New India Assurance Company Ltd. vs R.K. Geetha and Another

P. Sathasivam, J.—Aggrieved by the Award of the Motor Accident Claims Tribunal, Madras, in M.A.C.T.O.P. No. 1641 of 1986, New

India Assurance Company Limited, Madras-2, has filed the above appeal questioning its liability.

First respondent herein/claimant therein filed the said claim application, claiming a sum of Rs. 2 lakhs for the injuries sustained by her in an

accident which took place on 26.4.1986 at about 2.45 p.m. After considering the oral and documentary evidence and after holding that the

accident was caused due to the negligence of the driver of the first respondent therein and after finding that the Insurance Company is liable to

indemnify the owner, passed an award of Rs. 1,67,750 in favour of the petitioner and directed the insured as well as the insurer to pay the same.

Aggrieved by the said award, the Insurance Company alone has filed the present appeal questioning its liability.

Heard the learned Counsel for the appellant as well as first respondent.

Mr. K.S. Narasimhan, learned Counsel for the appellant, even at the outset would contend that in the light of Ex.P-1, Insurance Policy, the

liability of the Insurance Company is restricted to Rs. 50,000 only, more particularly, under the terms and conditions of the policy as well as under

Motor Vehicles Act. He further contended that the liability of the Insurance Company is determined on the basis of the premium paid arid the

tribunal failed to appreciate the evidence of R. W. 1 an officer of the Insurance Company. On the other hand, Mr. R.N. Kothandaraman, learned

Counsel for the 2nd respondent/claimant has contended that the policy in question is a comprehensive one; accordingly, it is the duty of the

Insurance Company to pay the entire claim of the third party. Even on the face of Ex.R-1, the Insurance Company is not permitted to repudiate the

contract of insurance which was very well alive on the date of the accident.

I have carefully considered the rival submissions.

In view of the limited questions involved, namely, the liability of the Insurance Company, it is unnecessary to refer negligence and quantum

aspects.

It is seen from the records that on 26.4.1986 at about 2.45 p.m., while the claimant was travelling as a pillion-rider in a scooter bearing

Registration No. TME. 5262 near Central Excise Department, Nungambakkam High Road, the van TMI. 2939 belonging to the second

respondent herein driven by its driver in a rash and negligent manner and dashed against the scooter, thereby both the rider and pillion-rider

sustained grievous injuries. For the injuries sustained by her, medical expenses and for other expenses, she claimed a sum of Rs. 2 lakhs as

compensation. In the light of the evidence let in the tribunal passed an award of Rs. 1,67,750 with interest at 12 per cent against both the

respondents.

In support of the plea of the Insurance Company, Mr. K.S.Narasimhan very much relied on the evidence of one Sooryanarayana as R.W.1, an

officer of the Insurance Company and Exs.R-1 to R-3. Ex.R-1 is a policy and Ex.R-2 is the certificate of insurance (Cover note) and Ex.R-3 is the

schedule of rates. It is the case of the Insurance Company that the owner of the vehicle has taken a policy for limited liability and paid a sum of Rs.

120 as per the provisions of the Motor Vehicles Act. In other words, according to the learned Counsel for the appellant, in the absence of

payment of extra premium, the insurance coverage is restricted to Rs. 50,000 only. As per Section 95(2) of the Motor Vehicles Act, the liability of

the Insurance Company is restricted to Rs. 50,000 only. The perusal of the said policy shows that even though the owner had paid premium for

own damage and for flood, earth-quake etc., he has not paid any extra premium to cover the entire compensation being awarded by the tribunal. It

is also brought to my notice the schedule of rates Ex.R-3 wherein it is clear that on payment of a sum of Rs. 120 the insurance coverage is

restricted only upto Rs. 50,000. Exs.R-1, R-2 and R-3 support the defence taken by the Insurance Company.

Apart from the above documents, one Sooryanarayana, an officer of the Insurance Company was examined as R.W. 1. He explained the details

regarding the policy taken by the owner and the premium paid by him. After explaining those details in the chief-examination, he has concluded

However, Mr. Kothandaraman, by pointing out Section 2 and liability to third parties in the policy Ex.R-1 has argued that the Insurance Company

has indemnified the insured against all sums including claimant''s cost and expenses. The perusal of the Schedule of premium policy Ex.R-1 shows

that the said payment is subject to the limits of liability. The perusal of the policy shows that even though the owner has taken a comprehensive

premium, for third party risk, he had paid only Rs. 120 accordingly as per the terms and conditions of the policy as well as the provisions of the

Motor Vehicles Act and also of the fact that the vehicle involved is a tourist taxi, their liability is restricted to Rs. 50,000 at the relevant time. This is

clear from Exs.R-1 to R-3 as well as the evidence of R.W. 1.

Apart from the above factual and legal position, the learned Counsel for the appellant very much relied on a Division Bench decision of this

Court reported in Oriental Insurance Co. Ltd. Vs. Jalaja and Others, . After considering similar policy of insurance. Their Lordships in the said

decision have concluded as follows:

...The policy does not mention any specific amount. The limitation clause merely refers to the Act and says that such amount as is necessary to

meet the requirements of the Act. When that is the relevant clause, we have no doubt whatever about the genuineness of the copy of the policy

produced by the company. This is the general form used by the company in the case of all persons who take insurance. It is not the suggestion of

the claimants that the form itself is fabricated for the purpose of this case. The limitation clause is in printed portion of the form. It is not as if it is

handwritten or typewritten. In these circumstances, we differ from the view taken by the tribunal and hold that Ex.B-1 is a true copy of the policy.

