Padma Srinivasan Vs. Premier Insurance
Co. Ltd. [1982] INSC 21 (16 February 1982)
CHANDRACHUD, Y.V. ((CJ) CHANDRACHUD, Y.V.
((CJ) FAZALALI, SYED MURTAZA DESAI, D.A.
CITATION: 1982 AIR 836 1982 SCR (3) 244 1982
SCC (1) 613 1982 SCALE (1)107
ACT:
Motor Vehicles Act 1939, s. 95(2)(a) as
amended by Motor Vehicles (Amendment) Act 56 of 1969-Applicability of.
Accident claim-Liability of insurer-Material
date for ascertainment of extent of liability-Whether date of accident or date
of insurance policy.
Contract-Contract in accordance with a
particular statute law but not identifying the provision of law-Breach of
contract-Determination of quantum of damages-Law in force on date breach of contract
committed or law in force on date contract made.
HEADNOTE:
Section 95 of the Motor Vehicles Act 1939
prescribes the requirements of an insurance policy and the "limits of
liability" there under. Section 95(2) (a) was amended by the Motor
Vehicles (Amendment) Act 56 of 1969 to provide that the insurer's liability
under a policy of insurance be increased from the existing
"twenty-thousand rupees" to "fifty-thousand rupees". The
amendment came into force on March 2,1970.
The appellant's husband, who was driving a
scooter was knocked down dead by a truck on April 5, 1970. The owner of the
truck had taken a statutory insurance policy with the respondent which was
operative from June 30,1969 to June 29, 1970.
The appellant filed an application before the
Motor Accident's Claims Tribunal under section 110-A of the Act seeking
compensation for her husband's death. The respondent denied its liability and
contested the application The Tribunal passed an award holding that the
appellant was entitled to recover compensation in the sum of Rs. 60,000 for
self and her children, but limited the liability of the respondent-insurer to a
sum of Rs. 50,000.
The respondent in its appeal to the High Court
contended that on the date on which the insurance policy was issued, its
statutory liability was limited to a sum Rs. 20,000 only, and therefore the
Tribunal was in error in passing an award against it for a sum of Rs. 50,000.
This contention was accepted, and the appeal was allowed.
245 In the claimant's appeal to this Court on
the question whether the insurer's liability for third party risks under the
statutory policy must be held to be limited to Rs. 20,000 according to the
relevant legal provision as it existed on the date on which the policy came
into force, or whether that liability can be extended to Rs. 50,000 in
accordance with the legal provision as it stood on the date of the accident,
the accident having occurred during the currency of the policy.
Allowing the appeal,
HELD: 1. The material date for ascertaining
the extent of liability of the insurer is the date of the accrual of the cause
of action for a claim arising out of an accident, which in general would be the
date of the accident and therefore, the insurer's liability arising out of an
accident which happens after March 2, 1970 has to be determined on the basis of
the amended provisions of section 95(2) (a) of the Act, even though the policy
of insurance may have been issued prior to the date of the amendment, that is,
prior to March 2, 1970. [249 G-H; 250A-B]
2. The governing factor for determining the
application of the appropriate law is not the date on which the policy of
insurance came into force, but the date on which the cause of action accrued
for enforcing liability arising under the terms of the policy. [248 G]
3. The application of a law to facts which
came into existence after that law has come into force does not involve giving
retrospective operation to the law, merely because the facts to which the law
is being applied are relatable to a contract or an instrument which had come
into operation prior to the date on which the law itself had come into force.
[249E-F]
4. If the parties to a contract agree that
one shall pay to the other damages for breach of contract in accordance with
the law contained in any particular statute without identifying the law as the
provision which is in force on the date of the contract, the law which will
apply for determining the quantum of damages is the one which is in force on
which the breach of contract is committed, that being the date on which the
cause of action arises, and not the law which was in force on the date on which
the contract was made. [249 B-C] In the instant case, the insurance policy came
into force on June 30, 1969 and covered the period from June 30, 1969 to June
29, 1970. The amendment by which the statutory liability of the insurer was
increased from Rs. 20,000 to Rs. 50,000 came into force on March 2, 1970. The accident
which gave rise to these proceedings occurred on April 5, 1970. The extent of
the insurer's liability must therefore be determined by the application of the
law introduced by the Amendment which had come into force before the date of
accident. [248C; 249E] Sanjiva Shetty S. v. Anantha, [1978] 2 Karnataka Law
Journal 227, approved.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1282 of 1976.
