1998 JTR(SC) 1237
1999 ACJ 657 ; 1999 AIR(SC) 623 ; 1999 AIR(SCW) 272 ; 1999 2 ALT(SC) 21 ; 1998 4 AWC 197 ; 1999 1 BBCJ(SC) 85 ; 1999 95 CompCas 276 ; 1998 8 JT 572 ; 1999 1 PLR(SC) 560 ; 1999 1 RCR(Civ) 482 ; 1998 6 Scale 578 ; 1999 1 SCC 552 ; 1999 SCC(Cri) 99 ; 1999 1 UJ 125 ; AIR 1999 SC 623 ; 1999 KHC 924 ; 1998 9 Supreme 444
1998(9) Supreme 444
Supreme Court of India
(From Rajasthan High Court)
K. Venkataswami & A.P. Misra, JJ.
National Insurance Co. Ltd. -Appellant
versus
Nathilal & Ors. -Respondents
Civil Appeal No. 6959 of 1994
Decided on 15-12-1998
Counsel for the Parties :
For the Appellant : O.K. Khullar, R.S. Kohli, Advocates.
For the Respondents : R.K. Gupta, (Advocate N.P.) and Sushil K. Jain, Advocate.
Important Point
The mere fact that the column against unlimited liability was not filled, will not automatically lead to the inference that the liability was unlimited in the absence of any special premium paid towards that claim.
Act
Referred
:CONSTITUTION OF INDIA : Art.136
MOTOR VEHICLES ACT : S.110(a), S.147(1)(b), S.166, S.95(2)(b)
(A) The Motor Vehicles Act, 1939, read in conjunction with Section 110-A, governs claim petitions for compensation in motor accident cases, while Section 147(1)(b) and Section 166 address liability and policy requirements. Section 95(2)(b) and Section 110-A specifically frame the statutory liability of insurers, and Section 166 provides for appeals to the High Court. This case revolves around the interpretation of an insurance policy where a blank column regarding unlimited liability does not automatically imply unlimited coverage under the Act, especially when no separate premium for such extended liability is paid.
(B) Key legal principles include that an insurance policy covering seven passengers and one driver does not confer unlimited liability on the insurer merely because the unlimited liability column is left blank. The liability is governed by the statutory framework under the Motor Vehicles Act, and any extension of coverage requires a specific agreement and additional premium. The burden of proving an unlimited liability endorsement lies on the insurer.
Facts of the case:
The deceased was traveling in a jeep involved in an accident, leading to a claim petition under Section 110-A for compensation. The Tribunal held the insurers liability to be unlimited, a view upheld by the High Court. The Insurance Company argued that the blank column limited its liability to Rs. 15,000, a stance rejected due to lack of additional premium for such coverage.
Findings of Court:
The Supreme Court held that the blank column against unlimited liability does not itself impose unlimited liability. The policy document showed payment of premium only for seven passengers, one driver, and public liability, with no extra premium for unlimited third-party liability. The Court emphasized that comprehensive insurance does not automatically expand third-party statutory liability beyond the limits prescribed under the Act.
Issues:
Whether the insurers liability is unlimited when the policy contains a blank column for unlimited liability and no additional premium was charged for such coverage.
Ratio Decidendi:
The insurers liability is limited to the statutory amount unless specifically agreed upon in the policy with an additional premium. A blank column does not imply unlimited liability, and comprehensive coverage does not extend third-party liability beyond statutory limits.
Result:
The appeal is allowed, the Tribunals and High Courts findings are set aside, and the insurers liability is capped at Rs. 15,000.
(A) The Motor Vehicles Act, 1939, read in conjunction with Section 110-A, governs claim petitions for compensation in motor accident cases, while Section 147(1)(b) and Section 166 address liability and policy requirements. Section 95(2)(b) and Section 110-A specifically frame the statutory liability of insurers, and Section 166 provides for appeals to the High Court. This case revolves around the interpretation of an insurance policy where a blank column regarding unlimited liability does not automatically imply unlimited coverage under the Act, especially when no separate premium for such extended liability is paid.
(B) Key legal principles include that an insurance policy covering seven passengers and one driver does not confer unlimited liability on the insurer merely because the unlimited liability column is left blank. The liability is governed by the statutory framework under the Motor Vehicles Act, and any extension of coverage requires a specific agreement and additional premium. The burden of proving an unlimited liability endorsement lies on the insurer.
Facts of the case:
The deceased was traveling in a jeep involved in an accident, leading to a claim petition under Section 110-A for compensation. The Tribunal held the insurers liability to be unlimited, a view upheld by the High Court. The Insurance Company argued that the blank column limited its liability to Rs. 15,000, a stance rejected due to lack of additional premium for such coverage.
Findings of Court:
The Supreme Court held that the blank column against unlimited liability does not itself impose unlimited liability. The policy document showed payment of premium only for seven passengers, one driver, and public liability, with no extra premium for unlimited third-party liability. The Court emphasized that comprehensive insurance does not automatically expand third-party statutory liability beyond the limits prescribed under the Act.
Issues:
Whether the insurers liability is unlimited when the policy contains a blank column for unlimited liability and no additional premium was charged for such coverage.
