Meena Devi And Ors. vs Ramesh Kumar And Ors.
1998 Latest Caselaw 387 Del

JUDGMENT

Usha Mehra, J.

1. The points for consideration in tills appeal are -- (1) whether. Motor Accident Claims Tribunal (in short the Tribunal) was justified in allowing deduction on account of lump sum payment of compensation? (2) Whether the Tribunal was justified in not awarding interest on the awarded amount from the date of petition till realisation? (3) Whether the liability of the Insurance Company was limited? (4) Whether the Compensation awarded by the Tribunal is not just and proper?

2. In order to answer these questions, we may have glance to the relevant facts which are necessary for the determination of these questions. The deceased Ram Gopal aged 35 years was going on his cycle on 25th March,1980 at 8.40 p.m. when a truck bearing No. RRK-2964 came in a fast speed driven rashly and negligently by its Driver hit the cycle driven by Ram Gopal. Deceased Ram Gopal suffered injuries and ultimately succumbed to the same. He was Halvai by profession. His monthly, income was Rs. 600/- from this business. Deceased Ram Gopal left behind his widow, minor daughter and four minor sons. Having lost the bread earner of the family, the legal heirs of the deceased filed a claim petition under the Motor Vehicles Act (in short the Act) claiming a compensation to the tune of Rs. 2,50,000/-. By the impugned award the Tribunal worked out the dependency loss at Rs. 57,600/- and then order deduction at the rate of 15% on account of lump sum payment. Thus awarded a sum of Rs. 48,960/-. The Tribunal also held that liability of the Insurance Company, as per the policy, was limited to the extent of Rs. 50,000/-.

3. At the outset it must be mentioned that deduction on account of the lump sum payment is not permissible. It is now settled principle of law as laid down by the Supreme Court in the case of Hardeo Kaur and Ors. v. Rajasthan State Road Transport Corporation and Anr. , that deduction on account of lump sum payment is not justified. While setting aside such a direction, the Apex Court observed that "with the value of rupee dwindling due to high rate of inflation, there is no justification for making deductions on account of lump sum payment". Similar view was expressed by this Court in Chameli Wati and Ors. v. Delhi Municipal Corporation and Ors. 1984 ACJ page 134 : II (1985) ACC 373, wherein it was held that no deduction on such account is called for and that by permitting this deduction for the benefit of the respondent who had been found negligent and responsible for causing death would be in fact to reward him for his negligence. Similar view was expressed in the case of Rukmani Devi and Ors. v. Om Prakash and Ors. 1991 ACJ page 3; General Manager, Kerala State Road Transport Corporation v. Susamma Thomas and Ors. ; Dharam Singh and Anr. v. Parveen Sehgal and Ors. . In view of the law laid down by this Court as well as by Apex Court, the deduction allowed by the Tribunal at the rate of 15% is hereby set aside.

4. Now turning to the question of non-granting of interest, I am in full agreement with the contention of Ms. Manjit Chawla, Counsel for the appellant that the Tribunal erred in not awarding interest on the amount of compensation from the date of petition till realisation. No reasons have been assigned by the Tribunal as to why interest from the date of petition till realisation could not be awarded. In fact perusal of the record shows that there was no delay on the part of the appellant in pursuing their petition. This Court in the following cases Nirmal Singh and Anr. v. C.M. Jaya and Ors. , Bimla Devi and Anr. v. New India Assurance Co. Ltd. and Ors. and National Insurance Co. Ltd. v. Harjeet Kaur and Ors. held that if there is no fault of the claimant or there was no delay attributable to them and the Tribunal having not given any reason for non-granting of interest from the date of petition then such an award requires interference Accordingly, the award in this regard is modified. The appellant would be entitled to interest on the compensation amount from the date of petition till realisation.

