New India Assurance Co. Ltd. vs Pushpa And Ors.
2003 Latest Caselaw 1220 Bom

JUDGMENT

S.T. Kharche, J.

1. The appellant New India Assurance Co. Ltd. challenged the award dated 3.10.1991 passed by the Additional Motor Accidents Claims Tribunal, Nagpur in Claim Petition No. 22 of 1989 awarding compensation of Rs. 3,00,000 to the respondent Nos. 1 and 2 making the appellant insurance company as well as respondent Nos. 3 and 4 owner and driver of the motor vehicle involved in the accident jointly and severally liable to pay the amount of compensation with interest at the rate of 15 per cent per annum from the date of petition till realisation in this appeal.

2. Brief facts are as under:

Respondents-claimants are legal heirs of deceased Ashok who died as a result of accident arising out of the use of motor vehicle, i.e., Matador bearing registration No. MYW 4614. The accident occurred on 8.7.1988 at about 23.00 hrs. near Makardhokha village on the Katol Road, Nagpur. The deceased was travelling on a scooter.

The driver of Matador in the accident had given a dash to the scooter causing him grievous injuries. Ashok was immediately taken in injured condition to Mayo Hospital, Nagpur where he succumbed to the injuries. Police had registered the offence under Section 304-A of the Indian Penal Code and under Sections 89 and 112 of the Motor Vehicles Act against the driver of Matador. They visited the spot and drew spot panchnama. Thereafter the respondents had filed claim petition under Section 110-A of Motor Vehicles Act, 1939 (for short, 'the Act') claiming compensation of Rs. 6,00,000.

3. The appellant insurance company had resisted the claim on the contention that the third party liability of the insurance company was limited to the extent of Rs. 1,50,000. Though it is not disputed that Matador involved in the accident was duly insured with it for the period 12.2.1988 to 11.2.1989 and covered the risk on the date of the accident.

4. The parties adduced oral as well as documentary evidence in support of their contentions. The Tribunal, on considering the evidence and on hearing the learned counsel for the parties, recorded the finding that the accident occurred due to rash and negligent driving of the motor vehicle, i.e., Matador and that the respondent would be entitled to receive compensation of Rs. 3,00,000 with interest as mentioned above.

5. Learned counsel for the insurance company contended that the insured had taken the comprehensive insurance policy and the liability of the insurer is limited to the extent of Rs. 1,50,000 as indicated under Section 95 of the Act as well as in the terms and conditions mentioned in the insurance policy. He contended that no additional or higher premium was paid by the owner of the motor vehicle to cover unlimited or higher liability than the statutory liability fixed as found in the terms of the insurance policy and, therefore, the Claims Tribunal has committed an error in saddling the unlimited liability on the appellant. In support of these submissions he relied on the decision of the five-Judge Bench decision of the Supreme Court in the case of New India Assurance Co. Ltd. v. CM. Jaya, .

6. The learned counsel for the appellant further contended that the appellant may be permitted to tender the evidence before this court on the point of limited liability under the policy of insurance and for proving the carbon copy of the policy which is already on record. He further contended that the Tribunal was not justified in not admitting the policy of insurance on record though the carbon copy duly signed by the Constituted Attorney has been placed on record. He further contended that the impugned award is liable to be set aside so far as the limits of liability of insurance company is concerned.

7. Learned counsel for the respondents-claimants contended that the insurance policy does not indicate that the liability was limited to the extent of Rs. 1,50,000. The insurance company did not adduce any oral evidence and though in the written statement it has been pleaded that the liability of the insurance company is limited to the extent of Rs. 1,50,000, in absence of proof, it cannot be said that the liability was limited. He contended that the Tribunal was perfectly justified in holding that the liability is not limited. In support of this contention, he relied on the decision of Karnataka High Court in the case of United India Insurance Co. Ltd. v. Lachammawwa, 1999 ACJ 920 (Karnataka).

