National Insurance Co. Ltd. vs Kamla Devi
1996 Latest Caselaw 924 Del

JUDGMENT

Manmohan Sarin, J.

(1) ADMIT.

(2) This letters patent appeal has been preferred by the National Insurance Company Ltd. against the judgment of the learned Single Judge in FAO.141/91 and CM.372/92 dated 9.5.1995, by which the learned Single Judge allowed the appeal filed by the owner/insured and held that the liability of the insurance company was unlimited and not limited to Rs.1,50,000.00 as held by the Motor Accident Claims Tribunal. The Mact had based on the policy of insurance and the documents filed on record, viz. the proposal form, insurance policy cover note, renewal endorsement, etc., held that the liability of the appellant insurance company was limited to Rs.1,50,000.00 . It may be noted that the appellant had earlier moved the learned Single Judge with an application for re- hearing, praying that the impugned judgment dated 9.5.1995 had been passed without hearing the appellant's counsel. The learned Single Judge granted the re-hearing, but vide its order dated 28.7.1995 held that no change was warranted in the impugned judgment dated 9.5.1995.

(3) The quantum of compensation is not in issue in the present appeal filed by the insurance company. The facts giving rise to the present appeal may be briefly noted:-

"(I)One Nirmal Singh, Sub-Inspector of Police, died in a road accident on 14.12.1984. The legal representatives, viz. Ms. Kamla Devi, wife; Kumari Deepali, minor daughter; Digvijay Singh, minor son; Mahadevo, mother; and Kanwar Singh, father; filed the claim for compensation, claiming Rs.10,00,000.00 with interest at the rate of 18% per annum.

"(II)The owner and the driver in their written statement denied their liability and the factum of the accident and the involvement of their vehicle. However, they admitted the insurance of the vehicle with the appellant. The appellant insurance company had also based on the information received from the insurer, denied the liability and, in any case, while admitting the insurance of the vehicle pleaded that it was a commercial vehicle and the liability of the insurance company was limited in terms of the policy."

"(III)The owner did not produce the original insurance policy in evidence. The appellant insurance company had examined two witnesses, viz. Mr. R.S. Fulliya and Mr. Ram Kunwar who produced and tendered in evidence the proposal form, the cover note and a true copy of the policy. However, these were for the period from 18.4.1982 to 17.4.1983, i.e. prior to the date of the accident in question. The appellant also produced in evidence the renewal endorsement for the period in question, viz. 20.4.1984 to 19.4.1985 (Exhibit RW.3/3). These documents clearly showed that the owner/insured had paid premium of Rs.240.00 for third party risk and another sum of Rs.16.00 to cover the risk for driver and cleaner, i.e. a total of Rs.256.00 . The appellant's contention was that the aforesaid premium covered limited liability upto Rs.1,50,000.00 as per the tariff. A suggestion was made to the witness during cross-examination that on payment of extra premium of Rs.4.00 the liability of the insurance company could be enhanced and/or made unlimited. The witness denied the suggestion that the policy for the period 20.4.1984 to 19.4.1985 was issued covering unlimited third party risk. The Development Officer of respondent No.4 was also examined who deposed that the proposal form had been signed by him and that the appellant was fully advised of the rates of premium and that he had taken the insurance for a limited third party cover."

"(IV)The learned Motor Accident Claims Tribunal after recording evidence on the question of negligence had disbelieved the version of the owner and the driver and awarded compensation in sum of Rs.4,49,600.00 with interest @9% from the date of the petition. The learned Tribunal, however, on consideration of the proposal form, insurance policy and renewal endorsement held that the liability of the insurance company was limited to Rs.1,50,000.00 and confined it to the same. The Award was passed accordingly."

"(V)The appellant insurance company has already deposited the sum of Rs.2,33,712.00 based on the limited liability of Rs.1,50,000.00 alongwith interest at the rate of 9%."

"(VI)The learned Single Judge vide the impugned judgment increased the rate of interest to 12%."

