National Insurance Co Ltd vs Smt. Shanta Kesarawani And Ors
2013 Latest Caselaw 4992 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
LUCKNOW BENCH, LUCKNOW
 
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Court No. - 5
 

 
Case :- FIRST APPEAL FROM ORDER No. - 98 of 1995
 

 
Appellant :- National Insurance Co Ltd
 
Respondent :- Smt. Shanta Kesarawani And Ors
 
Counsel for Appellant :- R.C .Sharma
 
Counsel for Respondent :- P.C.Agarwal,Mohd.Nihat,R.S.Pandey,S.P.Yadav,V.Achariya
 
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Hon'ble Ritu Raj Awasthi,J.

Heard Mr. R.C. Sharma, learned counsel for appellant as well as Mr. P.C. Agarwal, learned counsel for respondents and perused the record.

This First Appeal From Order has been filed under Section 173 Motor Vehicles Act, 1988 against the judgment and award dated 30.1.1994 passed by Motor Accident Claims Tribunal awarding Rs. 5,00,000/- as compensation along with half of the total interest @ 10% per annum from the date of petition till the payment to respondents 1 to 6 against the present appellant as well as respondent nos. 7 & 10 jointly and severally in Claim Petition No. 66 of 1988; Smt. Shanta Kesarwani and Ors. Vs. National Insurance Cot. Ltd. and Others.

Learned counsel for appellant submits that the alleged accident had taken place on 24th March, 1988 i.e. prior to coming into force of the new Act i.e. Motor Vehicles Act, 1988 which had come into force w.e.f. 01.07.1989.

It is submitted that as per old Act i.e. Motor Vehicles Act, 1939 under Section 95(2)(b)(i) the liability of the Insurance Company was limited to only Rs. 50,000/- as the deceased was not covered under the definition of passenger carried for hire or reward.

It is also submitted that the learned Tribunal has failed to appreciate that the liability of the appellant was limited to the extent as provided under the policy and as per law. The learned Tribunal has fastened the liability on the Insurance Company jointly and severally to the extent of Rs. 5,00,000/- with interest along with the owner and driver of the vehicle which is against the law.

In support of his submissions, learned counsel for appellant relies on the Constitution Bench judgment of the Apex Court in the case of New India Assurance Co. Ltd. Vs. C.M. Jaya and Others; 2002 ACJ 271 as well as Division Bench judgment of this Court in the case of Oriental Insurance Company Ltd., Mathura through its A.O. (legal) Division Office, Allahabad Vs. Smt. Jeevan Jangra and others; [2007 (3) T.A.C. 443 (Alll.)] wherein the judgment of the Apex Court in the case of New India Assurance Co. Ltd. (supra) and Oriental Insurance Company Limited Vs. Shakuntala Garg and others; Civil appeal No. 104 of 2002 has been considered and the Court has come to conclusion that the insurer is liable only to the extent of statutory liability under Section 95 Motor Vehicles Act, 1939 and cannot be fasten with entire liability awarded by the Tribunal.

Mr. P.C. Agarwal, learned counsel for respondents, on the other hand, submitted that the appellant has not taken the plea of limited liability before the Tribunal. This fact has come in the impugned judgment itself. It is submitted that the appellant, for the first time, had taken this plea in its review petition before the Tribunal which was rejected by the learned Tribunal.

It is also submitted that in any case if the appellant had to take this defence then it is liable to produce the insurance policy along with its defence before the Tribunal to prove that it has only limited liability of Rs. 50,000/-.

In support of his submissions, learned counsel for respondents relies on the judgment of the Apex Court in the case of Smt. Rajendra Kumar and Another Vs. Smt. Shanta Trivedi and Others; AIR 1989 SC 1074 wherein it has been held that it was the liability of Insurance Company to have filed policy in case it claims that the Company's liability is not in excess of statutory liability.

It is further submitted by learned counsel for respondents that in any case if the Court is of the view that the appellant had only limited liability as provided under statute then it must be directed to pay the entire amount of compensation as awarded by the learned Tribunal with liberty to recover the excess amount from the owner.

