Kerala High Court
Vijayalakshmi vs Rajasekharan Nair on 19 October, 2004
Equivalent citations: II(2005)ACC45, 1995ACJ405, 2005(1)KLT195
Author: K.A. Abdul Gafoor
Bench: K.A. Abdul Gafoor, V. Ramkumar
JUDGMENT K.A. Abdul Gafoor, J.
1.The Apex Court as per order in Civil Appeal No. 754/1999 has remanded M.F.A. No. 209/90 for consideration by this Court. The Apex Court ordered as follows:
"The appeal is allowed. The impugned judgment of the High Court is set aside. The appeal is remanded to the High Court for hearing and decision afresh. The High Court shall admit the policy in evidence and decide the case keeping in view the law settled by the Constitution Bench decision of this Court referred to hereinabove. The claimants and the owner shall be noticed for the date of hearing. However, we make it clear that the appeal is being remanded to the High Court only for the hearing and decision on the question of determining the extent of liability of the insurer qua the third-party claim. The quantum of compensation as determined by the High Court shall not be available for reconsideration in view of the owner having not pursued his challenge to the quantum in this Court."
2. Thus the point involved for consideration is in a narrow campus viz. the extent of liability to be fastened on the insurer in the light of the decision reported in New India Assurance Co. Ltd. v. C.M. Jaya and Ors. (2002 (1) KLT 596 (SC) = AIR 2002 SC 651).
3. The appellants are the defendants and legal representatives of a deceased in a motor accident occurred on 26.9.1986. The tribunal below awarded a total compensation of Rs. 1,99,650/-. Dissatisfied with the compensation this appeal has been filed. Appeal has been allowed by this Court on 11.11.1994 enhancing the compensation to Rs. 5 lakhs. Rejecting the contention of the insurer that in terms of the policy the liability of the insurer was limited only to the extent of Rs. 50,000/-, this Court while disposing the appeal on the earlier occasion, fastened the entire liability on the insurer, as the policy containing the restriction clause was not properly tendered in evidence and marked. That judgment was taken up in appeal by the insurer before the Supreme Court. It is in that appeal the Supreme Court has remanded the matter, as mentioned above.
4. Therefore the only question that falls for our consideration is whether the insurer can be made liable for any amount in excess of that undertaken in the policy concerned, which is directed to be taken in evidence, by the Supreme Court. Admittedly the policy contains a restriction clause that the insurer will be liable only to the extent of Rs. 50,000/-. In C.M. Jaya's case AIR 2002 SC 651 the Constitution Bench of the Supreme Court had considered the point 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."
The question was answered as follows:
"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."
The Act mentioned is 1939 Act. the liability under Section 95(2) is limited to Rs. 50,000/-. Consequently based on the answer given by the Supreme Court in the said decision, the insurer cannot be made liable for any amount in excess of Rs. 50,000/-.
5. It is contended by the appellant relying on a still later decision of the Supreme Court in National Insurance Company Ltd. v. Swaran Singh, AIR 2004 SC 1531 that the amount payable in excess of that mentioned in the policy shall be allowed to be recovered from the owner. Our attention was drawn to para.76, which reads as under:
"Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and therefore, its liability may be zero but it does mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with Sub-section (1) thereof. The right to avoid liability in terms of Sub-section (2) of Section 149 is restricted as he has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading."
We are unable to accept this contention for two reasons. (i) Consideration in Swaran Singh's case was with reference to Section 149(5) of 1988 Act, whereas the Jaya's case was concerned with the provision applicable at the material point of time, namely Section 95(2) of 1939 Act. (ii) In the remand order the Apex Court has directed this Court to consider the issue involved based on the policy produced, in the light of the decision rendered by the Constitution Bench in C.M. Jaya's case. So we cannot take note of the decision in Swaran Singh's case to decide the issue involved.
6. It is further contended on behalf of the claimants/appellants that considering Section 96(3) of the old Act and Section 149(5) of the New Act and taking that the legislation as a whole is a beneficent one, the insurer shall be directed to pay the entire amount and the amount so to be paid in excess of the liability undertaken in the policy shall be allowed to be recovered from the owner. If we do so, it will be expanding the scope of remand and we will not be acting in accordance with the pronouncement of the Constitution Bench in Jaya's case, which has been specifically mentioned in the remand order. Going by the decision of this Court in Achuthan Nair v. Raman and Ors. (1979 KLT 119) that, "so far as the parties to the present proceedings are concerned, they are bound by the order of remand. It is now fairly settled that a wrong decision of a Court having jurisdiction is as much binding between the parties as aright one, and is superseded only by appeals to higher tribunals or other procedure like review which the law provides". Consequently, a subsequent decision of the Supreme Court is of no avail, in the narrow scope of the remand ordered by the Apex Court.
7. Necessarily, we have to accept the answer given to the question in Jaya's case and order that the liability of the insurer shall be limited to Rs. 50,000/- and the balance shall have to be recovered by the claimants from the owner or driver as the case may be. The admitted amount, if not paid, shall be paid at any rate within two months.
Appeal is disposed of.