* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ F.A.O. No.286 of 2001
% 24.05.2010
UNITED INDIA INSURANCE CO. LTD. ...... Appellant
Through: Mr. Pankaj Seth, Advocate.
Versus
LUKNI DEVI & ORS. ......Respondents
Through: None.
Reserved on: 15th April, 2010
Pronounced on: May 24, 2010
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment?
2. To be referred to the reporter or not?
3. Whether judgment should be reported in Digest?
JUDGMENT
1. This appeal has been preferred by insurance company against an award passed by
the Tribunal on 19th March, 2001 whereby the Tribunal awarded compensation of
Rs.1,77,060/- to the claimants and held that it was the liability of the insurance company
to pay the entire claim. It is submitted that the Tribunal wrongly held that the liability of
the insurance company was unlimited because of non-proving of the insurance policy
whereas there was sufficient material before the Tribunal to show that premium of
Rs.240/- only was charged and the liability of insurance company was, therefore, limited
to Rs.50,000/-.
2. I find that the insurance company has even not cared to read the provisions of
even 1939 Act as amended in October, 1982 when the Legislature amended the limits of
minimum liability from Rs.50,000/- to Rs.1,50,000/-. However in any case, the plea
F.A.O. No.286/2001 Page No.1 of 4
taken by the insurance company that since the premium was Rs.240/-, the liability of the
insurance company was limited to Rs.50,000/- is is not tenable. This court in F.A.O. No.
257 of 1991 titled Neeta Trehan & Ors. Vs. Gopal Krishan & Ors., decided on 17th May,
2010, observed as under :-
“14. The issue arises whether this insurance cover obtained by
the insured was limited to a liability of Rs.1,50,000/- being the
minimum liability for which a vehicle was required to be insured
by the owner or this premium covered wider liability. Counsel for
the appellants has drawn my attention to the judgment in Veena
Pruthi’s case (supra) given by the Division Bench of this court
where the Division Bench of this court held that if the premium
was Rs.125/-, the liability would be limited to Rs.1,50,000/- and
not unlimited. On the same logic it is stated that if the premium
was Rs.240/- for class A(2) vehicle, the liability of insurance
company would be limited to Rs.1,50,000/-.
15. Where obtaining of an insurance cover is made mandatory
by statute, the contract is to be interpreted in the light of statutory
provisions. In case of motor vehicles, obtaining of an insurance
cover by the owners of vehicles is a statutory requirement. Thus,
an insurance policy has to be interpreted keeping in view the
statutory provisions and the rules of tariff as framed by the
Advisory Board. Under the tariff rules, two separate tariffs are
provided for ‘Act Only Liability’ and for ‘Public Risk’. It cannot
be said that the Advisory Board provided tariff for ‘Act Only
Liability’ as a superfluous phenomenon. The Advisory Board was
having in mind that where the owner wants to take an insurance
policy covering the minimum liability under Section 95 of the Act,
then the premium should be different. If the owner wants wider
liability then the premium should be different and that is the
reason that for ‘Act Only Liability’, a premium of Rs.200/- was
provided and for ‘Public Risk’, a premium of Rs.240/- was
provided. Public risk is a wider term and takes into account the
entire risk faced by the owner for bringing vehicle on road. If
there had been no compulsion under the Act to obtain an insurance
policy, the only insurance cover which owner could have obtained
from an insurance company for covering public risk would have
been this that he would pay Rs.240/- and get the public risk
covered. If the Act would have not prescribed any limit, the public
risk would naturally have been unlimited. The Act prescribed that
every owner of vehicle should get insurance cover covering a
minimum amount. Beyond that, the Act did not provide anything.
It is under these circumstances that the Tariff Advisory Committee
prescribed separate premium for ‘Act Only Policy’ and separate
premium for a ‘Public Risk Policy’. I, therefore, consider that theF.A.O. No.286/2001 Page No.2 of 4
‘Public Risk’ premium would cover unlimited amount of risk and
would not cover a limited amount of risk.
………………
18. There is another aspect to be kept in mind. When an owner
approaches insurance agent for insurance, he is told what would
be the tariff payable by him and on payment of tariff, an insurance
certificate or cover note is issued. The contract of insurance, thus,
stands concluded on receipt of tariff/premium in terms of the tariff
schedule as laid down by Advisory Board. Insurance policy is
subsequently mailed to owner by insurance company. If insurance
company unilaterally inserts a clause in the policy which is
contrary to tariff regulations, such a clause is not binding. All
insurance policies are in the shape of one standard performa used
for different kinds of coverage. If while sending insurance policy
to owner the company official does not score off non-applicable
clauses or inserts a limited liability clause which is contrary to the
tariff charged from owner, such a clause is not binding.”
3. In the present case, the insurance company has charged a premium of Rs.240/- for
‘Third Party Liability’, that is, public liability. The tariff rate for Class B (1) passenger
carrying vehicle prevalent at that time was as under :-
CLASS B (1) : PASSENGER CARRYING VEHICLES-
(Excluding Passenger Risks)
a) Buses/(including Tourist Buses)
b) Hotel/School omnibuses
c) Airline Buses
Subject to Endorsement No.26 and compulsory Excess of Rs.500/-
except in the case of Liability to the Public Risk.
Maximum Licensed Own Damage Liability 'Act
Passenger Carrying to the Only'
Capacity Public Liability
Risks
Not exceeding 18 Seats Rs.280 + 1.10% Rs.240/- Rs.200/-
on I.E.V.
Not exceeding 36 Seats Rs.360 + 1.10% Rs.240/- Rs.200/-
on I.E.V.
Not exceeding 60 Seats Rs.440 + 1.10% Rs.240/- Rs.200/-
on I.E.V.
Exceeding 60 Seats Rs.545 + 1.80% Rs.240/- Rs.200/-
on I.E.V.
F.A.O. No.286/2001 Page No.3 of 4
4. It is apparent from perusal of this tariff rate that in case of limited liability, the
premium was Rs.200/- and not Rs.240/-. It was incumbent upon the insurance company
to show as to how, by charging a premium of Rs.240/-, which was not premium for an
‘Act Only Liability’ premium, a claim could be made by it that its liability was limited as
per ‘Act Only’. The premium charged was liability to ‘Public Risk’ without any limit.
5. I, therefore, consider that the Tribunal rightly held that the liability of the
insurance company was unlimited, though the route adopted by the Tribunal was
different. The appeal is hereby dismissed.
SHIV NARAYAN DHINGRA J.
MAY 24, 2010
‘AA’
F.A.O. No.286/2001 Page No.4 of 4