N.I.C. Ltd. vs Ramawati Devi
2017 Latest Caselaw 3340 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?AFR 
 
Court No. - 34
 
Case :- FIRST APPEAL FROM ORDER No. - 1170 of 1993
 
Appellant :- N.I.C. Ltd.
 
Respondent :- Ramawati Devi
 
Counsel for Appellant :- V.K.Birla,O.P. Mishra,S.B.L. Gour
 
Counsel for Respondent :- S.N.Srivastava,A.K.Shukla,Arvind Kumar Shukla,S.K.Shukla
 

 
Hon'ble Saumitra Dayal Singh,J.

Office report dated 18.5.2017 indicates that notices dispatched to respondent nos. 8 and 9 by registered post AD have neither been received back undelivered nor acknowledgement have been received after service.

Accordingly, service on respondent nos. 8 and 9 is deemed sufficient.

This appeal has been filed by the insurer against the award dated 26.8.1993 passed by the Motor Accident Claims Tribunal, Deoria in MACP No. 88 of 1986.

It is a death case. According to the claim petition the deceased Sri Niwas Chaubey (hereinafter described as the deceased) was a constable in the police department and was aged 51 years at the time of his death. He was drawing salary at Rs. 1,100/- per month at the time of the accident, it was further disclosed that on 5.3.1990 at about 12:30 pm accident took place on Deoria near village Dumri wherein Jeep bearing registration no. URS-9060 being driven in a rash and negligent manner over turned and caused grievous injuries to the deceased who succumbed to the injuries thus suffered by him.

There is some dispute as to whether the deceased was travelling in the Jeep or he was outside the Jeep at the time of the accident. Learned counsel for the appellant though, initially, submitted that the deceased was travelling inside the Jeep and the accident having taken place prior to the enforcement of the Motor Vehicles Act, 1988, the liability of the appellant was limited to Rs. 15,000/-.

However, after some arguments were advanced, he fairly states even if the finding of the Tribunal were to be accepted in toto and it is held that the deceased was hit by the offending Jeep and he was not travelling in the Jeep at the time of the accident, even then, by virtue of Section 95(2)(b)(i) of the Motor Vehicles Act, 1939 the liability of the appellant would have been Rs. 50,000/- only.

He therefore submits that the award of the Tribunal whereby the entire amount of compensation awarded Rs. 1,25,952/- has been awarded against the appellant-insurer, is erroneous being contrary to the statutory law. In this regard, he relied on judgment of the Supreme Court in the case of New India Assurance Co. Ltd. Vs. C.M. Jaya & Ors reported in (2002) 2 SCC 278.

Also, Section 95(2)(b)(i) of the Motor Vehicles Act, 1939 reads as below:-

"95. Requirements of policies and limits of liability.-(1).......

(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).........

(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 thousands rupees in all;"

In the aforesaid case, five Judges Constitution Bench of the Supreme Court had to occasion to consider the issue of liability of the insurer under the old Act. The interpretation of Section 95(2) was directly involved in that case.

After considering the entire gamut law the Supreme Court concluded that the normal liability under the comprehensive policy insurance under the old Act was up to Rs. 50,000/- in the case of a person other than a passenger, travelling in a passenger vehicle. According to that judgment, the compensation in excess of Rs. 50,000/- could be awarded only in the event of extra premium being paid by the insured.

For ready reference, the question involved in the aforesaid case as stated in para 2 of the judgment is quoted below:-

"2. 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. On this question, there appears to be some apparent conflict in the two three-Judges Bench decisions of this Court (1) New India Assurance Co. Ltd. v."

Then, para 11, 12, and 13 of that judgment contained in the discussion and finding on the aforesaid issue read as below:-

"11. In the premises, we hold that the view expressed by the bench of three learned Judges in the case of Shanti Bai 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 under Section 95(2) of the act and would not be liable to pay the entire amount.