In this regard, he relies on the Division Bench judgment of this Court in the case of National Insurance Company Limited through its Administrative Officer Vs. Smt. Raj Kumar Singh & Ors; [2012 (3) JCLR 396 (All)] wherein the Court has observed that in case the Insurance Company is not liable to pay the compensation, it shall pay the amount to claimant and recover the same from the owner.

I have considered the submissions made by the parties' counsel.

It is relevant to observe that the date of accident in the present case is vital to decide the controversy involved in the present case.

The alleged accident had taken place on 24.3.1988.

At the time of accident, Motor Vehicles Act, 1939 was in vogue. As per Section 95, which relates to limitation of liability, particularly Section 95 (2) (b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, the liability of insurer in respect of persons other than passengers carried for hire or reward is limited to Rs. 50,000/- in all. Section 95 for convenience is reproduced below:

"95. Requirements of policies and limits of liability.- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-

(a) is issued by a person who is an authorised insurer 3[or by a co-operative society allowed under section 108 to transact the business of an insurer], and

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)-

(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place ;

(ii)against the death of or bodily injury to any passenger of a public service vehicle caused by or, arising out of the use of the vehicle in a public place

Provided that a policy shall not * * * be required-

(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment 3[other than a liability arising under the Workmen's Compensation Act, 1923, in 8 respect of the death of, or bodily injury to, any such employee-

(a) engaged in driving the vehicle, or

(b)if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

(c) if it is a goods vehicle, being carried in the vehicle], or

(ii) except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting front the vehicle at the time of the occurrence of the event out of which a claim arises, or

(iii) to cover any contractual liability.

[Explanation.-For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage, to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.]

(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 4[one lakh and fifty thousand rupees] in all, including the liabilities, if any,arising under the Workmen's Compensation Act, 1923, (8 of 1923.) 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 ;]

[(b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment,-

(i) in respect of persons other than passengers carried for hire or reward, a limit of fifty thousand rupees in all;

(ii) in respect of passengers, a limit of fifteen thousand rupees for each individual passenger;

(c) save as provided in clause (d), where the vehicle is a vehicle of any other class, the amount of liability incurred;

(d)irrespective of the class of the vehicle, a limit of rupees 5[six thousand]in all in respect of damage to any property of a third party.]

* * * * * *

(4) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance 2*** in the prescribed form a containing the prescribed particulars of any, conditions subject which the policy is issued and of any other prescribed matters different forms, particulars and matters may be prescribed in different cases.

[(4-A) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify he fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.]

(5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person, specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person."

There is no dispute to the fact that the deceased was not covered under the definition of passenger carried for hire or reward. The Apex Court in the case of New India Assurance Co. Ltd. (supra) has held that in case the Insurance Company has not taken any higher liability by accepting higher premium for payment of compensation to a third party, the Insurance company would be liable to the extent of limited liability under Section 95 (2) of the Act and would not be liable to pay the entire amount. Relevant paragraph 11 of the judgment on reproduction reads as under:

"11. In the premise, we hold that the view expressed by the Bench of the three learned Judges in the case of Shanti Bai, 1995 ACJ 470 (SC), is correct 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 of payment of compensation to a third party, the insurer would be liable to the extent limited under section 95 (2) of the Act and would not be liable to pay the entire amount."

In the case of United India Insurance Company Ltd. Vs. A.N. Subbulakshmi and others; 2008 (4) T.A.C. 381 (S.C.) it has been held by the Apex Court that at the time of accident the old Act of 1939 was in operation. The liability of Insurance Company was governed by Section 95 (2) (b) (i) of the old Act and could not exceed to Rs. 50,000/-. The direction of the High Court to the Insurance Company to make payment of compensation to claimant and then recover from owner of vehicle is not sustainable in law. The balance amount was directed to be paid by owner of vehicle involved in the accident. Relevant paragraphs 9, 10 & 11 of the judgment on reproduction read as under:

