IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 05/12/2002
Coram
The Hon'ble Mr. Justice P. SATHASIVAM
and
The Hon'ble Mr.Justice K. GNANAPRAKASAM
Civil Miscellaneous Appeal No. 690 of 1994
and
Cross Objection No.73 of 1995.
C.M.A.No. 690/94.
Oriental Insurance Company Ltd.,
Branch Office, Police Station Road,
Pollachi Post, 642 001. .. Appellant/3rd respondent.
-Vs-
1. C. Santhamani,
2. C. Rajaram,
3. C. Sriram,
4. C. Sarathram,
..Petitioners.
5. R. Marimuthu,
6. V. Balakrishnan,
7. New India Assurance
Co., Ltd., Branch Office,
389-391, Cross Cut Road,
Coimbatore.
..Respondents 1,2 and 4.
..Respondents.
Cross Objection No. 73/1995
1. C. Santhamani,
2. C. Rajaram,
3. C. Sriram
4. C. Sarathram.
..Cross Objectors.
Vs.
1. Oriental Insurance Co.,Ltd.,
Branch Office, Police Station
Road, Pollachi,642 001.
2. R. Marimuthu,
3. V. Balakrishnan,
4. New India Assurance Co.,Ltd.,
Branch Office, Coimbatore-11.
.. Respondents in Cross
Objection.
Appeal against the Judgment and Decree made in M.C.O.P.No. 224/90 dated
10-01-1994, on the file of the Motor Accidents Claims Tribunal (Subordinate
Judge), Coimbatore.
!For appellant and 1st respondent :: Mr. M.B. Raghavan
in Cross Objection.
^For Respondents 1 to 4 in C.M.A :: Mr. K. Mohanram for Mr. S. Kadarkarai
and Cross Objectors.
:JUDGMENT
(Judgment of the Court was made by P. Sathasivam, J.)
Since the appeal and Cross Objection arise against the very same award of the
Motor Accidents Claims Tribunal, Coimbatore, the same are being disposed of by
the following common judgment. Aggrieved by the award of the Motor Accidents
Claims Tribunal, Coimbatore dated 10-1-94 in M.C.O.P.No. 224/90, Oriental
Insurance Company, Pollachi has filed C.M.A.No. 690/94. Respondents 1 to 4
in this appeal, claimants have filed Cross Objection No.73/95, seeking further
compensation of Rs.1,00,000/-.
2. Heard the learned counsel for the appellant as well as contesting
respondents 1 to 4.
3. Mr. M.B. Raghavan, learned counsel for the appellant Insurance Company,
by drawing our attention to Section 95 (2) (a) of Motor Vehicles Act, 1939 and
terms and conditions of policy of insurance, namely, Ex.B-5, would contend
that their liability is restricted to Rs.1,50,000/- only and that the Tribunal
committed an error in passing the entire liability on the Insurance Company
which is unsustainable in law. Regarding cross objection, it is his
contention that inasmuch as the appeal is only by the Insurance Company
questioning its liability, the cross objection in their appeal by the
claimants is not maintainable and liable to be dismissed. On the other hand,
Mr. K. Mohan Ram, learned counsel for the respondents 1 to 4/claimants,
would contend that the deceased being a third party, and in the light of valid
insurance policy, the appellant insurance company is liable to pay the entire
amount and the same has been rightly granted by the Tribunal. In any event,
according to him, even if the case of the appellant is acceptable, direction
may be issued for payment of the entire amount by the insurance company at the
first instance with a liberty to them to recover the same from the owner of
the vehicle. In so far as the cross objection is concerned, it is stated that
the compensation was arrived at after applying proper multiplier, and the
deduction of 1/4th amount towards uncertainty of life etc., cannot be
sustained, accordingly the cross objectors are entitled to a further
compensation of Rs.1,00,000/-.
4. We have carefully considered the rival submissions.
5. First we shall consider the stand taken by the Insurance Company.
6. In terms of section 95 (2) (a) of the Motor Vehicles Act, 1939, the
insurance company is obliged to satisfy the liability to an extent of
Rs.1,50,000/- in so far as goods carriage vehicle is concerned. However, it
is the case of the respondents 1 to 4/claimants that inasmuch as the insurance
covers third party risk, the liability is unlimited. First we shall consider
the policy of insurance which has been marked as Ex.B-5 through R.W.1. After
referring to the registration No., owner of the vehicle etc., Ex.B-5 contains
the following details:
“SCHEDULE OF PREMIUM IN RUPEES
B. Liability to public risk
Add:for LL to authorised non-fare paying
passengers as per ENDT, IMT-14(b) Rs240.00
Total No.of authorised non fare
paying passengers. Rs.
