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Judgment
P. Sathasivam, J.—Since the appeal and Cross Objection arise against the very same award of the Motor Accidents Claims Tribunal,
Coimbatore, the same are being disposed of by the following common judgment. Aggrieved by the award of the Motor Accidents Claims Tribunal,
Coimbatore dated 10-1-94 in M.C.O.P.No. 224/90, Oriental Insurance Company, Pollachi has filed C.M.A.No. 690/94. Respondents 1 to 4 in
this appeal, claimants have filed Cross Objection No.73/95, seeking further compensation of Rs.1,00,000/-.
Heard the learned counsel for the appellant as well as contesting respondents 1 to 4.
Mr. M.B. Raghavan, learned counsel for the appellant Insurance Company, by drawing our attention to Section 95 (2) (a) of Motor Vehicles
Act, 1939 and terms and conditions of policy of insurance, namely, Ex.B-5, would contend that their liability is restricted to Rs.1,50,000/- only
and that the Tribunal committed an error in passing the entire liability on the Insurance Company which is unsustainable in law. Regarding cross
objection, it is his contention that inasmuch as the appeal is only by the Insurance Company questioning its liability, the cross objection in their
appeal by the claimants is not maintainable and liable to be dismissed. On the other hand, Mr. K. Mohan Ram, learned counsel for the respondents
1 to 4/claimants, would contend that the deceased being a third party, and in the light of valid insurance policy, the appellant insurance company is
liable to pay the entire amount and the same has been rightly granted by the Tribunal. In any event, according to him, even if the case of the
appellant is acceptable, direction may be issued for payment of the entire amount by the insurance company at the first instance with a liberty to
them to recover the same from the owner of the vehicle. In so far as the cross objection is concerned, it is stated that the compensation was
arrived at after applying proper multiplier, and the deduction of 1/4th amount towards uncertainty of life etc., cannot be sustained, accordingly the
cross objectors are entitled to a further compensation of Rs.1,00,000/-.
We have carefully considered the rival submissions.
First we shall consider the stand taken by the Insurance Company.
In terms of section 95 (2) (a) of the Motor Vehicles Act, 1939, the insurance company is obliged to satisfy the liability to an extent of
Rs.1,50,000/- in so far as goods carriage vehicle is concerned. However, it is the case of the respondents 1 to 4/claimants that inasmuch as the
insurance covers third party risk, the liability is unlimited. First we shall consider the policy of insurance which has been marked as Ex.B-5 through
R.W.1. After referring to the registration No., owner of the vehicle etc., Ex.B-5 contains the following details:
SCHEDULE OF PREMIUM IN RUPEES
B. Liability to public risk
Add:for LL to authorised non-fare paying
passengers as per ENDT, IMT-14(b) Rs240.00
Total No.of authorised non fare
paying passengers. Rs.
Limit any one passenger Rs.10000/- Rs36.00
Limit any one accident Rs.50000/-
Add:LL to paid driver and/or Cleaner/
Coolies as per ENDT.IMT-16 Rs.16.00
Add:for increased T.P.Limits under
Section 11 1(i) unlimited
Under sec.11 1(ii) Rs. Rs.
---------
292.00
---------
Add: Rs.
Less 10% Special Discount Rs.
Absolute Net Premium ''B'' Rs.
Absolute Net Premium ''A'' Rs.
Total Net Premium A +B Rs.
Net Premium Due (rounded off) 292.00
Subject to Endorsement Nos.2a,14b,16 & Warranty Printed/
Attached here to?
By pointing out the fact that in view of payment of premium of Rs.240/- towards third party risks (TPR), it is contended on the side of the
claimants that the liability of the insurance company is unlimited. On the other hand, it is the case of the insurance company that, in the absence of
payment of additional premium, the liability is to the extent of Rs.1,50,000/-. The Motor Insurance Rating Guide, which sets out the provisions
relating to the benefits under motor insurance, has defined the types of insurance policies. Though the Motor Insurance Rating Guide has not been
marked, the same was produced at the time of the argument and we have perused and considered the various clauses therein, particularly the
liability to public risk policy. In our case, the policy is a third party liability insurance policy. Learned counsel appearing for the appellant has also
brought to our notice a Division Bench judgment of this Court (P. Shanmugam and P. Thangavel, JJ) dated 14-02-2002 made in C.M.A.No.
252/95 (National Insurance Company Ltd., Kumbakonam vs. Pakkiriammal and 5 others) wherein the Bench has considered this identical
question with reference to Section 95 (1), (2) (a) of the Motor Vehicles Act, 1939. The Division Bench has extracted the relevant clauses from the
Motor Insurance Rating Guide. After referring to various types of Insurance Policies and the liability to the Public risk, the Bench has concluded
that,
As per the definitions of the three types of policies, we find that each one of them are distinct and separate. The comprehensive insurance
policy covers the following risks:
(a) Public risk including Act Liability
(b) Loss or damage to the vehicle''s risk
The Public Risk Policy indemnifies the legal liability in respect of third party accidental personal injury or property damage by the vehicle.
