Insurance Co. Ltd Vs. Smt. Raj Kumari & Ors  Insc 1144 (14 November 2007)
Arijit Pasayat & Lokeshwar Singh Panta
out of SLP (C) No. 2511/2006) Dr. ARIJIT PASAYAT, J.
Challenge in this appeal is to the order passed by a learned Single Judge of
the Punjab and Haryana High Court.
impugned judgment, the High Court held that though the liability of the
appellant (hereinafter referred to as the insurer) was limited to
Rs.50,000/- yet it was to first pay the amount awarded to the claimants and
recover amount in excess of Rs.50,000/- from the owner and driver of the
Factual position in a nutshell is as follows:
Singh, conductor of the bus no.DEP-3514 lost his life in an accident which took
place on 14.7.1984. The bus belonged to M/s Mewat Transport Company Private
Limited (hereinafter referred to as the insured). The bus was driven
by deceased Karan Singh and it dashed in a tanker no.HRG- 2852. The impact was
so intense and severe that several persons sitting in the bus died, while many
others sustained injuries. The widow, minor children and parents of aforesaid Karan
Singh lodged claim petition claiming compensation of Rs.1,40,000/-. The
Tribunal took several claim petitions together and in respect of the claim
under consideration awarded compensation of Rs.57,600/- along with 12% interest
p.a. from the date of institution of the claim petition. It was, however, held
that liability of the insurer was limited to Rs.50,000/-.
claimants filed appeal before the Punjab and Haryana High Court. By the impugned order the High Court enhanced
claim of compensation to Rs.1,25,200/-. It was held, as was done by the
Tribunal, that the liability of the insurer was limited to Rs.50,000/- in terms
of the insurance policy.
it was held that the entire amount was to be paid by the insurer to the
claimants and it was entitled to recover the amount in excess of Rs.50,000/-
from the owner and the driver of the vehicle.
4. In support
of the appeal, learned counsel for the appellant submitted that having held
that the liability of the insurance company was limited to Rs.50,000/-, the
High Court was not justified in directing payment of the entire amount by it
and to recover the differential amount.
There is no appearance on behalf of the respondents.
would be appropriate to take a note of what was held by the Constitution Bench
of this Court in New India Assurance Co. Ltd. V. C.M. Jaya and Ors. (2002 (2)
case it was held, inter alia, as follows:
the circumstances, we hold that the liability of the appellant,
insurance-company is limited to Rs.50,000/-, as held by the Tribunal. In the
view we have taken, it is unnecessary to go into the question relating to
either maintainability of cross-objections before the High Court against the
appellant alone or as to the enhancement of compensation when the owner and
driver have not filed appeal against the impugned judgment.
questions that were considered by the Constitution Bench are as follows:
"The question involved in these appeals is whether in a case of insurance
policy not taking any higher liability by accepting a higher premium, in case
of payment of compensation to a third party, the insurer would be liable to the
extent limited under Section 95(2) or the insurer would be liable to pay the
entire amount and he may ultimately recover from the insured.
this question, there appears to be some apparent conflict in the two
three-Judge Bench decision of this Court –
New India Assurance Co. Ltd. v. Shanti Bai (1995 (2) SCC 539) and
Lal Sood v. Kaushalya Devi Thapar (1998 (3) SCC 744) .
the latter decision, unfortunately the decision in New India Assurance case
(supra) has not been noticed though reference has been made to the decision of
this Court in National Insurance Co. Ltd. v. Jugal Kishore [(1998) 1 SCC 626],
which was relied upon in the earlier three-Judge Bench Judgment. In view of the
apparent conflict in these two three-Judge Bench decisions, we think it
appropriate that the records of this case may be placed before my Lord, the
Chief Justice of India to constitute a larger Bench for resolving the conflict.
We accordingly so direct. The record may now be placed before the Hon'ble the
Chief Justice of India."
would be evident from the conclusions of this Court the liability of the
insurance company would in the instant case be limited to quantum which was to
be indemnified in terms of the policy. The Tribunal and the High Court have
Oriental Insurance Co. Ltd. vs. Shakuntala Garg and Ors. (Civil Appeal No. 104
of 2000, disposed of on 10.1.2003), it was held as follows:
counsel for the appellant at this stage expressed an apprehension that by
virtue of the terms of the Award, the appellant may be required to pay the
entire amount and recover it from the owner. In the light of the modification
of the impugned Award, such question does not arise.
is true that in certain cases this Court has, after looking into the fact
situation, directed the insurance company to make payment with liberty to
recover the amount in excess of the liability from the insured. Those decisions
were given on the facts situation of the cases concerned.
