub-rule (5) of Motor vehicles 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 th 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 ht eissue whether the compulsory insurance covers the owner of the goods who has been travelling with the express permission and consent of the driver. It was held that the insurance company is liable on two grounds viz., that the owner of the goods was travelling 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. The reference is also made to the decision of this Court in M/s. N.I.A. Company ltd., v. S. Jaffar : AIR1982AP309 . 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 was 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 (sic) and in violation of permit the passengers wer permitted to travel on the 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 persons have been travelling contrary to the specific conditions 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 (1979) 1 APLJ 401 (supra) observing that the passengers travelling on payment of wages do not come within the purview of category of persons or employees mentioned in Rule 213 The Considerations pertaining to Act policy and the statutory liability under section 95 of the Act were not considered. This decision squarely 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 cnsonance with the provisions of the statute and the ratiocination propounded by the Supreme Court in : 3SCR372 (supra) and we are unable to agree with the view taken by Jeevan Reddy J.
8. The Court below having found that there is 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 fastend upon the insurance company on the basis of the Act policy or compulsory insurance envisaged under section 95 of the Act. It is true that the perusal of 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 observations here in before.
9. Appeal allowed No costs.
10. Appeal allowed.