12. In these appeals presently before us, the judgment and order of Delhi High Court are under challenge. The deceased was riding the pillion seat of a two wheeler when it met with a truck insured by the appellant. On the claimants approaching the Motor Accident Claims Tribunal, it awarded a sum of Rs. 1,03,360/- as compensation and held that the liability of the appellant was limited to Rs. 50,000/- and the balance amount was recoverable from the driver and owner of the truck jointly and severally. The truck owner (the respondent no.4) preferred an appeal to the High Court. The High Court held that the liability of the appellant was unlimited as the vehicle was comprehensively insured. The High Court also allowed cross-objections preferred by the claimants/Respondents Nos. 1 to 3 solely against the appellant under Order XLI Rule 22 CPC for the full pecuniary liability to be placed upon the insurer while enhancing the amount of compensation  from Rs. 1,03,360/- to Rs. 3,60,000/- with interest @ 15% per annum from the date of application. Hence, these two appeals are brought by the appellant, aggrieved by the judgment and order of the High Court. The submissions were made before us by the learned counsel for the parties in support of the respective contentions citing the decisions aforementioned as to the extent of liability of the appellant to pay the amount of compensation to Respondents 1 to 3. It is not in dispute from the admitted copy of the insurance policy produced before the Court that the liability of the appellant is limited to Rs. 50,000/- in regard to the claim in question. The relevant clause in the policy relating to limits of liability reads:-

Limits of Liability: Limit of the amount of the Company's liability under Section 11-1(i) in respect of any one accident-Rs. 50,000/-

Limit of the amount of the Company's liability under Section II-1(i) in respect of any claim or series of claims arising out of one event-Rs. 50,000/-.

It is also not the case that any additional or higher premium was paid to cover unlimited or higher liability than the statutory liability fixed as found in the term of the policy extracted above. In the light of the law stated above, it necessarily follows that the liability of the appellant is limited to Rs. 50,000/-, as was rightly held by the Tribunal. The High Court committed an error in taking the contrary view that the liability of the appellant was unlimited merely on the ground that the insured had taken a comprehensive policy. In Shanti Bai's case, this Court has clearly expressed the opinion that a comprehensive policy issued on the basis of the estimated value of the vehicle does not automatically result in covering the liability with regard to third party risk for an amount higher than the statutory limit in the absence of specific agreement and payment of separate premium to cover third party risk for an amount higher than the statutory limit. This position is accepted in Amrit Lal Sood's case as well though no reference is made to this case. As already stated above, in Amrit Lal Sood's case, the Court found an express term in the policy for covering wider risk and to meet the higher liability unlike in the case of Shanti Bai. Therefore, the High Court was not right in holding that the liability of the appellant insurance-company was unlimited merely on the ground that the vehicle in question, i.e. the truck, was covered by a comprehensive insurance policy.

13. 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."

In so far as the present case is concerned, learned counsel for the appellant has brought on record a copy of the insurance policy which does not disclose payment of any extra premium for risk coverage of Rs. 50,000/- which was a statutory requirement at the relevant time. In this background, the impugned award of the Tribunal suggests that it got swayed by the fact that the deceased was not travelling in the vehicle and therefore the liability of the appellant has been held to be not limited. Accordingly, the Tribunal has proceeded to make entire award against the insurer.

In view of the judgment of the Supreme Court and a plain reading of Section 95(2)(b)(i) of the Motor Vehicles Act, 1939, the finding so recorded by the Tribunal cannot be sustained and the award deserves to be modified.

There being no dispute as to quantification of the compensation awarded, the impugned award is modified to the effect. against the amount at Rs. 1,25,952/- awarded by the Tribunal, the present appellant would be liable to satisfy the award up to Rs. 50,000/- together with proportionate interest. Inasmuch as admittedly the appellant has paid to Rs. 15,000/-, the balance amount of Rs. 35,000/- together with interest as awarded shall be paid out to the claimant respondents within a period of two months from today by the appellant. As for the balance amount of Rs. 75,952/- together with interest as awarded, the award is modified and the same shall be recoverable from the owner respondent no.8. The Tribunal shall take all steps necessary for insuring expeditious recovery of the aforesaid amount.

The appeal thus allowed. The award is modified as above indicated. No order as to costs.

Order Date :- 18.8.2017

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