The insurer's liability for vehicles covered under Section 95(2) of the Motor Vehicles Act, 1939, is not limited to the sum specified in Section 95(2) but extends to the sum assured by the policy of insurance.

S.S.SANDHAWALIA, J.

1. The meaningful issue which calls for determination has been formulated in the following terms, in the lucid order of reference :

"Do the provisions of sub-section (1) of Section 96 of the Motor Vehicles Act limit the liability of the insurer qua the insured as also the third party to the one that by virtue of sub-section (2) of Section 95 it is required to cover, even though by charging extra premium the insurer has undertaken a liability greater than the one the provision of sub-section (2) of Section 95 requires it to cover."

2. Mulkh Raj is the registered owner of truck No. UTJ-3338. On June 8, 1979 at 3-30 P.M. it was involved in a collision with two bullock-carts of the claimant-respondents. As a result thereof all the four bullocks involved died and the two carts were damaged whilst injuries were suffered by both the drivers of the carts. Separate claims with regard to the injuries and loss of property were preferred by the two drivers. Besides the appellant No. 1 - driver of the truck - its insurer Messrs : New India Assurance Company Limited were also impleaded as respondents. The Tribunal decided in favour of the claimants and assessed the loss with regard to the damage to their property at Rs. 6,500.00 and compensation for personal injuries at Rs. 500.00 . Thus he awarded Rs. 7,000.00 to each one of the claimants. However as regards the liability of the Insurance Company, it held as follows :-

"......... The Insurance Company shall be liable to pay compensation with regard to rite property of Rs. 2,000.00 only in one accident. However, its liability is limited up to Rs. 500.00 in case of injuries. The Insurance Company is liable to pay only up to Rs. 1,500.00 to the petitioner in each case. This order can be executed against the Insurance Company to the extent of Rupees 1,500.00 only. The rest of the amount is to be paid by respondents Nos. 1 and 2. Counsel fee is fixed at Rs. 500.00 in each case."

Both the truck-owner and the driver challenged the Award of the Tribunal by two separate appeals (FAOs. 20 and 21 of 1981). These F.A.Os. first came up before my learned brother Tewatia. J. sitting singly. Noticing that the core point arising therein was one of frequent occurrence and was of considerable importance, he referred it for an authoritative decision to a larger Bench.

3. Before us, learned counsel for the appellant placed firm reliance on the language of the statute itself. Adverting first to S.96 of the Motor Vehicles Act, 1939 (hereinafter called the Act ), he contended that this in itself envisages the liability of the insurer to pay to the claimants any sum not exceeding the sum assured and payable under the Insurance Policy. Consequently, it was forcefully submitted that the liability of the insurer is to the exent of the sum assured and payable under the policy of insurance and not subject to any limitations spelt out in Section 95(2) of the Act, Reliance was also placed on Section 110-B of the Act which provides that the Claims Tribunal shall specify the amount which shall be paid by the insurer as well. Counsel submitted that reading the aforesaid two provisions together it was inevitable that the insurers would be liable up to the limit of the sum assured and the Tribunal was enjoined to direct such payment by the insurer.

4. To appreciate the aforesaid contention, one may at the very out-set read the relevant provisions of Sections 94, 95 and 96 of the Act :

"94. Necessity for insurance against third party risk.- (1) No persons shall use except as a passenger or cause or allow any other 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 that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.

x x x x

"95. Requirements of policies and limits of liability.- (1) In order to comply, with the requirements of this Chapter, a policy of insurance mus