* IN THE HIGH COURT OF DELHI AT NEW DELHI + F.A.O. No.257 of 1991 & C.M. Appl. No.14645 of 2006 % 17.05.2010 NEETA TREHAN & ORS. Appellants Through: Mr. [ENTITY], Advocate. Versus GOPAL KRISHAN & ORS. Respondents Through: Mr. [ENTITY], Senior Advocate with Mr. [ENTITY] & Ms. [ENTITY], Advocates for R-3. Reserved on: 10th May, 2010 Pronounced on: 17th May, 2010 JUSTICE [ENTITY] 1. Whether reporters of local papers may be allowed to see the judgment? Yes. 2. To be referred to the reporter or not? Yes. 3. Whether judgment should be reported in Digest? Yes. JUDGMENT
1. By present appeal, the appellants have assailed an order dated 23rd September, 1991 passed by Motor Accident Claims Tribunal on two counts. The first that the compensation awarded by the learned Tribunal was not just and fair, it was inadequate and the other that the Tribunal wrongly held that the liability of the insurance company was limited only to pay a sum of Rs.1,50,000/- and balance was to be recovered from the owner of the vehicle.
2. Brief facts relevant for the purpose of deciding this appeal are that on 26th October, 1982, Sh. [ENTITY] (appellant No.2 herein) and his father Sh. [ENTITY] were going on two wheeler scooter No.DLU-1675 being driven by Sh. [ENTITY] and they were hit by a truck bearing No.DHG-6383 with the result that father and son both fell from the scooter. While son who was driving the scooter fell on one side, the father fell on the other side and the father was run over by the truck. It was alleged that the truck was being driven rashly and negligently by its driver. His father died on the spot.
3. The age of the deceased at the time of accident was 47 years. He was the supervisor in Hindustan Petroleum Corporation, Shakur Basti, Delhi and was getting a gross salary of Rs.2,697/- per month free from tax, as per evidence produced before the Tribunal. The learned Tribunal made a deduction of 1/3rd amount from this salary towards his own expenses and considered dependency @ Rs.1,800/- per month as the deceased had left behind widow and three children. A multiplier of 16 was applied and a compensation of Rs.3,45,600/- was awarded. It was directed that the claimants would be entitled to 12 per cent interest over this amount from the date of filing of the petition.
4. The insurance company had argued that its liability was limited only to Rs.1,50,000/-. It was not disputed that the vehicle was insured with the insurance company. The initial policy was proved as RW 1/1 and its renewal for the period from 4th April, 1982 to 3rd April, 1983 was proved as Ex. RW 1/3. The Tribunal considered that the insurance company has placed on record tariff rates and the liability of the insurance company cannot be said to be unlimited in view of the amount of premium paid. Thus, the insurance company was having limited liability to the extent of Rs.1,50,000/- in view of the amendment of [SECTION] of [ACT] (hereinafter referred to as the Act) whereby the minimum liability was changed from amount of Rs.50,000/- to Rs.1,50,000/.
Thus, the Tribunal held that out of compensation of Rs.3,45,600/-, insurance company would pay Rs.1,50,000/- to claimants and remaining Rs.1,95,600/- would be paid by the owner Sh. [ENTITY] (respondent No.2 herein) to claimants.
5. During appeal it has been strenuously argued by counsel for the insurance company that the liability of insurance company was limited only to Rs.1,50,000/-.
Reliance was place on New India Assurance Company Limited Vs. Shashikalabai & Ors.;
2006 ACJ 194, Oriental Fire and General Insurance Company Limited Vs. [ENTITY] & Ors.; 1989 ACJ 1163, New India Assurance Company Limited Vs. C.M. Jaya & Ors.;
2002 ACJ 271 (SC), National Insurance Company Limited Vs. Maya Rani Roy & Ors.;
2003 ACJ 1028, [PRECEDENT], [ENTITY] & Ors. Vs. Oriental Fire and General Insurance Company Limited;
LPA No.30 of 1989 decided on 25th November, 2009 and National Insurance Company Limited Vs. [ENTITY] & Ors.; 2004 ACJ 648.
6. On the other hand counsel for the appellants has submitted that the policy issued by the insurance company was not an 'Act Only Policy'. The insurance company had charged premium of Rs.240/- which covered unlimited public risk. If the policy had been a policy of 'Act Only Policy' covering limited liability as provided under the Act, the premium charged would have been Rs.200/- and not Rs.240/-. The very fact that premium charged was Rs.240/- showed that extra premium, that is, Rs.40/- above Rs.200/- was charged to provide unlimited cover to the owner in respect of third party/public risks to life.
7. The insurance policy is a contract between insured and the insurer where under insured is indemnified by the insurer against the damages which the insured would have to pay but for the contract. After the insurance policy is obtained, it is the insurance company which pays damages or loss for property or other risks as per terms of the policy. Thus, the liability of the insurance company has to be determined as per the insurance contract entered into between the insured and the insurer.
8. In case of general insurances and insurance of risks other than motor vehicles, there is no legal liability to enter into an insurance contract and the contract of insurance is entered into by the insured to protect his own interest and the terms and conditions of the policy are to be interpreted as a normal contract. However in case of motor vehicles, obtaining of an insurance cover has been made compulsory by law. No owner can bring on road and ply a vehicle unless and until it is insured in terms of the Act. Under [SECTION] of [ACT], it is mandatory for the owners to get insurance of their vehicles to the extent provided in the provisions of the Act so as to enable them to ply the vehicle on road. However, [SECTION] of the Act provided some minimum risk to be covered by the insurance contract. The Act did not provide a limit of the maximum amount of risk to be covered. This was to ensure that in case of accidental deaths and injuries to third parties, the third parties, i.e., the injured and victims of the accident should not go without some minimum compensation to be paid by insurance company.