Limit any one passenger Rs.10000/- Rs36.00
Limit any one accident Rs.50000/-
Add:LL to paid driver and/or Cleaner/
Coolies as per ENDT.IMT-16 Rs.16.00
Add:for increased T.P.Limits under
Section 11 1(i) unlimited
Under sec.11 1(ii) Rs. Rs.
———
292.00
———
Add: Rs.
Less 10% Special Discount Rs.
Absolute Net Premium ‘B’ Rs.
Absolute Net Premium ‘A’ Rs.
Total Net Premium A +B Rs.
Net Premium Due (rounded off) 292.00
Subject to Endorsement Nos.2a,14b,16 & Warranty Printed/
Attached here to?”
By pointing out the fact that in view of payment of premium of Rs.240 /-
towards third party risks (TPR), it is contended on the side of the claimants
that the liability of the insurance company is unlimited. On the other hand,
it is the case of the insurance company that, in the absence of payment of
additional premium, the liability is to the extent of Rs.1,50,000/-. The
Motor Insurance Rating Guide, which sets out the provisions relating to the
benefits under motor insurance, has defined the types of insurance policies.
Though the Motor Insurance Rating Guide has not been marked, the same was
produced at the time of the argument and we have perused and considered the
various clauses therein, particularly the liability to public risk policy. In
our case, the policy is a third party liability insurance policy. Learned
counsel appearing for the appellant has also brought to our notice a Division
Bench judgment of this Court (P. Shanmugam and P. Thangavel, JJ) dated
14-02-2002 made in C.M.A.No. 252/95 (National Insurance Company Ltd.,
Kumbakonam vs. Pakkiriammal and 5 others) wherein the Bench has considered
this identical question with reference to Section 95 (1), (2) (a) of the Motor
Vehicles Act, 1939. The Division Bench has extracted the relevant clauses
from the Motor Insurance Rating Guide. After referring to various types of
Insurance Policies and the liability to the Public risk, the Bench has
concluded that,
“5. As per the definitions of the three types of policies, we find that each
one of them are distinct and separate. The comprehensive insurance policy
covers the following risks:
(a) Public risk including Act Liability
(b) Loss or damage to the vehicle’s risk
The Public Risk Policy indemnifies the legal liability in respect of third
party accidental personal injury or property damage by the vehicle.
The Act Liability Policy covers the third party risks in a public place.
In both the policies, expressions ‘legal liability for claims’ have been used
and in the Act Liability Policy, a further expression “as is necessary to meet
the requirements of section 95 of the Motor Vehicles Act, 1939″ has been
included. But, none of the policies say that the liability is unlimited.
Even in reference to comprehensive policy, it says that the liability is
subject to the limitation mentioned in the policy and the liability to the
public risk, including act liability. By going through the schedule of
Premium, it is seen that the premium differs from the public risk and the act
only liability and the minimum premium payable for goods carrying vehicle for
public risk is Rs.240/-. If there has to be additional benefit under
commercial vehicles’ tariff for a personal injury or unlimited property damage
up-to Rs.3 lakhs, an additional premium of Rs.150/- is to be paid. The Note
under this additional benefit clause makes it clear that the limits of
indemnity under the policy may be increased in accordance with the scale.
From the above, it is clear that the liability is limited to the extent
mentioned under the Act unless and until additional premium is paid.”
In our case, we have already referred to the details of payments under Ex.
B-5. It is clear that as per policy-Ex.B-5, the owner has paid the minimum
bonus for third party risks plus Rs.16/- for paid driver and cleaner, but he
has not paid additional amount for increased T. P.limits. As rightly
contended by the learned counsel for the Insurance company, if the owner had
to get an unlimited legal liability, he should have paid extra premium, which
has not been done in our case. Earlier the Division Bench after considering a
decision of the Supreme Court in NATIONAL INSURANCE COMPANY LIMITED Vs. JUGAL
KISHORE [A. I.R. 1998 S.C. 719], earlier Division Bench decision of this
Court in NEW INDIA ASSURANCE COMPANY LIMITED Vs. K. CHANDRA [1991 A.C.J.
386], and another Division Bench decision in ORIENTAL INSURANCE COMPANY LTD.
