The liability of an insurance company for third-party property damage is limited to the statutory amount (Rs. 6,000/- under the unamended Motor Vehicles Act) unless an additional premium is paid for higher coverage.

Judgment on Board

(Single Bench)

1. The appellant/insurance company has preferred this appeal under Section 173 of the Motor Vehicles Act, 1988 calling in question the legality, validity and correctness of the impugned award dated 12.02.2020 passed by learned Additional Motor Accident Claims Tribunal, Baikunthpur, District Korea, in Claim Case No.13/ 2019 by which the claimant’s application for third party property damage of his vehicle has been granted to the extent of Rs. 1,67,167/-.

2. Mr. Swapnil Thawanay, learned counsel appearing for the appellant/ insurance company, would submit that as per Ex.D-1 i.e. Insurance Policy, duly proved by Ravi Prakash Singh, officer of the insurance company, in which for third party damage, no premium has been obtained. Therefore, according to Section 147(2)(b) of the Motor Vehicles Act as unamended prior to 01.09.2019, the liability is fixed to Rs. 6,000/- only.

3. Mr. Puskar Sinha, learned counsel for the respondents, opposes the argument advanced by learned counsel appearing for the appellant and submits that the appeal is liable to be set aside.

4. I have heard learned counsel appearing for the parties, considered their rival submissions made herein-above and went through the records with utmost circumspection.

5. A careful perusal of the insurance policy i.e. Ex.D-1, which has been proved by Ravi Prakash Singh, would show that so far as third party property damage, no premium has been obtained by the insurance company/ appellant herein and the third party property damage is restricted to Rs. 6,000/- only as per Section 147(2)(b) of the Motor Vehicles Act, as unamended.

6. In this regard, para 6 of the decision rendered by the Madras High Court in the matter of The Manager, United India Insurance Co. Ltd. v. S.R. Radhakrishnan¹C.M.A.(MD) No.407 of 2010 may be noticed herein profitably.

“6. Regarding the liability, the appellant contended that the statutory liability as per Ex.R1 was only Rs. 6,000/- as per Section 147(2)(b) of Motor Vehicles Act. Ex.R1 is the Policy Certificate, wherein, it has been noted that third party's property damage liability is restricted to Rs. 6,000/- (Rupees Six Thousand only). According to the claimant, it is a comprehensive policy. Hence, what ever is suffered by the third party, the Insurance Company is liable to pay the amount on behalf of the Insured. But, since this is a statutory liability and if at all, if the insured person wanted to have a larger coverage, he could have paid the extra premium. Even though the petitioner is a third party and there is a statutory coverage limit to Rs. 6,000/- (Rupees Six Thousand only) and in absence of any coverage for a larger liability, the Insurance Company cannot be fastened with any liability. If any third party suffers any damage exceeding Rs. 6,000/-, the owner of the vehicle is liable to pay. So, the contention on the part of the claimant that since they are the third parties, who have incurred heavy loss due to the accident and it is difficult for re-covering the damage from the Insured, cannot be accepted. Inconvenience will be there, but, this Court cannot extend the liability, which was not at all sought to be extended by the Contractor of the parties. So, regarding the liability, this Court finds that the appellant is liable to pay only Rs. 6.000/- towards the damages to the property and the balance amount has to be paid only by the owner of the vehicle, viz., the second respondent herein.

7. In that view of the matter, the impugned award dated 12.02.2020 is set aside and liability upon the insurance compan