(Prayer: This M.F.A is filed Under Section 173(1) of MV Act against the judgment and award dated 16.11.2009 passed in Mvc.No.290/2004 on the file of presiding officer, Fast Track Court, MACT, Kundapura, awarding a compensation of Rs.31,200/- with interest at 6% P.A. from the date of suit till realization.This M.F.A is filed under Section 173(1) of MV Act against the judgment and award dated 16.11.2009 passed in MVC.No.291/2004 on the file of presiding officer, Fast Track Court, MACT, Kundapura, awarding a compensation of Rs.4,48,900/- with interest at 6% P.A. from the date of suit till realization.)1. These two appeals are filed by the Insurance Company challenging the judgment and award dated 16.11.2009, passed in M.V.C.Nos.290/2004 and 291/2004, on the file of the Fast Track and MACT at Kundapara ('the Tribunal' for short) fastening the liability on the Insurance Company.2. The parties are referred to as per their original rankings before the Tribunal to avoid the confusion and for the convenience of the Court.3. The factual matrix of the case is that the claimants in both the claim petitions have stated that on 03.01.2004 at about 3.00 a.m., the claimant in M.V.C.No.290/2004 Imran Khan and one Vasudeva Veluskar, son of petitioner No.1 and sister of petitioner No.2 in M.V.C.No.291/2004, were traveling in Maruthi car bearing registration No.GA-01/S-2677 from Goa towards Dharmasthala. At that time, near Babu Bhandary's house near Maravanthe Village, Kundapura Taluk, the driver of the said vehicle drove the same in a rash and negligent manner and suddenly applied the break. As a result, the car was capsized. On account of the same, they sustained grievous injuries. Immediately they were shifted to Adarsha Hospital, Kundapura and after taking the first aid treatment therein they were shifted to KMC Hospital, Manipal. Vasudeva Veluskar died on 05.01.2004 in the said hospital. The other occupant Imran Khan took the treatment and spent money. Hence, the legal heirs of Vasudeva Veluskar and injured Imran Khan have filed the claim petitions seeking compensation.4. In response to the claim petitions, notice was issued by the Tribunal. Respondent No.1 was placed exparte and respondent No.2 Insurance Company filed the written statement contending that petitioner in M.V.C.No.290/2004 and deceased in M.V.C.No.291/2004 were the gratuitous passengers in the vehicle and the owner of the said vehicle, i.e. respondent No.1 has violated the conditions of the insurance policy. Hence, the Insurance Company is not liable to pay the compensation.5. The claimant in M.V.C.No.290/2004 in order to substantiate his claim examined himself as P.W.1 and got marked the documents at Exs.P.1 to 13. Wife of the deceased Vasudeva Veluskar in M.V.C.No.291/2004 examined herself as P.W.1 and got marked the documents at Exs.P.1 to 16. The respondents got examined two witnesses as R.Ws.1 and 2 and got marked the documents at Exs.R.1 to 4 in M.V.C.No.290/2004.6. The Tribunal after considering both oral and documentary evidence placed on record, by common judgment awarded a compensation of Rs.31,200/- in M.V.C.No.290/2004 and Rs.4,48,900/- in M.V.C.No.291/2004 with interest at the rate of 6% per annum from the date of petition till the date of realization. The Tribunal fastened the liability on the owner of the vehicle and directed the insurer to pay the compensation and recover the same from the insured.7. Being aggrieved by the judgment and award of the Tribunal, the present two appeals are filed by the Insurance Company contending that the Tribunal was required to have noticed that law would not mandate coverage of risk of passengers in a private car more particularly when it is used for hire or reward. The insured has deliberately withheld the express conditions of the policy of insurance and provisions of the Motor Vehicles Act. Under these circumstances, there exists no liability on the part of the insurer to indemnify the risk of the occupants. The Tribunal was required to have noticed that when there exists no liability to pay the compensation, the question of pay and recovery would not arise for consideration.8. The learned counsel appearing for the Insurance Company reiterated the grounds urged in the appeal memo and would submit that the occupants of the car, which was a private vehicle, was used for hire and reward and the answers elicited from the mouth of the witnesses is clear that the vehicle was taken for trip. Hence, the Insurance Company is not liable to pay and recover the compensation amount.9. In support of his contentions, the learned counsel for the Insurance Company relied upon the judgments of the Apex Court in the case of NATIONAL INSURANCE CO. LTD., v. BALAKRISHNAN AND ANOTHER reported in (2013) 1 ACJ 199 and in the case of NATIONAL INSURANCE CO. LTD. v. SWARAN SINGH AND OTHERS reported in (2004) 3 SCC 297, particularly, paragraph No.102 of the judgment and would contend that under Section 149(a)(ii), the Apex Court held that the Company is not liable to pay any compensation for violation of policy conditions.10. The learned counsel also relied upon the judgment of the Hon'ble Apex Court in the case of NATIONAL INSURANCE CO. LTD. v. BALJIT KAUR AND OTHERS reported in (2004) 2 SCC 1.11. The learned counsel appearing for the Insurance Company also relied upon the judgment of the Hon'ble Apex Court in the case of ORIENTAL INSURANCE CO. LTD. v. SURENDRA NATH LOOMBA AND OTHERS reported in (2013) 1 ACJ 321, wherein it is held that the Insurance Company is liable under comprehensive/package policy but not under the Act policy and case is remitted back to the Tribunal to enable the Insurance Company to