246 From the Judgment and Decree dated the
8th and 9th January 1976 of the Karnataka High Court in Misc. First Appeal No.
19 of 1973.
K.N. Bhatt for the Appellant.
K.C. Dua for the Respondent.
The Judgment of the Court was delivered by
CHANDRACHUD, C.J. This appeal by certificate of fitness arises out of the
judgment of the Karnataka High Court dated January 9, 1976 in Misc. First
Appeal No. 19 of 1973.
On April 5, 1970, the appellant's husband was
driving a scooter, MYL 8574, on the Kasturba Road, Bangalore, when a goods
truck, MYT 3298, knocked him dead. The owner of the truck had taken a statutory
insurance policy with the respondent. The Premier Insurance Co. Ltd.,
Gandhinagar, Bangalore, which was operative from June 30, 1969 to June 29,
1970. The appellant filed an application before the Motor Accidents Claims
Tribunal, Bangalore, under section 110-A of the Motor Vehicles Act, 1939,
seeking compensation for her husband's death. The respondent denied its
liability on the ground, amongst others, that its record did not disclose that
it had issued any insurance policy in respect of the particular truck. On a
consideration of the entire evidence, the Tribunal passed an award on November
20, 1972, holding that the appellant was entitled to recover compensation in
the sum of Rs. 60,000 for herself and her children. The Tribunal limited the
liability of the respondent-insurer to a sum of Rs. 50,000.
The respondent filed an appeal in the High
Court contending that on the date on which the insurance policy was alleged to
have been issued by it, its statutory liability was limited to a sum of Rs.
20,000 only and, therefore, the Tribunal was in error in passing an award
against it in the sum of Rs. 50,000. This contention was accepted by the High
Court and hence this appeal by the claimant.
Chapter VIII of the Motor Vehicles Act, 1939
(The Act), bears the heading "Insurance of motor vehicles against third
party risks". By section 94 (1) of the Act, no person can use a motor 247
vehicle in a public place, except as a passenger, unless there is in force in
relation to the use of the vehicle a policy of insurance complying with the
requirements of the chapter. Section 95 prescribes the requirements of the
insurance policy and the "limits of liability" thereunder.
Broadly, by sub-section (1) of section 95, a
policy of insurance must insure the person or classes of persons specified in
the policy to the extent specified in sub- section (2) against any liability
which may be incurred by him or them in respect of the death of or bodily
injury to any person caused by or arising out of the use of the vehicle in a
public place. Section 95 (2) (a) of the Act, with which alone we are concerned
in this appeal, was originally cast thus:
"95 (2)-- Subject to the proviso to
sub-section (1), a policy of insurance shall cover any liability incurred in
respect of any one accident up to the following limits, namely- (a) where the
vehicle is a vehicle used or adapted to be used for the carriage of goods, a
limit of twenty thousand rupees." This section was amended by Amendment
Act 100 of 1956 which, inter alia, introduced therein the words "in
all" after the words "twenty thousand rupees". We are not
concerned with that amendment. What we are concerned with is the amendment made
to clause (a) of section 95 (2) by the Motor Vehicles (Amendment) Act 56 of
1969, which substituted therein the word "fifty" for the word
"twenty". Section 95 (2) (a) so amended reads thus:
"95 (2)-- Subject to the proviso to
sub-section (1), a policy of insurance shall cover any liability incurred in
respect of any one accident up to the following limits, namely:- (a) where the
vehicle is a goods vehicle, a limit of fifty thousand rupees in all..
..." Thus, the insurer's liability under
the statutory policy was increased by this amendment from twenty thousand
rupees to fifty thousand rupees. The amendment came into force on March 2,
1970.