The Act Liability Policy covers the third party risks in a public place.
In both the policies, expressions ''legal liability for claims'' have been used and in the Act Liability Policy, a further expression ""as is necessary to
meet the requirements of section 95 of the Motor Vehicles Act, 1939"" has been included. But, none of the policies say that the liability is unlimited.
Even in reference to comprehensive policy, it says that the liability is subject to the limitation mentioned in the policy and the liability to the public
risk, including act liability. By going through the schedule of Premium, it is seen that the premium differs from the public risk and the act only liability
and the minimum premium payable for goods carrying vehicle for public risk is Rs.240/-. If there has to be additional benefit under commercial
vehicles'' tariff for a personal injury or unlimited property damage up-to Rs.3 lakhs, an additional premium of Rs.150/- is to be paid. The Note
under this additional benefit clause makes it clear that the limits of indemnity under the policy may be increased in accordance with the scale. From
the above, it is clear that the liability is limited to the extent mentioned under the Act unless and until additional premium is paid.
In our case, we have already referred to the details of payments under Ex. B-5. It is clear that as per policy-Ex.B-5, the owner has paid the
minimum bonus for third party risks plus Rs.16/- for paid driver and cleaner, but he has not paid additional amount for increased T.P.limits. As
rightly contended by the learned counsel for the Insurance company, if the owner had to get an unlimited legal liability, he should have paid extra
premium, which has not been done in our case. Earlier the Division Bench after considering a decision of the Supreme Court in NATIONAL
INSURANCE COMPANY LIMITED Vs. JUGAL KISHORE [A.I.R. 1998 S.C. 719], earlier Division Bench decision of this Court in New
India Assurance Co. Ltd. Vs. V.K. Chandra and Others, , and another Division Bench decision in Oriental Insurance Co. Ltd. Vs. Jalaja and
Others, held that the insurance company is not liable to pay anything more than the amount limited in the statute unless the policy contains a
different provision. In New India Assurance Co. Ltd. Vs. Smt. Shanti Bai and others, , the Supreme Court, after referring to Section 95 of the
Act, held as follows:
Comprehensive insurance of the vehicle and payment of higher premium on this score, however, does not mean that the limit of 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.
It is clear from the above decision that even the comprehensive policy does not automatically result in covering the liability of third party risk for the
amount higher than the statutory limit. Similar view has been expressed by a Division Bench of this Court in NEW INDIA ASSURANCE
COMPANY LIMITED Vs. R.K. GEETHA AND ANOTHER [Vol.I (1999) A.C.C. 535]. In National Insurance Co. Ltd. Vs. Nathilal and
Others, , the Hon''ble Supreme Court has held that in the absence of payment of any special premium for the purpose of unlimited liability, it is
presumed that the terms of the policy were limited to Rs.1,50,000/-. Apart from the above decisions, learned counsel for the appellant has also
relied on a decision of this Court in NATIONAL INSURANCE COMPANY LIMITED, ERODE v. BOOPATHI alias
VENKATACHALAPATHY [1999 2 M.L.J. 653] wherein one of us (P. Sathasivam, J.), after following the Division Bench decision in New
India Assurance Co. Ltd. Vs. V.K. Chandra and Others, held that u/s 95 (2) (b) of the Motor Vehicles Act, 1939, the insurance company is not
liable to pay anything more than the amount limited by the Statute unless the policy contains a different provision. In that case, after referring to
Ex.R-1 policy of insurance, it is held that the liability of the insurance company is restricted to Rs.1,50,000/- only. We are in agreement with the
said conclusion.
Mr.K. Mohan Ram, learned counsel for the respondents 1 to 4/claimants, would contend that in the event of taking a decision that in terms of
Ex.B-5, the liability of the insurance company is limited to Rs.1,50,000/-, they may be directed to pay the entire amount as awarded to the
claimants with a right to recover from the insured the excess amount over and above covered under the policy. In support of his claim, he very
much relied on a decision of the Supreme Court in Oriental Insurance Co. Ltd. Vs. Cheruvakkara Nafeessu and Others, wherein Their Lordships
have held that the insurance company is liable to pay the entire award amount to the claimants. They further held that upon making such payment,
the insurance company can recover the excess amount from the insured by executing the award against the insured to the extent of such excess as
per Section 174 of the Motor Vehicles Act, 1988. By relying upon the above judgment, learned counsel for the respondents 1 to 4 prayed for
necessary direction to the insurance company to pay the entire liability. In this regard, learned counsel for the appellant pressed into service a
recent judgment of the Constitution Bench of the Supreme Court in New India Assurance Co. Ltd. Vs. C.M. Jaya and Others, . After considering
2,3 Judges Bench decisions of the Supreme Court, namely, New India Assurance Co. Ltd. Vs. Smt. Shanti Bai and others, and Amrit Lal Sood
and Another Vs. Smt. Kaushalya Devi Thapar and Others, , Their Lordships have concluded as follows: (para 11)
In the premise, we hold that the view expressed by the Bench of the three learned Judges in the case of New India Assurance Co. Ltd. Vs.
