Civil Appeal No 1282 of 1976
246 From the Judgment and Decree dated the 8th and 9th January 1976 of the Karnataka High Court in Misc
First Appeal No 19 of 1973
KN Bhatt for the Appellant
KC Dua for the Respondent
The Judgment of the Court was delivered by CHANDRACHUD CJ
This appeal by certificate of fitness arises out of the judgment of the Karnataka High Court dated January 9 1976 in Misc
First Appeal No 19 of 1973
On April 5 1970 the appellant s husband was driving a scooter MYL 8574 on the Kasturba Road Bangalore when a goods truck MYT 3298 knocked him dead
The owner of the truck had taken a statutory insurance policy with the respondent
The Premier Insurance Co Ltd Gandhinagar Bangalore which was operative from June 30 1969 to June 29 1970
The appellant filed an application before the Motor Accidents Claims Tribunal Bangalore under section 110 A of the  seeking compensation for her husband s death
The respondent denied its liability on the ground amongst others that its record did not disclose that it had issued any insurance policy in respect of the particular truck
On a consideration of the entire evidence the Tribunal passed an award on November 20 1972 holding that the appellant was entitled to recover compensation in the sum of Rs 60000 for herself and her children
The Tribunal limited the liability of the respondent insurer to a sum of Rs 50000
The respondent filed an appeal in the High Court contending that on the date on which the insurance policy was alleged to have been issued by it its statutory liability was limited to a sum of Rs 20000 only and therefore the Tribunal was in error in passing an award against it in the sum of Rs 50000
This contention was accepted by the High Court and hence this appeal by the claimant
Chapter VIII of the The Act bears the heading Insurance of motor vehicles against third party risks
By section 94 1 of the Act no person can use a motor 247 vehicle in a public place except as a passenger unless there is in force in relation to the use of the vehicle a policy of insurance complying with the requirements of the chapter
Section 95 prescribes the requirements of the insurance policy and the limits of liability thereunder
Broadly by sub section 1 of section 95 a policy of insurance must insure the person or classes of persons specified in the policy to the extent specified in sub section 2 against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place
Section 95 2 a of the Act with which alone we are concerned in this appeal was originally cast thus 95 2 Subject to the proviso to sub section 1 a policy of insurance shall cover any liability incurred in respect of any one accident upto the following limits namely a where the vehicle is a vehicle used or adapted to be used for the carriage of goods a limit of twenty thousand rupees
 This section was amended by Amendment Act 100 of 1956 which inter alia introduced therein the words in all after the words twenty thousand rupees
We are not concerned with that amendment
What we are concerned with is the amendment made to clause a of section 95 2 by the Motor Vehicles Amendment Act 56 of 1969 which substituted therein the word fifty for the word twenty
Section 95 2 a so amended reads thus 95 2 Subject to the proviso to sub section 1 a policy of insurance shall cover any liability incurred in respect of any one accident upto the following limits namely a where the vehicle is a goods vehicle a limit of fifty thousand rupees in all  Thus the insurer s liability under the statutory policy was increased by this amendment from twenty thousand rupees to fifty thousand rupees
The amendment came into force on March 2 1970
248 The question which arises for consideration is whether the insurer s liability for third party risks under the statutory policy must be held to be limited to Rs 20000 according to the relevant legal provision as it existed on the date on which the policy came into force or whether that liability can be extended to Rs 50000 in accordance with the legal provision as it stood on the date of the accident the accident having occurred during the currency of the policy
The relevant dates which have to be borne in mind in this behalf are these The insurance policy came into force on June 30 1969 and covered the period from June 30 1969 to June 29 1970 the amendment by which the statutory liability of the insurer was increased from Rs 20000 to Rs 50000 came into force on March 2 1970 and the accident which gave rise to these proceedings occurred on April 5 1970
The High Court in its judgment has referred to the principles governing retrospective of statutes and has held by the application of those principles that the amendment introduced by Amending Act 56 of 1969 is prospective in nature and cannot be given any retrospective effect
We consider that the High Court with respect has failed to appreciate the true nature of the issue before it
The certificate of insurance Exhibit p9 which was issued by the respondent s agent on May 31 1969 for the period June 30 1969 to June 29 1970 shows that the respondent insurer had undertaken liability as the one under Chapter VIII of the 
That must mean liability as determinable under Chapter VIII at the relevant time that is to say at the time when the liability arises
Since the liability of the insurer to pay a claim under a motor accident policy arises on the occurrence of the accident and not until then one must necessarily have regard to the state of the law obtaining at the time of the accident for determining the extent of the insurer s liability under a statutory policy
In this behalf the governing factor for determining the application of the appropriate law is not the date on which the policy of insurance came into force but the date on which the cause of action accrued for enforcing liability arising under the terms of the policy
That we consider to be a reasonable manner in which to understand and interpret the contract of insurance entered into by the insured and the insurer in this case
The contracting parties did not incorporate the provisions of Chapter VIII of the Act in their contract
That is to say they did not identify the liability of the promisor on 249 the basis of the provisions of Chapter VIII as they stood on the date when the contract was made
They merely referred to the provisions of Chapter VIII which means the provisions of Chapter VIII in force at any given time the given time being the date on which the right to sue accrues or correspondingly the liability arises
