PETITIONER: THE NEW INDIA ASSURANCE CO. LTD. Vs. RESPONDENT: SMT. SHANTI BAI & ORS. DATE OF JUDGMENT06/02/1995 BENCH: MANOHAR SUJATA V. (J) BENCH: MANOHAR SUJATA V. (J) AHMADI A.M. (CJ) BHARUCHA S.P. (J) CITATION: 1995 AIR 1113 1995 SCC (2) 539 JT 1995 (2) 95 1995 SCALE (1)472 ACT: HEADNOTE: JUDGMENT:
1. Leave granted.
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.
4. 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 respondents 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.
5. The short question that we have to consider is whether
the appellant is liable to pay compensation to the tune of
Rs. 1,10,000/- together with interest thereon at the rate of
12% from the date of the presentation of the petition to
respondents 1 to 3. The appellant contends that its
liability in this regard is limited to Rs. 15,000/-.
6. The insurance policy taken out by the owner of the
said bus i.e. respondent No. 4 herein, and which was in
force at the relevant time, was a comprehensive policy.
This policy has been produced before us. It shows that the
insured estimated value of the vehicle is Rs. 2,50,000/ —
in the Schedule of Premium, there in an additional payment
of Rs. 600/- in respect of 50 passengers. The claim against
this amount states : “for L L to passengers as per Ednt.
No. I.M.T. 12”. The -appellant-company has contended that
it has charged premium at the rate of Rs. 12/ per passenger
in respect of 50 passengers to cover its limited liability
under Section 50 of the Motor Vehicles Act, 1939 which was
then in force.
7. Section 95 forms part of Chapter VIII of the Motor
Vehicles Act, 1939 which deals with insurance of motor ve-
hicles against third party risks. Under Section 95, in
order to comply with the requirements of this Chapter, a
policy of
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insurance must be a policy which, inter alia, insures the
person or classes of persons specified in the policy to the
extent specified in sub-section (2). Under Section 95
(1)(b)(ii), the insurance policy must cover the death or
bodily injury to any passenger of a public service vehicle,
caused by or arising out of the use of the vehicle in a
public place. Sub-section (2)(b) provides as follows:-
“Section 95(1) : x x x xx
(2) Subject to the proviso to sub-section
(1), a policy of insurance shall cover any
liability incurred in respect of any one
accident tip to the following limits, namely –
(a) x x x x
(b) Where the vehicle is a vehicle in which
passengers are carried for hire or reward or
by reason of or in pursuance of a contract of
employment.
(i) in respect of persons other than
passengers carried for hire or reward, a limit
of fifty thousand rupees in all;
(ii) in respect of passengers, a limit of
fifteen thousand rupees for each individual
passenger;”
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 behalf
In the present case, therefore, a comprehensive policy which
has been issued on the basis of the estimated 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 statutory limit.
8. It was contended before the High Court that a separate
premium has been paid for the passengers. This shows 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 paise per passenger to
cover the risk of unlimited liability towards passengers.
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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
regard 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. Kunhimohammed 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/-.
10.The, appeal is, therefore, allowed to this extent. The
liability of the appellant and respondents 4 and 5 to pay
the amount of the award was joint and several. We make it
clear that the fact that the appeal is allowed and the
liability of the appellant is limited to Rs. 15,000/- does
not affect in and manner the liability of’ respondents 4 and
5 to pay the amount of the award. There will be no order as
to costs.
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