Ratio Decidendi:
The insurers liability is limited to the statutory amount unless specifically agreed upon in the policy with an additional premium. A blank column does not imply unlimited liability, and comprehensive coverage does not extend third-party liability beyond statutory limits.
Result:
The appeal is allowed, the Tribunals and High Courts findings are set aside, and the insurers liability is capped at Rs. 15,000.
Judgment
Venkataswami, J.-This appeal is preferred by the appellant-Insurance Company against the judgment and order dated 10.12.93 of the Rajasthan High Court in Civil Misc. Appeal No. 394/93.
2. Brief facts are the following:-
Respondents 1 and 2 filed a Claim Petition under Section 110-A of the Motor Vehicles Act, 1939 claiming damages in a sum of Rs. 6,50,000/- for the death of their son, Akhilesh Kumar, aged about 22 years. The deceased Akhilesh Kumar was travelling in a Jeep bearing No. RST-1286 along with three other adults and two children from Jaipur to Sawai Madhopur when the accident took place on 4th/5th May, 1998 at about 1.15 a.m. Before the Motor Accident Claims Tribunal (for short ‘Tribunal’) the appellant took a stand that its liability was restricted to a sum of Rs. 15,000/- under the Policy. The said stand of the appellant was not accepted by the Tribunal and by its Award dated 27.2.93 it held that the liability of the appellant was unlimited and awarded a compensation in a sum of Rs. 2,44,000/- with interest at the rate of 12% per annum.
3. Aggrieved by the Award of the Tribunal, in particular, the finding that the Insurance Company’s liability was unlimited, the appellant-Insurance Company preferred an appeal to the Rajasthan High Court.
4. The High Court affirmed the view taken by the Tribunal and the present appeal against the order of the High Court has been filed by special leave.
5. The only ground, which weighed with the Tribunal as well as with the High Court, that one column was left blank in the Insurance Policy and, therefore, the case of the Insurance Company was that its liability was limited, cannot be accepted.
6. A perusal of the Insurance Policy, which has been exhibited through the witness examined on behalf of the Insurance Company, clearly shows that the Policy was in respect of seven passengers and one driver. The premium under Part-8 of Schedule of Premium paid as against the seven passengers at Rs. 12/- per passenger was shown as Rs. 84/- and an additional sum of Rs. 8/- for the driver. In addition to this, a premium of Rs. 180/- was paid towards liability to public risk. As against unlimited liability column, no premium was paid as is evident from the Policy. The mere fact that the column against unlimited liability was not filled, will not automatically lead to the inference that the liability was unlimited in the absence of any special premium paid towards that claim.
7. This Court in National Insurance Co. Limited, New Delhi v. Judgal Kishore & Ors.1 while considering a similar case, held as follows:-
“We have accordingly perused the photostat copy of the Policy to ascertain whether risk for any amount higher than the amount of Rs. 20,000/- contemplated by C1. (b) aforesaid was covered. Our attention was invited by learned counsel for the respondents to the circumstance that at the right hand corner on the top of page 1 of the Policy the words “COMMERCIAL VEHICLE COMPRE-HENSIVE” were printed. On this basis and on the basis that the premium paid was higher than the premium of an “act only” policy it was urged by the learned counsel for the respondents that the liability of the appellant was unlimited and not confined to Rs. 20,000/- only. We find it difficult to accept this submission. Even though it is not permissible to use a vehicle unless it is covered at least under an “act only” policy it is not obligatory for the owner of a vehicle to get it comprehensively insured. In case however, it is got comprehensively issued a higher premium than for an “act only” policy is payable depending on the estimated value of the vehicle. Such insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle calculated according to the rules and regulations framed in this behalf. Comprehensive insurance of the vehicle and payment of higher premium on this score, however, do not mean that the limit of the liability with regard to third party risk becomes unlimited or higher than the statutory liability fixed under sub-sec. (2) of Section 95 of the Act. For this purpose a specific agreement has to be arrived at between the owner and the insurance company and separate premium has to be paid on the amount of liability undertaken by the insurance company in this behalf. Likewise, if risk of any other nature for instance, with regard to the driver or passengers etc. in excess of statutory liability, if any, is sought to be covered it has to be clearly specified in the Policy and separate premium paid therefor. (Emphasis supplied)
8. In the light of the above ratio laid down by this Court and in view of the fact that no extra premium was paid towards unlimited liability as is clear from the Policy produced before the Tribunal, the judgment and order of the Tribunal affirmed by the High Court cannot be sustained and are, accordingly, set aside. The liability of the Insurance Company is limited to Rs. 15,000/-. The Award of the Tribunal will accordingly stand modified insofar as the liability of the appellant-Insurance Company is concerned.
9. This Court by an order dated 24.10.94, while granting interim stay, directed the appellant-Insurance Company to deposit the entire Award money in the Tribunal. It further permitted the claimant to withdraw a sum of Rs. 50,000/- out of such deposit. The balance amount was directed to be invested in a Long Term Deposit in a scheduled bank. The appellant-Insurance Company is permitted to withdraw the amount in deposit with accrued interest in view of its success in this appeal. The amount paid to the claimant, pursuant to the order of this Court, shall not be recovered from the claimant but the appellant can recover that amount from the owner of the vehicle.
10. The appeal is, accordingly, allowed with no order as to costs.
(C.R.) Appeal allowed.
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