produce the policy, parties to file documents and lead evidence and to decide the liability of the Insurance Company reiterating the earlier judgment of the Apex Court in the case of Balakrishnan (supra).12. Per contra, the learned counsel for respondent No.1 in the appeal would submit that the policy was in force and the same was a comprehensive policy. Relying upon the judgment of the Hon'ble High Court of Karnataka at Gulbarga in the case of UNITED INDIA INSURANCE CO. LTD. v. KALAWATHI AND OTHERS REPORTED IN (2011) 3 ACJ 1831, the learned counsel would submit that even if the private vehicle is used in violation of the terms and conditions of the policy, the same covers the risk of the inmates of the private vehicle and the Insurance Company cannot avoid its liability on the ground that the deceased was a paid passenger. The terms in the policy, which discriminate the liability of Insurance Company for the paid inmate and gratuitous inmate are discriminatory and illegal.13. The learned counsel also relied upon the Division Bench judgment of Kerala High Court at Ernakulam in the case of ORIENTAL INSURANCE CO. LTD. v. NANI JANAKI reported in (1999) 1 ACJ 788. Referring this judgment, the learned counsel would contend that the Insurance Company is not exempted from the liability to a third party and the same is a statutory liability which cannot be taken away because of violation of condition of policy by the owner of the vehicle and the Insurance Company is entitled to recover the amount from the owner.14. The learned counsel also relied upon the judgment of the High Court of Gujarat at Ahmedabad dated 24.09.2018 passed in R/First Appeal No.521/2016. Referring this judgment the learned counsel would submit that the liability of the Insurance Company was exonerated by the Tribunal and in the appeal, the appeal was allowed by modifying the judgment of the Tribunal and directed the Insurance Company to indemnify the owner. The Insurance Company is free to agitate the issue in an appropriate proceedings against the owner, if they are under the impression that even after the above discussion, their policy does not cover the liability of the occupants of private car.15. Having heard the arguments of the learned counsel for the appellant in both the appeals and the learned counsel appearing for the respondents, the points that arise for the consideration of this Court are:(i) Whether the Tribunal has committed an error in directing the Insurance Company to pay and recover the compensation amount?(ii) What Order?Point No.(i):16. Having heard the arguments of both the learned counsel, on perusal of the grounds urged in the respective appeals and the material available on record, this Court has to consider the material on record. There is no dispute with regard to the accident and with regard to the fact that the vehicle was taken to trip by the claimant and the deceased. There is also no dispute with regard to the fact that they traveled in the car and the said car is a private car and the same is used for hire and reward. It is emerged in the evidence of the witnesses that they took the car to see the places engaging the same for hire and reward. The Insurance Company examined R.W.2 - Assistant Director of Transport, who deposed that the car is a private car and the same cannot be used for hire or reward.17. Now the question before this Court is whether the Tribunal has committed an error in directing the Insurance Company to pay and recover the compensation amount. No doubt the Tribunal has come to the conclusion that there was a breach of terms and conditions of the policy by respondent No.1 - insured and fastened the liability on the insured. However, passed an order of pay and recover the amount from the insured after making the payment.18. Before considering the question of law, first I would like to make a mention with regard to the document Ex.R.1 - policy issued by the National Insurance Company Limited. The period of insurance is from 27.02.2003 to midnight of 26.02.2004. The accident occurred on 03.01.2004 and as on the date of accident, the policy was in force. On perusal of Ex.R.1 in column 'limitation as to use', it is specifically mentioned that the policy covers use of the vehicle for any purpose other than hire or reward. Hence, it is clear that the vehicle cannot be used for hire or reward. On perusal of the schedule of premium, it is clear that an amount of Rs.500/- is collected towards third party - basic. An amount of Rs.40/- is collected towards PA to unnamed passengers number 4 and the amount is also mentioned as Rs.20,000/- per person. An amount of Rs.100/- is collected towards compulsory PA to owner-cum-driver and the coverage amount is maximum Rs.2,00,000/-. An amount of Rs.25/- is collected towards WC to employee 1.19. On perusal of the policy and schedule of premium, it is clear that an amount of Rs.40/- is collected towards PA to unnamed passengers number 4. R.W.1 - official of the Insurance Company, who has been examined before the Tribunal has not spoken anything about the payment of Rs.40/- covering the liability to PA to unnamed passengers. In the evidence of R.W.1, he categorically says that the said policy is a 'B' package policy and if the car is used for hire or reward, it amounts to violation of policy conditions. Both the injured/claimant and the deceased have paid the amount and the same was elicited in the cross- examination of P.W.1. The car is a private car and is used for hire or reward.20. In the cross-examination, nothing is elicited except the suggestion made that the policy was in force. It is suggested that both R.W.1 and R.W.2 are liable to