FAO No.889 of 1994

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IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA

AT CHANDIGARH

FAO No.889 of 1994

Date of Decision. 03.08.2010

National Insurance Company Limited, SCO No.332-334, Sector 34-A,

Chandigarh through its Regional Manager

......Appellant

Versus

Smt. Chand Chhabra and others

......Respondents

Present: Mr. L.M. Suri, Senior Advocate with

Mr. Neeraj Khanna, Advocate

for the appellant.

None for respondent Nos.1 to 5.

Mr. Rakesh Nagpal, Advocate

for respondent No.6.

Mr. Ashok Jindal, Advocate

for respondent No.6-A.

None for respondent No.7.

CORAM:HON'BLE MR. JUSTICE K. KANNAN

1.

Whether Reporters of local papers may be allowed to see the

judgment ? Yes

2.

To be referred to the Reporters or not ? Yes

3.

Whether the judgment should be reported in the Digest? Yes

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K. KANNAN J.(ORAL)

1.

The insurance company challenges the liability on the

ground that the vehicle had been actually transferred and the same

had not been brought to the notice of the insurer. The contract of

insurance will come to an end and the liability could not be fastened

on the insurer. It was the further contention of the insurance

company that one of the witnesses on the side of the claimant,

Sunder Singh-PW4, had admitted that all the passengers in the car

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had hired it as a taxi and the accident had taken place by the

negligent driving of the driver of the taxi. The last contention raised

was that the Tribunal determined the compensation at Rs.3,16,000/-

for the representatives of the decease, who was 37 years of age.

The Tribunal adopted a multiplier of 16, which was high and runs

counter to the several decisions of the Hon'ble Supreme Court with

regard to the quantum and choice of multiplier.

2.

On the issue of liability of the insurer notwithstanding the

transfer of the vehicle, the matter has been finally settled by a

decision of the Hon'ble Supreme Court in United India Insurance Co.

Ltd. Shimla Vs. Tilak Singh and others 2006(2) PLR 297 where

the registered owner was contesting the case and the plea of

transfer itself had been denied. The liability of the insurer to a

passenger in a Comprehensive Policy was dealt with by the Hon'ble

Supreme Court in Pushpabai Purshottam Udeshi and others Vs.

M/s Ranjit Ginning and Pressing Co. and another 1977 ACJ 343 .

In fact, subsequent to the judgment of the Hon'ble Supreme Court an

amendment was made by the Tariff Advisory Committee by a circular

dated 17.03.1978 to bind the insurer to liability accepting the

interpretation as adopted by the Hon'ble Supreme Court to Section

95 of the old Motor Vehicles Act, 1939. The third party cover under

the Comprehensive Policy then prevailing from 25.03.1977 was

worded as follows:

“The company will indemnify the insured in the event of

accident caused by or arising out of the use of the motor car against

all sums including claimant's costs and expenses which the insured

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shall become legally liable to pay in respect thereof for death or

bodily injury to any person but except so far as it is necessary to

meet the requirements of Section 95 of the Motor Vehicles Act,

1939. The wording of Comprehensive Policy before 25.03.1977 did

not expressly cover “occupants carried in the vehicle”. However, in

view of the ruling of the Hon'ble Supreme Court with the resultant

position that there was no liability for occupants in a private car,

TAC had deliberated the issue and came out with a Circular dated

17.03.1978 which stated as follows:

“Insurance Company's Liability in respect of Gratuitous

Passengers conveyed in a Private Car-Standard Form for

Private Car Comprehensive Policy-Section II-Liability to

Third Parties.

I am directed to inform Insurers that advices have

been received from the Tariff Advisory Committee to the

effect that since the industry had all these years holding

the view on liability the same practice should continue.

In order to make