Important Point
Though the Insurance Policy was a comprehensive policy it was to cover the entire loss or damage to the vehicle and not for the purpose of covering unlimited or higher liability in respect of death of or bodily injury to any passenger.

Headnote:Motor Vehicles Act, 1939-Section 95(2)(b)(ii)-Liability of Insurance Company-Insured Passenger Bus with 50 passengers capacity-Accident due to rash and negligent driving - 35 passengers dying-Claim to Accident Claims Tribunal -Insurance Co.’s liability fixed at 5000/- per passsenger and Rs. 75000/- in all-Whether correct despite the fact that it was a comprehensive Insurance as Rs. 300/- was paid over and above Basic Premium of Rs. 626/- to cover Act liability? (Yes)-Appeal dismissed.
       Held : The liability of the insurance company will have to be determined in terms of Section 95(2)(b)(ii). It is not in dispute that at the relevant time Section 95(2)(b)(ii) limited the liability of the insurance company to Rs. 5,000/- each passenger and Rs. 75,000/- in all, where the vehicle was registered to carry more than 30 but not more than 60 passengers. (Para 9)
       A fair reading of the insurance policy discloses that the basic premium of Rs. 626/- though paid for comprehensive risk was not intended to cover all the statutory liabilities but it was really intended to cover the entire loss or damage to the vehicle. (Para 10)
       The insurance company had charged a premium of Rs. 300/- towards passengers’ risk. It works out at Rs. 6/- per passenger. As per the Indian Motor Tariff applicable on the date of accident by charging a premium of Rs. 6/- per passenger the liability of the company per passenger was Rs. 5,000/- only. The Indian Motor Tariff which regulates a premium and liability of insurance company is framed by the Tariff Advisory Committee, a statutory body set up under the Insurance Act. The additional premium of Rs. 300/- was thus paid to cover the statutory liability for 50 passengers as the vehicle insured was a passenger bus having registered capacity of carrying 50 passengers. Endorsement No. 13 which was attached to and formed part of the policy and which we have set out above also makes it clear that it was in consideration of an additional premium of Rs. 300/- that the insurance company had undertaken to identify the insured against his liability in respect of passengers to the extent of Rs. 5,000/- for each passenger and Rs. 75,000/- in all. It is, therefore, not possible to accept the contention raised on behalf of the appellant that the additional premium of Rs. 300/- was paid for covering higher than the statutory liability. There was no special contract to cover unlimited liability in respect of the passengers. (Para 11)
       As we do not find any substance in any of the two contentions raised on behalf of the appellant these appeals are dismissed. However, in view of the facts and circumstances of the case there shall be no order as to costs. (Para 12)

Judgment

Nanavati, J.-Leave granted.

2. All these appeals arise out of the judgment of the Patna High Court in Civil Review Applications Nos. 4 to 10 of 1997 filed by the appellant. The appellant wanted the High Court to review its judgment passed in the appeals filed by it against the common judgment and separate awards given by the Additional Claims Tribunal Hazaribagh (hereinafter referred to as the Tribunal) in the motor accident claims cases filed by the claimants-respondents.

3. On 12.10.73, a passenger bus of the appellant met with an accident because of rash and negligent driving by its driver. 35 passengers travelling in that bus died. In all nine claim cases were filed before the Tribunal. Two cases were dismissed and the remaining seven cases the Tribunal awarded different sums of money by way of compensation and ordered that in each case out of the total amount payable to the claimants Rs. 5,000/- shall be paid by the insurance company and the rest shall be paid by the appellant.

4. The appellant feeling aggrieved by the amount of compensation and the finding that the insurance company was liable to pay only Rs. 5,000/- per passenger and Rs. 75,000/- in all preferred appeals before the High Court. Two contentions were raised before the High Court. It was contended that the insurance policy was a comprehensive policy and, therefore, the insurance company was legally liable to pay the whole amount of compensation and limiting its liability to Rs. 5,000/- per passenger and Rs. 75,000/- in all was contrary to the Motor Vehicle Act, 1939. The second contention was that the appellant had paid additional premium of Rs. 300/- and, therefore, limiting liability of the insurance company to Rs. 75,000/- in all was not justified. The High Court rejected both these contentions. Relying upon the decision of this Court in National Insurance Co. Ltd. v. Jugal Kishore1 the High Court held that even where the owner of a vehicle gets it comprehensively insured such insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle calculated according to the rules and regulations framed in that behalf. Comprehensive insurance of the vehicle and payment of higher premium on this score, however, do not mean that the limit of the liability with regard to third party risk or risk of any other nature becomes unlimited or higher than the statutory liability fixed under sub-section (2) of Section 95 of the Act. It also held that the additional premium of Rs. 300/- was paid as it was a passenger bus having capacity of carrying 50 passengers. It held that there was no special contract between the appellant-company and the insurance company to cover unlimited liability in respect of the passengers. In support of this view it also relied upon the decision of this Court in New Indian Assurance Company Limited v. Shanti Bai2. Taking this view the High Court dismissed all the appeals.

5. The appellant thereafter filed review petitions before the High Court on the ground that the insurance policy was misread or misinterpreted by the High Court as it failed to appreciate that extra premium of Rs. 300/- was paid over and above the basic premium of Rs. 615/- which covered the Act liability. The High Court did not agree with this contention raised by the appellant and dismissed the review petitions.

6. Only point raised in these appeals is whether the High Court was right in holding that, under the insurance policy, the insurance company was liable to indemnify the insured only to the extent of Rs. 5,000/- per passenger and Rs. 75,000/- in all. It was submitted by the learned counsel that the appellant had paid additional premium of Rs. 300/- and, therefore, the extent of liability of the insurance company was unlimited and should not have been restricted to Rs. 5,000/- in respect of any one person and Rs. 75,000/- in all. The learned counsel for the insurance company disputed t

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Judicial Analysis

SupremeToday

1998 Supreme(SC) 675

Important PointThough the Insurance Policy was a comprehensive policy it was to cover the entire loss or damage to the vehicle and not for the purpose of covering unlimited or higher liability in respect of death of or bodily injury to any passenger.

Cases Referred (2)

Judicial Analysis

Important Point
Though the Insurance Policy was a comprehensive policy it was to cover the entire loss or damage to the vehicle and not for the purpose of covering unlimited or higher liability in respect of death of or bodily injury to any passenger.