The liability of an insurance company under a motor vehicle insurance policy is governed by the provisions of the Motor Vehicles Act in force at the time of the accident, even if the policy was issued prior to the commencement of the Act.

T.H.B.Chalapathi, J.

1. The only point that arises in this appeal filed by the Insurance Company is whether the liability of the appellant is limited to the extent of Rs. 1,50,000/-.

2. The motor vehicle accident took place on 29.9.1989 in which one A.R. Jain died. His widow Satya Bala Jain and children namely Kumari Chetna Jain and Master Vikas Jain and his mother Bhulan Devi filed an application Under Sections 166 and 140 of the Motor Vehicles Act in MACT Case No. 148 of 1994 on the file of Motor Accident Claims Tribunal, Karnal which awarded a sum of Rs. 6,72,000/- (Rs. Six lacs seventy two thousands) as compensation, but the Tribunal held that the Insurance Company was liable to pay the compensation to the extent of Rs. 1,50,000/- as per statutory provisions contained in the Motor Vehicles Act, 1939 and the balance of the amount of the compensation to the extent of Rs. 5,22,000/- was to be paid by the owner of the vehicle namely. Puja Roller Flour Mills (Pvt.) Limited. The owner of the offending vehicle filed an appeal bearing FAO No. 303 of 1995. The learned Single Judge vide his judgment dated 6.9.1995 set aside the finding of the Tribunal whereby the Tribunal determined the liability of the National Insurance Company (appellant in this LPA) to the extent of Rs. 1,50,000/- and held that the liability of the Insurance Company is unlimited and directed the appellant Insurance Company to pay the full amount of compensation to the claimants. Aggrieved by the said judgment of the learned Single Judge, the Insurance Company preferred this Letters Patent Appeal.

3. The learned counsel for the appellant Insurance Company contended that Sub-section (2) of Section 147 of the Motor Vehicles Act gives an option to opt for the provisions of the contract of insurance and if the option was not exercised, the liability of the Insurance Company will be under the provisions of the new Act namely under the provisions of Section 147 of Motor Vehicles Act, 1988. The learned Single Judge relied upon the judgment of the Division Bench of this Court rendered in FAO No. 1174 of 1991 decided on 22.11.1991. The Division Bench in the aforesaid appeal observed as follows:-

"The accident took place on July 14, 1989. The amending Act came into force on July 1, 1989. Section 147 of the amending Act makes the liability of the Insurance Company unlimited. Under Section 95-A of the old Motor Vehicles Act, in the case of public carriers, the liability of the Insurance Company was limited to the extent of Rs. 1,50,000/-. Under the Amending Act, four months period was allowed to the Insurance Company to opt to be governed by old provisions or the new provisions of the Act. Admittedly, they did not exercise the option to revise the policy under the Act. as far as the policy in dispute is concerned, that being the position, now the Amending Act would apply to the case in hand and the Motor Accident Claims Tribunal rightly fixed the liability of the Insurance Company alongwith this for the entire amount of Rs. 1,70,000/-".

4. According to the Counsel for the appellant, the reasoning of the Division Bench of this Court in FAO No. 1174 of 1991 decided on 22.11.1991 is contrary to the provisions as contained in proviso to Sub-section (2) of Section 147 of the Motor Vehicles Act. According to him, the said proviso does not give any option to the Insurance Company either to opt to be governed by the old Act or the new Act. The proviso to Sub-section (2) of Section 147 of the new Act reads as follows;-

"Provided that any policy of insurance issued with any limited liability and in force immediately before the commencement of this Act, shall continue to be effective for a period of four months, after such commencement or till the date of expiry of such policy whichever is earlier."

5. We find sufficient force in the contention of the learned counsel for the appellant, but on a consideration of other provisions of the Act, we need not go into that quest