The Act did not lay down limits of compensation which could be granted to the victims.
The compensation has to be granted by the Tribunals commensurating with the injuries, income of deceased, dependency and various other factors necessary for determining the compensation. Wherever minimum insurance cover was obtained by the owner in terms of the Act the owner had to pay the balance compensation awarded by the Tribunal himself.
9. The insurance companies are issuing various kinds of policies which included 'Act Only Policy', 'Public Risk Policy' and 'Comprehensive Policy'. The 'Comprehensive Policy' and 'Public Risk Policy' are not the essential requirements of law. The only essential requirement of the Act was 'Act Only Policy' since without obtaining this policy providing minimum cover as required under [SECTION], no vehicle could be plied on the road. It was liberty of the owner of the vehicle to obtain an 'Act Only Policy' or to obtain a wider policy. However, an owner could ply vehicle on the road by obtaining an insurance cover giving him minimum indemnity as required under [SECTION] of the Act. If the insured/owner obtained a cover wider than the 'Act Only', he obtained so for his own benefit so that his balance risks and other risks were also covered by the insurance company.
10. Simultaneously, along with bringing law in respect of motor vehicles, the Government also constituted advisory bodies for insurance companies, since most of the insurance companies were public sector companies, in order to have uniformity in the tariff. A schedule of tariff prescribing premiums for insurance of different kinds of risks for different kinds of vehicles based on their capacity and extent of such coverage was prepared and was being followed by insurance companies. This schedule was being amended from time to time. Looking at the schedule of premiums would show that for 'Act Only Liability', a separate premium was prescribed and for 'Liability to Public Risk', a separate premium was provided and premium for 'Act Only Liability' was always lower than the premium against liability to 'Public Risk'. Different rates of premiums were prescribed for different capacity of vehicles depending upon their tonnage.
11. Both the parties in this case have relied upon the relevant tariff rates prevalent at the time of the accident in this case. It is undisputed that the truck in question was class A(2) goods carrying vehicle and the commercial vehicle tariff prescribed following table of premium for such vehicles:-
CLASS A(2) - GOODS CARRYING VEHICLES-GENERAL CARTAGE (PUBLIC CARRIER) PREMIUM FOR Licensed Carrying 'Own Damage' Liability 'Act Capacity of the Cover to the Only' Vehicle Public Risks
(a) Not exceeding Rs.340 Plus Rs.120/- Rs.100/-
1016 Kgs. (1 Ton) 1.05% on [ACT]
(b) Not exceeding Rs.550 Plus Rs.240/- Rs.200/-
3048 Kgs. (3 Tons) 1.10% on [ACT]
(c) Not exceeding Rs.850 1.10% on Rs.240/- Rs.200/-
5080 Kgs. (5 Tons) [ACT] (d) Exceeding 5080 Rs.850 plus Rs.240/- Rs.200/- Kgs. (5 Tons) Rs.200 for each additional 1016 Kgs. (1 Ton) or part thereof plus 1.10 on [ACT]
N.B.: Vide Note to IMT Endorsement No.26 special Exclusions (Commercial Vehicles Policies only) A perusal of above premium table would show that the 'Act Only' premium for the vehicle in question was Rs.200/- and liability to 'Public Risk' premium was Rs.240/-.
12. A perusal of insurance cover Exhibit RW 1/1 would show that insurance of this vehicle was initially done from 27th March, 1979 to 26th March, 1980 for which an insurance cover was issued. At the time when insurance cover was issued, the premium charged for that year was Rs.125/- under one head, and for driver and cleaner a separate premium of Rs.16/- was charged. After giving discount, this premium was taken from the insured. No separate insurance cover was issued to the vehicle for accident year and only a renewal endorsement was issued by the company and in the renewal note it was stated that the insurance policy was being renewed for a period of twelve months from 4 th April, 1982 to 3rd April, 1983. The details of premium were given as under :-
Third Party (TP) - Rs.240/- On damage - - Dvr./Clr. - Rs.16/- Total Rs.256/- Discount N.C.B. - Rs.76.80 Remaining amount charged - Rs.179.20
13. Under tariff rule it is permissible for the insurance company to give discounts over the scheduled premium to the insured.
14. The issue arises whether this insurance cover obtained by the insured was limited to a liability of Rs.1,50,000/- being the minimum liability for which a vehicle was required to be insured by the owner or this premium covered wider liability. Counsel for the appellants has drawn my attention to the judgment in [ENTITY]'s case (supra) given by the Division Bench of this court where the Division Bench of this court held that if the premium was Rs.125/-, the liability would be limited to Rs.1,50,000/- and not unlimited. On the same logic it is stated that if the premium was Rs.240/- for class A(2) vehicle, the liability of insurance company would be limited to Rs.1,50,000/-.
15. Where obtaining of an insurance cover is made mandatory by statute, the contract is to be interpreted in the light of statutory provisions. In case of motor vehicles, obtaining of an insurance cover by the owners of vehicles is a statutory requirement.