Smt. Shanti Bai and others, , is correct and answer the question set out in the order of reference in the beginning as under:
In the case of insurance company not taking any higher liability by accepting a higher premium for payment of compensation to a third party, the
insurer would be liable to the extent limited u/s 95 (2) of the Act and would not be liable to pay the entire amount.
In the light of the principle laid down by the Constitution Bench in the above judgment, we hold that the liability of the insurance company is limited
to Rs.1,50,000/-, and the insured is bound to pay the remaining amount of compensation. It is also relevant to note that similar contention was
raised before the Division Bench of this Court in C.M.A.No. 252/95 dated 14-02-2002 (cited supra). There also the Division Bench, in the light
of the Constitution Bench of the Supreme Court in 2002 AIR S.C.W. 259 (cited supra), arrived a similar conclusion that in the case of insurance
company not taking any higher liability by accepting a higher premium for payment of compensation to the third party, the insurer would be liable to
the extent limited u/s 92 of the Act and would not be liable to pay the entire amount. The said view of the Division Bench of this Court and the
present view of us are in consonance with the view expressed by the Constitution Bench of the Supreme Court. Accordingly, in view of the fact
that higher premium had not been paid for unlimited liability for payment of compensation to third party, we hold that the liability of the appellant-
insurer is limited to Rs.1,50,000/- and the insured is liable to pay the remaining amount of compensation.
Even at the outset, learned counsel appearing for the appellant insurance company pointed out that inasmuch as they are questioning their
liability, the Cross Objection by the claimants in this appeal is not maintainable. In support of the above contention regarding maintainability of the
Memorandum of Cross Objection, the insurance company relied on a Division Bench decision of this Court in United India Insurance Co. Ltd. Vs.
M.R. Subramanian and Another, . In that decision, it was pointed out that since the appeal is confined to the liability of the insurance company and
in that appeal the claimant cannot make a claim for enhancement, which is really directed against the owner of the vehicle who is a co-respondent
in the appeal. After referring to the earlier Division Bench decision of this Court in UNITED INDIA INSURANCE COMPANY LTD., v.
RAJAMMAL [ 1993 A.C.J 486 (Mad)], and after expressing their agreement with the decision arrived at therein, the Division Bench has held that
the memorandum of cross objection is not maintainable and dismissed the same. In the light of the said contention, we have carefully considered
the facts in the decision of the Division Bench referred to above and various grounds raised in this appeal. As rightly pointed out by Mr. K. Mohan
Ram, learned counsel for cross objectors, though the insurance company has mainly contended their limited liability in terms of Section 92 (2) of
the Motor Vehicles Act, 1939, a perusal of their grounds of appeal shows that they challenged the entire award of compensation, including
interest, as directed by the Tribunal and after arriving the value of the appeal, paid court-fee for the entire amount. It is clear that the entire amount
as awarded by the Tribunal including interest and costs are being questioned in this appeal. In this regard, it is relevant to refer a decision of the
Supreme Court in M/s. Bihar Supply Syndicate Vs. Asiatic Navigation and others, . In the said decision, Their Lordships, after referring to Order
41 Rule 33, Civil Procedure Code, have observed thus: (para 29)
Really speaking the Rule is in three parts. The first part confers on the appellate Court very wide powers to pass such orders in appeal as the
case may require. The second part contemplates that this wide power will be exercised by the appellate Court notwithstanding that the appeal is as
to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not
have filed any appeal or objection. The third part is where there have been decrees in cross-suits or where two or more decrees are passed in one
suit, this power is directed to be exercised in respect of all or any of the decrees, although an appeal may not have been filed against such
decrees.
In the light of the decision of the Supreme Court, more particularly in view of the fact that the entire amount is being questioned in the memorandum
of appeal by paying requisite court-fee (though in the argument they confined to their liability to the extent of Section 92 (2) of the Motor Vehicles
Act, 1939), in view of the peculiar circumstances of the case, we hold that the present cross objection is maintainable and we intend to consider
the merits of the same in the subsequent paragraph.
