1995 JTR(SC) 196
1995 ACJ 470 ; 1995 AIR(SC) 1113 ; 1995 AIR(SCW) 1142 ; 1995 25 AllLR 504 ; 1995 2 BLJR 729 ; 1995 1 CCC(SC) 304 ; 1995 83 CompCas 71 ; 1991 3 Crimes(SC) 418 ; 1995 1 CurCC(SC) 304 ; 1995 JLJ 331 ; 1995 2 JT 95 ; 1995 2 PLR(SC) 102 ; 1995 1 Scale 472 ; 1995 2 SCC 539 ; 1992 SCC(Cri) 20 ; 1995 1 SCR 871 ; 1992 1 UJ 204 ; 1995 1 UJ 482 ; 1995 WBLR 187 ; 1995 KHC 798
SUPREME COURT OF INDIA
A.M. AHMADI, C.J.I., S.P. BHARUCHA AND Mrs. SUJATA V. MANOHAR, JJ.
New India Assurance Co. Ltd., Appellant
Versus
Smt. Shanti Bai, and other, Respondents.
Civil Appeal No.1312 of 1965 (arising out of S.L.P.(C) No.11856 of 1994)
Decided on 6-2-1995.
Advocates appeared
Mr. Man Mohan Sarin and Mr. Pramod Dayal, Advocates, for Appellant; Mr. S. S. Tiwari and Mr. B. S. Banthiya, Advocates, for (Nos.1-3) and Mr. A. K. Sanghi, Advocate (for Nos. 4-5), for Respondents.
Act Referred :MOTOR VEHICLES ACT : S.95(2)(b)
(A) Section 95(2)(b) of the Motor Vehicles Act, 1939, governs insurance against third-party risks for vehicles used for hire or reward, specifying a statutory liability limit of fifteen thousand rupees per passenger for such vehicles. The comprehensive insurance policy in force, which included coverage for fifty passengers at a premium rate corresponding to the statutory limit, did not operate to raise the liability cap beyond this statutory maximum, as no separate agreement for unlimited passenger liability was evidenced.
(B) The key legal principles are that a comprehensive motor insurance policy does not automatically expand the statutory liability limits under Section 95(2)(b); the premium charged determines the scope of coverage; and where the premium is calculated on the basis of the statutory limit, the insurer is only liable up to that limit absent a specific contract to the contrary.
Facts of the case:
A bus owned by one party and insured comprehensively with an additional premium for fifty passengers was involved in an accident while being driven by another party. A passenger died from injuries sustained, and the legal heirs claimed compensation. The Motor Accident Claims Tribunal awarded compensation exceeding the statutory limit, a claim upheld by the High Court.
Findings of Court:
The Court found that the premium paid was calculated at the rate applicable to the statutory limit of fifteen thousand rupees per passenger and that there was no special contract for unlimited liability. The comprehensive policy did not, by itself, override the statutory liability cap.
Issues:
Whether a comprehensive insurance policy, coupled with a passenger premium, enlarges the insurers liability beyond the statutory limit under Section 95(2)(b) of the Motor Vehicles Act, 1939, in the absence of an express agreement for unlimited coverage.
Ratio Decidendi:
Where the premium is at the statutory rate, the insurers liability is limited to the statutory amount per passenger under Section 95(2)(b), and a comprehensive policy without a specific agreement for higher coverage does not increase this limit.
Result:
The appeal is allowed to the extent of limiting the insurers liability to fifteen thousand rupees per passenger, with joint and several liability remaining on the vehicle owner and the driver.
(A) Section 95(2)(b) of the Motor Vehicles Act, 1939, governs insurance against third-party risks for vehicles used for hire or reward, specifying a statutory liability limit of fifteen thousand rupees per passenger for such vehicles. The comprehensive insurance policy in force, which included coverage for fifty passengers at a premium rate corresponding to the statutory limit, did not operate to raise the liability cap beyond this statutory maximum, as no separate agreement for unlimited passenger liability was evidenced.