248 The question which arises for
consideration is whether the insurer's liability for third party risks under
the statutory policy must be held to be limited to Rs. 20,000 according to the
relevant legal provision as it existed on the date on which the policy came
into force or, whether, that liability can be extended to Rs, 50,000 in
accordance with the legal provision as it stood on the date of the accident, the
accident having occurred during the currency of the policy. The relevant dates
which have to be borne in mind in this behalf are these: The insurance policy
came into force on June 30, 1969 and covered the period from June 30, 1969 to
June 29, 1970; the amendment by which the statutory liability of the insurer
was increased from Rs.
20,000 to Rs. 50,000 came into force on March
2, 1970, and the accident which gave rise to these proceedings occurred on
April 5, 1970.
The High Court, in its judgment, has referred
to the principles governing retrospective of statutes and has held by the
application of those principles that the amendment introduced by Amending Act
56 of 1969 is prospective in nature and cannot be given any retrospective
effect. We consider that the High Court, with respect, has failed to appreciate
the true nature of the issue before it. The certificate of insurance, Exhibit
p.9, which was issued by the respondent's agent on May 31, 1969 for the period
June 30, 1969 to June 29, 1970 shows that the respondent-insurer had undertaken
"liability as the one under Chapter VIII of the Motor Vehicles Act, 1939".
That must mean liability as determinable under Chapter VIII at the relevant
time, that is to say, at the time when the liability arises. Since the
liability of the insurer to pay a claim under a motor- accident policy arises
on the occurrence of the accident and not until then, one must necessarily have
regard to the state of the law obtaining at the time of the accident for
determining the extent of the insurer's liability under a statutory policy. In
this behalf, the governing factor for determining the application of the
appropriate law is not the date on which the policy of insurance came into
force but the date on which the cause of action accrued for enforcing liability
arising under the terms of the policy.
That we consider to be a reasonable manner in
which to understand and interpret the contract of insurance entered into by the
insured and the insurer in this case. The contracting parties did not
incorporate the provisions of Chapter VIII of the Act in their contract. That
is to say, they did not identify the liability of the promisor on 249 the basis
of the provisions of Chapter VIII as they stood on the date when the contract
was made. They merely referred to the provisions of Chapter VIII, which means
"the provisions of Chapter VIII in force at any given time", the
given time being the date on which the right to sue accrues or,
correspondingly, the liability arises. If the parties to a contract agree that
one shall pay to the other damages for breach of contract in accordance with
the law contained in any particular statute, without identifying the law as the
provision which is in force on the date of the contract, the law which will
apply for determining the quantum of damages is the one which is in force on
the date on which the breach of contract is committed, that being the date on
which the cause of action arises, and not the law which was in force on the
date on which the contract was made.
Thus, there is no question here, as the High
Court thought, of giving retrospective operation to the amendment introduced by
Amending Act 56 of 1969, by which the statutory liability of the insurer was
increased from twenty thousand rupees to fifty thousand rupees with effect from
March 2, 1970. That question would have arisen if the accident had happened
prior to that date. The accident having happened on April 5, 1970, the question
as to the extent of the insurer's liability must be determined by the
application of the law introduced by the Amendment which had come into force
before the date of the accident. The application of a law to facts which come
into existence after that law has come into force does not involve giving
retrospective operation to the law, merely because the facts to which the law
is being applied are relatable to a contract or an instrument which had come
into operation prior to the date on which the law itself had come into force.
We endorse the view taken by the Full Bench
of the Karnataka High Court in Sanjiva Shetty S. v. Anantha.(1) The Full Bench
overruled the judgment which is under appeal in the instant case and held that
the material date for ascertaining the extent of liability of the insurer is
the date of the accrual of the cause of action for a claim arising out of an
accident, which in general would be the date of the accident and therefore, the
insurer's liability arising out of an accident which happens after March 2,
1970, has to be 250 determined on the basis of the amended provisions of
section 95 (2) (a) of the Act, even though the policy of insurance may have
been issued prior to the date of the amendment, that is, prior to March 2, 1970.
For these reasons, we set aside the judgment
of the High Court, restore the award of the Tribunal dated November 20, 1972
and allow the appeal with costs throughout.
N.V.K. Appeal allowed.
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