New India Assurance Co. Ltd. vs Sky Highways (Pvt.) Ltd. and Others

T.H.B. Chalapathi, J.—This appeal is filed by the Insurance Company against the judgment in FAO No. 716 of 1985 dated May 19,1995.

The only point that was urged by the appellant is that the liability of the Insurance Company should be limited to Rs. 15,000/- as the claimant was only a passenger in the bus. There is no dispute that the claimant-child who was 3% years old at the time of the accident, sustained a serious injury in the accident that took place on 6.4.1984 at about 10 a.m. near the bus stop at village Sidhwan in Gurdasur district. As he fell of the bus, his legs were run over by the rear wheel of the bus. Both the Tribunal as well as the learned Single Judge on the basis of the evidence on record found that the accident occurred due to rash and negligent driving on the part of the driver of the bus.

On a consideration of the evidence on record we do not find any grounds warranting interference with the findings arrived at by the Tribunal and the learned Single Judge. The Tribunal awarded a sum of Rs. 50,000/ - as compensation for the injuries sustained by the claimant who was only 3 1/2 years old at the time of the accident. The learned Single Judge confirmed the amount of compensation. The owner of the bus did not file any appeal. It is the Insurance Company which filed the appeal. There is no dispute that the Insurance Company in the absence of appeal by the owner of the vehicle cannot question the quantum of compensation awarded to the injured.

The only point that was urged before us was that the liability of the Insurance Company should be limited to Rs. 15,000/- under the provisions of the Motor Vehicles Act, 1939. The accident took place on 6.4.1984. There is no dispute that at the time of the accident the liability of the Insurance Company under the provisions of the Motor Vehicles Act, 1939 was limited to Rs. 15,000/-. Therefore, the learned Counsel for the Insurance Company urged that the liability of the Insurance Company has to be restricted to the extent of Rs. 15,000/ - but not to the extent of Rs. 50,000/- as awarded by the Tribunal and confirmed by the learned Single Judge.

Exhibit R-1 is the Policy. It is specifically mentioned in the Policy that the liability of the Insurance Company extends to such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939. As already observed the liability of the Insurance Company at the time of the accident was only limited to Rs. 15,000/- per passenger. It is, therefore, to be seen whether the liability of the Insurance Company is limited to Rs. 15,000/-.

6 In Sheikhupura Transport Company Ltd. v. Northern India Transporters'' Insurance Co. Ltd. 1971 A.C.J. 206, the Apex Court held as follows:

The opening words of this clause "Subject to the limit of liability of the company" evidently refer to the limit prescribed u/s 95(2)(b) of the Motor Vehicles Act. No clause in the insurance policy specifically providing for the payment of any amount higher than that fixed u/s 95(2)(b) was brought to our notice. The clause dealing with avoidance of certain terms and the right of recovery reads:

Nothing in this policy or any endorsement thereon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act 1939, Section 96.

This clause make it abundantly clear that the extent of the right of the person indemnified is as prescribed in Section 96 of the Motor Vehicles Act. Under the provision the amount to be recovered is that covered by Clause (b) of Sub-section (1) of Section 95. Clause (b) of Section 95(1) says:

In order to comply with the requirement of this Chapter, a policy of insurance must be a policy which:

(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the Vehicle in a public place". Reading all these provisions together, "It is clear that the statutory liability bf the insurer to indemnify the insured is as prescribed in Section 95(2). Hence the High Court was right in its conclusion that the liability of the insurer in the present case extends upto Rs. 2,000/- each in the case of Bachan Singh and Narinder Singh.

In National Insurance Co. Ltd. v. Jugal Kishore and Ors. 1988 A.C.J. 270, the Supreme Court held as follows:

In the instant case, the appellant is not seeking to avoid its liability but wants a determination of the extent of its liability which is to be determined in the absence of any contract to the contrary in accordance with the statutory provision contained in this behalf in Clause (B) of Sub-section (2) of Section 95 of the Act. In the instant case, since as seen above, the appellant did not undertake in the policy and liability in excess of the statutory liability the award against it could be only in accordance with the said statutory liability.

The same view was taken in The New India Assurance Co. Ltd. v. Smt. Shanti Bai and Ors. 1995 (2) P.L.R. 102, wherein it has been held as follows:

In the present case, the premium which has been paid is at the rate of Rs. 12/-per passenger and is clearly referable to the statutory liability of fifteen thousand rupees per passenger u/s 95(2)(b)(ii) of the Motor Vehicles Act, 1939. In the present case, there is no special contract between the appellant Company and respondent No. 4 to cover unlimited liability in respect of an accident to a passenger. In the absence of such an express agreement, the policy covers only the statutory liability. The mere fact that the insurance policy is a comprehensive policy will net help the respondents in any manner. As pointed out by the Court in the case of National Insurance Co. Ltd. v. Jugal Kishore and Ors. (supra) comprehensive policy only entitled the cover to claim reimbursement of the entire amount of loss or damage suffered upto the estimated value of the vehicles. It does not mean that the limit of liability with regard to third party risk becomes unlimited or higher than the statutory liability. For this purpose, a specific agreement is necessary which is absent in the present case.

In view of the binding decisions of the Supreme Court, we are of the opinion that the liability of the Insurance Company is restricted to the statutory liability i.e. an amount of Rs. 15,000/-. Therefore, the liability of the Insurance Company is limited upto Rs. 15,000/-per passenger. However, the accident took place in the year 1984 in which a small child of 3V6 years suffered an injury to his legs. By the interim order of this Court dated August 14,1986, the claimants wee allowed to withdraw the amount deposited by the Insurance Company. We were accordingly told by the Counsel that the amount has been withdrawn by the claimants. Since a period of more than 10 years has elapsed, we find it unjust to direct the claimants to repay or refund the same at this point of time. The liability of the owner of the vehicle is not under challenge. The Insurance Company is only liable to reimburse the amount of the loss of the owner of the vehicle upto Rs. 15,000/- as indicated above. When the Insurance Company paid the amount to the claimants, the Insurance Company is at liberty to recover the excess amount paid by it to the claimants from the owner of the vehicle. We, therefore, while allowing the appeal of the Insurance Company direct the owner of the bus to repay or refund the excess amount to the Insurance Company as the liability of the owner of the vehicle to pay the amount ofcompensationof Rs. 50,000/- is not challenged. Thus the Insurance Company can only recover the excess amount from the owner of the vehicle, but not from the claimants.

The appeal is, accordingly, allowed in terms of the above directions. There will be no order as to costs.