(B) The key legal principles are that a comprehensive motor insurance policy does not automatically expand the statutory liability limits under Section 95(2)(b); the premium charged determines the scope of coverage; and where the premium is calculated on the basis of the statutory limit, the insurer is only liable up to that limit absent a specific contract to the contrary.
Facts of the case:
A bus owned by one party and insured comprehensively with an additional premium for fifty passengers was involved in an accident while being driven by another party. A passenger died from injuries sustained, and the legal heirs claimed compensation. The Motor Accident Claims Tribunal awarded compensation exceeding the statutory limit, a claim upheld by the High Court.
Findings of Court:
The Court found that the premium paid was calculated at the rate applicable to the statutory limit of fifteen thousand rupees per passenger and that there was no special contract for unlimited liability. The comprehensive policy did not, by itself, override the statutory liability cap.
Issues:
Whether a comprehensive insurance policy, coupled with a passenger premium, enlarges the insurers liability beyond the statutory limit under Section 95(2)(b) of the Motor Vehicles Act, 1939, in the absence of an express agreement for unlimited coverage.
Ratio Decidendi:
Where the premium is at the statutory rate, the insurers liability is limited to the statutory amount per passenger under Section 95(2)(b), and a comprehensive policy without a specific agreement for higher coverage does not increase this limit.
Result:
The appeal is allowed to the extent of limiting the insurers liability to fifteen thousand rupees per passenger, with joint and several liability remaining on the vehicle owner and the driver.
A.K.Sanghi, B.S.BANTHIA, MAN MOHAN SINGH, PRAMOD DAYAL, S.S.TIWARI
JUDGMENT
SUJATA V. MANOHAR, J. :—Leave granted.
2. This appeal by special leave arises from a judgment and order dated 11th of February, 1994 passed by the High Court of Madhya Pradesh in Misc. Appeal No.444 of 1991. The appellant before us is the New India Assurance Company Ltd. It had issued a comprehensive insurance policy in respect of a bus which was used for carrying passengers for hire and bearing Registration No. CIK-8108, owned by respondent No.4. This insurance policy was in force at the material time.
3. On 3rd of January, 1989, this bus, while it was being driven by respondent No.5, met with an accident. The deceased. Laxman Singh, who was sitting on the roof top of the bus driver, respondent No.5, hit a tree on account of the alleged rash and negligent driving of the said bus by respondent No. 5. He was admitted to hospital and died on 7-1-1989 on account of the injuries received in the accident. The legal heirs of Laxman Singh, who are respondents 1 to 3 before us, filed a claim for compensation amounting to Rs.7,81,000/- before the Motor Accident Claims Tribunal, by its order dated 10-4-1991, awarded to respondents 1 to 3 compensation of Rs. 1,10,000/- together with interest the rate of 12% per annum from the date of the presentation of the petition and directed the appellant and respondents 4and 5 to pay the same.
4. Being aggrieved by this order, the appellant filed Misc. Appeal No.444 of 1991 before the High Court of Madhya Pradesh. The High Court, by its order dated 11th February, 1994, dismissed the appeal of the appellant and confirmed the findings of the Tribunal. The present appeal arises from this order of the Madhya Pradesh High Court.
5. The short question that we have to consider is whether the appellant is liable to pay compensation to the tune of Rs.1,10,000/- together with interests thereon at the rate of 12% from the date of the presentation of the petition to respondents 1 to 3. The appellant contends that its liability in this regard is limited to Rs.15,000/-
6. The insurance policy taken out by the owner of the said bus i.e. respondent No.4 herein, and which was in force at the relevant time, was a comprehensive policy. This policy has been produced before us. It shows that the insured estimated value of the vehicle is Rs.2,50,000/-. In the Schedule of Premium, there is an additional payment of Rs.600/- in respect of 50 passengers. The claim against this amount states : "for L L to passengers as per Ednt. No. I.M.T. 12. The appellant-company has contended that it had charged premium, at the rate of Rs.12/- per passenger in respect of 50 passengers to cover its limited liability under Section 95 of the Motor Vehicles Act, 1939 which was then in force.
