The liability of the insurance company is limited to the extent specified in the policy of insurance.

K.P. Radhakrishna Menon, J.

1. The insurance company, the third respondent in O.P. (MV) No. 1218 of 1985 before the M.A.C.T., Quilon is the appellant. The order of the Tribunal making the insurance company liable for the entire compensation awarded against the owner as also the driver of the vehicle involved in the accident is under challenge.

2. The learned counsel for the appellant argues that the liability of the insurance company is limited to the extent of Rs. 15,000/-and that it is so can be seen from the 'motor policy' issued on 11.5.1983. The counsel in this connection made specific reference to the endorsement in the policy under the head 'limits of liability', namely, limit of the amount of company's liability under Section II-I (i) in respect of any one accident such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939 and limit of the amount of the company's liability under Section II-I (ii) in respect of any one claim or series of claims arising out of one event Rs. 50,000/-. The Tribunal below, therefore, the counsel submits, has gone wrong in making the appellant insurance company liable for the entire compensation amount of 'Rs. 71,000/- with 6 per cent interest from 27.2.1984 till 3 months after the date of award and 18 per cent interest thereafter till realisation'.

3. The learned counsel representing the owner of the vehicle, the sixth respondent, on the other hand argues that though under the insurance policy the liability of the insurance company is limited, the insurance company must be deemed to be liable for the entire amount in view of the provisions contained in Section 147 of the Motor Vehicles Act, 1988, for short 'the 1988 Act'. It is all the more so, it is further contended, because the policy of insurance after the coming into force of the 1988 Act, must be treated as one issued under Section 147. If that be the position, it should be held that the Tribunal has rightly fastened the entire liability on the appellant insurance company, the counsel submits.

4. The question thus arising for consideration is: On the facts and circumstances of the case, could it be said that the liability of the appellant insurance company requires to be determined under Section 147?

5. To find an answer to the question we have to consider the scheme of Sections 146 and 147 of Chapter XI of the 1988 Act, which has as its caption 'Insurance of Motor Vehicles Against Third Party Risks'. Section 146 says that no person shall use, except as passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless he has taken a policy of insurance complying with the requirements of Chapter XI. Section 147 prescribes 'the requirements of policies and limits of liability'. It is thus clear from these sections that no person, except as a passenger, shall use or cause or allow any other person to use a motor vehicle in a public place unless it shall be in custody of a current policy of insurance complying with the requirements of Chapter XI of the 1988 Act. To put it differently, after the commencement of the 1988 Act no person, except as a passenger, can use or allow another person to use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle by that person or the other person, as the case may be, a policy of insurance complying with the requirements of Chapter XI. It should in this connection be noted that the liability of the insurer under the policy of insurance issued under Section 147 is the actual amount of liability incurred, i.e., the liability is unlimited except in respect of damage to any property of a third party, a limit of rupees six thousand. That means the contract evidenced by policy of insurance, with limited liability and in force on the commencement of the 1988 Act, in the absence of a saving clause, would get automatically terminated. So we have to see whether the 1988 Act contains any such saving clause.

A reference