Reliance on the decision without looking into the factual background of the
case before it is clearly impermissible. A decision is a precedent on its own
facts. Each case presents its own features. It is not everything said by a
Judge while giving a judgment that constitutes a precedent. The only thing in a
Judges decision binding a party is the principle upon which the case is
decided and for this reason it is important to analyse a decision and isolate
from it the ratio decidendi.
to the well-settled theory of precedents, every decision contains three basic
of material facts, direct and inferential. An inferential finding of facts is
the inference which the Judge draws from the direct, or perceptible facts;
of the principles of law applicable to the legal problems disclosed by the
based on the combined effect of the above.
decision is an authority for what it actually decides. What is of the essence
in a decision is its ratio and not every observation found therein nor what
logically flows from the various observations made in the judgment. The
enunciation of the reason or principle on which a question before a Court has
been decided is alone binding as a precedent. (See: State of Orissa v. Sudhansu Sekhar Misra and Ors. (AIR
1968 SC 647) and Union of India and Ors. v. Dhanwanti Devi and Ors. (1996 (6) SCC 44). A
case is a precedent and binding for what it explicitly decides and no more. The
words used by Judges in their judgments are not to be read as if they are words
in Act of Parliament. In Quinn v. Leathem (1901) AC 495 (H.L.), Earl of Halsbury
LC observed that every judgment must be read as applicable to the particular
facts proved or assumed to be proved, since the generality of the expressions
which are found there are not intended to be exposition of the whole law but
governed and qualified by the particular facts of the case in which such
expressions are found and a case is only an authority for what it actually
Courts should not place reliance on decisions without discussing as to how the
factual situation fits in with the fact situation of the decision on which
reliance is placed.
of Courts are neither to be read as Euclids theorems nor as provisions of the statute and that too taken out
of their context. These observations must be read in the context in which they
appear to have been stated. Judgments of Courts are not to be construed as
statutes. To interpret words, phrases and provisions of a statute, it may
become necessary for judges to embark into lengthy discussions but the
discussion is meant to explain and not to define. Judges interpret statutes,
they do not interpret judgments. They interpret words of statutes; their words
are not to be interpreted as statutes. In London Graving Dock Co. Ltd. V. Horton (1951 AC 737 at
p.761), Lord Mac Dermot observed:
matter cannot, of course, be settled merely by treating the ipsissima vertra of
Willes, J as though they were part of an Act of Parliament and applying the
rules of interpretation appropriate thereto. This is not to detract from the
great weight to be given to the language actually used by that most
Home Office v. Dorset Yacht Co. (1970 (2) All ER 294) Lord Reid said, Lord
Atkins speech.....is not to be treated as if it was a statute definition.
It will require qualification in new circumstances. Megarry, J in (1971) 1
WLR 1062 observed:
must not, of course, construe even a reserved judgment of Russell L.J. as if it
were an Act of Parliament. And, in Herrington v. British Railways Board
(1972 (2) WLR 537) Lord Morris said:
is always peril in treating the words of a speech or judgment as though they
are words in a legislative enactment, and it is to be remembered that judicial
utterances made in the setting of the facts of a particular case.
Circumstantial flexibility, one additional or different fact may make a world
of difference between conclusions in two cases. Disposal of cases by blindly
placing reliance on a decision is not proper.
The following words of Lord Denning in the matter of applying precedents have
become locus classicus:
case depends on its own facts and a close similarity between one case and
another is not enough because even a single significant detail may alter the
entire aspect, in deciding such cases, one should avoid the temptation to
decide cases (as said by Cordozo) by matching the colour of one case against
the colour of another. To decide therefore, on which side of the line a case
falls, the broad resemblance to another case is not at all decisive. ***
*** *** Precedent should be followed only so far as it marks the path of
justice, but you must cut the dead wood and trim off the side branches else you
will find yourself lost in thickets and branches.
plea is to keep the path to justice clear of obstructions which could impede
the instant case the insurer was a private limited company doing transport
business. There was no material placed before the High Court to show that the
claimants would have any difficulty in recovering the awarded amount from it.
being so, the High Courts order is modified to the extent that the insurer
shall pay an amount of Rs.50,000/- with interest awarded to claimants. The
balance has to be paid by the insured.
Another point urged before this Court in support of the appeal was that the
rate of interest is high. The liability of the insurance company is limited to
Rs.50,000/- with interest @ 9% p.a. from the date of the application. The rate
is being fixed considering the date of accident. The insured shall forthwith
make payment of the balance amount with interest to the claimants and in any
event not later than 3 months from the date of this order.
The appeal is allowed to the aforesaid extent with no order as to costs.