Jammu & Kashmir High Court
New India Assurance Co. vs Hurmat Begum And Ors. on 27 March, 1992
Equivalent citations: II(1994)ACC247, 1993ACJ1281, AIR 1994 JAMMU AND KASHMIR 1
JUDGMENT B.A. Khan, J.
1. What is the extent of Insurance Company's liability in a case where it fails to plead limited liability, but places on record the original, Insurance Policy indicating the limit of its liability. Can the Company be burdened with liability in excess of the limit contained in the policy. In other word? should the liability of Company be treated as unlimited merely because it had failed to take the plea of limited liability in its written-statement? This interesting question falls for determination in this appeal.
2. The controversy arises out of a claim petition filed by claimants of one Molvi Abdul Ghani, who was killed in a road accidental Pul Doda of Aug. 7, 1980. In reply to the claim petition, appellant company did not plead limited liability in its written-statement. It, however, placed on record original Insurance Policy which indicated that its liability was limited to Rs. 50,000/-. MACT, Jammu awarded a compensation of Rs. 92,000/ - to the claimants and fastened the entire liability on the company on the ground that it had failed to specifically plead its limited liability. The Tribunal ignored the original Insurance Policy from consideration and relying upon a single Judge judgment of Punjab and Haryana High Court, reported in 1987 ACC LJ 203, concluded that company's liability was unlimited. Hence, the appeal on the sole ground that Tribunal had erred in excluding the policy from consideration and by disregarding its terms which limited the company's liability to Rs. 50,000/-.
3. It is a beaten law that a policy of Insurance can cover a greater risk in excess of limit set out in Section 95(2). It is also settled that in case on Insurance Company wants its liability to be held limited, it must specifically plead so and substantiate it by proof particularly by bringing the policy on record. If it fails to raise a specific plea in this regard and holds back the policy record, its liability will be regarded unlimited. This position has been consistently affirmed by various High Courts and I feel no necessity of citing any decision in support.
4. Having said so, the difficulty confronts in a cae, like the present one, where Insurance Company has not pleaded its limited liability in the written statement, but has placed the original policy on record to show the extent of risk covered. Should Company's liability be treated as unlimited in such a case, as held by the Tribunal. In my opinion, the answer is No and this is so for the reasons to be recorded hereinafter.
5. I had the benefit of going through the judgment of Punjab and Haryana High Court, 1987 ACC CJ 203, relied upon by Tribunal. In this case also, extent of Insurance Company's liability was under examination.
6. The Insurer had not raised any plea in this regard, but had placed the policy on record. In the facts and circumstances of the case, learned single Judge held as under:--
"It is pertinent to note that no plea had been raised by the Insurance Company to the effect that its liability was in any manner limited. The plea put forth in written statement being that the offending vehicle was not insured with it. This stands negatived by the Insurance Policy, which has been placed on record. Mr. H. Kumar, appearing for Company sought to contend that as the Policy had been placed on record by the Truck-owner, he must be held to be bound by the terms thereof implying that liability of Insurance Company should be taken to be limited to what is stated therein regardness of the fact that no plea had been raised by the Company that its liability was in any manner limited. This is indeed a contention which can't be sustained keeping in view the well settled position in law new-namely that the liability of the Insurance Company must be held to be unlimited unless a specific plea is taken by the Insurance Company that its liability is limited and there is the policy on record to substantiate it."
With great respect, I am unable to subscribe to the view taken, which, in my opinion, is not correctly based on the legal position stated. There can be no dispute with the proposition that Insurance Company's liability should be regarded as unlimited where it fails to raise any plea about its limited liability and does not produce any policy on record in support thereof. But this can't hold true where the original policy is placed on record. In such a case, record should be allowed to speak for itself and it would be grossly unfair if the company's liability is held to be unlimited in the face of the original policy containing limits of the risk covered by the Insurer. There is a presumption of correctness to the official record unless proved to the contrary. It can't be ignored from consideration on the ground of some defect in the pleadings of parties. Such an approach is bound to cause miscarriage of justice.
7. A policy of Insurance is a contract of indemnity and the liability of Insurer should be taken to be what is contained in the contract. It is the best guide which can show the extent of risk which an insurer has sought to cover. Therefore, it can't be excluded from consideration and discarded on some obstract doctrine of burden of proof or for some inconsequential non-compliance with rules of pleadings.
8. Strict compliance with rules of evidence pleadings is not required in proceedings under M. V. Act, which are summary proceedings and any document of some probative value, which is not in doubt, deserves to be looked into, while fixing the liability. Courts have drawn adverse inference against the Insurer only in these cases where Insurance record was held back and not brought on record. I find support for my view from 1990 ACC CJ 71 : (Madh Pra) which is on all fours with the present case. Replying upon a Full Bench judgment of M.P. High Court, reported in 1988 ACC CJ 956, it was held as under :--
"Learned counsel for appellant has contended that since no plea by the Insurance Company that its liability is limited was taken in written-statement, Insurance Company should be held liable for the entire amount. But as has been held by this court in Full Bench decision, 1988 ACC CJ 956, an Insurance Company can be held liable to pay an amount in excess of the statutory limit under M. V. Act, if the policy covers that liability and that the question as to whether an Insurance Company is or is not liable should not be decided on the abstract burden of proof."
Viewed thus, I feel no qualms in holding that an Insurer's liability is only to the extent as contained in the Insurance Policy and where original Insurance Policy has been brought on record and its genuineness is not in dispute and it must be taken into consideration for purposes of determining the company's liability, irrespective of whether it has failed to take a specific plea about its limited liability.
9. In the instance case, original Insurance Policy was placed on record before the Tribunal, showing the liability limited to Rs. 50,000 /- Its genuineness was not in doubt and nor was any evidence required to prove its terms. Therefore, it deserved to be taken into consideration for determining the company's liability. The Tribunal has fallen in error by brushing it aside and by burdening the company with full liability when the same could not exceed the sum what was contained in the policy. Since the company's liability was fixed at Rs. 50,000/- in the policy, it can't be made liable to pay more than that. The balance amount shall be payable by respondent.
10. This appeal is accordingly allowed. The compensation awarded shall be paid to claiments within two months from today, failing which interest @ 18% p.a. shall be chargeable on the unpaid amount till the date of realisation. In case any money is deposited with DR, it shall be released to claimants along with interest. Record be returned to the concerned Tribunal.