pay the compensation and the same is denied. R.W.2 - Assistant Director of Transport in his evidence reiterates that it was a private car and the said car has to be used for personal use and for the family use and the same cannot be used for hire or reward. He was not subjected to cross-examination.21. Having perused the material on record, I have already pointed out that an amount of Rs.40/- is collected and the policy schedule is specific that it covers the risk of unnamed passengers four in number. The amount of liability is Rs.20,000/- per person. The policy issued by the Insurance Company is 'B' package policy and the same is admitted by R.W.1 and no doubt the car is used for hire and reward. There was a limitation as to use, that the policy covers the use of the vehicle for any purpose other than hire or reward. There is a clear violation of conditions of the policy as enumerated and clear bar for using of the vehicle for any purpose other than hire or reward. Hence, it amounts to violation of the policy conditions. The premium collected by the Insurance Company is in respect of four unnamed passengers and the liability is to the extent of Rs.20,000/- per person. There was a privity of contract between the insured and the Insurance Company that if any unnamed passengers are carried in the vehicle, then the Company is liable to pay the compensation amount of Rs.20,000/- per person.22. The learned counsel for the Insurance Company would submit that even if premium is collected, it is a clear breach of conditions of the policy as the vehicle is used for hire or reward. Hence, the Company is not liable to pay the compensation. The learned counsel would also submit that because of general regulations for personal coverage, the premium was collected, particularly in respect of the owner-cum-driver and also in respect of unnamed passengers. Inspite of collecting the premium, there is a fundamental breach and hence there cannot be any liability on the Insurance Company. The said contention cannot be accepted since there was a contract between the insured and the Insurance Company and law of indemnity applies. When once there was a contract of indemnity between the insured and the Insurance Company, the Company is bound to indemnify the insured to the extent of liability, which has been undertaken by the Company. Once, the premium is collected, the Insurance Company cannot blow hot and cold that liability cannot be fastened on the Insurance Company on the ground that there was a violation of policy conditions. I have already pointed out that there was a privity of contract between the insurer and the insured, hence the Insurance Company is liable to pay the compensation to the extent of liability which has been undertaken.23. The very contention of the learned counsel for the claimants that the judgments in the cases of Kalawathi (supra) and Nani Janaki (supra) are applicable to the case on hand and the Insurance Company cannot avoid the liability whether they are gratuitous inmates or paid inmates, cannot be accepted. Those two judgments are delivered in 2011 and 1999. Subsequently, the Apex Court in the judgment in the cases of Balakrishnan, Swaran Singh, Baljit Kaur and Surendra Nath Loomba (supra) has categorically held that if the policy is a comprehensive package policy, then the Insurance Company is liable to pay the compensation. In the case of Swaran Singh (supra), the Apex Court has held that if there is a breach of terms and conditions of the policy under Section 149(a)(ii), the Company is not liable to pay any compensation.24. In the case on hand also, the vehicle which was a private vehicle, was used for hire and reward and there is a specific clause in the policy that the same cannot be used for hire or reward. Hence, the contention of the claimants counsel that the judgments in the cases of Kalawathi (supra) and Nani Janaki (supra) are applicable to the case on hand, cannot be accepted. The poli
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cy is not a comprehensive policy and the same is a 'B' package policy and this Court has already pointed out that there was a privity of contract between the insured and the Insurance Company to the extent of the liability, which has been undertaken, hence the Company is liable to pay the compensation as per the premium collected to the extent of liability.25. The Hon'ble Apex Court in its judgment in the case of SURAJ MAL RAM NIWAS OIL MILLS PVT. LIMITED v. UNITED INDIA INSURANCE COMPANY LIMITED AND ANOTHER reported in (2010) 10 SCC 567, has held that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. The parties are governed by the terms of a contract of insurance which have to be strictly construed and no exception can be made on the ground of equity. Any amount beyond the sum assured for which insurance policy is undertaken, no legitimate claim can be laid by the insured. Hence, I answer point No.(i) partly affirmative.26. In view of the discussions made above, I pass the following:ORDER(i) The appeals are allowed partly.(ii) The appellant - Insurance Company is directed to pay the compensation in both the cases to the limited extent of Rs.20,000/- with interest at the rate of 6% per annum from the date of petition till realization.(iii) The insured is directed to pay the remaining compensation with interest in favour of the claimants within eight weeks from today.(iv) The amount in deposit, if any, shall be transmitted to the Tribunal to the extent of the liability and if any excess amount, be refunded in favour of the Insurance Company.(v) The Registry is directed to send the records to the concerned Tribunal, forthwith.