F.A.O.NO. 1239 of 1993, F.A.O.NO. 1072 of 1993 and 1 F.A.O.NO. 1267 of 1993 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O.NO. 1239 OF 1993 Date of decision:16th September, 2010 The New India Assurance Co. Ltd. Khanna through its duly constituted attorney .......Appellant Versus Baljit Singh and others ........Respondents F.A.O.No. 1072 of 1993 Swaran Kaur and others ........Appellants Versus Jaswant Singh and others .........Respondents F.A.O.No. 1267 of 1993 The New India Assurance Co. Ltd. Khanna through its duly constituted attorney. ........Appellants Versus Swaran Kaur and others .........Respondents BEFORE: HON'BLE MR. JUSTICE K.KANNAN Present: Mr. L.M.Suri, Senior Advocate with Mr. Neeraj Khanna, Advocate, for the Insurance Company. Mr. Satinder Khanna, Advocate and Mr. Munish Gupta, Advocate, for the claimants. 1. Whether Reporters of local papers may be allowed to see the judgment? Yes/No 2. To be referred to the Reporters or not?Yes/No F.A.O.NO. 1239 of 1993, F.A.O.NO. 1072 of 1993 and 2 F.A.O.NO. 1267 of 1993 3. Whether the judgment should be reported in the Digest? Yes/No K.Kannan, J.(Oral) 1. The Insurance Company is in appeal, challenging the liability on the ground that the accident had taken place on 21.10.1989 when the Motor Vehicles Act, 1939 was still in force. The Motor Vehicles Act, 1988 came into force on 1.07.1989. The case involved the claim as having arisen out of death of a third party by a truck. The truck had been insured for third party risk where the liability was restricted to meet the requirements of Motor Vehicles Act, 1939. The policy commenced on 4.11.1988 when the 1988 Act had already come into force and as per terms of Section 147 (2) (b) proviso, the liability restricted under the Motor Vehicles Act, 1939 at the time of commencement was to be effected for the period of four months, after such a commencement or till the date of expiry of the policy which ever was earlier. As already pointed out, the accident took place within a period of four months from the date of the commencement of the Act and therefore, the proviso applied to extend the allegation of the limited liability undertaken under the 1939 Act. 2. The Tribunal had assessed the compensation payable for injuries at Rs. 1,55,000/- and for death at Rs. 2,02,000/- respectively. Learned counsel appearing for the claimants would contend that the Full Bench judgment of this Court held in Tek Chand Behl and another F.A.O.NO. 1239 of 1993, F.A.O.NO. 1072 of 1993 and 3 F.A.O.NO. 1267 of 1993 vs. Khem Chand and others (2008) 1 RCR(Civil) 304 that provisions of Section 173(1) of the Act would apply to cases where accident and award were prior to the coming into force of the 1988 Act. The contention was that the Full Bench held that the provisions of new Act would be applicable. This decision must be understood that all the matters of procedure could be applied as per the new Act but the substantive rights of parties shall still be limited by what the policy details contained. If there is specific restriction under the new Act itself, it shall still be by virtue of reading new Act that a liability shall be found as restricted. As a matter of fact, when I hold that the insurer liability is restricted, I am applying the provision of the Act of 1988 itself, that contains restriction of liability for an insurer in the following words:- “Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.” 3. Therefore, the point that would require to be considered is whether there exists a restriction of liability for a claim by a third party or whether such restriction of liability must be understood only for person who are load men being carried in the goods carriage or F.A.O.NO. 1239 of 1993, F.A.O.NO. 1072 of 1993 and 4 F.A.O.NO. 1267 of 1993 passengers being carried in the passenger vehicle. There existed several shades of opinions on the same till it was resolved by reference to five member Bench judgment of the Hon'ble Supreme Court where the same issue was to be dealt in New India Assurance Company Ltd. vs. C.M.Jaya and others (2002) 2 SCC 278. The point of reference was whether an insurer would be liable to the extent limited under Section 95(2) of the Act and not liable to pay the entire amount of compensation for a third party, after coming into force of 1988 Act. A two member Bench of Hon'ble the Supreme Court referred to a seeming conflict in New India Assurance Co. Ltd. Vs. Shanti Bai (1995) 2 SCC 539 and Amrit Lal Sood and another vs. Kaushalya Devi Thapar and others (1998) 3 ACC 744. The five member Bench of the Hon'ble Supreme Court held that there was no inconsistency between the two rulings and in the case where the insurance company did not undertake a higher liability by accepting a higher premium for payment of compensation to a third party, the insurer would be liable only to the extent limited under Section 95(2) of the Act and the insurer would be liable to pay the entire amount. The liability has specified under the act under Section 95(2)(a) of the Motor Vehicles Act. 1939 rules as follows:- “Where the vehicle is a goods vehicle, a limit of one lakh fifty thousand rupees in all, including the liabilities, if any, arising under the Workmen's F.A.O.NO. 1239 of 1993, F.A.O.NO. 1072 of 1993 and 5 F.A.O.NO. 1267 of 1993 Compensation Act, 1923, 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;” There cannot be therefore, be any controversy about the fact that the insurer's liability shall be restricted to what this Section provides since the premium paid is the basic premium for liability to the public risk and no extra premium has been paid for enhancement of limited liability. 4. The learned counsel for the claimants points out to a judgment of this Court in Rajesh Kumar and another vs. Gurnam Kaur and others 2007(1) RCR (Civil) 814 that limited liability of insurance company qua third party does not exist and that Section 95 of the 1939, Act does not provide for any limit for third party liability. The authoritative pronouncement of the five member Bench of the Hon'ble Supreme Court in C.M.Jaya's case(supra) was not brought to the attention of this Court. In my respectful view, the judgment in Rajesh Kumar's case(supra) does not state the correct law and it has no value as a precedence in view of the decision of the Hon'ble Supreme Court. 5. The Learned counsel for the respondent relies on the judgment of the Hon'ble Supreme Court in Shanti Bai's case(supra) to contend that not withstanding the statutory limit and the limits of F.A.O.NO. 1239 of 1993, F.A.O.NO. 1072 of 1993 and 6 F.A.O.NO. 1267 of 1993 liability mentioned in the policy, the insurer would be liable to a 3rd party, for the whole amount. No such proposition is laid down in the said judgment. On the contrary, the liability is restricted in the judgment and makes possible for the claimant to claim the amount without any restriction only against private respondents. 6. The appeal is allowed, restricting the liability of the Insurer to Rs. 1,50,000/- with interest and the balance is recoverable only from the insured/owner. [K.KANNAN] JUDGE 16th September, 2010 Shivani Kaushik