"(VII)The learned Single Judge's reasoning for holding that the appellant had unlimited liability, as succinctly put by him, may be noted below: "The documents referred to above and as noted by the Tribunal in its award clearly indicate and establish two facts (a) that the original policy or the carbon copy of the same was never produced in the Court and (b) the documents which were produced did not relate to the specific period when the accident took place or were merely renewal endorsements and did not in any manner establish that the liability of the insurance company, respondent No.5 herein, was limited to the extent of Rs.1,50,000.00 . On the contrary, it is quite clearly specified that the policy of insurance covered third party risk. The Tribunal in this background has erred in holding that the liability of the insurance company was limited. I have no hesitation in holding that the liability of respondent No.5 is unlimited and the entire amount is so payable by the insurance company. The appeal is allowed in the above terms."

(4) Learned counsel for the appellant before us has argued that the finding of learned Single Judge that since the policy covered third party risk, it would be with unlimited liability, was not correct. Learned counsel submitted that the payment of premium of Rs.256.00 comprising Rs.240.00 as the liability for third party risk and Rs.16.00 covering the risk for driver and cleaner, was not in dispute. The above premium under the tariff covered only the statutory liability in respect of personal injury to third party and if the insurance was to extend to an unlimited amount, additional premium of Rs.150.00 was liable to be paid. It is argued that the learned Single Judge should not have ignored the proposal form, cover note and the standard terms and conditions of the policy on the ground that these related to earlier period. In doing so, it is submitted that the learned Single Judge did not appreciate that the policy was being renewed on the same standard terms and conditions as before and that the original cover note and policy were relevant to indicate the nature of the policy and the limits of liability of the company.

(5) We have carefully perused the documents on record, the evidence recorded and the decisions cited by learned counsel for the parties, which we shall presently notice. It is not in dispute that the proposal form as well as the cover note initially issued were for covering the third party risk with limited liability. It has not been seriously disputed before us that the premium paid was Rs.256.00 comprising Rs.240.00 for the third party insurance and Rs.16.00 covered the risk of the driver and the cleaner. There is no evidence on behalf of the owner to claim that additional premium over and above Rs.240.00 + Rs.16.00 , i.e. Rs.256.00 had been paid. The learned counsel for respondent/owner submitted that the policy was not available with the owner. It was contended before the Mact that the policy had not been received by the insured. It is now fairly well-settled that even if there is a comprehensive insurance of a vehicle upon payment of a higher amount as premium, it would not mean that the limit of liability with regard to third party risk becomes unlimited or higher than the statutory limit fixed under sub-section (2) of Section 95 of the Motor Vehicle Act, 1939. 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 risk of extra liability to be undertaken by the insurance company. Likewise, if risk of any other nature, for instance, with regard to driver or passengers in excess of the statutory limit of liability, it has to be specified in the policy and separate premium paid therefore. This was so held in National Insurance Co.Ltd. Vs. Jugal Kishore & Ors. (1988 (I) Acj 270). It may be noted that in this case the Apex Court had observed that it was the duty of the party which is in possession of the document to produce it and such party should not be permitted to take shelter behind abstract doctrine of burden of proof. The Court had emphasized the need for the insurance company to file the copy of the insurance policy alongwith its defense even though the Court permitted the production of the photocopy before it. The Apex Court followed this in the case of New India Assurance Co.Ltd. Vs. Shanti Bai & Ors. (1995 Acj 470). In this case the liability of the insurance company was held to be unlimited by the High Court. The Apex Court after examining the policy and documents evidencing premium paid, held that the sum of Rs.600.00 paid towards passengers' risk represented the premium of Rs.12.00 per passenger for 50 passengers covering the then prevailing statutory limit of Rs.15,000.00 and the liability of the insurance company had to be confined to the said limit. The court reached the above conclusion based on the rates given in the tariff. The Court observed: "In the present case the premium which has been paid is at the rate of Rs.12.00 per passenger and is clearly referable to the statutory limit of Rs.15,000.00 per passenger under Section 95(2)(b)(ii) of the Motor Vehicles Act, 1939."

(6) Learned counsel for the respondents argued that the appellant had failed to prove the insurance policy and relied on the decision in Mahender Singh Vs. Manju Sahni (1986 Acj 446) to support the view that liability of Insurance Company was unlimited. The above decision would not advance the case of the respondent, in as much as, the ratio of the case was that in case where it was admitted that the policy was a comprehensive one, but the insurance company failed to produce the policy, the liability of the insurance company would be unlimited. In the present case, admittedly, the policy is not a comprehensive one and the amount of premium paid is not in dispute.

