Case: New India Assurance Co. Ltd Vs. Shanti Bai

MANOHAR SUJATA V. (J), AHMADI A.M. (CJ) AND BHARUCHA S.P. (J) 1. Leave granted. 2. This appeal by special leave arises from a judgment and order dated 11th of February, 1994 passed by the High Court of Madhya Pradesh in Misc. Appeal No. 444 of 1991. The appellant before us is the New India Assurance Company Ltd. It had issued a comprehensive insurance policy in respect of a bus which was used for carrying passengers for hire and bearing Registration No. CIK-8108, owned by respondent No.3. This insurance policy was in force at the material time. 3. On 3rd of January, 1989, this bus, while it was being driven by respondent No. 5, met with an accident. The deceased, Laxman Singh, who was sitting on the roof top of the bus with the permission of the bus driver, respondent No. 5, hit a tree on account of the alleged rash and negligent driving of the said bus by respondent No.5.He was admitted to hospital and died on 7.1.1989 on account of the injuries received in the accident. The legal heirs of Laxman Singh, who are respondents 1 to 3 before us, filed a claim for compensation amounting to Rs. 7, 81, 000/-before the Motor Accident Claims Tribunal, Narsinghpur. The Motor Accident Claims Tribunal, by its order dated 10.4.1991, awarded to respondent s 1 to 3 compensation of Rs. 1, 10, 000/- together with interest at the rate of 12% per annum from the date of the presentation of the petition and directed the appellant and respondents 4 and 5 to pay the same.4. Being aggrieved by this order, the appellant filed Misc. Appeal No. 444 of 1991 before the High Court of Madhya Pradesh. The High Court, by its order dated 11th February, 1994, dismissed the appeal of the appellant and confirmed the findings of the Tribunal. The present appeal arises from this order of the Madhya Pradesh. 5. The short question that we have to consider is whether the appellant is liable to pay compensation to the tune of Rs. 1, 10, 000/- together with interest thereon at the rate of 12% from the date o f the presentation of the petition to respondents 1 to 3. The appellant contends that its liability in this regard is limited to Rs. 15, 000/-. 6. The insurance policy taken out by the owner of the said bus i.e. respondent No. 4 herein, and which was in force at the relevant time, was a comprehensive policy. This policy has been produced before us. It shows that the insured estimated value of the vehicle is Rs. 2, 50, 000/ -- in the Schedule of Premium, there in an additional payment of Rs. 600/- in respect of 50 passengers. The claim against this amount states: "for L L to passengers as per Ednt. No. I.M.T. 12". The -appellant-company has contended that it has charged premium at the rate of Rs. 12/ per passenger in respect of 50 passengers to cover its limited liability under Section 50 of the Motor Vehicles Act, 1939 which was then in force. 7. Section 95 forms part of Chapter VIII of the Motor Vehicles Act, 1939 which deals with insurance of motor vehicles against third party risks. Under Section 95, in order to comply with the requirements of this Chapter, a policy of insurance must be a policy which, inter alia, insures the person or classes of persons specified in the policy to the extent specified in sub-section (2). Under Section 95 (1)(b)(ii), the insurance policy must cover the death or bodily injury to any passenger of a public service vehicle, caused by or arising out of the use of the vehicle in a public place . Sub-section (2)(b) provides as follows:- "Section 95(1): x x x xx(2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any o ne accident tip to the following limits, namely - (a) x x x x (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.(i) in respect of persons other than passengers carried for hire or reward, a limit of fifty thousand rupees in all; (ii) in respect of passengers, a limit of fifteen thousand rupees for each individual passenger;" * There were the provisions at the relevant time, These provisions were interpreted by this Court in the case of National Insurance Co.Ltd. , New Delhi v. Jugal Kishore &Ors. 1988 (1) SCC 626 ). This Court observed that even though it is not permissible to use a vehicle unless it is covered at least under an act only policy, it is not obligatory for the owner of a vehicle to get it comprehensively insured. In case, however, it is got comprehensively insured, a higher premium is payable de- pending on the estimated value of the vehicle. Such insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle calculated according to the rules and regulations framed in this behalf It has further observed as under:-"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 subsection (2) of Section 95 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 behalfIn the present case, therefore, a comprehensive policy which has been issued on the basis of the estimate d value of the vehicle of Rs. 2, 50, 000/- does not automatically result in covering the liability with regard to third party risk for an amount higher than the statutory limit. 