8. Mr. Madkholkar, the learned counsel further contended that the insurance company cannot be allowed to lead additional evidence at this stage and question of remanding the case to the Claims Tribunal for recording additional evidence does not arise. In support of his contention, he has relied on the decision of Delhi High Court in the case of Amar Singh v. Atma Singh, 1986 ACJ 886 (Delhi) and also another decision of Delhi High Court in the case of National Insurance Co. Ltd. v. Harjeet Kaur, .

9. Mr. Madkholkar further contended that the respondents-claimants filed cross-objection in this appeal. The age of the deceased was 30 years. The legal representatives of the deceased comprise widow of the age of 25 years and son of the age of 3 years. He contended that the Tribunal wrongly assessed the loss of dependency at the rate of Rs. 1,200 per month on the assumption that deceased must have been incurring Rs. 800 on account of petrol expenses of the scooter owned by him. He contended that the deceased was a contractor and was working in a partnership firm and his monthly income was not less than Rs. 2,400 and in such circumstances though the Claims Tribunal was justified in adopting the multiplier of 20 years, has committed an error in computing loss of dependency. He further contended that the Tribunal has ignored the evidential value of the oral testimony of the widow as well as the witness Rajaram. He contended that in such a situation, the loss of dependency could be taken at Rs. 2,000 per month or Rs. 24,000 per annum and if the multiplier of 20 is adopted, the total amount of just and reasonable compensation could be worked out to Rs. 4,80,000 and as such the Tribunal ought to have awarded this much amount together with interest. In support of his submission he relied on the decision of Punjab and Haryana High Court in the case of United India Insurance Co. Ltd. v. Raj Rani, .

10. I have given thoughtful consideration to the contentions canvassed by the learned counsel for the parties. It is not disputed that Matador was involved in the accident and the said Matador has been duly insured with the appellant for the period 12.2.1988 to 11.2.1989 whereas the accident occurred on 8.7.1988. The insurance policy, Exh. 23, shows that it is a comprehensive insurance and the carbon copy duly signed by the Constituted Attorney has been placed on record.

11. In New India Assurance Co. Ltd. v. CM. Jaya, , which is a five-Judge Bench decision of the Apex Court, the court observed in para 5 that:

"Thus, a careful reading of these decisions clearly shows that the liability of the insurer is limited, as indicated in Section 95 of the Act, but it is open to the insured to make payment of additional higher premium and get higher risk covered in respect of third party also. But in the absence of any such clause in the insurance policy the liability of the insurer cannot be unlimited in respect of third party and it is limited only to the statutory liability. This view has been consistently taken in the other decisions of this court."

12. The Hon'ble Supreme Court further observed in para 12 that:

"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 II(1)(i) in respect of any one accident--Rs. 50,000.

Limit of the amount of the company's liability under Section II(1)(ii) 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 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. The Supreme Court considering the various decisions, held that, in a case of insurance policy not taking any higher liability by accepting a higher premium, in case of payment of compensation to third party, the insurer would be liable to the extent limited under Section 95(2) of the Act and negatived the contention of owner of the motor vehicle that the insurer would be liable to pay the entire amount and the liability would be unlimited.

14. In the present case, carbon copy of the insurance policy duly signed by the Constituted Attorney, Exh. 23, would indicate that Matador involved in the accident has been duly insured with the appellant for the period 12.2.1988 to 11.2.1989 and there is a clause regarding the limits of liability which reads as under:

"(a) Limit of the amount of company's liability under Section II(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 company's liability under Section II(1)(ii) in respect of any one claim or series of claims arising out of one event: Rs. 50,000."

Perusal of this insurance policy would reveal that no additional premium on account of additional legal liability has been paid by the owner of motor vehicle and, therefore, by virtue of the terms and conditions mentioned in the insurance policy, it would be obvious that this is an insurance policy not taking any higher liability by accepting higher premium in the case of payment of compensation to a third party and, therefore, the insurer would be liable to the extent limited under Section 95(2)(a) of the Act.

15. The contention of the learned counsel for the claimants that the Tribunal was justified in holding that the liability is unlimited, cannot be accepted for the simple reason that there was no attempt on the part of the owner of the motor vehicle to pay higher premium in order to make the liability unlimited. It is obvious from the provisions of Section 95(2)(a) of the Act that; if the policy is taken by not accepting higher liability by accepting higher premium, the liability would be limited to the extent of Rs. 1,50,000.

