Back
2002(1) Supreme 170
SUPREME COURT OF INDIA
(From Delhi High Court)
Chief Justice of India and Syed Shah Mohammed Quadri, Umesh C. Banerjee, S.N. Variava and Shivaraj V. Patil, JJ.
New India Assurance Co. Ltd. -Appellant
versus
C. M. Jaya & Ors. -Respondents
Civil Appeal Nos. 4566-4567 of 1996
Decided on 17-1-2002
Counsel for the Parties :
For the Appellant : Uday Gupta, Ms. Nina Gupta, Ms. Arpita Mahajan, Ms. Praneeta Sharma, Vineet Kumar, Advocates.
For the Respondents : K.C. Dua, Tarun Dua, Ms. Sonia Sharma, S. C. Sharda and Lalit Kumar, Advocates.
Held : 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. (Para 5)
Held also : In the light of what is stated above, we do not find any conflict on the question raised in the order of reference between the decisions of two benches of three learned Judges in Shanti Bai and Amrit Lal Sood aforementioned and, on the other hand, there is consistency on the point that in case of an insurance policy not taking any higher liability by accepting a higher premium, the liability of the insurance company is neither unlimited nor higher than the statutory liability fixed under Section 95(2) of the Act. (Para 8)
Held finally : In the premise, we hold that the view expressed by the bench of three learned Judges in the case of Shanti Bai is correct and answer the question set out in the order of reference in the beginning as under:-
In the case of insurance company not taking any higher liability by accepting a higher premium for payment of compensation to a third party, the insurer would be liable to the extent limited under section 95(2) of the Act and would not be liable to pay the entire amount. (Para 11)
(ii) Motor Vehicles Act, 1939-Section 95(2)-Liability of Insurance Co.-Insurance Policy limiting liability to Rs. 50,000/- -Award of Rs. 1,03,380/- as compensation by MAC limiting liability of appellant to Rs. 50,000/- -High Court holding the liability of the appellant was unlimited as the vehicle was comprehensively insured-Appeal to Supreme Court-Whether High Court was right? (No)-Appeal allowed.
Held : The appeals are, therefore, allowed to the extent of limiting the liability of the appellant insurance-company to Rs. 50,000/-, making it clear that it does not affect in any manner the liability of the respondents 4 and 5 (the truck owner and the driver) to pay the full amount of the award. The judgment and order of the High Court under challenge in these appeals shall stand modified accordingly. Parties to bear their respective costs. (Para 14)
JUDGMENT
Shivaraj V. Patil, J.-These appeals are placed before us pursuant to the order of reference made in New India Assurance Co. vs. C.M. Jaya and others [(1999) 2 SCC 47], which reads:-
"The question involved in these appeals is whether in a case of insurance policy not taking any higher liability by accepting a higher premium, in case of payment of compensation to a third party, the insurer would be liable to the extent limited under Section 95(2) or the insurer would be liable to pay the entire amount and he may ultimately recover from the insured. On this question, there appears to be some apparent conflict in the two three-Judge Bench decisions of this Court-(1) New India Assurance Co. Ltd. v. Shanti Bai [(1995) 2 SCC 539] and (2) Amrit Lal Sood v. Kaushalya Devi Thapar [(1998) 3 SCC 744].
2. In the latter decision, unfortunately the decision in New India Assurance case (supra) has not been noticed though reference has been made to the decision of this Court in National Insurance Co. Ltd. v. Jugal Kishore [(1988) 1 SCC 626], which was relied upon in the earlier three-Judge Bench judgment. In view of the apparent conflict in these two three-Judge Bench decisions, we think it appropriate that the records of this case may be placed before my Lord, the Chief Justice of India to constitute a larger Bench for resolving the conflict. We accordingly so direct. The record may now be placed before the Hon ble the Chief Justice of India."
2. In the first place, we think it appropriate to have a closer look at the three decisions referred to in the above order.
3. In New India Assurance Co. Ltd. v. Shanti Bai and others [(1995) 2 SCC 539], the facts were that on 3.1.1989 the deceased Laxman Singh, who was sitting on the top of the bus with the permission of the bus driver, respondent No. 5, who hit a tree by his rash and negligent driving. The legal heirs of Laxman Singh filed claim for compensation amounting to Rs.7,81,000/- before the Motor Accident Claims Tribunal. The Tribunal, by its order, awarded compensation of Rs. 1,10,000/- together with interest and directed the insurance company (the appellant before this Court) and the respondent Nos. 4 and 5, being the owner and driver of the bus, to pay the same. The appeal filed by the appellant before the High Court was dismissed. The short question that came up for consideration before this Court was whether the appellant was liable to pay compensation to the tune of Rs.1,10,000/- together with interest thereon in the light of the contention of the appellant that its liability was limited to Rs. 15,000/-.
The owner of the bus had taken a comprehensive insurance policy on the estimated value of the vehicle at Rs.2,50,000/-. In the schedule of premium an additional payment of Rs. 600/- in respect of 50 passengers was shown. The appellant-company contended that this additional payment @ Rs. 12/- per passenger was to cover its limited liability of 50 passengers under Section 95 of the Motor Vehicles Act, 1939 (for short the Act ).
Following the case of National Insurance Co. Ltd., New Delhi vs. Jugal Kishore and others [(1988) 1 SCC 626] and referring to the provisions of Section 95 of the Act, the Court stated thus: -
"These provisions were interpreted by this Court in the case of National Insurance Co. Ltd. v. Jugal Kishore. This Court observed that even though it is not permissible to use a vehicle unless it is covered at least under an "act only" policy, it is not obligatory for the owner of a vehicle to get it comprehensively insured. In case, however, it is got comprehensively insured, a higher premium is payable depending on the estimated value of the vehicle. 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 this behalf. It has further observed as under: -
"Comprehensive insurance of the vehicle and payment
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