Thus, an insurance policy has to be interpreted keeping in view the statutory provisions and the rules of tariff as framed by the Advisory Board. Under the tariff rules, two separate tariffs are provided for 'Act Only Liability' and for 'Public Risk'. It cannot be said that the Advisory Board provided tariff for 'Act Only Liability' as a superfluous phenomenon. The Advisory Board was having in mind that where the owner wants to take an insurance policy covering the minimum liability under [SECTION] of the Act, then the premium should be different. If the owner wants wider liability then the premium should be different and that is the reason that for 'Act Only Liability', a premium of Rs.200/- was provided and for 'Public Risk', a premium of Rs.240/- was provided.
Public risk is a wider term and takes into account the entire risk faced by the owner for bringing vehicle on road. If there had been no compulsion under the Act to obtain an insurance policy, the only insurance cover which owner could have obtained from an insurance company for covering public risk would have been this that he would pay Rs.240/- and get the public risk covered. If the Act would have not prescribed any limit, the public risk would naturally have been unlimited. The Act prescribed that every owner of vehicle should get insurance cover covering a minimum amount. Beyond that, the Act did not provide anything. It is under these circumstances that the Tariff Advisory Committee prescribed separate premium for 'Act Only Policy' and separate premium for a 'Public Risk Policy'. I, therefore, consider that the 'Public Risk' premium would cover unlimited amount of risk and would not cover a limited amount of risk.
16. This issue was devolved upon at length in judgment of Gujarat High Court in [PRECEDENT] and the court observed as under :-
"6. In [CASE NUMBER], only question is raised by learned advocate Mr. [ENTITY] appearing for appellant-owner that looking to insurance policy Exh.127, [SECTION] of Old Act and additional premium of Rs. 240/- which has been paid by insured policy covered risk of third party being an unlimited. Therefore, finding given by Claims Tribunal, Mehsana is erroneous and contrary to law. He has submitted that Claims Tribunal has committed gross error in deciding said issue merely relying upon [SECTION] but Claims Tribunal has not considered at all that for third party Rs. 240/- premium was paid and said amount is accepted by insurance company which amounts to acceptance of liability for third party as unlimited. This aspect was totally ignored by Claims Tribunal, Mehsana. In support his submissions, he has referred tariffs advisory circulars and referring tariff advisory in respect to commercial vehicle schedule of premium for passenger carrying vehicle including passengers risk liability to public risk is Rs. 240/- and act only liability is Rs. 200/- to be paid by insured to insurance company. He submitted that insured-owner has paid Rs. 240/-. Liability of public risk covering unlimited liability and act only liability is limited liability. This aspect has been totally ignored by Claims Tribunal, Mehsana. He also annexed tariff means India Motors Tariffs attached with schedule of premium with effect from 1/2/1982. For passenger vehicle liability to public risk is Rs. 240/- and act liability Rs. 200/- according to tariff. In support of said contention, he has relied upon several decisions which are stated as under:
Decision of Division Bench of this Court in [CASE NUMBER] in case of [PRECEDENT] decided on 24/7/2000. Decision of this Court in case of [PRECEDENT]. Decision of this Court in [CASE NUMBER] decided on 15/9/2008 in case of [PRECEDENT]. Decision of Delhi High Court in case of [PRECEDENT].
Decision of Patna High Court in case of [PRECEDENT].
Decision of Rajasthan High Court in case of [PRECEDENT].
Decision of Delhi High Court in case of [PRECEDENT]. reported in [PRECEDENT].
Decision of Rajasthan High Court in case of [PRECEDENT]. reported in [CASE NUMBER].
Decision of Rajasthan High Court in case of [PRECEDENT]. reported in [CASE NUMBER].
Decision of Rajasthan High Court in case of [PRECEDENT]. reported in MANU/RH/0477/1998 :
1999 ACJ 988.
Decision of Rajasthan High Court in case of [PRECEDENT]. reported in [PRECEDENT].
Decision of Delhi High Court in case of [PRECEDENT]. reported in [PRECEDENT].
Decision of Rajasthan High Court in case of [PRECEDENT].
Decision of Rajasthan High Court in case of [PRECEDENT].
Decision of Rajasthan High Court in case of [PRECEDENT].
Decision of Delhi High Court in case of [PRECEDENT]. Decision of Rajasthan High Court in case of [PRECEDENT].
Decision of Delhi High Court in case of [PRECEDENT].
7. Learned advocate Mr. [ENTITY] submitted that in aforesaid decisions referred and relied by him, Rs. 240/- premium is paid by insured-owner to insurance company and therefore in respect to third party is unlimited liability of insurance company. Therefore according to his submission, Claims Tribunal has committed gross error and come to conclusion that insurance company is having limited liability for third party of Rs. 50,000/-.
8. Learned advocate Mr. [ENTITY] appearing for insurance company raised contention that appellant has not produced on record India Motor Tariff which has been produced before this Court after considering insurance policy Exh.127 and therefore such tariff should not have to be considered. He also raised contention that no separate agreement was arrived at between appellant-insured and insurance company for unlimited liability. He submitted that accident occurred on 11/5/1986 i.e. prior to amendment made in [SECTION] i.e. 1/7/1989 and therefore old Act is applicable and amended act is not applicable. He submitted that beyond [SECTION] of [ACT] insurance company cannot accepted unlimited liability because by statutory provision there was a limited liability. He also referred tariff and pointed out from tariff that there is no unlimited liability is mentioned or not mentioned that policy covers unlimited liability when Rs. 240/- premium is paid by insured-owner.