5. Regarding the question whether liability of the Insurance Company was limited or not, Mr. S.K. Paul appearing for the Insurance Company contended that the insurance policy dearly stipulated that the limit of 1iability of the Company was to fee extent of Rs. 50,000/- only. There was no special contract covering additional liability as required in the case of Union of India v. Jugal Kiskare, 1988 ACJ page 270, On the other hand Mrs. Manjit Chawla drew my attention to the terms of the policy and contended that the term of the policy clearly depicts that it was not an "Act only" policy. The. policy covered third party risk for which higher premium was paid by, the insured. As per the Tariff prevalent at the relevant time the premium for an "Act only" policy was Rs. 84A whereas in the present case the insured paid the premium of Rs. 125/-. This being not an "Act only" policy but a policy covering higher risk for which additional premium was paid, therefore, the policy covered higher risk and the liability of the Insurance company was unlimited. To support her contention that third party is not bound by the contract of insurance particularly when additional premium was charged by the Insurance Company covering higher risk the insurer would be liable to pay full compensation amount, she placed reliance on the decision of the Supreme Court in the case of Amrit Lal Sood v. Smt Kaushalya Devi Thapar 1998 (2) Scale page 344 : I (1998) ACC 332 (SC). In that case the Court after analysing the terms of the policy which were similar and identical to the terms of the insurance policy in question, the Apex Court after relying on the judgment of New Asiatic Insurance Co. Ltd. v. Pessumal Dhannamal Aswani and Ors. 1964 (7) SCR page 867, observed mat contract between the insured and the Company may not provide for all the liabilities which the Company has to undertake vis-à-vis the third party, in view of the provisions of the Act. But once the Company undertook liability to third party incurred by the person specified in the policy, the third party's right to recover any amount under or by virtue of provisions of the Act is not affected by any condition in the policy.... To conclude that proviso (a) of para No. 3 of Section II is a mere condition affecting the rights of the insured who affected the policy and the persons to whom cover of the policy was extended by the Company, and does not come in the way of third party's claim against the Company on account of its claim against a person specified in para 3 as one to whom the cover of the policy was extended. By observing so the Apex Court held that the Insurance Company was liable to meet the claim of the claimants and satisfy the award and the liability of the Insurance Company was held to be unlimited. In the present case also the admitted fact on record shows that it was not an "Act Only" policy. It was a policy covering higher risk for which the Insurance Company had charged additional premium to the tune of Rs. 125/-. For an "Act Only" policy at the relevant time as per the Tariff the premium payable was Rs. 84/-. Therefore, insurer having agreed to cover higher risk by charging additional premium in fact undertook to discharge its liability to unlimited extent. Since in this case higher risk was covered and additional premium was charged, therefore, relying on the observations in Amrit Lal Sood's case (supra) it can safely be concluded that liability of me Insurance Company was not limited. Mr. Paul's contention that merely because third party risk was covered will not make its liability unlimited, to my mind, this argument has no force. It is not mere mention of third party risk we are talking but the additional premium charged which has made its liability unlimited. If it was not additional premium then for what purpose higher premium was charged has not been explained. Insurance Company did not lead any evidence before the Tribunal to explain as to under what circumstances the premium of Rs. 125/- was charged as against Rs. 84/-. Having failed to give any explanation the only conclusion which can be drawn is that higher risk was covered by paying additional premium. Therefore, liability of the Insurance company in the facts of this case cannot be called limited. In the policy against clause "limit of liability" the liability of the Company under Section II-I(ii) in respect of any one claim arising out of damage to property was restricted to Rs. 50,000/-. But against Section II-I(i) in respect of bodily injury or death, no limit was prescribed. Nothing was mentioned except affixing a stamp stating "such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939". Mr. Paul states that this would indicate that Insurance Company was only liable to pay as prescribed under Section 95 of the Motor Vehicles Act and nothing beyond that. By affixing these words it was clearly indicated that liability would be limited to the tune of Rs. 50,000/- as per Section 95. I am afraid this argument of Mr. Paul cannot stand for two reasons, firstly the stamp affixed against column Section II-I(i) was ineligible. Nothing could be decipher, therefore, insured would not know what was stated by the insurer. Since insurance is a contract, the contract party must make the other party understand the terms of contract. By the stamp being not legible and the terms having not explained to insured cannot be now used against him or third party. Even if it is presumed that stamp was legible still it has no relevance because of the additional premium having been charged by the Insurance Company from the insured. Exhibit R-1 is not an "Act only" policy. It cannot be said that such type of policy restricted the liability of the Insurance Company to the extend indicated therein. As already pointed out above, the Insurance Company charged additional premium, therefore, it cannot be said that liability of the Insurance Company was limited. In similar circumstances, Madhya Pradesh High Court in the case of Anupama and Ors. v. Laxmanrao and Ors. 1988 ACJ page 996 : II (1988) ACC 237, held that the statutory insurance policy does not necessarily require the insurer to insure the vehicle in respect of passengers. In that case the policy incorporated a condition which was in addition to the statutory requirement. Therefore, the Court opined that it could not be said to be of such a type which restricts the limit of liability of the Insurance Company to the extent indicated therein. In that case as in this case additional premium was charged hence the Court observed that in view of this fact the words "such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939, would not absolve the Insurance Company from its liability to pay the entire compensation amount as fixed by the Tribunal which is a part and parcel of the provisions under the Motor Vehicles Act". It was further observed that if the Insurance Company intended to restrict its liability to the extent as contemplated by Section 95 of the Motor Vehicles Act, the words "such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939" would have been worded differently thereby specifically stating that even in respect of third, parties, even though extra premium is charged for passengers, the liability would be restricted as mentioned in Section 95 of the said Act. The very words 'such amount' and 'requirement' itself contemplate mat it is a mandatory requirement under the terms of the present policy. That apart from the statutory liability in the present case the Insurance Company is also liable to fulfill the requirements covered by the provisions of the Motor Vehicles Act itself and, payment of compensation awarded by the Tribunal under the provisions of the said Act being a requirement of the said Act, that liability is covered by the words 'such amount' especially when under Section II 'liability to third parties' the Company has specifically agreed that the Company will indemnify the insured against all sums including claimant's costs and expenses which the insured shall become legally liable to pay, subject to the provisions as mentioned therein, which are not attracted to the facts of the present case. In that case owner of the bus had insured his vehicle covering the risk of passengers with a clause that "liability will be such amount as was necessary to meet the requirement of the Motor Vehicles Act, 1939".

