IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.24 of 1990 (O&M) Date of decision:17.02.2011 The New India Insurance Company Limited ....Appellant versus Rajinder Kaur and others ..Respondents II. FAO No.25 of 1990 (O&M) The New India Insurance Company Limited ....Appellant versus Ranjit Singh and others ..Respondents III. FAO No.26 of 1990(O&M) The New India Insurance Company Limited ....Appellant versus Nirpinder Kaur and others ..Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. Lalit Mohan Suri, Senior Advocate, with Mr. Neeraj Khanna, Advocate, for the appellant. Mr. Sanjiv Ghai, Advocate, for respondents 1 to 3 in FAO No.25 of 1990. None for other respondents. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? No. 2. To be referred to the reporters or not ? Yes. 3. Whether the judgment should be reported in the digest ? Yes. ---- FAO No.24 of 1990 (O&M) - 2 - K.Kannan, J.(Oral) 1. All the three appeals are connected and they address the same issue as regards the limit of liability for the Insurance Company for an accident that involved a collision between a car and a truck. Three passengers in the car died and in the manner of award of compensation, the Tribunal had awarded Rs.5,80,000/-, Rs.2,56,000 and Rs.1,54,000/- to the representatives of three deceased persons. Inasmuch as each one of the awards was in excess of Rs.1,50,000/-, the Insurance Company is in appeal referring to the terms of the policy that the limit of liability for anyone of the accident was “such amount as is necessary to meet the requirement of the Motor Vehicles Act of 1939”. I have seen through the policy and a basic premium of Rs.240/- has been paid to cover the public risk. In terms of Section 95(2)(a), the liability which had been previously restricted at Rs.50,000/- was later increased by Act 47 of 1982 to Rs.1,50,000/-. This was effective from 31st August, 1982 till this was substituted by new Motor Vehicles Act of 1988 effective from 01.05.1989. In a case, therefore, where only basic premium for third party risk is made, the amount to meet the requirements of the Motor Vehicles Act would mean what Section 95(2)(a) provides. Any other reading of the Section does violence to the bare provisions of the Act. The Tribunal rejected the plea of the Insurance Company in a rather strange intemperate language that the Insurance Company had the temerity to make a plea for restriction of liability. What an insurer pleads under law requires no temerity to do so. On the contrary, if it fails to take a plea which the law permits that should be matter of concern, FAO No.24 of 1990 (O&M) - 3 - for, the Insurance Company operates on pubic funds. 2. The liability in each of the cases is, therefore, restricted at Rs.1,50,000/- with interest as awarded by the Tribunal. 3. The learned counsel for the claimants 1 to 3 in FAO No.25 of 1990 would contend that the award was only at Rs.1,54,000/- and the the Insurance Company ought not to be contesting the claim for additional amount of Rs.4,000/- with interest. The entitlement of the claimants is not in any way defeated for the amount in excess of Rs.1,50,000/- with interest shall be realized by the claimants against the owner/insured. This follows the inevitable reasoning that I have adopted while reading Section 95(2)(a) of the Motor Vehicles Act, 1939. 4. The awards are modified and the appeals are allowed to the above terms. (K.KANNAN) JUDGE 17.02.2011 sanjeev