Case: M. K. Kunhimohammed Vs. P. A. Ahmedkutty and Others

The petitioner was the owner of a bus bearing No. KLD-9327 which was being run as a stage carriage. On July 24, 1978, while the said bus was carrying passengers, it met with an accident and Saheeda, who was one of the passengers in the bus, died as a consequence of the said accident. The accident took place, according to the Motor Accidents Claims Tribunal, due to the negligence on the part of the driver of the vehicle who had been employed by the petitioner. The Tribunal found that the compensation payable by the petitioner to the legal representatives of Saheeda was Rs. 56, 800. It, however, held that the liability of the insurer to indemnify the petitioner was limited to Rs. 5, 000 as the policy specifically limited the insurers liability to what had been provided by section 95(2)(b)(ii)(2) and (4) of the Motor Vehicles Act, 1939 (hereinafter referred to as " the Act "). Aggrieved by the decision of the Tribunal, the petitioner filed an appeal before the High Court of Kerala. The said appeal was dismissed. This petition is filed under article 136 of the Constitution for special leave to appeal against the judgment of the High Court.

Reasoning:
Section 95(2)(b) as it existed before its amendment in 1982 dealt with the limits of the liability of an insurer in the case of motor vehicles in which passengers were carried for hire or reward or by reason of or in pursuance of a contract of employment. Sub-clause (i) of section 95(2)(b) provided that in respect of death of or injury to persons other than passengers carried for hire or reward, a limit of Rs. 50, 000 in all was the limit of the liability of the insurer. Sub-clause (ii) dealt with the liability in respect of, death of or injury to, passengers. Under that sub-clause, there were two specific limits on the liability of the insurer in the case of motor vehicles carrying passengers. The first limit related to the aggregate liability of the insurer in any one accident. It was fixed at Rs. 50, 000 in all where the vehicle was registered to carry not more than thirty passengers, at Rs. 75, 000 in all where the vehicle was registered to carry more than thirty but not more than sixty passengers and at Rs. 1, 00, 000 in all where the vehicle was registered to carry more than sixty passengers. The said sub-clause proceeded to lay down the other limit in respect of each passenger by providing that subject to the limits aforesaid as regards the aggregate liability, the liability extended up to Rs. 10, 000 for each individual passenger where the vehicle was a motor cab and Rs. 5, 000 for each individual passenger in any other case. Neither of the two limits can be ignored. In the present case, the vehicle in question being a bus carrying passengers for hire or reward registered to carry more than thirty but not more than sixty passengers, the limit of the aggregate liability of the insurer in any one accident was Rs. 75, 000 and subject to the said limit, the liability in respect of each individual passenger was Rs. 5, 000. We find it difficult to hold that the limit prescribed in section 95(2)(b)(ii)(4) was only the minimum liability prescribed by law. The amount mentioned in that provision provides the maximum amount payable by an insurer in respect of each passenger who has suffered on account of theaccident. This appears to us to be a fair construction of section 95(2) of the Act as it existed at the time when the accident took place. Our view receives support from at least two decisions of this courtAs the law stands today, the insurer is liable to pay up to Rs. 15, 000 in respect of death of any passenger or any injury caused to him. In the Statement of Objects and Reasons attached to the Bill which ultimately became Act 47 of 1982, it was stated that the limit with respect to an insurers liability to a passenger involved in an accident in a public service vehicle was being fixed at Rs. 15, 000. After the above amendment which was intended to increase the liability of the insurer, instead of Rs. 10, 000 in the case of each individual passenger where the vehicle was a motor cab and Rs. 5, 000 for each individual passenger in other cases which were the limits in force immediately prior to the said amendment, the liability in respect of an individual passenger is now raised to Rs. 15, 000. This clearly demonstrates that Parliament never intended that the aggregate liability of the insurer mentioned in sub-clauses (1), (2) and (3) of section 95(2)(b)(ii) of the Act would be the liability of the insurer even when one passenger had died or suffered injury on account of an accident. Such liability was always further limited by sub-clause (4) of section 95(2)(b)(ii) of the Act. Even in the latest Bill, i.e., Bill No. 56 of 1987, which was introduced in the Lok Sabha on May 11, 1987, for the purpose of consolidating and amending the law in regard to motor vehicles, it is proposed by section 147 to retain the provision regarding the limit of the insurers liability in respect of vehicles in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment as it was provided by Act 47 of 1982Having regard to the large number of motor vehicle accidents which are taking place on roads and also to the fact that a large number of public service vehicles carrying passengers are involved in them, we are of the view that the limit of Rs. 15, 000 fixed in the case of each passenger appears to be still meagre and we hope that Parliament while enacting the Bill into law would take steps to increase the insurers liability keeping in view the need for providing for adequate compensation as a measure of social securityHaving regard to the statute as it stood prior to the amendments by Act 47 of 1982, we hold that the insurer was liable to pay upto Rs. 10, 000 for each individual passenger where the vehicle involved was a motor cab and up to Rs. 5, 000 for each individual passenger in any other case. The judgment of the Kerala High Court against which this petition is filed has followed the above construction. We do not find any ground to interfere with it.