IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 03.07.2008 C O R A M THE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR C.M.A.No.1371 of 2002 The Manager The National Insurance Co. Ltd., J.N.Street, Pondicherry ... Appellant/3rd Respondent Vs. 1.Vedavalli @ Vedanayagi ... 1st Respondent/1st Petitioner 2.Thirunavookkarasu (late minor ... 2nd Respondent/2nd Petitioner now attained majority) 3.Raniammal ... 3rd Respondent/1st Respondent This Civil Miscellaneous Appeal has been filed under Section 173 of the Motor Vehicles Act, 1988 as against the Judgment and award of the Motor Accidents Claims Tribunal (III Additional District Judge), Pondicherry dated 30.08.2001 made in M.C.O.P.No.167/2008. For Appellant : Mr.K.S.Narasimhan For Respondents : Mr.R.Sathiyakumar (for R1&R2) Respondent 3 : No appearance. J U D G M E N T The National Insurance Co. Ltd., which figured as the 2nd respondent before the Motor Accidents Claims Tribunal (III Additional District Judge), Pondicherry has brought-forth this Civil Miscellaneous Appeal under Section 173 of the Motor Vehicles Act, 1988 against the judgment and award of the said Tribunal dated 30.08.2001 made in M.C.O.P.No.167 of 1988 on the file of the said Tribunal. 2. The first and second respondents herein claiming to be the legal heirs and dependents of deceased Thirugnanam @ Thirugnanasambandam had preferred a claim on the file of the Motor Accidents Claims Tribunal, Pondicherry in M.A.C.T.O.P.No.167 of 1988 under section 110-A of the Motor Vehicles Act, 1939 (old Act) praying for an award directing the respondents 3 and 4 and the appellant herein to pay a sum of Rs.1,00,000/- as compensation for the death of the above said Thirugnanam @ Thirugnanasambandam due to the injuries sustained by him in an accident that took place on 13.06.1988 at about 9.00 p.m on the Cuddalore-Pondicherry Main Road at Kattukuppam https://hcservices.ecourts.gov.in/hcservices/ opposite to industrial estate. 3. According to the petition averments, while the above said Thirugnanam @ Thirugnanasambandam was proceeding in his bicycle from Kannikovil to Kattukuppam riding the same on the extreme left side of the road, the car belonged to the third respondent (first respondent in the MCOP) bearing Regn.No.PYX 933 hit him and caused the accident as the said vehicle was driven by its driver at high speed with rashness and negligence. The rash and negligent driving of the car by its driver was the sole cause of the accident and hence the third respondent, being the owner of the said vehicle is liable to pay compensation to the first and second respondents who are respectively the mother and son of the deceased. Soon after the accident, the deceased Thirugnanam @ Thirugnanasambandam was taken to the hospital and there he was given treatment as an in-patient for two days which proved ineffective and ultimately deceased Thirugnanam @ Thirugnanasambandam succumbed to the injuries on 15.06.1988. 4. Contending further that the deceased, at the time of his death, was aged about 34 years and was having a monthly income of not less than Rs.700/- per month in his profession as a tractor driver, the respondents 1 and 2 herein (petitioners in the MCOP) at the first instance had claimed a sum ofRs.1,00,000/- as compensation for the loss suffered by them due to the untimely death of the said Thirugnanam @ Thirugnanasambandam and subsequently amended the prayer claiming a sum of Rs.3,00,000/- with future interest at the rate of 9% from the date of petition till the date of realisation and litigation costs against the third respondent herein and the appellant herein in their capacities as the owner and insurer of the said vehicle respectively. 5. Though, the third respondent herein/the first respondent in the MCOP, who was admittedly the owner of the above said car involved in the accident at the time of accident, had entered appearance through a counsel, he did not file a counter statement and the appellant insurance company which figured as the second respondent before the Tribunal above contested the claim by filing a counter statement denying the petition averments and contending that the accident occurred due to the negligence of the deceased who was riding the bicycle in a zig-zag manner as he was under the influence of alcohol. The further contention raised in the counter statement of the appellant herein was that the liability of the insurance company namely (the appellant herein/second respondent in the MCOP) was limited to Rs.50,000/- only per accident and that the compensation claimed by the respondents 1 and 2 herein/claimants was highly excessive and exorbitant. 6. Based on the rival pleadings, the Tribunal framed necessary issues and conducted trial. In the trial, two witnesses were examined as P.W.1 and P.W.2 and eight documents were marked as Ex.A1 to Ex.A8 on the side of the Respondents 1 and 2 herein/petitioners in the MCOP. Except marking Ex.B1 with the consent of the parties no other evidence was adduced by the appellant herein/2nd respondent in the MCOP. At the conclusion of trial, after hearing the arguments advanced on https://hcservices.ecourts.gov.in/hcservices/ either side and upon considering the evidence adduced on either side in the light of the arguments advanced, the learned Tribunal came to the conclusion that the accident occurred solely due to the rash and negligent driving of the Ambassador car belonging to the third respondent herein by its driver. 