16. Learned counsel for the claimants relied on the decision of Karnataka High Court in the case of United India Insurance Co. Ltd. v. Lachammawwa, 1999 ACJ 920 (Karnataka), wherein it was held that raising of plea does not tantamount to giving evidence. Plea raised in the pleadings by itself does not become evidence. Evidence has to be adduced or produced. On the basis of this observation, learned counsel contended that in the present case, the appellant did not adduce any oral evidence to prove the terms and conditions of the insurance policy and in such circumstances, the terms and conditions mentioned in the policy cannot be read in evidence. This contention of the learned counsel is devoid of merit because the carbon copy duly signed by the duly Constituted Attorney was placed on record and in fact, on the basis of this policy pleadings appeared in the written statement submitted by the insurance company that its liability was limited to the extent of Rs. 1,50,000. Not only this, if this policy would not have been produced on record, it would not have been possible to consider as to whether the insurance company would have been liable even to pay the limited liability. It is only on production of this insurance policy, it appears that the motor vehicle, i.e. Matador involved in the accident was duly insured with appellant for the period 12.2.1988 to 11.2.1989 covering the risk of third party on the date of the accident, i.e., 8.7.1988. In such a situation, the insurance policy could be read as a whole and not in part and in such circumstances, the contention of learned counsel for the claimants that this policy is not admissible in evidence is liable to be rejected.

17. Learned counsel for the claimants also relied on two decisions of Delhi High Court in Amar Singh v. Atma Singh, 1986 ACJ 886 (Delhi) and National Insurance Co. Ltd. v. Harjeet Kaur, and contended that the appellant cannot be allowed to adduce additional evidence to show what were the terms and conditions of the insurance policy. Both these authorities are not applicable to the facts and circumstances of the present case especially when the document of insurance policy is admissible in evidence and there is no necessity to consider as to whether the appellant should be allowed to lead additional evidence.

18. That takes as to consider the cross-objections filed by the claimants. It is not in dispute that Ashok died as a result of accident arising out of the use of motor vehicle and on the date of accident the age of the deceased was 30 years. It is also not disputed that Ashok died leaving behind him his widow whose age was 25 years and the minor son whose age was 3 years at the time of the accident. These factors are relevant so far as the adoption of suitable multiplier is concerned. The Tribunal has applied the multiplier of 20 years but in my view maximum multiplier of 18 years' purchase factor would have been just and reasonable. In this context, reference was made by it to the various decisions of the Supreme Court. In the case of General Manager, Kerala State Road Transport Corporation v. Susamma Thomas, , wherein it has been observed that:

"It is necessary to reiterate that the multiplier method is logically sound and legally well established... It must be borne in mind that multiplier method is the accepted method of ensuring a 'just' compensation which will make for uniformity and certainty of the awards."

It refers to the principle of computing compensation by the English courts under which the multiplier granted never exceeded 16. This is a case in which multiplier of 12 was applied.

19. In S. Chandra v. Pallavan Trans. Corporation, , the Hon'ble Supreme Court observed that:

"...It cannot be disputed that the life expectancy in India even in the year 1979 was not less than 65 years. We, therefore, hold that the appellants were entitled to a multiplier of 20."

Similarly in the case of Sneha Dutta v. Himachal Road Trans. Corporation, , the Supreme Court recorded multiplier of 12 to be just and proper.

20. The aforesaid decisions make it clear that the application of multiplier would depend upon the facts and circumstances of each case.