Therefore according to him Claims Tribunal has rightly examined claim petitions while considering insurance policy Exh.127 and rightly appreciated provisions of [SECTION] of [ACT]. He has relied upon [SECTION] which is quoted as under:
(2) Subject to the provisio 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) where the vehicle is a goods vehicle, a limit of [fifty] thousand rupees in all, including the liabilities, if any, arising under the [ACT], in respect of the death of or bodily injury to, employees (other than the driver), not exceeding six in number, being carried in the vehicle;
(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 -
in respect to persons other than passengers carried for hire or reward, a limit of fifty thousand rupees in all;
in respect of passengers -
(1) a limit of fifty thousand rupees in all where the vehicle is registered to carry not more than thirty passengers; (2) a limit of seventy-five thousand rupees in all where the vehicle is registered to carry more than thirty but not more than sixty passengers;
9. Learned advocate Mr. [ENTITY] has relied upon three decisions of Hon'ble [ENTITY] Court in case of [ENTITY] (2) v. United India Insurance Co. and Ors. reported in MANU/SC/2603/2006 : (2006) 3 SCC 750, in case of National Insurance Co. Ltd. v. [ENTITY] and Ors. reported in [PRECEDENT] and in case of [PRECEDENT]. Relying upon aforesaid three decisions he has submitted that [SECTION] where even in case of comprehensive insured vehicle the liability of insured was limited to Rs. 50,000/-. He also relied upon terms and conditions of insurance policy Exh.127. He has relied upon following terms of policy:
SECTION N- LIABILITY TO THIRD PARTIES
1. Subject to the Limits of Liability the Company will indemnity the insured against all sums including claimant's cost and expenses which the insured shall become legally liable to pay in respect of
(i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of Motor Vehicle,
(ii) damage to property caused by the use (including the loading and/or unloading) of the Motor Vehicle.
12. I have considered submissions made by learned advocates for respective parties and perused impugned award passed by Claims Tribunal, Mehsana. I have also considered para-15 of impugned award in which question of limited liability is decided relying upon insurance policy Exh.127 and [SECTION]. Against that question which was not considered by Claims Tribunal, Mehsana while referring [SECTION] that insured has paid additional premium of Rs. 240/- for liability to public risk, it is not a case of insurance company that Exh.127 policy is act policy but it was a public risk policy issued by insurance company. Tariff as referred above suggested Rs. 200/- for act only liability and Rs. 240/- liability to public risk. [SECTION] of [ACT] deal with statutory policy means act policy but not deal with comprehensive policy having separate agreement or separate premium being additional premium accepted by insurance company. Therefore, additional premium accepted by insurance company over and above act policy which covered risk of third party unlimited. This aspect has been considered by Division Bench of this Court in [CASE NUMBER] decided on 24/7/2000. Relevant discussion of said decision is quoted as under:
6. We have examined the apex court judgments carefully. In the case of [PRECEDENT], the apex court has made reference to the earlier pronouncement of [PRECEDENT] (supra) and has also referred the another verdict of the apex court in M.K. Kunhimohammed v. P.A. Ahmedkutty MANU/SC/0477/1987 :
AIR 1987 SC 2158.
7. Before enumerating the ratio of the two cases of the apex court referred to above, it would be desirable to reproduce [SECTION] of the [ACT] It provides that 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) where the vehicle is goods vehicle, limit of 1,50,000/-
rupees in all including liabilities, if any, arising under the Workmen's compensation and in respect of death or bodily injury to employees (other than driver) not exceeding six in number being carried in the vehicle;
(b) where the vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment,-
in respect of persons other than passengers carried for hire or reward, a limit of fifty thousand rupees in all;
in respect of passengers, a limit of fifteen thousand rupees for such individual passengers.
8. Thus, [SECTION] is relevant for our purpose which applies to the facts of the case before us for the obvious reason that the insured was not a passenger in the truck nor he was carried for hire or reward in the truck. The initial liability under this provision was 50,000/- rupees but now Shri [ENTITY] has admitted that consequent upon the amendment in the Act of 1939 which came into force in October, 1982, the maximum liability in such cases is raised to Rs. 1,50,000/. Relying upon this statutory liability, Shri [ENTITY] has contended that the tribunal could not have awarded compensation exceeding Rs. 1,50,000/- .
9. It is now to be seen what is the ratio of the apex court in the aforesaid two cases of [PRECEDENT] and [PRECEDENT] (supra).
In our opinion, the following ratio can be deduced from the above two cases.
(1) The motor vehicle can not be used by the owner unless it is covered at least "act only" class. Policy.
(2) Owner of the vehicle cannot ply the same on public road unless it is insured.
(3) Insurance may be under "an act policy" only or it may be under comprehensive policy.
(4) It is the choice of the owner of the vehicle to get his vehicle insured as an "act only" policy and it is also his choice to get it comprehensively insured.
(5) If it is a case of insurance under "an act only" policy, premium as prescribed in the tariff has to be paid by the owner of the vehicle to the insurer.
(6) If it is comprehensively insured, then, mere use of "comprehensive" in the insurance policy or use of the words "unlimited liability" in the insurance policy will not render the insurance company liable to an unlimited extent. (7) If the vehicle is comprehensively insured, higher premium than that for "act policy" is payable depending on the estimated value of the vehicle.
(8) Comprehensive insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the motor vehicle calculated according to the rules and regulations framed in this behalf.
(9) 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] 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.
(10) Likewise, if the risk of any other nature for instance with regard to the driver or passengers etc. in excess of the statutory liability, if any, is sought to be covered, it has to be clearly specified in the policy and separate premium paid therefore. This is the requirement of tariff regulations framed for the purpose.