7. The appellant insurance company had also contended in its counter statement that the respondents 1 and 2/claimants should prove that the driver of the car involved in the accident was having a proper license to drive the same and that the car was covered with proper documents as contemplated under the Motor Vehicles Act, 1988. The Tribunal also held that it was the duty of the insurance company to plead and prove any violation of any policy condition including absence of driving license for the driver to drive the vehicle involved in the accident, but the appellant herein failed to prove the same by adducing evidence. 8. The Tribunal assessed the compensation to which respondents 1 and 2 are entitled as Rs.1,55,000/-. Even though the Tribunal accepted the contention of the appellant (insurer) that the liability of the insurer under the policy was restricted to Rs.50,000/-, it held the appellant and the third respondent herein, as the insurer and the owner respectively of the vehicle involved in the accident, jointly and severally liable to the entire extent of the compensation and directed the third respondent herein and the appellant herein to jointly and severally pay the said amount of Rs.1,55,000/- together with an interest at the rate of 9% per annum from the date of petition till realisation and with costs. The Tribunal also directed that in the event of the appellant paying full amount of compensation to the respondents 1 and 2 (petitioners in the MCOP), the appellant shall be entitled to recover from the third respondent herein the excess amount paid over and above Rs.50,000/-. The appellant (insurer) has broughtforth this Civil Miscellaneous Appeal. 9. Aggrieved by and challenging the said award holding the appellant (insurer) liable to the entire extent of damages arrived at by the Tribunal, incorporating a condition that in the event of the appellant paying the full award amount to the respondents 1 and 2/claimants, the appellant shall be entitled to recover from the third respondent the excess amount paid over and above the sum of Rs.50,000/-. Since the Motor Vehicles Act, 1939 was repealed and replaced by Motor Vehicles Act, 1988 during the pendency of the MCOP, the present appeal has been filed under Section 173 of the Motor Vehicles Act, 1988 challenging the award of the Tribunal in so far as it directs payment at the first instance and recovery from the third respondent of the excess amount paid over and above Rs.50,000/-. 10. The point that arises for consideration in this civil miscellaneous appeal is as follows:- "Whether the Tribunal has committed an error in directing the appellant to pay the entire award amount at the first instance and recover the excess amount paid over and above Rs.50,000/- from the third respondent (owner of the https://hcservices.ecourts.gov.in/hcservices/ vehicle), even after holding that the liability of the appellant insurer was limited to Rs.50,000/-?." 11. The arguments advanced by Mr.K.S.Narasimhan, learned counsel for the appellant and Mr.R.Sathiyakumar, learned counsel for the respondents 1 and 2 were heard and the materials available on record were perused. 12. There is no controversy regarding the fact that one Thirugnanam @ Thirugnanasambandam, the son of the first respondent herein and the father of the second respondent herein/claimants met with an accident on 13.06.1988 at about 9.00 p.m on the Cuddalore- Pondicherry Main Road at Kattukuppam, opposite to industrial estate in which he was hit by the Ambassador car bearing Registration No.PYX 933; that the said accident resulted in grievous injuries which proved to be fatal after two days as the said Thirugnanam @ Thirugnanasambandam succumbed to the injuries on 15.06.1988 despite treatment given to him as an in-patient and that the said Ambassador car at the time of accident belonged to the third respondent herein and stood insured with the appellant herein. The finding of the Tribunal based on the oral and documentary evidence adduced on the side of the respondents 1 and 2 herein that the accident was the result of rash and negligent driving of the said car by its driver has not been challenged in this civil miscellaneous appeal. As there is no challenge to the said finding on the question of negligence, the same has got to be confirmed. 13. The deceased Thirugnanam @ Thirugnanasambandam, according to the averments made in the claim petition, at the time of accident was aged about 34 years and was having a monthly income of Rs.700/- as a tractor driver. Relying on the judgment of the Hon'ble Supreme Court in Susamma Thomas case reported in AIR 1994 SC 1, the average monthly income of the deceased was assessed by the Tribunal at Rs.1,200/-. The Tribunal deducted 2/5th from the said amount towards expenses of the deceased for maintaining himself had he been alive and assessed the dependency at Rs.700/- per month, which is equivalent to Rs.8,400/- per annum. Relying on Ex.A5 - Birth Certificate, the Tribunal found the age of the deceased at the time of death to be 33 years, selected '17' as the appropriate multiplier and calculated the damages for the loss of dependency at Rs.1,42,800/-. A sum of Rs.2,000/- towards funeral expenses and a sum of Rs.10,000/- towards loss of consortium and loss of love and affection were also awarded. The total amount of compensation was, thus arrived at Rs.1,54,800/- and rounded to Rs.1,55,000/- by the Tribunal. No challenge has been made either by the appellant herein or by the respondents herein to the assessment of damages to which the respondents 1 and 2 were entitled. Therefore, the question of quantum of damages is a non- issue