New India Assurance Co. Ltd. Vs. Smt. Shanti Bai & Ors  INSC 117 (6 February 1995)
Sujata V. (J) Manohar Sujata V. (J) Ahmadi A.M. (Cj) Bharucha S.P. (J)
1995 AIR 1113 1995 SCC (2) 539 JT 1995 (2) 95 1995 SCALE (1)472
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.
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
This insurance policy was in force at the material time.
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.
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.
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/-.
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 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.
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 97 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.
respect of persons other than passengers carried for hire or reward, a limit of
fifty thousand rupees in all;
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
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.
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
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.
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/-.
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.