Rajasthan High Court - Jaipur
New India Assurance Co. Limited vs Rajasthan State Road Transport ... on 3 February, 2003
Equivalent citations: 2003(2)WLN581
JUDGMENT Rajesh Balia, J.
1. Heard the learned Counsel for the parties.
2. The only question raised before us is whether in a case, the liability of the Insurance Company is held to be limited to the statutory liability under Section 95(2) of the Motor Vehicles Act, 1939 towards third party in respect of the goods/properties which have been damaged as a result of the accident, the Insurance Company is required in the first instance to satisfy the entire claim which the owner of such goods/property is entitled to recover from the owner of the vehicle, and the insurance company, when the vehicle is insured, may be left to recover the same from the owner of the vehicle, as per their inter se rights.
3. The learned Single Judge relying on the decision of the Hon'ble Supreme Court in case of Oriental Insurance Co. Ltd. v. Cheruvakkara Nafaeesu and Ors., reported in AIR 2000 SCW 4535 corresponding to has held as under:
Thus it may be that the liability of the insurance company may be limited to an extend but for that reason the right of the claimant to be indemnified by the insurance company to the extent of the entire affected and the insurance company shall be entitled only to recover such excess amount as it has paid beyond the limit of its liability from the insured.
4. With this conclusion, the award made by the M.A.C.T. to that effect was sustained.
5. learned Counsel for the appellant has urged that insurance company cannot be held liable even in first instance to satisfy the full compensation awarded to the claimants in excess of its statutory liability, except in case where by charging higher premium, additional liability has been accepted by the company under policy. He placed reliance on a decision of the Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. v. C.M. Jaya and Ors., reported in 2002 WLC (SC) Civil page 179 which is a 5 judges bench decision. It is contended by the learned Counsel for the appellant that precisely the aforesaid question was referred to a larger bench of Supreme Court vide earlier order passed in the aforesaid appeal which has been reported in 1992 (2) SCC 47 and the said question has been answered in negative by the Supreme Court, therefore the answer given in C.M. Jaya's case (Supra) must prevail over the other decisions of smaller benches of the Supreme Court.
6. The question which was referred to the larger bench for decision reads as under:
This 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 liable to pay the entire amount and he may ultimately recover from the insured.
7. There was a cleavage of opinion between the different decisions of the Supreme Court which were rendered earlier and which were referred in the order of reference. The answer to the aforesaid question was rendered by the Supreme Court in the following terms--
We...answer the question set out in the order of reference in the beginning as under:
In the case of insurance company not taking any higher liability by accepting a higher premium for payment of compensation to a third party, the insurer would be liable to the extent limited under Section 95(2) of the Act and would not be liable to pay the entire amount.
8. Faced with this, learned Counsel for the respondents urged that second part of the question referred to namely, whether the insurer would be liable to pay the entire amount and he may ultimately recover from the insured, was not answered by the Supreme Court at all and the answer is confined to first part of the question. He has also contended that in view of the aforesaid judgment relied by the learned single judge which has not been referred to the larger bench in C.M. Jaya's case(Supra), the said judgment ought to prevail in answering the said question.
9. We are unable to find any merit in the contention raised by the respondents. The Supreme Court after quoting the question has answered the question in fullness making it clear, when it expressed "we answer the question set out in the order of reference in the beginning", that there is no room to contend that the answer given by the Supreme Court was to a part of question and not to the full question. Moreover, the last part of the answer that the "Insurance Company would not be liable to pay the entire amount", in our opinion, succintly and clearly answers that full question referred to the larger bench that the insurance company is not liable to make payment and ultimately recover from the insured to the extent it makes the payment of liability undertaken by it.
10. It is true that the decision in case of Cheruvakkara Nafaeesy (Supra) has not been referred to in C.M. Jaya's case (Supra) but in the realm of precedents, it is well settled that the smaller bench decisions of Supreme Court should give way to the larger bench decisions of Supreme Court, even if the former judgment is not referred to the later. It is only where an earlier larger bench decision is contrary to a judgment rendered by the smaller bench and the smaller bench has not taken note of the decision of the larger bench that the former judgment can continue to be a binding precedent notwithstanding a contrary decision of the smaller bench but vice versa is not true.
11. Accordingly, in our opinion, there is no room for further contention before this Court in view of the decision in C.M. Jaya's case (Supra) that the insurance company may be made liable to make payment of entire amount of compensation arising out of damages to the property in excess of statutory liability where no higher amount is accepted by accepting a higher premium and thereafter the insurance company may recover the same from the insured.
12. The appeal is accordingly allowed, the judgment under appeal and the award is modified by setting aside and the same to the extent it directs the Insurance Company to pay to the claimants the amount of entire compensation awarded in excess of Rs. 6,000/- for the damages caused to the claimants property and then to recover the excess sum from the insured. The liability of the owner of the vehicle is not modified or altered in any manner. There shall be no order as to costs.