"9. Mr. P. K. Seth, learned counsel appearing on behalf of the appellant, submitted that the accident took place on 14 May, 1981, when the Motor Vehicles Act, 1939 was in operation and the liability of the insurer was governed by Section 95(2)(a) of the Act. Learned counsel submitted that under Section 95(2)(a), the insurer's liability could not exceed the sum of Rs.50, 000/- and the direction of the High Court asking the appellant to pay the entire amounts of Rs.25, 000/- and Rs.3, 25,000/- to the claimants and then to recover it from the insurer was without any sanction of law. In support of the submission he relied upon a Constitution Bench decision in New Indian Assurance Co. Ltd. vs. C .M. Jaya & Ors., (2002) 2 SCC 78. In that case the same question came up for consideration before the Constitution Bench of this Court and it was held that under Section 95(2)(a) of the Act even in case of a comprehensively insured vehicle the liability of the insurer was limited to Rs.50, 000/- (raised to Rs.1,50,000=00 with effect from 1 October 1982). An unlimited or a higher liability than the statutory liability of the insurer would arise only in case there is a separate contract and payment of additional premium by the owner of the vehicle. In paragraph 17 of the decision it was held as follows:

"In the circumstances, we hold that the liability of the appellant-Insurance Company is limited to Rs.50, 000/-, as held by the Tribunal. In the view we have taken, it is unnecessary to go into the question relating to either maintainability of cross-objections before the High Court against the appellant alone or as to the enhancement of compensation when the owner and driver have not filed appeal against the impugned judgment."

10. The Constitution Bench decision applies to the facts of this case with full force. We accordingly hold and find that the impugned direction of the High Court is unsustainable in law. The direction as contained in paragraph 36 of the High Court judgment is therefore set aside.

11. In terms of an interim order passed in this appeal, the appellant had deposited a sum of Rs.50, 000/- before the Trial Court it will be open to the claimants to withdraw that amount. The balance amount in terms of the High Court judgment would be payable by the owner of the lorry, namely, M/s. Aruppukottai Sri Jaya Vilas Pvt. Ltd., unless the judgment of the High Court is modified in any appeal preferred by the lorry's owner."

The Division Bench of this Court in the case of Oriental Insurance Co. Ltd., Mathura through its A.O. (Legal) Division Office, Allahabad (supra) relying on the judgment of the Apex Court in the case of New India Assurance Co. Ltd. (supra) had held that in view of terms and conditions of agreement, insurer was liable to pay the statutory liability under Section 95 Motor Vehicles Act, 1939 and could not have been fastened with the entire liability as awarded by the Tribunal. The liability of insurer should be restricted as per statute. Relevant paragraphs 3, 4 & 5 of the judgment on reproduction read as under:

"3. Although initially we were under the impression that there should be a permission on the part of the Court below to address, this case is not coming under the provisions of law as regards the permission to be granted for the purpose of appearance in the Court below as an agent of the insured. In case any statutory liability is there, the Insurance Company is obviously liable to pay for the sum but if the statute says otherwise no Court can compel a party to do something beyond the scope of the statute, therefore, the permission or no permission at the relevant point of time is immaterial. This observation is made because of several questions have been raising now a days about the same. For the fitness of the fact this application arose under the old Act, i.e., Motor Vehicles Act, 1939 and the Judgment and award was passed on 14th February 2000 prior to the establishment of such question as to whether the permission is liable to be granted to the Insurance Company or not. Since at such situation there was no occasion for considering the same, we cannot hold that the appeal is not maintainable, particularly when statute is directly supporting the case of the appellant. The case of the appellant is also fortified by the five Judges Bench of Hon'ble the Supreme Court rendered in the case of New India Assurance Company Limited Vs. C.M. Jaya and others, reported in 2002 (3) T.A.C. - 434 (S.C.) and also an unreported Judgment arising out of SLP (C) No.691/2002 in Civil Appeal No.104 of 2003 Oriental Insurance Company Limited Vs. Shakuntala Garg and others wherein the similar question arose.

4. It has been answered by the five Judges Bench of the Supreme Court is as follows:-

"The question involved in these appeals is whether in a case of insurance policy not taking any higher liability by accepting a higher premium, in case of payment of compensation to a third party, the insurer would be liable to the extent limited under Section 95 (2) or the insurer would be liable to pay the entire amount and he may ultimately recover from the insured."

It has been further held 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 part, the insurer would be liable to the extent limited under Section 95 (2) of the Act and would not be liable to pay the entire amount."