The passenger in that case got down for urinating and the driver reversed the bus. In that case also the Insurance Company had charged additional premium for insuring the passengers. When the claim was filed, the Insurance Company pleaded its liability as per the Statute as per the term mentioned in the policy. Negating the contention of the Insurance Company, the Court held that Insurance Company is liable to pay entire amount of compensation as it had accepted extra premium for passengers and had thus agreed and contracted to satisfy 'such amount as is necessary to meet the requirements of the Motor Vehicles Act'. These words were interpreted to mean that liability was not limited. Therefore, relying on this decision, it can safely be concluded that using the words "such amount as is necessary to meet the requirements of the Motor Vehicles Act,1939" do not absolve the Insurance Company from making payment of the entire amount as awarded by the Tribunal. Accordingly I hold that Insurance Company's liability is joint and several for the entire amount of compensation.

6. So far as the question of compensation is concerned, from the testimony of Lakhan Pal, PW-4 it has come on record that the deceased was earning about Rs. 600 to Rs. 700/- per month. Even when subjected to cross examination, his statement could not be dislodged. It has also come in evidence that deceased was getting Rs. 700/- to Rs. 800/- from the owner of the shop where he was working as Karigar. Deceased's wife Rajwati appearing as PW-5 in no uncertain words stated that her husband was earning Rs. 30/- to Rs. 40/- per day. That he was contributing Rs. 30/- per day for household expenses. Thus from the unrebutted and un contrbverted testimony of PW-4 and PW-5 it has been fully established that on an average the income of the deceased was more than Rs. 600/- per month. He was 35 years of age. Had he been alive he would have earned more; This aspect the Tribunal, to my mind, completely ignored .The Tribunal took into consideration the per day earning of the deceased at Rs. 15/- and thus arrived at the income of deceased at Rs. 450/- per month. By doing so the Tribunal fell in error because this conclusion is not based on evidence available on record. There was no justification to ignore the testimony of Shri Lakhan Singh, PW-4 and deceased's wife PW-5 particularly when their statements with regard to the earning of the deceased had remained unrebutted and uncontroverted on record. Therefore, taking into consideration the testimony of PW-4 and PW-5, the income of the deceased ought to have been taken at Rs. 600/- per month or Rs. 7,200/- per annum. Out of which 1/3rd could be deducted for his personal expenses. Thus the dependency loss to the family would come to Rs. 4,800/- per annum. The deceased was 35 years old at the time of his death and the Tribunal having come to the conclusion that he could have lived upto the age of 70 years if he had not died in the accident, widow of the deceased being younger to him and the children being minor, to my mind, the multiplier of 18 years ought to have been applied. Applying the multiplier of 18 years the compensation will come to Rs. 86,400/- on which the appellant would also be entitled to interest at the rate of 12% per annum from the date of petition till realisation subject of course to the credit to be given for the amount already paid. The amount of compensation alongwith interest, the respondents are jointly and severally liable to pay.

With these observations, the appeal stands disposed of.