It has been held in New India Assurance Co. Ltd. Vs. V.K. Chandra and Others, that u/s 95(2)(b) of the Act, the Insurance Company is not liable

to pay anything more than the amount limited by the statute unless the policy contains a different provision. We agree with the view taken by the

Bench and hold in this case that the statutory liability at Rs. 1,50,000 is applicable and consequently the Insurance Company is liable to pay only

Rs. 1,50,000 out of the award amount.

Since the liability of the Insurance Company is limited to Rs. 1,50,000 in that case, their Lordships have modified the award to an extent of Rs.

1,50,000 only. In our case also, in Ex.R-1 it is specifically mentioned as follows:

Limits of Liability: (a) Limit of the amount of the company''s liability u/s 11-1(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 11-1 (ii) in respect of any one claim or series of claims arising out of one event: Rs. 50,000.

As stated earlier, similar clause of liability was considered by the Division Bench, accordingly the principle laid down in that decision directly

supports the case of the Insurance Company.

In the case of National Insurance Co. Ltd. v. Jugal Kishore 1988 A.C.J. 270, the Hon''ble Supreme Court after referring to Section 95 of the

Act as well as schedule to the policy, has held that the Insurance Company is liable to pay to the extent of its liability which is to be determined in

accordance with the statutory provisions contained in Clause (b) of Sub-section (2) of Section 95 of the Act. The following observation of their

Lordships is very relevant:

...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 said decision of the Apex Court also supports the stand of the appellant. In Oriental Fire and General Insurance Co. Ltd. Vs. Poompavai and

others, , another Division Bench of this Court, after considering Section 95(2)(a) of the Act as well as ""comprehensive policy"", ""legal liability"" and

statutory minimum liability"" came to the conclusion that ""thus a due consideration of the terms of the policy and the relevant provisions of the Act,

no liability in excess of Rs. 50,000 in each upon the appellant Insurance Company...

In United India Insurance Co. Ltd. Vs. M.R. Subramanian and Another, , another Division Bench of this Court once again while considering

Section 95(2)(b) of the Act as well as earlier decisions on this point, expressed that the liability of the Insurance Company cannot be fastened

more than the amount mentioned in the statute.

In New India Assurance Co. Ltd. Vs. Smt. Shanti Bai and others, , three Judges Bench of the Hon''ble Supreme Court after referring to

Section 95 of the Act has observed thus:

These were the provisions at the relevant time. These provisions were interpreted by this Court in the case of National Insurance Co. Ltd. v. Jugal

Kishore 1988 A.C.J. 27 . This Court observed that even though it is not permissible to use a vehicle unless it is covered at least under an ""Act

only"" policy, it is not obligatory for the owner of a vehicle to get it comprehensively insured, In case, however, it is got comprehensively insured, a

higher premium is payable depending on the estimated value of the vehicle. Such insurance entitles the owner to claim reimbursement of the entire

amount of loss or damage suffered upto the estimated value of the vehicle calculated according to the rules and regulations framed in this behalf. It

has further observed as under:

Comprehensive insurance of the vehicle and payment of higher premium on this score, however, does not mean that the limit of the liability with

regard to third party risk becomes unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act. For this

purpose a specific agreement has to be arrived at between the owner and the Insurance Company and separate premium has to be paid on the

amount of liability undertaken by the Insurance Company in this behalf.

In the present case, therefore, a comprehensive policy which has been issued on the basis of the estimated value of the vehicle of Rs. 2,50,000

does not automatically result in covering the liability with regard third party risk for an amount higher than the statutory limit.

The above mentioned series of decisions both from this Court as well as the Apex Court clearly show that, in the absence of any additional

payment of premium, the liability of the Insurance Company is limited to the extent mentioned in the Act. If that is so, the vehicle involved being a

tourist taxi and in the absence of any extra premium, the liability of the Insurance Company is restricted to Rs. 50,000. No doubt, Mr. R.N.

Kothandaraman, learned Counsel for first respondent, by referring to the very same insurance policy, vehemently contended that it is a

comprehensive policy and in the absence of any limit, the Insurance Company is liable to pay the entire compensation awarded by the tribunal.

After going through the insurance policy, certificate of insurance and schedule of rates and Section 95(2)(b) of the Act as well as various decisions

of this Court and Supreme Court on this point, I am unable to accept the said contention. As stated earlier, R. W. 1, an officer of the Insurance

Company has also explained the amounts paid by the owner of the vehicle and the coverage of the Insurance Company.

In the light of what is stated above, the conclusion arrived at by the tribunal in so far as against the appellant/Insurance Company cannot be

sustained; accordingly the liability of the Insurance Company is restricted to Rs. 50,000 only. The award of the tribunal is modified to the extent

only and appeal is confirmed in all other respects. Net result, the C.M.A. is allowed, No costs.