Honble PASAYAT, J.–Leave granted.

(2). National Insurance Company Limited (hereinafter referred to as `the insurer) questions legality of the judgment of a Division Bench of the Jharkhand High Court holding that the insurer has to pay the compensation of Rs.72,000/- awarded to the legal representatives of one Hasta Bahadur (hereinafter referred to as `the deceased) who lost his life in a vehicular accident on 5.6.1987. The deceased was working as a Chowkidar of Hydel Project, Sikidri. A claim petition was filed by his sons under Section 110A of the Motor Vehicles Act 1939 (in short `the Act). The Motor Vehicle Accidents Tribunal (hereinafter referred to as `the Tribunal) awarded compensation of Rs.72,000/- along with interest @ 12% per annum. The amount was directed to be paid within 60 days. It was further directed that in case of failure to pay within 60 days, the rate of interest would be 18%. The insurer questioned the legality of the direction that the whole amount of compensation was to be paid by the insurer; and the direction regarding default rate of interest. According to it, the liability was limited to Rs.50,000/- in terms of Section 95(2)(b)(i) of the Act; and there was no legal basis for the default rate. Though these points were specifically urged before the Tribunal, no definite finding was recorded. Similar was the situation so far as the High Court is concerned. Though it dealt with the question of interest and reduced the rate from 12%, as awarded by the Tribunal, to 9% per annum, no finding was recorded regarding legality of default rate.

(3). Learned counsel for the appellant-insurer submitted that the liability statutorily fixed in respect of third party risk was at the relevant point of time Rs.50,000/-. With reference to copy of the policy of insurance, which was produced before the Tribunal and the High Court it is pointed out that a sum of Rs.240/- was paid as the third party insurance premium. The limits of liability were also indicated in the following terms:

"Limits of Liability:

(a) Limit of the amount of the Companys liability under Section II-I (i) in respect of any one accident.

Such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939.

(b) Limit of Amount of the Companys Liability under Section II-I((ii) in respect of any one claim or series of claims arising out of the one event: Rs.50,000/-"

(4). In the Schedule of premium under the heading B. "LIABILITY TO PUBLIC RISK" it was indicated to be Rs. 240/-. The stand in essence, therefore, is that when extra premium, if any, is not paid, for any enhanced liability, the statutorily fixed liability of Rs.50,000/- was the maximum that could have been awarded and nothing beyond it. It is also submitted that the High Court had directed payment of the amount within a particular time with the default stipulation of higher penal interest @ 18% p.a. It took note of the fact that pursuant to the order dated 23.2.1998 insurer deposited Rs.50,000/- on 6.3.1998. It was pointed out that neither the Tribunal nor the High Court could have stipulated any penal interest as was done. The High Court directed payment of the balance amount of compensation with interest and had stipulated that in case insurer does not pay the balance amount with interest at the rate indicated in the judgment penal interest @ 18% was to be paid. It was submitted that there is no provision for any penal interest. The only provision relating to interest is Section 110CC of the Act.

(5). There is no response by the respondents in spite of the service of notice.

(6). 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 for insurer to accept higher risk covered in respect of third party also. But in the absence of any such clause in the insurance policy, and proof of payment of additional premium the liability of the insurer cannot be unlimited in respect of third party

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