(7) Learned counsel for respondents also relied on the judgment in Oriental Fire & General Insurance Company Vs. Chhoti Bai (1995 Acj 962). In the said decision, it was held that provisions of Section 95, Motor Vehicles Act, 1939, do not prohibit covering of risk of a higher amount and the requirements of the Motor Vehicles Act, 1939 cannot be read as requirement of Section 95 only. The said decision did not consider the extent of premium paid and the tariff providing for the limits of liability covered. In any case, the said decision would not be of any avail in view of the judgment of the Apex Court referred to in Shanti Bai's case and Jugal Kishore (Supra). Similarly, the judgment in the case of Sham Lal & Ors. Vs. New India Assurance Co.Ltd. (1979 Acj 208) would not advance the respondents' case since it covered a case of complete failure to produce the insurance policy or other documentary evidence regarding the premium paid and in those circumstances the liability of the insurance company was held to be unlimited.

(8) Reference may also be usefully made to an earlier decision of this Court in Oriental Fire and General Insurance Co.Ltd. Vs. Veena Pruthi & Ors. (1989 Acj 1163). The Insurance Company in this case had contended that its liability was limited to Rs.50,000.00 . The owner had not produced the insurance policy but contended that the entire liability was that of the insurance company. The insurance company had produced office copy of the policy. The learned Judge observed: "The insurance company produced the office copy of the policy. Usually, in the file pertaining to the insurer only the last page of the policy is annexed as the rest of the terms are standard terms. The Tribunal held that the sheet produced by the insurance company without the terms and conditions cannot be accepted in evidence. The approach of the Tribunal was wholly erroneous. The Tribunal ought to have weighed the circumstances and evidence before it. When the owner had not produced the original copy, it was erroneous on the part of the Tribunal to hold the insurance company also jointly and severally liable for the entire amount. As stated above, the normal practice of the insurance companies is to keep the relevant page or pages on the file of each insured, showing how much of the premium is paid and risk of what amount is covered. The Tribunal also overlooked the fact that it is supposed to make a summary enquiry where it cannot insist upon the technical rules of evidence. I have, therefore, no hesitation to accept the office copy of the policy produced by the insurance company."

We are in complete agreement with the above decision and approach adopted.

(9) The proceedings before the Mact are in the nature of an enquiry to determine just compensation and the provisions/rules of Indian Evidence Act are not applicable in their rigour. The Mact is not bound to strictly enforce provisions of Indian Evidence Act. The owner/insured had contended before the Mact that the Insurance policy had not been received and was not available. Accordingly, even under the proviso to Section 66 of the Indian Evidence Act, the appellant was entitled to lead secondary evidence, without service of any notice. The appellant had accordingly tendered in evidence the copies of the documents as available with it to prove factum of insurance and payment of premium. The mandate of the statute is to determine the just compensation.

(10) We are, therefore, of the view that in the present case the appellant insurance company had duly proved the factum of insurance, produced the initial proposal, cover note and the standard terms and conditions of the policy followed by the renewal endorsement for the period in question. It goes without saying that the renewal endorsement would be as per the standard terms and conditions. Considering the same with the uniform tariff rates, it leaves no doubt that the insurance policy taken was for a limited liability as per the statute, which was Rs.1,50,000.00 and no premium to have coverage for liability in excess had been paid. We are supported in this view by the judgments of the Apex Court in New India Assurance Co.Ltd. Vs. Shanti Bai & Ors. (Supra) and National Insurance Co.Ltd. Vs. Jugal Kishore & Ors. (Supra). We do not agree with the view of the Learned Single Judge that the liability of the insurance company has to be unlimited. We, accordingly, allow the appeal, set aside the order of the learned Single Judge in this regard and restrict the liability of the appellant insurance company to Rs.1,50,000.00 .

(11) The learned Single Judge in his discretion had increased the rate of interest from 9% to 12%. The same has not been assailed or challenged before us. In any case, exercise of such discretion cannot be faulted with. Accordingly, the liability of the appellant insurance company would be limited to Rs.1,50,000.00 alongwith enhanced interest @ 12%, as directed by the learned Single Judge, from the date of the petition till the date the amount was deposited by the insurance company.