Vs. JALAJA & OTHERS [1995 A.C.J. 829] held that the insurance company is not
liable to pay anything more than the amount limited in the statute unless the
policy contains a different provision. In NEW INDIA ASSURANCE COMPANY LIMITED
Vs. SHANTHI BAI [1995 A.C.J. 470], the Supreme Court, after referring to
Section 95 of the Act, held as follows:
“Comprehensive insurance of the vehicle and payment of higher premium on this
score, however, does not mean that the limit of liability with regard to third
party risk becomes unlimited or higher than the statutory liability fixed
under Sub-section (2) of Section 9 5 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 behalf.”
It is clear from the above decision that even the comprehensive policy does
not automatically result in covering the liability of third party risk for the
amount higher than the statutory limit. Similar view has been expressed by a
Division Bench of this Court in NEW INDIA ASSURANCE COMPANY LIMITED Vs. R.K.
GEETHA AND ANOTHER [Vol.I (1999) A.C.C. 535]. In NATIONAL INSURANCE COMPANY
LIMITED Vs. NATHILAL AND OTHERS [1999 (1) S.C.C. 552], the Hon’ble Supreme
Court has held that in the absence of payment of any special premium for the
purpose of unlimited liability, it is presumed that the terms of the policy
were limited to Rs.1,50,000/-. Apart from the above decisions, learned
counsel for the appellant has also relied on a decision of this Court in
NATIONAL INSURANCE COMPANY LIMITED, ERODE v. BOOPATHI alias VENKATACHALAPATHY
[1999 (II) M.L.J. 653] wherein one of us (P. Sathasivam, J.), after
following the Division Bench decision in NEW INDIA ASSURANCE CO. TD., v. K.
CHANDRA [1991 A.C.J. 386] held that under Section 95 (2) (b) of the Motor
Vehicles Act, 1939 , the insurance company is not liable to pay anything more
than the amount limited by the Statute unless the policy contains a different
provision. In that case, after referring to Ex.R-1 policy of insurance, it is
held that the liability of the insurance company is restricted to
Rs.1,50,000/- only. We are in agreement with the said conclusion.
7. Mr.K. Mohan Ram, learned counsel for the respondents 1 to 4/claimants,
would contend that in the event of taking a decision that in terms of Ex.B-5,
the liability of the insurance company is limited to Rs.1,50,000/-, they may
be directed to pay the entire amount as awarded to the claimants with a right
to recover from the insured the excess amount over and above covered under the
policy. In support of his claim, he very much relied on a decision of the
Supreme Court in ORIENTAL INSURANCE COMPANY LTD., v. C. NAFEESSU [2001 (1)
UJ 378 (SC): [2001 A.C.J page 1] wherein Their Lordships have held that the
insurance company is liable to pay the entire award amount to the claimants.
They further held that upon making such payment, the insurance company can
recover the excess amount from the insured by executing the
award against the insured to the extent of such excess as per Section 174 of
the Motor Vehicles Act, 1988. By relying upon the above judgment, learned
counsel for the respondents 1 to 4 prayed for necessary direction to the
insurance company to pay the entire liability. In this regard, learned
counsel for the appellant pressed into service a recent judgment of the
Constitution Bench of the Supreme Court in NEW INDIA ASSURANCE COMPANY LTD.,
v. C.M. JAYA & OTHERS [2002 ACJ 271] : [2002 A.I.R. S.C.W 259]. After
considering 2,3 Judges Bench decisions of the Supreme Court, namely, NEW INDIA
ASSURANCE CO., LTD. v. SHANTI BAI [1995 A.C.J.470 (SC)] and AMRIT LAL SOOD
v. KAUSHALYA DEVI THAPAR [1998 ACJ 531 (SC)], Their Lordships have concluded
as follows: (para 11)
“11. In the premise, we hold that the view expressed by the Bench of the
three learned Judges in the case of SHANTI BAI, 1995 ACJ 470 (SC), is correct
and answer the question set out in the order of reference in the beginning as
under:
In the case of insurance company not taking any higher liability by accepting
a higher premium for payment of compensation to a third party, the insurer
would be liable to the extent limited under section 95 (2) of the Act and
would not be liable to pay the entire amount.”