Now we shall consider the cross objection No.735 filed by respondents 1 to 4 herein seeking a further compensation of Rs.1,00,000/- in
addition to the amount awarded by the Tribunal. Since in the cross appeal the cross objectors restricted their claim to the extent of Rs.1,00,000/-,
the only issue to be considered in the cross appeal is whether they (cross objectors) are entitled to a further compensation of Rs.1,00,000/- as
claimed. It is seen from the evidence of P.W.1, second claimant that at the time of the accident, the deceased father was aged about 58 years and
at the relevant time, he was working as an Adviser in textile mills. He further deposed that his father secured decree in textiles in the United States
and on the date of retirement in 1987 he was getting Rs.15,000/-p.m. According to him, even after his retirement, he was employed as the Adviser
in Narasimma Mill and was getting sizeable income. Though the claimants have produced acceptable documentary evidence in respect of his
avocation, income, payment of income tax etc., taking note of all the aspects including the fact that the second claimant (P.W.1) and third claimant
are earning members, the Tribunal arrived an amount of Rs.7,750/- as his monthly income and Rs.93,000/- as his annual income and after
deducting a portion towards his personal expenses, it arrived a conclusion that he would contribute at least Rs.6,000/- per month to his family and
annual contribution would be Rs.72,000/-. Based on the evidence of P.W.1 and upon the reference made in the post-mortem certificate-Ex.P-7,
the Tribunal fixed the age of the deceased as 58 years which is acceptable. After holding that but for the accident, the deceased Chandrasekaran
would live up-to the age of 65, multiplied the same by multiplier of 7 and arrived an amount of Rs.5,04,000/-. From and out of the said amount,
the Tribunal deducted 1/4th towards uncertainty of life and arrived an amount of Rs.3,78,000/- as loss caused to the claimants. After adding a sum
of Rs.15,000/- towards loss of love and affection, mental agony etc., Rs.25,000/- towards damage to his vehicle and other belongings, passed an
award for Rs.04,18,000/-. Considering the fact that the deceased was aged about 58 years on the date of the accident, in the light of his
educational qualification and of the fact that even after retirement he was working as Adviser to many textile mills, we are of the view that as rightly
observed by the Tribunal, undoubtedly, he would contribute at least Rs.6,000/- per month to his family till 65 years. Likewise, the application of 7
years multiplier for arriving a pecuniary loss to the family is also quite reasonable. As stated earlier, it is to be noted that even on the date of filing of
the claim petition, the claimants 2 and 3 were not depending on the deceased. However, as rightly contended by the learned counsel for the cross
objectors, having applied multiplier method and selecting proper multiplier, namely, 7, the Tribunal is not justified in deducting 1/4th of the amount
towards uncertainty of life. We have already referred to the fact that the Tribunal after fixing that the deceased would earn Rs.7,750/-, deducted a
portion towards his personal expense and arrived Rs.6,000/-per month as his contribution to his family. When multiplier is adopted, there is no
need to deduct amount towards uncertainty. In this regard, it is useful to note a Division Bench decision of this Court in VIJAYALAKSHMI, C. &
ANOTHER v. N. SIVA BAGIYAM 7 ANOTHER [1996 2 L.W. 238]. In that decision, while determining the amount by applying multiplier
method, speaking for the Bench, one of us (P. Sathasivam, J) has held that if proper multiplier and multiplicant is applied and the same is
reasonable, there is no need to deduct any amount towards uncertainty of life and lump sum payment. Since the Tribunal in our case selected
proper multiplier and fixed acceptable multiplicant, as stated in the Division Bench decision, there is no need to deduct 1/4th towards uncertainty of
life. In such a circumstance, we hold that the Tribunal committed an error in allowing a deduction of 1/4th of the amount towards uncertainty of life.
We set aside the said order of the Tribunal. Inasmuch as the deducted amount towards uncertainty of life is Rs.1,26,000/-, and in view of our
conclusion, we hold that the claimants are entitled to the said amount, however, in the cross objection, they are claiming Rs.1,00,000/- only, hence
we grant the same as claimed.
In the light of what is stated above, we pass the following order:
(i) The award of compensation of Rs.4,18,000/- fixed by the Tribunal is enhanced to Rs.5,18,000/- (Rs.4,18,000 + Rs.1,00,000) with interest at
9 per cent per annum (for the enhanced amount) from the date of petition till date of payment;
(ii) Out of the said amount of Rs.5,18,000/-, the liability of the appellant-Insurance Company is limited to Rs.1,50,000/- in terms of Ex. B-5-
Insurance policy;
(iii) The insured of the vehicle-lorry/ R.Marimuthu/5th respondent herein, is liable to pay the balance amount over and above Rs.1,50,000/- to the
claimants.
(iv) The first respondent herein - C. Santhamani, wife of the deceased Chandrasekar is entitled to the enhanced compensation as ordered above.
The Civil Miscellaneous Appeal as well as the Cross Objection are allowed to the extent mentioned above. No costs.