10. In [PRECEDENT] (supra), these principles were applied by the apex court and it was again reiterated that the 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, specific agreement is necessary which was found absent in the case of [PRECEDENT] (supra).
11. Keeping in view the above ratio of the apex court in the two cases, we have examined the insurance policy in this appeal. Xerox copy of the insurance policy is on the record of the tribunal and since it is not very legible, slightly legible Xerox copy was supplied to us or our perusal. After examining the Xerox copy so supplied, we found that in the end regarding limit of the amount of compensation liability under [SECTION] in respect of any accident, it was Rs. 50000/- only. The insurance policy was issuedon17.12.1988. The accident occurred on 20.10.1984.The Act was amended in October, 1982 and maximum statutory liability on the date of accident was Rs. 1,50,000/-. Consequently, recital in the insurance policy that the limit of the amount of compensation liability was Rs. 50,000/- is irrelevant and deserves out right rejection. Presuming that it should have been Rs. 1,50,000/-, we have examined whether there was any specific agreement between the owner and the insurer making the liability of the insurance company unlimited or that the insurance company was to remain statutorily liable to the extent of Rs. 1,50,000/- only. The apex court in the above two cases has clearly laid down that mere use of the word "unlimited liability" or "comprehensive insurance" will not make any difference. If it is claimed that the policy was comprehensive, separate agreement between the owner of the vehicle and the insurance company has to be established. However, in both the cases, the apex court has not laid down that separate agreement should be on separate document bearing requisite stamp paper. Such an agreement has to be inferred if the insurance company charged additional or extra premium from the insured. That is what is precisely laid down in [PRECEDENT]. (supra) when it was observed that for this purpose, 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. It was further observed that this is the requirement of the tariff regulations framed for the purpose. The tariff regulations were not produced before us in the course of arguments. However, we have extracted relevant tariff agreement quoted in the case of [PRECEDENT] which we believe that it was tariff prevalent on the relevant date when the insurance policy was issued by the appellant in the case before us.
12. The schedule of tariff prescribing premiums for insurance of goods carrying vehicle based on their capacity and extent of such coverage as in force at the material time as per the "India Motor Tariff", for the commercial vehicles of the capacity in question, schedule of premium was as follows:
Licenced Own damage Liability "Act carrying to pay only" capacity of public liability. the vehicle risk.
(2)Not exceeding Rs.550/- Rs. 240/- Rs.200/-
3048kg +1.10% on IEV
13. From the above tariff, it is clear that the licensed vehicle having carrying capacity of 3048 kg. (10 tons) schedule of premium for damage to the vehicle is Rs. 550+1.10% IEV. Likewise, for liability to the public risk, schedule of premium is Rs. 240/- and the premium for "act only" is Rs. 200/- only.
14. Keeping in view this tariff schedule, if the premium was charged for "act only" liability, it should have been Rs. 200/- only. But if the premium was charged at Rs. 240/-, then, it will be deemed that there was specific agreement between the insured and the insurer to undertake the liability to pay the public risk. This is nothing but an agreement between the owner of the vehicle and the insured to charge additional and extra premium covering public risk.
15. If in the light of this schedule, we examine the policy issued by the appellant in the instant case, we find that the premium of Rs. 240.00 has been charged for third party premium described as [ACT]. Another additional premium of Rs. 100/- has been charged which is styled as [ACT] Insurance. We interpret "[ACT] Insurance" as "Third Party Property Insurance" for which additional premium of Rs. 100/- was charged. Therefore, keeping tariff schedule in mind, we find that Rs. 240/- were charged for Third Party Insurance which is nothing but premium for liability to the public risk. In addition to this, premium of Rs. 100/- was charged for third party property insurance. This is also extra and additional premium charged by the insurance company. Charging of these two amounts will clearly indicate that there was separate agreement between the parties namely the insured and insurer that in case of any accident where damage is caused to the property of the third party, the insurance company will be liable to compensate for the whole damage. Likewise, if the injury is caused to the third party or third party dies, then the compensation has to be worked out keeping in view the provisions of the [ACT] and limit of statutory liability will not be of any rescue to the insurance company. We are, therefore, unable to agree with the contention of Shri [ENTITY] that no extra or additional premium was charged by the insurance company.
16. On Similar facts, before the Delhi High Court in the case of [PRECEDENT] where the controversy was different in the sense that the insurance policy or its copy was not filed, still from the statement of the witness examined by the insurance company it emerged that the insurance company charged premium of Rs. 240.00 covering third party risk. According to the Delhi High Court, in view of the schedule of premium in the tariff for "act only" liability, sum of Rs. 200/- has been prescribed to be the premium and in case of liability to third party public risk, sum of Rs. 240.00 has been provided. Since in that case, premium of Rs. 240.00 was charged by the insurance company, it was held that the premium is more than 'act only" premium of Rs. 200.00. As such, unlimited liability of the insurance company was upheld in this case. We do not find any force in the contention of Shri [ENTITY] that this case runs contrary to the ratio of the two apex court's verdict cited by us above. On the other hand, the view taken by the Delhi High Court is in consonance with the ratio laid down by the apex court wherein it has been observed that in case separate agreement is established or extra premium is charged by the insurance company, the liability of the insurance company will not be limited to the statutory liability only.