in this appeal. The only challenge made to the award of the Tribunal is that the appellant insurance company's liability under the policy of insurance having been fixed at Rs.50,000/-, the Tribunal should not have held the appellant jointly and severally liable along with the third respondent to pay Rs.1,55,000/- along with interest and costs. https://hcservices.ecourts.gov.in/hcservices/ 14. It is the contention of the learned counsel for the appellant that the method of payment first and recovery next should not be adopted in a case wherein the liability of the insurer is proved to be limited to a certain extent alone. According to the contention of the learned counsel for the appellant, only in case of avoidance of contract of insurance on the ground of violation of policy conditions, in order to safeguard the interest of the victim against the avoidance of such liability towards the third party victims, the method of directing payment and recovery should be adopted and application of the said method to a case wherein there is no coverage of insurance and to a case of limited liability beyond the monetary ceiling shall virtually result in injustice. 15. In support of his contention, the learned counsel for the appellant relied on the judgment of a full bench of this court in Jayalakshmi and others V. The Ruby General Ins. Co. Ltd. Madras, and another reported in 1970 ACJ 451, a judgment of the Hon'ble Supreme Court in New India Assurance Co. Ltd., V. Krishan Pal Singh and others reported in 2000 ACJ 522. It is the contention of the appellant that as per the old Act - Motor Vehicles Act, 1939 as it stood on the date of the accident, vehicles had been classified into three categories namely, goods vehicles, vehicles carrying passengers for hire or reward and vehicle of any other class; that the vehicle concerned in this appeal fell in Sub-clause 2(b) of Section 95 of the old Act; that as per the said provision, it was mandated that a policy should cover atleast the risk involved to any person other than passengers carried for hire are rewarded to an extent of Rs.50,000/-; that the minimum requirement of the statutory provision alone was sought to be complied with in taking an insurance policy for the vehicle involved in the accident, a copy of which has been marked as Ex.B1 and that hence the liability towards the respondents 1 and 2, the legal heirs and dependents of deceased Thirugnanam @ Thirugnanasambandam (a third party victim) was only to the extent of Rs.50,000/-. 16. It is the further contention of the learned counsel for the appellant that though the statute required minimum coverage there was no impediment for the owner of such a vehicle to get a policy for a larger coverage and that such a choice given to the owner of the vehicle (insured) was not exercised for getting a policy with wider coverage than the minimum requirement of the statute. The learned counsel for the appellant also contended no doubt Ex.B1 would reveal that the policy issued to the vehicle was a comprehensive policy, but the term "comprehensive policy" would not necessarily mean the coverage of the third party to an unlimited extent; that whenever a policy is obtained with more coverage than what was required as a minimum under the Act, the same would be called comprehensive policy; that a policy which covers the minimum requirement of the statute towards third party and the persons carried in the vehicle plus the owner's risk shall also be called a "comprehensive policy" and that hence, the mere term comprehensive policy will not indicate that the coverage of third party risk had been made unlimited. 17. The learned counsel for the appellant pointed out the fact that though premium for the owner's risk towards the damage that may https://hcservices.ecourts.gov.in/hcservices/ be caused to the vehicle had been paid on a certain percentage of insured's estimated value of the vehicle, additional premium had not been paid to enhance the liability towards third party and the further fact that the policy itself contained a specific clause that the liability of the insurer under Section 11(1) in respect of any one accident shall be limited to the amount as is necessary to meet the requirements of Motor Vehicles Act, 1939 and that the amount of the company's liability under Section 11-1(ii) in respect of any one claim or series of claim arising out of one event shall be Rs.50,000/-. It has also been pointed out that for increasing the liability towards third party either to an unlimited extent or upto a particular limit, no additional premium had been collected. 18. In this regard the learned counsel for the appellant has relied on the judgment of a full bench of this court in Jayalakshmi and others V. The Ruby General Ins. Co. Ltd. Madras, and another reported in 1970 ACJ 451, a judgment of the Hon'ble Supreme Court in New India Assurance Co. Ltd., V. Krishan Pal Singh and others reported in 2000 ACJ 522 cited supra. A full bench of this court in the first of the above cited cases and the Hon'ble Apex court in the second of the above cited cases, have taken a view that the liability of the insurance company in case of a policy which has been taken to cover the Act liability towards third party shall be limited to the extent prescribed in Section 95(2)(b)(i) of the Motor Vehicles Act, 1939. 