21. It may also be useful to refer to the three-Judge Bench decision of the Apex Court in U.P. State Road Trans. Corporation v. Trilok Chandra, , wherein it has been observed in para 18 as under:

"We must at once point out that the calculation of compensation and the amount worked out in the Schedule suffer from several defects. For example, in item No. 1, for a victim aged 15 years, the multiplier is shown to be 15 years and the multiplicand is shown to be Rs. 3,000. The total should be Rs. 3,000 x 15 = Rs. 45,000, but the same is worked out at Rs. 60,000. Similarly, in the second item, the multiplier is 16 and the annual income is Rs. 9,000; total should have been Rs. 1,44,000, but is shown to be Rs. 1,71,000. To put it briefly, the Table abounds in such mistakes. Neither the Tribunals nor the courts can go by the ready-reckoner. It can only be used as a guide. Besides, the selection of multiplier cannot in all cases be solely dependent on the age of the deceased. For example, if the deceased, a bachelor, dies at the age of 45 and his dependants are his parents, age of the parents would also be relevant in the choice of multiplier. But these mistakes are limited to actual calculations only and not in respect of other items. What we propose to emphasise is that the multiplier cannot exceed 18 years' purchase factor. This is the improvement over the earlier position that ordinarily it should not exceed 16. We thought it necessary to state the correct legal position as courts and Tribunals are using higher multiplier, as in the present case, where Tribunal used the multiplier of 24, which the High Court raised to 34, thereby showing a lack of awareness of the background of the multiplier system in Davies' case."

In view of the above observations, in the present case, in my view, application of 18 years' purchase factor as multiplier would have been reasonable.

22. Now that takes me to the question of quantum. The Tribunal has assessed the loss of dependency at Rs. 1,200 and awarded compensation on considering the fact that the deceased was driving his scooter and, therefore, his minimum expense for fuel, i.e., petrol must not have been less than Rs. 800 per month. The claimants had adduced the oral evidence of the widow as well as one witness Rajaram to show that income of the deceased was not less than Rs. 2,400 per month and after deducting 1/3rd, the loss of dependency would work out to Rs. 2,000 per month or Rs. 24,000 per annum and the Claims Tribunal on considering these facts, recorded the finding that the claimants would be entitled to receive compensation on the basis of loss of dependency at Rs. 1,200 per month.

23. It is also relevant to note that the deceased is said to have been doing the business of contractorship in a partnership firm. If that was so, then the claimants ought to have produced the partnership deed or copy of document showing registration of the partnership firm as well as the account maintained by the partnership firm. Claimants did not also produce on record the account or Income Tax Return which is said to have been maintained by the partnership firm in order to assess as to what was the actual income of the deceased or what share the deceased was getting in the income of the partnership firm on the date of the accident. In such circumstances, it appears that there was no alternative before the Tribunal except to take into consideration the expenses which were being incurred by the deceased on account of fuel required for plying the scooter. In such circumstances, it is not possible to accept the contention of learned counsel for the claimants that the Tribunal ought to have assessed the loss of dependency at the rate of Rs. 2,000 per month or Rs. 24,000 per annum and after application of multiplier of 20 years' purchase factor, ought to have granted compensation of Rs. 4,80,000.

24. When the documentary evidence was available and it was not placed on record, it cannot be held that the Tribunal has committed any error in appreciation of the oral evidence adduced by the widow as well as by the witness Rajaram and in such circumstance, the decision of Punjab and Haryana High Court in United India Insurance Co. Ltd. v. Raj Rani, , relied on by learned counsel for the claimants is of no assistance to him.

25. In view of the aforesaid circumstances, this court is not inclined to interfere with the amount awarded since in my view while the multiplier used is excessive, I am satisfied that appropriate multiplicand has been used for assessment of the loss of dependency and if this court were to correct the multiplicand and use the correct multiplier, the compensation would work out near about the same figure. Therefore, I am disinclined to interfere even with the figure of the compensation. I have already held above that the liability of the insurance company was limited to the extent of Rs. 1,50,000 in view of the provisions of Section 95(2)(a) of the Act and, therefore, the appeal deserves to be allowed and the cross-objection is liable to be dismissed.

26. Hence, the appeal is allowed and the impugned award passed by the Claims Tribunal holding the appellant insurance company liable to pay unlimited compensation is set aside and instead the insurance company is held liable to pay only Rs. 1,50,000. Needless to say that the owner of the motor vehicle involved in the accident has to pay the remaining amount of the award and the insurance company would be entitled to recover the excess amount from the insured by executing this award against the insured to the extent of such excess amount as per Section 174 of the Act. Cross-objection stands dismissed. No costs.