17. Similar view was taken in the case of [PRECEDENT]. (supra). In this case also, the insured had paid Rs. 240.00 as premium for coverage of the liability of public risk. The Patna High Court observed that as against this for coverage of liability to the extent of minimum statutorily fixed liability which has been defined under the tariff as "act only"
liability is only Rs. 200/-. It was further observed that, therefore, there is no escape from holding that the respondent company is liable to indemnify the owner of the vehicle for the entire liability arising in respect of the claims by the public under the Act because of any accidental personal injury. This case also does not run contrary to the apex court verdict in the two cases cited by us in the foregoing paragraphs of this judgment.
18. Yet in another case of [PRECEDENT] the Rajasthan High Court was also of the View that in such cases, liability of the insurance company is to pay the entire amount of compensation awarded by the tribunal. Here also, the truck was insured by the insurance company. The insurance policy indicated that the premium of Rs. 240.00 was charged for the third party risk. It was undisputed that at the relevant time, premium for "act only"
policy was Rs. 200/- whereas for third party liability or liability of public risk, premium was Rs. 240/-. Since Rs. 240/- were charged as premium by the insured to cover the third party risk which was more than "act only" premium of Rs. 200/-, hence, the liability of the insurance company was found and held to be unlimited. This case also does not run counter to the view taken by the apex court in the two cases cited by Shri [ENTITY].
19. No other point has been pressed before us. We, therefore, do not find force in the contention of Shri [ENTITY] that the insurance company is liable only to the extent of Rs. 1,50,000/- as statutory liability under [SECTION] of the [ACT]. On the other hand, we find from the above analysis that the insurance company having charged additional premium is liable to compensate for the entire loss and damage caused to the third party.
20. Before parting with this judgment, we would like to mention again that in [PRECEDENT] (supra) the apex court further observed that likewise if the 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 therefore. If this observation of the apex court is kept in mind and the policy produced before us is examined, we find that for the limit of liability to two drivers and one cooley additional premium of Rs. 24/- was charged and further limit of liability to three coolies another amount of Rs. 24/- was charged by the insurer. Thus, the insurer not only charged additional premium for third party risk but also charged additional premium for loss likely to be caused to the third parties property and also additional premium was charged for two drivers and four coolies. This is nothing but separate agreement charging additional and extra premium. As such, it is difficult to hold that the insurance company is liable statutorily to the extent of Rs. 1,50,000/- only.
We, therefore, do not find any merit in this appeal which is hereby dismissed with no order as to costs.
13. In reported decision of this Court in case of [PRECEDENT], Hon'ble Court has observed in head note that: '[ACT] - [SECTION] - Interpreting terms of the policy, held that policy was neither 'Comprehensive' nor 'Act only' policy - Policy found to be 'Public Risk Policy' - Held, liability of the Insurance Company was unlimited.' In para-6 and 7 of said decision this Court has also observed as under:
6. As can be seen from the policy Ex. 70, as far as Limits of Liability are concerned, limit of the amount of the Company's liability under [SECTION] in respect of any one accident is, "Such amount as is necessary to meet the requirements of the [ACT]." The real controversy between the parties is as to which of the three policies will govern the policy Ex. 70. It is the contention of the appellant Insurance Company that it is an Act Liability Insurance Policy, but the contention of the respondent- [ENTITY] is that it is Covering Public Risk Third Party Liability Insurance Policy. The learned Counsel for the appellant submitted that use of words "Such amount as is necessary to meet the requirements of [ACT]" shall mean the amount of liability stated in [SECTION] of the Act and Rs. 1.50 lacs being the outer limit stated as the liability under the said provision, the limits of liability as far as the appellant Insurance Company is concerned, is only Rs. 1.5 lacs. To make good this submission, the learned Counsel invited our attention to the decisions of the Supreme Court in the case of [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT] and [PRECEDENT].
7. Before considering the aforesaid authorities cited before us, we would once again like to highlight the facts by stating that the policy in question Ex. 70 and more particularly as far as the limits of liability are concerned, they only provide limit of the amount of Company's liability under [SECTION] i.e. death or bodily injury to any person caused by or arising out of the use (including loading and/or unloading) of a motor vehicle. It is to be noted here that there is no reference to any amount. However, the policy further states that "such amount as is necessary to meet the requirements of [ACT]". We are, therefore, required to find out as to whether such a clause has been interpreted by the Court in the aforesaid decision cited by the learned Counsel for the appellant.
14. In decision of this Court in case of [PRECEDENT] dated 15/9/2008 in para-3 to 7, this Court has observed as under:
3. Learned advocate Mr. [ENTITY] raised contention before this Court that Claims Tribunal has committed gross error by not appreciating the terms and conditions of Insurance Company, where, policy is having the premium of Rs. 240/- which suggests a limited liability of Rs. 1,50,000/- and not beyond that. This contention was raised by Insurance Company before the Claims Tribunal in Para 12 and that contention has been discussed by the Claims Tribunal in Para 12 to 15 which are quoted as under:
12. So far as the question of liability is concerned, it is proved that the accident happened due to negligent act on the part of opponent No. 1 i.e. driver of Truck No. GRQ and the said vehicle was involved in the accident. It is also proved that the opponent No. 1 is the driver of alleged truck and opponent No. 2 was the owner of the said truck at the time of accident. The applicant has also produced policy at Exh.67 which shows that the truck No. GRQ 6858 was insured with opponent No. 3 i.e. United Insurance Co. Ltd. for the period from 19.12.88 to 18.12.88 and the accident happened on 30/4/89. Hence, the policy period was in force at the time of accident. Thus in short, all the opponents are jointly and severally liable to pay the compensation.
