JUDGMENT
1. In this appeal presented under section 173 of the Motor Vehicles Act, 1988 (“the Act” for short), by the New India Assurance Company Limited, the following question of law arises for consideration.
“Whether section 147(2) of the Act which provides for continuance of the liability of an insurance company as it existed prior to the coming into force of the Act or four months, does not apply to the liability of the insurance company to answer the no fault liability of the owner of the vehicle under section 140 of the Act and, therefore, the no fault liability of the insurance company on and after July 1, 1989, in case of death is Rs. 25,000 ?”
2. The brief facts of the case are these :- A claim petition under section 166 of the Act was presented before the Motor Accidents Claims Tribunal, Tumkur, claiming compensation for the death of Ramaiah, husband of the first respondent in a motor accident which occurred on July 17, 1987. In the claim petition, a compensation of Rs. 25,000 was also claimed under section 140 of the Act. The Tribunal having found that the vehicle in question was involved in the accident, proceeded to award compensation on the ground of no fault at Rs. 25,000 as fixed under section 140 of the Act and fixed the said liability on the insurance company. Aggrieved by the said order, the appellant has presented this appeal.
3. Under the Motor Vehicles Act, 1939, as it originally stood, compensation for injury or death caused by a motor accident was payable on proof of negligence on the part of the driver of the vehicle concerned. Subsequently, Chapter VII-A was introduced into the Act for the first time creating “no fault” liability. According to section 92A of the Act, in respect of death, a compensation of Rs. 15,000 was made payable without going into the question of fault. In other words, the said amount of compensation was payable irrespective of the question of negligence. The question under what circumstances was the compensation fixed under section 92A was payable by the insurer and the insurance company came up for consideration before the Full Bench of this court in United India Insurance Co. v. Immam Aminasab Nadaf [1990] 67 Comp Cas 287; [1990] ILR Kar 16. The Full Bench held the “no fault” liability under section 92A of the 1939 Act was independent of the liability to pay compensation in a claim petition under section 110A of the Act on the basis of fault. It was further held that a sum of Rs. 15,000 as fixed under section 92A was payable in the case of death, by the owner, the moment it is proved that the vehicle was involved in the accident. Further, it was held that though the liability under section 92A of the Act is fixed only on the owner of the vehicle and there was no reference to the insurance company, in view of section 93(b-a) of the Act, the insurance company was liable to pay the compensation awarded under section 92A of the Act, subject to the condition that the risk was covered by the insurance policy.
4. The 1939 Act was repealed by the Act which came into force on July 1, 1989. The provision corresponding to section 92A of the 1939 Act in the 1988 Act is section 140. It reads :
“140. Liability to pay compensation in certain cases on the principle of no fault. – (1) Where death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section.
(2) The amount of compensation which shall be payable under sub-section (1) in respect of the death of any person shall be a fixed sum of twenty-five thousand rupees and the amount of compensation payable under that sub-section in respect of the permanent disablement of any person shall be a fixed sum of twelve thousand rupees.
(3) In any claim for compensation under sub-section (1), the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any other person.
(4) A claim for compensation under sub-section (1) shall not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or permanent disablement the claim has been made nor shall the quantum of compensation recoverable in respect of such death or permanent disablement be reduced on the basis of the share of such person in the responsibility for such death or permanent disablement.”
5. The only difference between section 92A of the 1939 Act and section 140 of the 1988 Act is the enhancement of rate of compensation payable, i.e. in the case of death, it is Rs. 25,000 and, in the case of permanent disability, it is Rs. 12,500. The provision corresponding to section 93(b-a) is section 145(c), which expressly provides that the liability wherever used in relation to the death of, or bodily injury to, any person, includes liability in respect thereof under section 140. In view of section 145(c), there is no doubt that the amount payable under section 140, on the ground of no fault by the owner or a vehicle, is also the liability of the insurance company, subject of course to the condition that the risk was covered by the insurance policy which was in force on the date of accident.