In the light of the principle laid down by the Constitution Bench in the above
judgment, we hold that the liability of the insurance company is limited to
Rs.1,50,000/-, and the insured is bound to pay the remaining amount of
compensation. It is also relevant to note that similar contention was raised
before the Division Bench of this Court in C.M.A.No. 252/95 dated 14-02-2002
(cited supra). There also the Division Bench, in the light of the
Constitution Bench of the Supreme Court in 2002 A.I.R. S.C.W. 259 (cited
supra), arrived a similar conclusion that in the case of insurance company not
taking any higher liability by accepting a higher premium for payment of
compensation to the third party, the insurer would be liable to the extent
limited under Section 92 of the Act and would not be liable to pay the entire
amount. The said view of the Division Bench of this Court and the present
view of us are in consonance with the view expressed by the Constitution Bench
of the Supreme Court. Accordingly, in view of the fact that higher premium
had not been paid for unlimited liability for payment of compensation to third
party, we hold that the liability of the appellant-insurer is limited to
Rs.1,50,000/- and the insured is liable to pay the remaining amount of
compensation.
8. Even at the outset, learned counsel appearing for the appellant insurance
company pointed out that inasmuch as they are questioning their liability, the
Cross Objection by the claimants in this appeal is not maintainable. In
support of the above contention regarding maintainability of the Memorandum of
Cross Objection, the insurance company relied on a Division Bench decision of
this Court in UNITED INDIA INSURANCE CO.LTD. v. M.R. SUBRAMANIAN & ANOTHER
[1996 ACJ 1260]. In that decision, it was pointed out that since the appeal
is confined to the liability of the insurance company and in that appeal the
claimant cannot make a claim for enhancement, which is really directed against
the owner of the vehicle who is a co-respondent in the appeal. After
referring to the earlier Division Bench decision of this Court in UNITED INDIA
INSURANCE COMPANY LTD., v. RAJAMMAL [1993 A.C.J 486 (Madras)], and after
expressing their agreement with the decision arrived at therein, the Division
Bench has held that the memorandum of cross objection is not maintainable and
dismissed the same. In the light of the said contention, we have carefully
considered the facts in the decision of the Division Bench referred to above
and various grounds raised in this appeal. As rightly pointed out by Mr. K.
Mohan Ram, learned counsel for cross objectors, though the insurance company
has mainly contended their limited liability in terms of Section 92 (2) of the
Motor Vehicles Act, 1939, a perusal of their grounds of appeal shows that they
challenged the entire award of compensation, including interest, as directed
by the Tribunal and after arriving the value of the appeal, paid court-fee for
the entire amount. It is clear that the entire amount as awarded by the
Tribunal including interest and costs are being questioned in this appeal. In
this regard, it is relevant to refer a decision of the Supreme Court in M/ s.
BIHAR SUPPLY SYNDICATE v. ASIATIC NAVIGATION [AIR 1993 Supreme Court 2054].
In the said decision, Their Lordships, after referring to Order 41 Rule 33,
Civil Procedure Code, have observed thus: (para 29)
“29. Really speaking the Rule is in three parts. The first part confers on
the appellate Court very wide powers to pass such orders in appeal as the case
may require. The second part contemplates that this wide power will be
exercised by the appellate Court notwithstanding that the appeal is as to part
only of the decree and may be exercised in favour of all or any of the
respondents or parties, although such respondents or parties may not have
filed any appeal or objection. The third part is where there have been
decrees in cross-suits or where two or more decrees are passed in one suit,
this power is directed to be exercised in respect of all or any of the
decrees, although an appeal may not have been filed against such decrees.”
In the light of the decision of the Supreme Court, more particularly in view
of the fact that the entire amount is being questioned in the memorandum of
appeal by paying requisite court-fee (though in the argument they confined to
their liability to the extent of Section 92 (2) of the Motor Vehicles Act,
1939), in view of the peculiar circumstances of the case, we hold that the
present cross objection is maintainable and we intend to consider the merits
of the same in the subsequent paragraph.
