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

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.

Court's reasoning:
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/-.