IMPORTANT POINT
The proviso to sub-section (2) of Section 147 of the Motor Vehicles Act, 1988 cannot be read as a proviso to Section 217(2)(c) of the New Act and it does not, in case of the existing policy being in force on the date of the occurrence of the accident, limit the liability of the Insurance Company to the amount mentioned in Section 92(2) of the Old Act.

Headnote:Motor Vehicles Act, 1988-Section 147-Motor Vehicles Act, 1939-Section 95-Liability of Insurance Company-Scope and import of proviso to sub-section (2) of Section 147-Proviso merely indicates span of validity of existing policy-Proviso does not limit liability of Insurance Company to amount mentioned in policy issued under Old Act-Liability of Insurance Company determinable in terms of law in force as on date of accident.
       Proviso to Section 147 cannot be so interpreted as to subject the insurance companies to different maximum liabilities under statutory policies in respect of accidents occurring during the same period. We do not think that this could be the intention of the Parliament. Having fixed a date for enforcement of the New Act incorporating the requirement of a statutory policy under Section 147(1) thereof, the effect of the provision could not have been whittled down during the period which may vary from one day to four months depending upon when the existing policy expires within the said period of four months. It merely indicates the span of validity of existing policy. Here, it is pertinent to notice the provisions of Section 217(2) of the New Act which deal with the effect of repeal of the Old Act (under which a statutory policy was taken) on coming into force of the New Act. Sub-section (1) of Section 217 repeals, inter alia, the Old Act. Clause (c) of sub-section (2), which is relevant, provides that notwithstanding the repeal under sub-section (1) of the Old Act any document, referring to any of the repealed enactments or the provisions thereof, shall be construed as referring to the New Act or the corresponding provisions thereof. (Para 10)
       The proviso to sub-section (2) of Section 147 of the Motor Vehicles Act, 1988 cannot be read as a proviso to Section 217(2)(c) of the New Act and it does not, in case of the existing policy being in force on the date of the occurrence of the accident, limit the liability of the Insurance Company to the amount mentioned in Section 95(2) of the Old Act. The proviso to sub-section (2) of Section 147 does not limit the liability of Insurance Companies to payment of compensation to the extent specified in the policy of insurance in terms of Section 95(2) of the Old Act which is in force before the commencement of the New Act for a period of four months after commencement of the New Act or till the date of expiry of such a policy, whichever is earlier. (Paras 11 & 12)
       In the instant case, the policy was issued on October 28, 1988 and it was valid up to October 27, 1989. The New Act came into force on July 1, 1989 and the accident occurred on September 4, 1989, after the New Act came into force but before the expiry of the policy in force. On these facts the liability of the Insurance Company will be governed by sub-section (2)(a) of Section 147 of the New Act, namely, the amount of liability incurred but not under Section 95(2) of the Old Act. The High Court is, therefore, right in allowing the appeal of the respondents claiming the whole amount of compensation awarded by the Tribunal from the Insurance Company. (Para 14)

JUDGMENT

Syed Shah Mohammed Quadri, J.-Leave is granted.

2. This appeal is from the judgment and order of the High Court of Rajasthan at Jaipur dated May 29, 1997 allowing Civil Misc. Appeal No. 682 of 1996 filed by respondents 1 and 2 herein. The point that arises for consideration is the scope and import of the proviso to sub-section (2) of Section 147 of the Motor Vehicles Act, 1988 (for short, the New Act ).

3. The appellant (hereinafter referred to as, the Insurance Company ) issued a policy in favour of the first respondent (Behari Lal), owner of the bus bearing registration No. R.J.P. 4719. The policy of insurance, issued under the provisions of the Motor Vehicles Act, 1939 (for short, the Old Act ), was valid for one year - from October 28, 1988 to October 27, 1989. The said bus, while being driven by respondent No. 2, met with an accident which resulted in the death of one passenger - Shiv Bhagwan and injuries to the other passengers travelling therein. Respondent Nos. 3 to 8, heirs of the said Shiv Bhagwan, filed a petition before the court of Additional District Judge, Khetri, Rajasthan - the Motor Accident Claims Tribunal (for short, the Tribunal ), claiming compensation of Rs. 14,14,000/- from respondent Nos. 1 and 2 (being the owner and the driver of the bus) and the Insurance Company as the insurer. The Insurance Company contested the claim, inter alia, on the ground that its liability under the terms of the policy issued under the Old Act and the provisions of the New Act, was limited to only Rs. 15,000/- per passenger travelling in the bus. On June 1, 1996, the Tribunal held that respondent Nos. 3 to 8 were entitled to compensation of Rs. 1,50,000/- from respondent Nos. 1 and 2 and that the liability of the Insurance Company was limited only to Rs. 15,000/-. Respondent Nos. 1 and 2 filed appeal before the High Court challenging that part of the order of the Tribunal, which limited the liability of the Insurance Company. On May 29, 1997 a learned Single Judge of the High Court allowed the appeal holding that the liability of the Insurance Company is co-extensive with that of respondent Nos. 1 and 2 herein and thus modified the Award of the Tribunal. It is from that order of the High Court, the Insurance Company is in appeal before us.

4. Mr. Jitendra Sharma, learned senior counsel appearing for the Insurance Company, contended that in view of the proviso to sub-section (2) of Section 147 of the New Act, the liability of the Insurance Company is limited only to Rs. 15,000/- per passenger as the existing policy was issued under Section 95(2) of the Old Act, therefore, the High Court erred in law in modifying the Award of the Tribunal.

5. Dr. Sushil Balwada, learned counsel appearing for the respondents, has submitted that under the New Act the liability of the Insurance Company is unlimited; the existing policy which was issued under the Old Act and was valid beyond the period of four months from coming into force of the New Act was kept alive within that period by the proviso but it did not limit the liability of the Insurance Company to the amount mentioned in the policy in accordance with the terms of Section 95(2) of the Old Act.

6. In the light of the above contentions and the relevant provisions of the New Act, we shall examine the scope of the proviso to sub-section (2) of Section 147 of the New Act. Insofar as the provisions of the Section 147 are relevant for purposes of the present discussion, they are set out hereunder :

CHAPTER XI

147. Requirements of policies and limits of liability.-

(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-

(a) is issued by a person who is an authorised insurer; and

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)-

(i) against any liability which may be incurred by him in respect of the death of or bodily (in

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