19. In New India Assurance Co. Ltd., V. C.M.Jaya and Others reported in 2002 AIR SCW 259, a constitutional bench of the Hon'ble Supreme court has taken a view that in case of the insurance company not taking any higher liability by accepting a higher premium for payment of compensation to a third party, the insurer would be liable to the extent limited under Section 95(2) of the Act (1939 Act) and would not be liable to pay the entire amount of compensation. It has also been observed that there was nothing in Section 95 of the Act prohibiting the parties from contracting to create unlimited or higher liability to cover wider risk; that in such an event the insurer was bound by the terms of contract as specified in the policy creating higher or unlimited liability as the case may be; that in the absence of such a clause in the contract of insurance, the limited statutory liability could not be expanded to make it unlimited or higher and that if it was so done it would amount to rewriting the statute or the contract of insurance, which was not permissible. 20. Similar view was expressed in National Insurance Co. Ltd. V. Keshav Bahadur & Others reported in 2004(1) TN MAC 184(SC). It was also observed therein that simply because higher premium was paid, liability with regard to the third party risk did not become unlimited or higher than the statutory liability and that for the higher risk in respect of third party, a specific agreement had to be made between the insured and the insurer and separate premium had to be paid in respect of additional amount of liability undertaken by the insured in that regard. 21. The learned Motor Accidents Claims Tribunal relying on the judgment of the Apex court came to a correct conclusion that the https://hcservices.ecourts.gov.in/hcservices/ liability of the insurer (appellant) under the policy, a copy of which has been marked as Ex.B1, was limited to the extent of Rs.50,000/-. However, the learned Motor Accidents Claims Tribunal has transgressed the limit without any basis and on an erroneous assumption that in all cases, the liability of the insurer towards the third party shall be unlimited, held that the liability of the insurer (appellant) towards the respondents 1 and 2 (third parties) to be a co-extensive with that of the third respondent (owner of the vehicle), with a qualification that any excess amount which the insurer (appellant) was obliged to pay under the award over and above the liability fixed by contract could be recovered from the insured (3rd respondent). The said approach made by the learned Motor Accidents Claims Tribunal is quite erroneous. Courts have so far gone to the rescue of the poor victims by directing the insurer to pay the compensation payable by the insured not withstanding the fact that there had been violation of policy conditions giving a rise to a right to the insurer to rescind and repudiate the contract. Only in cases of coverage of risk and to the extent of coverage alone, the method of directing payment first and recovery next has been adopted. In no case the insurer has been directed to satisfy the claim in case of no coverage at all or over and above the limit when the coverage is limited. In the authoritative pronouncement made by the Hon'ble Supreme Court in the judgments cited supra, it has been observed that it would be unethical to mulct the liability on the insurer to satisfy the claim of the third party against insured if there is no coverage at all or to direct the insurer to incur liability over and above the limit fixed as per the contract of insurance of course with a rider to get reimbursed from the insured in the absence of a statutory provision making the liability unlimited as the minimum requirement of policy in respect of a particular category of persons. 22. In this case, as per Section 95(2) of the Motor Vehicles Act, 1939 which was in force on the date of accident, the minimum limit of coverage in respect of third party risk was Rs.50,000/- and the policy itself had been issued with a specific clause that the liability of the insurer towards the third party would be only to the extent of Rs.50,000/-. It is also abundantly clear from the policy that no extra premium for making the liability unlimited or higher than the statutory minimum was received by the insurer. Under such circumstances, the award of the Tribunal holding the liability of the insurer (appellant) co-extensive with that of the insured has got to be set aside and modified. 23. In the result, the civil miscellaneous appeal succeeds and the award of the Tribunal is modified by limiting the liability of the appellant insurance company to Rs.50,000/- plus proportionate interest and cost. As it is represented that the entire award amount was deposited by the appellant to the credit of the MCOP, the excess amount deposited by the appellant insurance company shall be refunded to the appellant. The respondents 1 and 2/ claimants shall be entitled to payment out of the above said sum of Rs.50,000/- plus proportionate interest and proportionate cost out of the amount deposited by the appellant insurance company, if not already withdrawn. The respondents 1 and 2/claimants shall recover the https://hcservices.ecourts.gov.in/hcservices/ balance amount from the third respondent herein (first respondent in the MCOP). In all other respects, the award of the Tribunal shall stand confirmed. There shall be no order as to cost. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. asr To 1) The Motor Accidents Claims Tribunal (III Additional District Judge), Pondicherry 1 cc to Mr.K.S.Narasimhan,Advocate, SR.35022 Copy to The Record Keeper, V.R.Section, High Court, Madras. C.M.A.No.1371/2002 SSN(CO) EM/8.12.08 https://hcservices.ecourts.gov.in/hcservices/