9. Now we shall consider the cross objection No.735 filed by respondents 1 to
4 herein seeking a further compensation of Rs.1,00,000/- in addition to the
amount awarded by the Tribunal. Since in the cross appeal the cross objectors
restricted their claim to the extent of Rs.1,00,000/-, the only issue to be
considered in the cross appeal is whether they (cross objectors) are entitled
to a further compensation of Rs.1,00,000/- as claimed. It is seen from the
evidence of P.W.1, second claimant that at the time of the accident, the
deceased father was aged about 58 years and at the relevant time, he was
working as an Adviser in textile mills. He further deposed that his father
secured decree in textiles in the United States and on the date of retirement
in 1987 he was getting Rs.15,000/-p.m. According to him, even after his
retirement, he was employed as the Adviser in Narasimma Mill and was getting
sizeable income. Though the claimants have produced acceptable documentary
evidence in respect of his avocation, income, payment of income tax etc.,
taking note of all the aspects including the fact that the second claimant
(P.W.1) and third claimant are earning members, the Tribunal arrived an amount
of Rs.7,75 0/- as his monthly income and Rs.93,000/- as his annual income and
after deducting a portion towards his personal expenses, it arrived a
conclusion that he would contribute at least Rs.6,000/- per month to his
family and annual contribution would be Rs.72,000/-. Based on the evidence of
P.W.1 and upon the reference made in the post-mortem certificate-Ex.P-7, the
Tribunal fixed the age of the deceased as 58 years which is acceptable. After
holding that but for the accident, the deceased Chandrasekaran would live
up-to the age of 65, multiplied the same by multiplier of 7 and arrived an
amount of Rs.5,04,000/-. From and out of the said amount, the Tribunal
deducted 1/4th towards uncertainty of life and arrived an amount of
Rs.3,78,000/- as loss caused to the claimants. After adding a sum of
Rs.15,000/- towards loss of love and affection, mental agony etc., Rs.25,000/-
towards damage to his vehicle and other belongings, passed an award for
Rs.04,18,000 /-. Considering the fact that the deceased was aged about 58
years on the date of the accident, in the light of his educational
qualification and of the fact that even after retirement he was working as
Adviser to many textile mills, we are of the view that as rightly observed by
the Tribunal, undoubtedly, he would contribute at least Rs.6,00 0/- per month
to his family till 65 years. Likewise, the application of 7 years multiplier
for arriving a pecuniary loss to the family is also quite reasonable. As
stated earlier, it is to be noted that even on the date of filing of the claim
petition, the claimants 2 and 3 were not depending on the deceased. However,
as rightly contended by the learned counsel for the cross objectors, having
applied multiplier method and selecting proper multiplier, namely, 7, the
Tribunal is not justified in deducting 1/4th of the amount towards uncertainty
of life. We have already referred to the fact that the Tribunal after fixing
that the deceased would earn Rs.7,750/-, deducted a portion towards his
personal expense and arrived Rs.6,000/-per month as his contribution to his
family. When multiplier is adopted, there is no need to deduct amount towards
uncertainty. In this regard, it is useful to note a Division Bench decision
of this Court in VIJAYALAKSHMI, C. & ANOTHER v. N. SIVA BAGIYAM 7 ANOTHER
[1996-2-L.W. 238]. In that decision, while determining the amount by
applying multiplier method, speaking for the Bench, one of us (P. Sath
asivam, J) has held that if proper multiplier and multiplicant is applied and
the same is reasonable, there is no need to deduct any amount towards
uncertainty of life and lump sum payment. Since the Tribunal in our case
selected proper multiplier and fixed acceptable multiplicant, as stated in the
Division Bench decision, there is no need to deduct 1/4th towards uncertainty
of life. In such a circumstance, we hold that the Tribunal committed an error
in allowing a deduction of 1/4th of the amount towards uncertainty of life.
We set aside the said order of the Tribunal. Inasmuch as the deducted amount
towards uncertainty of life is Rs.1,26,000/-, and in view of our conclusion,
we hold that the claimants are entitled to the said amount, however, in the
cross objection, they are claiming Rs.1,00,000/- only, hence we grant the same
as claimed.
10. In the light of what is stated above, we pass the following order:
(i) The award of compensation of Rs.4,18,000/- fixed by the Tribunal is
enhanced to Rs.5,18,000/- (Rs.4,18,000 + Rs.1,00,000) with interest at 9 per
cent per annum (for the enhanced amount) from the date of petition till date
of payment;
(ii) Out of the said amount of Rs.5,18,000/-, the liability of the
appellant-Insurance Company is limited to Rs.1,50,000/- in terms of Ex.
B-5-Insurance policy;
(iii) The insured of the vehicle-lorry/ R.Marimuthu/5th respondent herein, is
liable to pay the balance amount over and above Rs.1 ,50,000/- to the
claimants.
(iv) The first respondent herein – C. Santhamani, wife of the deceased
Chandrasekar is entitled to the enhanced compensation as ordered above.
The Civil Miscellaneous Appeal as well as the Cross Objection are allowed to
the extent mentioned above. No costs.
R.B.
Index:- Yes
Internet:- Yes
To:-1) The Motor Accidents Claims Tribunal (Sub Court),
Coimbatore (with records).
2) The Section Officer, V.R. Section, High Court,
Madras.