Case: National Insurance Co. Ltd Vs. Puja Roller Flour Mills (P) Ltd. & Others

1. Heard learned counsel for the parties. 2. The Motor Accidents Claims Tribunal (for short the Tribunal) by its award dated 15-9-1994 fixed the compensation at Rs 6,72,000 and directed that as according to the terms of the insurance policy the liability of the Insurance Company was limited to the extent of Rs 1,50,000, the claimants shall be entitled to recover a sum of Rs 1,50,000 only from the Insurance Company and the balance amount of Rs 5,22,000 from the owner of the vehicle. Against the said order, the owner of the vehicle filed an appeal before the High Court of Punjab and Haryana giving rise to First Appeal No. 303 of 1995, in which the High Court upheld the quantum of compensation but directed that liability of the Insurance Company could not have been limited to Rs 1,50,000 but the same was an unlimited one. Thereafter, the Insurance Company filed a letters patent appeal before the High Court which has been dismissed. Hence, this appeal by special leave.3. Learned counsel appearing on behalf of the appellant submitted that according to the terms of the insurance policy the liability of the Insurance Company was to the extent of Rs 1,50,000 in accordance with the Motor Vehicles Act, 1939 (hereinafter referred to as the old Act) but now, under the Motor Vehicles Act, 1988 (hereinafter referred to as the new Act) the liability of the Insurance Company is unlimited. It has been submitted that in cases where the insurance policy issued under the old Act was subsisting on the date of passing of the new Act, a special provision has been made under the proviso to S.147(2) of the new Act which lays down that if any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, the same 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. The new Act came into force on 1-7-1989 and the accident had taken place on 29-9-1989 on which date the policy was effective. As the accident has taken place within the period of four months and the policy was to expire thereafter, the date of accident being earlier one in point of time, according to the proviso, the policy issued under the old Act shall continue to be effective in the case in hand. Thus, in view of the proviso the liability of the appellant Insurance Company would be limited to a sum of Rs 1,50,000 only.

Decision reasoning: 1[ds]The new Act came into force on 1-7-1989 and the accident had taken place on 29-9-1989 on which date the policy was effective. As the accident has taken place within the period of four months and the policy was to expire thereafter, the date of accident being earlier one in point of time, according to the proviso, the policy issued under the old Act shall continue to be effective in the case in hand. Thus, in view of the proviso the liability of the appellant Insurance Company would be limited to a sum of Rs 1,50,000new Act came into force on 1-7-1989 and the accident had taken place on 29-9-1989 on which date the policy was effective. As the accident has taken place within the period of four months and the policy was to expire thereafter, the date of accident being earlier one in point of time, according to the proviso, the policy issued under the old Act shall continue to be effective in the case in hand. Thus, in view of the proviso the liability of the appellant Insurance Company would be limited to a sum of Rs 1,50,000