13. It was argued on behalf of the petitioners that the liability of the insurance Co. is unlimited. It was argued on behalf of the petitioners that the owner of the ruck paid Rs. 240/-
covering liability of public risk whereas for coverage of 'Act only liability' the premium payable under tariff was Rs. 200/-. Hence, the liability of Insurance Co. is unlimited and for which he relies on [CASE NUMBER] reported in case of [PRECEDENT]. and also he relies on [PRECEDENT] reported in case of [PRECEDENT]. I am fully agree with this citation. Owner paid Rs. 240/- covering liability to public risk whereas for coverage of 'Act only liability' the premium payable under the tariff was Rs. 200/-. Hence, the liability company is unlimited.
14. It was argued on behalf of the opponent No. 3 that the liability of Insurance Company is limited. It was argued on behalf of the insurance Company that policy is Act policy.
Hence, the liability of Insurance Company is limited and for that he relies on [CASE NUMBER] reported in case of [PRECEDENT]., and (2) [PRECEDENT] - [PRECEDENT]. and (3) [CASE NUMBER] - [PRECEDENT]. I am fully agree with this citation but this citation does not help the opponent No. 3.
15. The owner of the truck has paid Rs. 240/- covering liability to public risk whereas for coverage of 'Act only liability' the premium payable under the tariff was Rs. 200/-. The owner has paid the premium for the third party risk and the witness No. 1 [ENTITY] on behalf of the opponent No. 3 has admitted in his deposition that owner of the truck has paid Rs. 240/- for the third party risk. Hence, the liability of the Insurance Company is unlimited. Hence, the arguments advanced by the advocate of the Insurance Company is not acceptable and I am of the view that all the opponents are jointly and severally liable to pay the compensation to the petitioners.
4. In view of aforesaid discussion made by Claims Tribunal, one fact is undisputed that owner has paid Rs. 240/- premium for third party risk.
5. Learned advocate Mr. [ENTITY] raised contention that in premium of Rs. 240/-, a third party risk is covered a limited coverage of Rs. 1,50,000/-. For increasing their risk, some more premium is necessary which was not paid. Therefore, Claims Tribunal has not considered this aspect and committed an error in awarding compensation in favour of respondent claimant.
6. Learned advocate Mr. [ENTITY] appearing on behalf of respondent claimant raised contention that according to the tariff, Rs. 240/- premium covers the risk of owner of unlimited liability of Insurance Company. The said question has been decided by this Court in case of [PRECEDENT] and the decision of this Court in case of [PRECEDENT] in [CASE NUMBER] decided on 24th July 2000 (Coram: [ENTITY] and [ENTITY], JJ.).
7. I have considered the submissions made by both the learned advocates and also perusing the relevant Para 12 to 15 as referred above. The contention which has been raised by learned advocate Mr. [ENTITY] that Insurance Company is having limited liability of third party in premium of Rs. 240/-, but, a witness of Insurance Company [ENTITY] admitted in his deposition that owner of the truck has paid Rs. 240/- for the third party risk. But, before the Claims Tribunal, Insurance Company has not made clear that Rs. 240/- covers the risk of third party which is limited up to Rs. 1,50,000/- and beyond that, if, risk is to be covered, then, some more premium is necessary. Such kind of submission was not made before the Claims Tribunal by the Insurance Company and therefore, Insurance Company has not examined that in detail. But, apart from that, the decisions of this Court as referred above which have been relied upon by learned advocate Mr. [ENTITY], according to my opinion, Claims Tribunal has rightly examined the issue and for that, Tribunal has not committed any error which requires interference by this Court.
30. Learned advocate Mr. [ENTITY] relied upon three decisions of Hon'ble [ENTITY] as referred above. In case of [ENTITY] (supra) a question has been arise whether there is separate contract for payment by owner of vehicle and amount according to same has been paid or not. For the same, Hon'ble [ENTITY] Court has observed that: [ACT] - [SECTION] - Under [SECTION] of the Act even in case of a comprehensive insured vehicle the liability of the insurer was limited to Rs. 50,000/- - An unlimited or a higher liability than the statutory liability of the insurer would arise only in case there is a separate contract and payment of additional premium by the owner of the vehicle. Therefore, facts of that case is altogether different to present case because hear insured owner has paid additional premium of Rs. 240/- covering public risk which is more than premium of act policy. Therefore said decision is not applicable to facts of present case. In case of [ENTITY] (supra) as referred above it is observed that in respect to third party risk liability of insured has been considered on ground that in absence of any specific agreement undertaking liability in excess of statutory limit and payment of additional premium therefore insurer's liability would be confirmed to that provided in the statute. This decision is also not applicable to facts of present case because here additional premium having specific agreement undertaking liability by insurance company has been accepted. In case of [ENTITY] (supra) question was that insured vehicle was 'motor cab' which was being used for hire or reward and was thus covered by [SECTION] of the Act which prescribes a limited liability of Rs. 50,000/- only in respect of persons other than passengers carried for higher or reward. In case of Hon'ble [ENTITY] Court the child insured was not a passenger. The question which has been raised in these appeals are not raised before Hon'ble [ENTITY] Court because it relating to only legal liability to passenger not in respect to third party and policy was act only policy not covering public risk policy. Therefore that decision is also not applicable to facts of these cases. Therefore, contention of learned advocate Mr. [ENTITY] relying upon [SECTION] as referred above cannot be accepted. Learned advocate Mr. [ENTITY] not pointed out before this Court even before Claims Tribunal that risk of insurance company is limited by leading proper evidence before Claims Tribunal. The contention raised by insurance company before Claims Tribunal that insurance policy Exh.127 is issued while accepting limited liability. That contention is not proved by insurance company before Claims Tribunal while leading proper evidence of any officer who can explain terms and conditions of policy. Therefore in absence of such evidence merely reading [SECTION] the Claims Tribunal has come to conclusion that insurance company having limited liability and said finding is erroneous finding while ignoring Rs. 240/- additional premium paid by insured-owner and what would be the effect of additional premium has not been considered by Claims Tribunal, Mehsana. Therefore, contention raised by learned advocate Mr. [ENTITY] cannot be accepted."