7. Section 95 forms part of Chapter VIII of the Motor Vehicles Act, 1939 which deals with insurance of motor vehicles against third party risks. Under Section 95, in order to comply with the requirements of this Chapter, a policy of insurance must be a policy which, inter alia, insures the person or classes of persons specified in the policy to the extent specified in sub-section (2). Under Section 95(1)(b)(i) (sic), the insurance policy must cover the death or bodily injury to any passenger of a public service vehicle, caused by or arising out of the use of the vehicle in a public place. Sub-section (2)(b) provides as follows :-
"Sections 95 (1) : x x x x
(2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely -
(a) x x x x x
(b) Where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment,
(i) in respect of person other than passengers carried for hire or reward, a limit of fifty thousand rupees in all;
(ii) in respect of passengers, a limit of fifteen thousand rupees for each individual passenger,"
These were the provisions at the relevant time. These provisions were interpreted by the Court in the Case of National Insurance Co. Ltd., New Delhi v. Jugal Kishore, (1988) 1SCC 626 : (AIR 1988 SC 719). This Court observed that 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, a higher premium is payable depending on the estimated value of the vehicle. Such insurance entitles the owners 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. It has further observed as under (para 6 of AIR) :-
"Comprehensive insurance of the vehicle and payment of higher premium on this score, however, does 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-section (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."
In the present case, therefore, a comprehensive policy which has been issued on the basis of the estimated value of the vehicle of Rs.2,50,000/- does not automatically result in covering the liability with regard to third party risk for an amount higher than the statutory limit.
8. It was contended before the High Court that a separate premium has been paid for the passengers. This shows that there was a special contract to cover unlimited liability in respect of passengers between the appellant- company and respondent No.4. The Tribunal as well as the High Court seem to have proceeded on the basis that the appellant-Company had charged an extra premium of 0.50 paise per passenger to cover the risk of unlimited liability towards passengers. This seems to be an error. The premium of Rs.600/- has been paid in respect of 50 passengers. The policy clearly shows this. It is not 0.50 paise per passenger. It is pointed out by the appellant-company with reference to its tariff in respect of "Legal Liability for Accidents to Passengers" that if the limit of liability for any one passanger is fifteen thousand rupees, the rate of annual premium per passenger is Rs.12/-. If the limit is twenty thousand rupees, the rate of premium per passenger is Rs. 23/- per annum and so on. In respect of unlimited liability, the premium, payable per passenger is Rs.50/-.
9. In the present case, the premium which has been paid is at the rate of Rs.12/- per passenger and is clearly referable to the statutory liability of fifteen thousand rupees per passenger under Section 95(2)(b)(ii) of Motor Vehicles Act, 1939. In the present case, there is no special contract between the appellant-Company and respondent No.4 to cover unlimited liability in respect of an accident to a passenger. In the absence of such an express agreement, the policy covers only the statutory liability. The mere fact that the insurance policy is a comprehensive policy will not help the respondent in any manner. As pointed out by this Court in the case of National Insurance Co. Ltd. v. Jugal Kishore, (AIR 1988 SC 719) (supra), comprehensive policy only entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle. It does not mean that the limit of liability with regard to third party risk becomes unlimited or higher than the statutory liability. For this purpose, a specific agreement is necessary which is absent in the present case. Reference in this connection may also be made to the case of M. K.Kunhimohammed v. P. A. Ahmedkutty, (1987) 3 SCR 1149 : (AIR 1987 SC 2158). The appellant-Company is, therefore entitled to succeed to the extent that it has been directed to pay to respondents 1 to 3 any amount in excess of Rs. 15,000/-.
10. The appeal is, therefore, allowed to this extent. The liability of the appellant and respondents 4 and 5 to pay the amount of the award was joint and several. We make it clear that the fact that the appeal is allowed and the liability of the appellant is limited to Rs.15,000/- does not affect in any manner the liability of respondents 4 and 5 to pay the amount of the award. There will be no order as to costs.
Order accordingly.
For Citation: AIR 1995 SC 1113
Vikas Info Solutions Pvt. Ltd.