If the parties to a contract agree that one shall pay to the other damages for breach of contract in accordance with the law contained in any particular statute without identifying the law as the provision which is in force on the date of the contract the law which will apply for determining the quantum of damages is the one which is in force on the date on which the breach of contract is committed that being the date on which the cause of action arises and not the law which was in force on the date on which the contract was made
Thus there is no question here as the High Court thought of giving retrospective operation to the amendment introduced by Amending Act 56 of 1969 by which the statutory liability of the insurer was increased from twenty thousand rupees to fifty thousand rupees with effect from March 2 1970
That question would have arisen if the accident had happened prior to that date
The accident having happened on April 5 1970 the question as to the extent of the insurer s liability must be determined by the application of the law introduced by the Amendment which had come into force before the date of the accident
The application of a law to facts which come into existence after that law has come into force does not involve giving retrospective operation to the law merely because the facts to which the law is being applied are relatable to a contract or an instrument which had come into operation prior to the date on which the law itself had come into force
We endorse the view taken by the Full Bench of the Karnataka High Court in Sanjiva Shetty section vs Anantha1 The Full Bench overruled the judgment which is under appeal in the instant case and held that the material date for ascertaining the extent of liability of the insurer is the date of the accrual of the cause of action for a claim arising out of an accident which in general would be the date of the accident and therefore the insurer s liability arising out of an accident which happens after March 2 1970 has to be 250 determined on the basis of the amended provisions of section 95 2 a of the Act even though the policy of insurance may have been issued prior to the date of the amendment that is prior to March 2 1970
For these reasons we set aside the judgment of the High Court restore the award of the Tribunal dated November 20 1972 and allow the appeal with costs throughout
NVK Appeal allowed


Summary:
Section 95 of the prescribes the requirements of an insurance policy and the limits of liability thereunder
Section 952 a was amended by the Motor Vehicles Amendment Act 56 of 1969 to provide that the insurer s liability under a policy of insurance be increased from the existing twenty thousand rupees to fifty thousand rupees
The amendment came into force on March 21970
The appellant s husband who was driving a scooter was knocked down dead by a truck on April 5 1970
The owner of the truck had taken a statutory insurance policy with the respondent which was operative from June 301969 to June 29 1970
The appellant filed an application before the Motor Accident s Claims Tribunal under section 110 A of the Act seeking compensation for her husband s death
The respondent denied its liability and contested the application The Tribunal passed an award holding that the appellant was entitled to recover compensation in the sum of Rs 60000 for self and her children but limited the liability of the respondent insurer to a sum of Rs 50000
The respondent in its appeal to the High Court contended that on the date on which the insurance policy was issued its statutory liability was limited to a sum Rs 20000 only and therefore the Tribunal was in error in passing an award against it for a sum of Rs 50000
This contention was accepted and the appeal was allowed
245 In the claimant s appeal to this Court on the question whether the insurer s liability for third party risks under the statutory policy must be held to be limited to Rs 20000 according to the relevant legal provision as it existed on the date on which the policy came into force or whether that liability can be extended to Rs 50000 in accordance with the legal provision as it stood on the date of the accident the accident having occurred during the currency of the policy
Allowing the appeal  HELD 1
The material date for ascertaining the extent of liability of the insurer is the date of the accrual of the cause of action for a claim arising out of an accident which in general would be the date of the accident and therefore the insurer s liability arising out of an accident which happens after March 2 1970 has to be determined on the basis of the amended provisions of section 952 a of the Act even though the policy of insurance may have been issued prior to the date of the amendment that is prior to March 2 1970
249 G H 250A B 2
The governing factor for determining the application of the appropriate law is not the date on which the policy of insurance came into force but the date on which the cause of action accrued for enforcing liability arising under the terms of the policy
248 G 3
The application of a law to facts which came into existence after that law has come into force does not involve giving retrospective operation to the law merely because the facts to which the law is being applied are relatable to a contract or an instrument which had come into operation prior to the date on which the law itself had come into force
249E F 4
If the parties to a contract agree that one shall pay to the other damages for breach of contract in accordance with the law contained in any particular statute without identifying the law as the provision which is in force on the date of the contract the law which will apply for determining the quantum of damages is the one which is in force on which the breach of contract is committed that being the date on which the cause of action arises and not the law which was in force on the date on which the contract was made
249 B C In the instant case the insurance policy came into force on June 30 1969 and covered the period from June 30 1969 to June 29 1970
The amendment by which the statutory liability of the insurer was increased from Rs 20000 to Rs 50000 came into force on March 2 1970
The accident which gave rise to these proceedings occurred on April 5 1970
The extent of the insurer s liability must therefore be determined by the application of the law introduced by the Amendment which had come into force before the date of accident
248C 249E Sanjiva Shetty section vs Anantha  approved