6. After the 1988 Act came into force, in the case of Rukmaniyamma v. A. M. Venkata Swamy [1991] ILR Kar 778, the question whether the higher rate of no fault liability at Rs. 25,000 fixed in the case of death in section 140 applied even in respect of accidents which occurred prior to July 1, 1989, the date on which the Act came into force, arose for consideration. In the said decision, it was held, following the ratio of the decision of the Supreme Court in Padma Srinivasan v. Premier Insurance Co., to the effect that the extent of liability to pay compensation stands determined by the law which was in force on the date of accident and not the law which was in force on the date of filing of the claim petition or on the date on which the claim petition was decided. Accordingly, it was held that, in respect of death caused by a motor accident which took place prior to July 1, 1989, “no fault” liability was Rs. 15,000 and, in the case of death caused by an accident which took place after July 1, 1989, the “no fault” liability was Rs. 25,000 in view of section 140 of the Act.
7. Learned counsel for the appellant contends that, even after July 1, 1989, up to a period of four months, the liability of the insurance company continues to be the same liability which was in force prior to the commencement of the Act and, therefore, in the present case, “no fault” liability that could have been fixed on the appellant-insurance company was only Rs. 15,000 and not Rs. 25,000. Section 147(2) of the Act on which learned counsel relies reads :-
“147(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely :-
(a) save as provided in clause (b), the amount of liability incurred;
(b) in respect of damage to any property of a third party, a limit of rupees six thousand :
Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, 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.”
8. Learned counsel pointed out that, in view of the proviso to sub-section (2) of section 147, the liability of the insurance company has been limited by the insurance policy which was in force immediately prior to the date of commencement of the Act and continues to be effective for a period of four months thereafter. Relying on the above provision, learned counsel submitted that the accident in the present case had taken place on July 17, 1989, i.e., within a period of four months after the commencement of the Act on July 1, 1989, and hence the liability of the insurance company even under section 140 of the Act was limited to Rs. 15,000.
9. The argument addressed by learned counsel, though at first sight is very attractive, on a closer examination, is devoid of any merit. As held by the Supreme Court in the case of Padma Srinivasan, , the liability of the insurance company stands determined by the law which was in force on the date of the accident irrespective of the liability undertaken under the policy. Therefore, applying the ratio of the decision of the Supreme Court in Padma Srinivasan, , even if the risk covered by the insurance policy which was in force prior to the date of coming into force of the Act on July 1, 1989 was only Rs. 15,000, the liability of the insurance company stands determined by the provisions of section 140 read with section 145(c) of the Act. In other words, if there is any conflict between the quantum of compensation payable by the insurance company under the policy and under the provisions of the Act, it is the latter which prevails.
10. Learned counsel for the appellant submitted that, that would have been the position but for sub-section (2) of section 147 of the Act. Whatever may be the position of the saving clause incorporated in section 147(2) of the Act regarding the fault liability incurred in respect of any accident, as far as “no fault” liability fixed under section 140 of the Act is concerned, section 144 of the Act gives overriding effect to section 140. That section reads :
“144. Overriding effect. – The provisions of this Chapter shall have effect notwithstanding anything contained in any other provision of this Act or of any other law for the time being in force.”
11. As can be seen from the wording of the above provision, notwithstanding anything contained in any other provisions of this Act or any other law for the time being in force, the provisions contained in Chapter X prevail. Therefore, in so far as it relates to “no fault” liability fixed under section 140 of the Act that section prevails over the provisions of section 147(2) of the Act.
12. For the aforesaid reasons, we answer the question first set out as follows :
“Section 147(2) of the Act which provides for continuance of the liability on an insurance company as it existed prior to the coming into force of the Act on July 1, 1989, for four months thereafter, has no application to the liability of the insurance company to answer the ‘no fault’ liability of the owner of the vehicle fixed under section 140 of the Act and, therefore, the no fault liability of the insurance company on and after July 1, 1989, in case of death is Rs. 25,000.
Before concluding, we make it clear that the question we have decided is in respect of interpretation of sections 140, 144 and 147(2) of the Act only in so far they relate to the “no fault” liability prescribed under section 140 of the Act and not in respect of any other liability.
In the result, we make the following order :
13. The appeal is dismissed.