17. It is urged by the counsel for the insurance company that for covering unlimited liability, an additional premium of Rs.100/- was to be paid for class A(2) vehicles as is given in paragraph 11 of the tariffs Ex. RW 1/6. A perusal of Ex. RW 1/6 would show that while prescribing additional premium for each kind of vehicle, the additional premium is payable for property damage and not for personal injury. The personal injury has been written as unlimited. It is only quantum of property damage which keeps on rising with the increase in premium and additional premium of Rs.100/- is to be paid when additional risk for property damage to be covered. Thus, Rs.100/-, additional premium, has nothing to do with the risk to life of third parties.
18. There is another aspect to be kept in mind. When an owner approaches insurance agent for insurance, he is told what would be the tariff payable by him and on payment of tariff, an insurance certificate or cover note is issued. The contract of insurance, thus, stands concluded on receipt of tariff/premium in terms of the tariff schedule as laid down by Advisory Board. Insurance policy is subsequently mailed to owner by insurance company. If insurance company unilaterally inserts a clause in the policy which is contrary to tariff regulations, such a clause is not binding. All insurance policies are in the shape of one standard performa used for different kinds of coverage. If while sending insurance policy to owner the company official does not score off non-applicable clauses or inserts a limited liability clause which is contrary to the tariff charged from owner, such a clause is not binding.
19. I, therefore, consider that the liability of insurance company in this case was unlimited and not limited since the insured had paid tariff/premium of Rs.240/- for liability to 'Public Risk' and not Rs.200/- for 'Act Only Liability'.
20. The other issue involved is whether the Tribunal had granted just and fair compensation to the appellants. It is submitted by counsel for the appellants that the Tribunal has wrongly deducted 1/3rd of amount from the salary towards personal expenses. The Tribunal should have deducted 1/4th salary towards personal expenses. He submits that in this case the number of dependents included a widow and three children.
Thus, as per judgment of the Supreme Court in [ENTITY] & Ors. vs. Delhi Transport Corporation & Anr.; (2009) 6 SCC 121, only 1/4th of the amount should have been deducted towards personal expenses as number of dependents were between 4 to 6. He further submits that the court has not taken into account future prospects and since the age of deceased at the time of accident was 47 years, at least 30 per cent of income should have been added as future prospects. It is further submitted that no compensation was given on account of non-monetary heads like loss of love, loss of consortium, loss of estate, funeral expenses, etc.
21. It is settled law that while assessing compensation, the court should be alive to the fact that the compensation awarded in case of death of a sole earning member of a family or in case of permanent disablement should be just and fair, although it should not be in the nature of a windfall. In [ENTITY]'s case (supra), the Hon'ble Supreme Court taking into consideration the fact that different Tribunals and High Courts were adopting different criteria for calculating compensation in such cases, laid down a sort of thumb rule for calculating compensation. It has been laid down by Supreme Court that where the dependents were 4 to 6, 1/4th deduction should be made towards personal expenses of the deceased and where the age of deceased was between 46 and 50, a multiplier of 13 should be used and if the deceased was having a permanent job and was aged between 40- 50 years, 30 per cent should be added towards future prospects. Adopting these norms, the salary of claimants in this case was Rs.2,697/-. If future prospects of 30 percent, that is, Rs.809/- are added, his salary for the purpose of compensation would be Rs.3,506/-
say 3,500/-. Since the deceased left behind widow and three children aged 9, 16 and 18 years, 1/4th would be the appropriate deduction toward personal expenses. Thus, Rs.875/-
be deducted from Rs.3,500/- for personal expenses. So his salary would be Rs.2,625/-.
Since the deceased was aged between 46 and 50, the appropriate multiplier as per [ENTITY]'s case (supra) and as per [SECTION] would be 13. So, the deceased would be entitled to a compensation of Rs.4,09,500/- [(Rs.2625/- x 12) x 13]. As per standard laid down in [ENTITY]'s case, the deceased would also be entitled to Rs.5,000/- towards loss of estate and Rs.5,000/- towards loss of consortium and Rs.5,000/- towards funeral expenses etc. Thus, the total compensation to which the appellants would be entitled would be Rs.4,24,500/- [Rs.4,09,500/- + Rs.15,000/-]. I, therefore, consider that the award passed by learned Tribunal needs modification to that extent and the compensation to which the appellants are entitled is held to be Rs.4,24,500/-.
22. In view of my holding that it is the insurance company who has to pay the entire amount because of unlimited liability incurred and the insurance company has paid only Rs.1,50,000/- to the appellants, the balance amount (Rs.2,74,500/-) be paid by the insurance company with interest @ 8 per cent per annum from the date of award till payment.
23. With this, the appeal stands disposed of.
[ENTITY] J.
MAY 17, 2010 'AA'