National Insurance Co. Ltd. vs Kalai Selvi and others

Srinivasan, J.—The appellant is the insurance company. The only question raised by the appellant refers to the limit of the liability of the

insurance company. The compensation awarded by the Tribunal is Rs. 1,85,000. According to the insurance company, the liability of the

companies restricted to Rs. 1,50,000. It produced the certificate of insurance (exhibit B-4) for the vehicle in question for the relevant period. The

Tribunal on a construction of the clause in exhibit B-4 rejected the contention of the appellant and passed an award against the appellant and that

owner of the vehicle for the entire amount jointly and severally.

The relevant provision in exhibit B-4 reads thus :

I/we hereby certify that the policy to which this certificate relates as well as this certificate of insurance are issued in accordance with the

provisions of Chapter VII-A and VIII of the Motor Vehicles Act, 1939.

According to learned counsel for the appellant, when the insurance is effected in accordance with the provisions of Chapter VII-A and Chapter

VIII of the Motor Vehicles Act, 1939, it means that the limits prescribed in the Act are automatically applicable. It is also submitted by her that no

additional premium has been paid for the increase in the liability to third parties. It is seen from exhibit B-4 that a sum of Rs. 16 has been paid as

additional premium for limited liability to be paid to driver and/or cleaner as per END IMT. 16.

RW-2 is the official of the appellant-company. He has spoken to the fact that the maximum liability for the appellant under the policy is only Rs.

1,50,000 and no additional premium has been paid for the purpose of increasing the liability to third parties. In cross-examination it has been

elicited from him that the additional sum of Rs. 16 is only for the purpose of the limited liability to driver and/or cleaner. According to him, there are

three kinds of policies. (1) Act policy, (2) comprehensive policy, and (3) public risk or third party policy. It is stated by him that the policy in this

case is a third party policy and no an Act policy. It is suggested to him that the liability is not expressly restricted to Rs. 1,50,000. A question was

put to him that according to the Indian Motor Tariff it is sufficient if a sum of Rs. 200 is paid as premium for Act policies. he has denied knowledge

of the same. In answer to another suggestion whether according to the Indian Motor Tariff if only a sum of Rs. 40 is paid the liability of the

insurance company with reference to third parties unlimited, he has denied that suggestion.

Section Motor Vehicles Act, 1939 of the Motor Vehicles Act, 1939, prescribes the requirements or a policy of insurance. The clause reads as

follows :

(2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the

following limits, namely -

(a) where the vehicle is a goods vehicle, a limit of one lakh and fifty thousand rupees in all, including the liabilities, of any, arising under the

Workmen''s Compensation Act, 1923 (8 of 1932), in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding

six in number, being carried in the vehicle.

There is no dispute that in this case the vehicle is a goods vehicle. Thus the section requires that the limit for the policy should be at least Rs.

1,50,000. According to learned counsel, when the certificate of insurance states that the policy is in accordance with the provisions of the Act it

means that the liability is restricted to Rs. 1,50,000. She prayed for a direction to the owner of the vehicle to produce the original policy which is

with the owner. Though we are not inclined to grant such a prayer at the instance of the appellant, learned counsel appearing for the owner of the

vehicle who is the fourth respondent in this appeal, has produced the original policy before us. The document is absolutely necessary for a just and

proper disposal of the appeal. Hence the document is accepted as additional evidence and marked as exhibit B-5. The relevant clause therein

dealing with the limits of liability read as follows :

Limits of liability. - (a) Limits of the amount of the company''s liability u/s II-1(i) in respect of any one accident. Such amount as is necessary to

meet the requirements of the Motor Vehicles Act, 1939.

(b) Limits of the amount of the company''s liability u/s 11-(ii) in respect of any one claim or series of claims arising out of one event Rs. 50,000.

There is no ambiguity whatever in the said clause. It says that the limit of the liability of the insurance company is such amount as it is necessary

of meet the requirements of the Motor Vehicles Act, 1939. We have already referred to section 95(2)(a) of the Motor Vehicles Act, 1939,

according or which the requirement is Rs. 1,50,000.

The same expression came up for consideration before a Division Bench of this court in United India Insurance Co. Ltd., v. Kandan [1992]

TLNJ 48. After referring to the said clause, the Division Bench placed reliance on the judgment of Supreme Court in National Insurance Co. Ltd.,

New Delhi Vs. Jugal Kishore and Others, and held that the liability of the insurance company is restricted to Rs. 1,50,000 as the relevant clause

meant only that the requirement of the Act shall be satisfied and nothing more than that. We are entirely in agreement with the view taken by the

Division Bench.

It is argued by learned counsel for the respondents that a sum of Rs. 16 has been paid as additional premium for increase in the limits of liability

with reference to third parties and not for driver and/or cleaner as contended by the appellant. There is no merit in this contention. No doubt, in the

policy the figure ""16"" is not typed exactly as against the relevant column provided on the left hand side relating to driver and or cleaner. But in the

certificate of insurance, the figure is typed clearly against the column for limited liability to be paid to driver and/or cleaner. Apart from that we have

the specific evidence of RW-2 that the additional premium is only with reference to limited liability to the driver and/or cleaner and not for increase

in limits to third parties. There is no evidence contra. RW-1 is the son of the owner of the vehicle. He has not spoke even a word about either the

policy or the unlimited liability of the insurance company. When the insurance company has raised a specific plea in the counter statement to the

effect that its liability is limited to Rs. 1,50,000 only, it is the duty of the owner of the vehicle to have filed a pleading on his behalf and also given

evidence to the effect that the liability is unlimited. He had not done either in this case.

The Tribunal has erroneously taken the view that there was no plea in the counter statement filed by the insurance company that the liability

was limited to Rs. 1,50,000. The Tribunal has overlooked the specific plea in paragraph 5 of the counter-statement filed by the insurance

company. That paragraph read thus :

This respondent is not at all liable for the claim under the circumstances of the case. If at all the claim is proved by the petitioner against this

respondent the liability of this respondent is only to the extent of Rs. 1,50,000 as per policy details. Even such amount of Rs. 1,50,000 by way of

compensation for loss of life of the deceased is highly excessive.

When the pleading of the insurance company is supported by the evidence of RW-2, we do not find any justification whatever to reject the

same. The Tribunal is also in error in thinking that the liability is unlimited in the case of third parties overlooking the specific clause contained in the

certificate of insurance, exhibit B-4, that the insurance will have effect, in accordance with the Act. The position is now made clear further by the

original policy itself which has been produced before us and marked as exhibit B-5.

In the circumstances, the award passed by the Tribunal as against the appellant with reference to the entire amount awarded is erroneous. The

appellant is liable to pay only a sum of Rs. 1,50,000 from the total amount of Rs. 1,85,000. The appeal is accordingly allowed and the award of

the Tribunal is modified accordingly. The award passed by the Tribunal as against the owner of the vehicle who is the fourth respondent remains

untouched. The parties will bear their respective cots in this appeal.