5. Therefore, after taking into the totality of the facts and circumstances of the case as well as applicability of the law. In this respect, we are of the view that the liability of the Insurance Company should be restricted as per the statute not for the entire liability as had been fasten by the Tribunal in this respect. Therefore, the appeal is allowed. The Judgment and award of the Tribunal is modified by holding a view that out of awarded sum, the liability of the Insurance Company is restricted only to the extent of Rs.1,50,000/-. However, the owner of the vehicle is liable for the rest in that way the interest of the third party is protected. No order is passed as to costs."

So far as the contention of learned counsel for respondents that it was the liability of the appellant-Insurance Company to have produced the insurance policy along with its defence before the Tribunal and prove the statutory liability, it is to be noted that in the written statement filed by the present appellant-Insurance Company before the Tribunal in paragraph 28 it was pleaded that the liability, if any, of the answering opposite parties (present appellant) relating to the Tempo involved in the alleged accident, though not admitted, is limited to the extent as provided in term of policy of the insurance of the said vehicle and as per law. Paragraph 28 of written statement filed by present appellant before the Tribunal is reproduced below:

"28. That the liability, if any, of the answering opposite party relating to the Tempo involved in the alleged accident, though not admitted by the answering opposite party, is limited to the extent as provided in terms of policy of the insurance of the said vehicle, (namely, Tempo) and as per law."

It is also to be noted that the insurance policy was filed before the Tribunal and it was very much available before the Tribunal at the time of deciding the claim petition, as such, I am of the considered opinion that it was incumbent upon the learned Tribunal to have held the liability of the appellant as per terms and conditions of the policy and the statutory provisions, particularly Section 95 (2) (b) of Motor Vehicles Act, 1939 which was fully applicable to the present facts and circumstances of the case.

In the case of Smt. Rajendra Kumari and Another (supra), reliance on which has been placed by learned counsel for respondents, it has been observed by the Apex Court that in case the Insurance Company concerned wish to take a defence in claim petition that its liability is not in excess of the statutory liability, it should file a copy of the insurance policy along with its defence, the said decision in my opinion is not applicable to the facts and circumstances of the case as it has already been noticed that before the Tribunal the appellant had categorically pleaded that its liability is limited to the extent as provided in terms of policy and as per law. Copy of insurance policy was also filed before the Tribunal.

So far as the contention of learned counsel for respondents that in case the liability of the appellant was only limited then it should be directed to pay the entire amount of compensation with liberty to recover the same from the owner is concerned, it is to be noted that in Division Bench judgment of this Court in the case of National Insurance Company Limited through its Administrative Officer (supra), reliance on which has been placed by learned counsel for respondents, the claim petition was filed under the new Act i.e. Motor Vehicles Act, 1988 wherein the liability of Insurance Company is unlimited. The facts and circumstances of the present case are altogether different, hence the judgment of the Division Bench aforesaid would not be of any assistance to learned counsel for respondents.

Considering the entire aspect of the matter, I am of the considered opinion that the learned Tribunal has erred in law in holding the liability of the appellant jointly and severally to the extent of Rs. 5,00,000/- while awarding the compensation to the claimants.

It has been informed by learned counsel for claimant that the owner and driver of the vehicle i.e. respondent nos. 7 & 10 have not filed any appeal challenging the impugned judgment and award and this Court while admitting the appeal had directed the appellant to deposit Rs. 50,000/- in Court in addition to statutory amount of Rs. 25,000/- within six week with a direction that the execution proceedings shall remain stayed. The appellant has deposited the said amount within time.

In this view of the matter, the appeal is allowed.

The impugned judgment and award dated 30.1.1994 is modified to the extent that the appellant is liable to pay the amount of Rs. 50,000/- along with interest @ 10% simple interest per annum from the date of petition till date the said amount is/was deposited. Remaining amount of compensation as awarded by the learned Tribunal shall be payable by the owner and driver of the vehicle (respondent nos. 7 & 10) jointly and severally as directed by the learned Tribunal.

The amount deposited before this Court shall be released in favour of claimants forthwith, if already not released.

[Justice Ritu Raj Awasthi]

Order Date :- 8.8.2013

Santosh/-