8. It was contended before the High Court that a separate premium has been paid for the passengers. This shows that there was a special contract to cover unlimited liability in respect of passengers between the appellant-company and re- spondent No. 4. The Tribunal as well as the High Court seem to have proceeded on the basis that the appellant-company had charged an extra premium of 0.50 paiseper passenger to cover the risk of unlimited liability towards passengers.This seems to be an error. The premium of Rs. 600/- has been paid in respect of 50 passengers . The policy clearly shows this. It is not 0.50 paise per passenger. It is pointed out by the appellant-company with reference to its tariff in respect of "Legal Liability for Accidents to Passengers" that if the limit of liability for any one passenger is fifteen thousand rupees, the rate -of annual premium per passenger is Rs. 12/-. If the limit is twenty thousand rupees, the rate of premium per passengers is Rs. 23/per annum and so on. In respect of unlimited liability, the premium payable per passenger is Rs. 50/-.9.In the present case, the premium which has been paid is at the rate of Rs. 12/- per passenger and is clearly referable to the statutory liability of fifteen thousand rupees per passenger under Section 95 (2)(b)(ii) of the Motor Vehicles Act, 1939. In the present case, there is no special con- tract between the appellant-company and respondent No. 4 to cover unlimited liability in respect of an accident to a passenger. In the absence of such an express agreement, the policy covers only the statutory liability. The mere fact that the insurance policy is a comprehensive policy will not help the respondents in any manner. As pointed. out by this Court in the case of National Insurance Co. Ltd. v. Jugal Kishore &Ors., (supra) 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 re gard to third party risk becomes unlimited or higher than the statutory liability. For this purpose, a specific agreement is necessary which is absent in the present case. Reference in this connection may also be made to the case of M.K. Kunhimoha mmed v. P.A. Ahmedkutty &Ors., 1987 (3) SCR 1149 ). The appellant-company is, therefore, entitled to succeed to the extent that it has been directed to pay to respondents 1 to 3 any amount in excess of Rs. 15, 000/-.

Decision reasoning: 1[ds]There were the provisions at the relevant time, These provisions were interpreted by this Court in the case of National Insurance Co.Ltd. , New Delhi v. Jugal Kishore &Ors. 1988 (1) SCC 626 ). This Court observed that even though it is not permissible to use a vehicle unless it is covered at least under an act only policy, it is not obligatory for the owner of a vehicle to get it comprehensively insured. In case, however, it is got comprehensively insured, a higher premium is payable de- pending on the estimated value of the vehicle. Such insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle calculated according to the rules and regulations framed in this behalf It has further observed as under:-"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 subsection (2) of Section 95 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 behalfIn the present case, therefore, a comprehensive policy which has been issued on the basis of the estimate d value of the vehicle of Rs. 2, 50, 000/- does not automatically result in covering the liability with regard to third party risk for an amount higher than the statutoryshows that there was a special contract to cover unlimited liability in respect of passengers between the appellant-company and re- spondent No. 4. The Tribunal as well as the High Court seem to have proceeded on the basis that the appellant-company had charged an extra premium of 0.50 paiseper passenger to cover the risk of unlimited liability towards passengers.This seems to be an error. The premium of Rs. 600/- has been paid in respect of 50 passengers . The policy clearly shows this. It is not 0.50 paise per passenger. It is pointed out by the appellant-company with reference to its tariff in respect of "Legal Liability for Accidents to Passengers" that if the limit of liability for any one passenger is fifteen thousand rupees, the rate -of annual premium per passenger is Rs. 12/-. If the limit is twenty thousand rupees, the rate of premium per passengers is Rs. 23/per annum and so on. In respect of unlimited liability, the premium payable per passenger is Rs. 50/-.9.In the present case, the premium which has been paid is at the rate of Rs. 12/- per passenger and is clearly referable to the statutory liability of fifteen thousand rupees per passenger under Section 95 (2)(b)(ii) of the Motor Vehicles Act, 1939. In the present case, there is no special con- tract between the appellant-company and respondent No. 4 to cover unlimited liability in respect of an accident to a passenger. In the absence of such an express agreement, the policy covers only the statutory liability. The mere fact that the insurance policy is a comprehensive policy will not help the respondents in any manner. As pointed. out by this Court in the case of National Insurance Co. Ltd. v. Jugal Kishore &Ors., (supra) 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 re gard to third party risk becomes unlimited or higher than the statutory liability. For this purpose, a specific agreement is necessary which is absent in the present case. Reference in this connection may also be made to the case of M.K. Kunhimoha mmed v. P.A. Ahmedkutty &Ors., 1987 (3) SCR 1149 ). The appellant-company is, therefore, entitled to succeed to the extent that it has been directed to pay to respondents 1 to 3 any amount in excess of Rs. 15, 000/-.