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2012 Supreme(Del) 1605
HIGH COURT OF DELHI
G.P. MITTAL, J.
National Insurance Co. Ltd.
Versus
K.R. Murgeshan & Others
MAC. APP. 10 of 2008
Decided On : 02-07-2012
For the Appellant:Pradeep Gaur, Dev Dutt, Advocates.
For the Respondents: None.
In the absence of proof of the insurance policy, the liability of the insurance company is unlimited.
Headnote:
Insurance Liability - Motor Accident Compensation - Motor Vehicles Act, 1939, Section 95(2) - National Insurance Company Limited v. Jugal Kishore & Ors., (1988) 1 SCC 626, New India Assurance Company Ltd. v. C.M. Jaya and Ors., (2002) 2 SCC 278 - NarenderSingh v. Sudershan Kumar, 2005 ACJ 731 - New Asiatic Insurance Co. Ltd. v. Pessumal Dhannamal Aswani, AIR 1964 SC 1736 - Chandro Devi & Ors. v. Jit Singh & Ors., 1989 ACJ 41 - New India Assurance Company Limited v. Darshan Singh & Ors., 1992 ACJ 533
Fact of the Case:
The First Respondent suffered serious injuries in a motor accident and was awarded compensation. The Insurance Company's liability was disputed based on the insurance policy terms and the amount of compensation awarded.
Finding of the Court:
The Court found that the Insurance Company failed to prove the limitation of its liability to 50,000/- as it did not produce the complete insurance policy for the relevant period. The Court held that in the absence of proof of the insurance policy, the liability of the insurance company is unlimited.
Issues: Dispute over the Insurance Company's liability and the amount of compensation awarded.
Ratio Decidendi: In the absence of proof of the insurance policy, the liability of the insurance company is unlimited. The insurance company must prove the insurance policy and its terms and conditions to limit its liability.
Final Decision: The Appeal was dismissed, and the Insurance Company was ordered to pay the awarded compensation without limitation.
G.P. Mittal, J.
1. The Appeal is directed against the judgment dated 19.04.2006 and 04.08.2007 whereby a compensation of 1,86,000/-was awarded in favour of the First Respondent for having suffered injuries in a motor accident which occurred on 09.07.1988. While awarding the compensation, the Motor Accident Claims Tribunal (the Claims Tribunal) opined that the Appellant’s liability was limited to 50,000/-. However, it ordered the Insurance Company to pay the entire compensation and recover the excess compensation from Respondents No.2 and 3 (the driver and owner) of the bus involved in the accident.
2. On 09.07.1988 at about 5:30 P.M., the First Respondent suffered serious injuries while boarding a bus near Virat Cinema. On appreciation of evidence, the Claims Tribunal found that the accident was caused on account of rash and negligent driving of bus No.DEP-4614 by its driver, the Second Respondent. The bus was owned by the Third Respondent. The Claims Tribunal found that the First Respondent had suffered 50% disability in respect of his right lower limb. The Claims Tribunal awarded an overall compensation of 1,86,000/-along with interest @ 10% per annum.
3. The rashness or negligence on the part of the Second Respondent or the amount of compensation awarded has not been disputed by the Appellant Insurance Company. The finding on the quantum of compensation and the Appellant’s limited liability to the extent of 50,000/-has not been challenged by the driver or the owner of the bus.
4. Even during hearing of the Appeal none appeared on behalf of the Claimant (the First Respondent), the driver (the Second Respondent) and the owner of the bus (the Third Respondent) The Claims Tribunal did not give any reason to make the Insurance Company liable to pay the entire compensation and then recover it from the Second and the Third Respondent.
5. During inquiry before the Claims Tribunal it was proved that in spite of service of the notice under Order XII Rule 8 CPC, the original insurance policy was not produced by Gyan Singh (the Third Respondent), owner of the bus. The Appellant Insurance Company in the circumstances was entitled to lead secondary evidence to prove the policy. I would advert a little later, as to whether the office copy of the insurance policy was proved or not. (It may, however, be noted that the Claimant, the driver and the owner have not filed any Appeal).
6. It is urged by the learned Counsel for the Appellant Insurance Company that since the premium of just 240/-was paid towards the liability to public risk, the Appellant Insurance Company’s obligation to indemnify the insured was only to the extent of 50,000/-.
7. It is urged that although the Third Respondent obtained a comprehensive policy, but the same need not necessarily cover a higher risk vis-à-vis the third party. There has to be a specific contract for coverage of a higher risk by paying additional premium towards the third party risk, which has not been done in this case. Thus, the liability of the Insurance Company was limited to 50,000/-only. Reliance is placed on a three Judge Bench decision of the Supreme Court in National Insurance Company Limited v. Jugal Kishore & Ors., (1988) 1 SCC 626, and a Constitutional Bench judgment of the Supreme Court in New India Assurance Company Ltd. v. C.M. Jaya and Ors., (2002) 2 SCC 278.
8. Suffice it to say that as per the first Page of the Insurance Policy issued for the period 27.11.1985 to 26.11.1986 (which was allegedly renewed from 27.11.1986 to 26.11.1987 and then from 27.11.1987 to 26.11.1988) there was an avoidance clause, which is extracted hereunder:-
“IMPORTANT NOTICE
The insured is not indemnified if the vehicle is used or driven otherwise than in accordance with this Schedule. Any payment made by the Company by reason of wider terms appearing in the Certificate in order to comply with the Motor Vehicles Act, 1939 is recoverable from the insured. See the clause headed “AVOIDANCE OF CERTAIN TERMS”
