Kerala High Court
National Insurance Co. Ltd. vs Annamma Abraham And Ors. on 9 January, 1998
Equivalent citations: 1998ACJ1131, [1998]92COMPCAS556(KER), 1998 A I H C 2380, (1998) 1 TAC 908, (1998) 1 KER LT 427, (1998) 2 ACJ 1131, (1998) 3 CIVLJ 423, (1998) 92 COMCAS 556
Author: Ar. Lakshmanan
Bench: Ar. Lakshmanan
JUDGMENT Ar. Lakshmanan, J.
1. Heard both sides. The appeal is directed against the award of the Motor Accidents Claims Tribunal, Alleppey, dated October 25, 1989, in O. P. (MV) No. 192 of 1985, on its file. The insurance company is the appellant. There is no dispute with regard to the accident which occurred and the insurance policy taken. Before the Tribunal it was argued by the insurance company that their liability is clear from the policy terms and that the limits of liability has been clearly mentioned in the policy itself that is such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939. Therefore, it was argued that the liability of the insurance company in respect of third party personal injury is limited to statutory provisions of the Motor Vehicles Act, 1939. Further, in respect of third party damage where an enhanced limit was agreed to in the contract of insurance, i.e., Rs. 50,000 as against the statutory requirement of Rs. 6,000. The enhanced limit was also clearly indicated on the face of the policy itself.
2. The Tribunal, however, interpreted the phrase "such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939" as any amount that may be awarded by the Tribunal. By interpreting so, the Tribunal held that the insurance company is liable for payment of the entire compensation of Rs. 1,49,675 with interest at 9 per cent. and costs of Rs. 500 awarded in the O. P. Aggrieved by the said award, the insurance company has preferred the above appeal.
3. We have perused the award of the Tribunal and heard the arguments of the respective counsel appearing on either side. On the other hand, similar contention was raised before us by counsel for the insurance company. Section 95(2)(b) provides that the policy of insurance shall cover any liability incurred in respect of any one accident up to the limits mentioned in Clauses (a) and (b) and Sub-clauses (i) and (ii) of Clause (b). Section 95, Clause (2)(b) deals with the vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. Clause (b)(i) of section 95(2) fixes the liability limit of the insurance company at Rs. 50,000 in respect of persons other than passengers carried for hire or reward. In the instant case, there is no dispute that the deceased is only third party. Therefore, as rightly contended by counsel for the appellant, the liability of the insurance company is limited to the statutory requirement of Rs. 50,000 only. As pointed out by him, the Tribunal has also failed to appreciate the fact that the premium charged is only Rs. 240, i.e., only the basic premium. Wo are of the view that the Tribunal has not taken note of the terms as per the contract of insurance which only provides that the insurance company is liable to pay such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939. The interpretation made by the Tribunal is not correct and such an interpretation is contrary to the terms of the statutory provisions. A similar view was taken by the Division Bench of this court in Oriented Insurance Co. Ltd. v. Saji [1997] 2 KLT 695, relying on the decision of the apex court reported in [1988] ACJ 270 and also reported in National Insurance Co. Ltd. v. Jugal Kishore [1988] 63 Comp Cas 847 ; AIR 1988 SC 719. In that case, the Supreme Court had occasion to interpret the meaning of the clause "such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939", as contained in the section as it stood then. In this case, the accident has occurred on March 4, 1985. Therefore, the provision as it stood then alone is applicable. The Supreme Court, after referring to the relevant provisions of the Act and also the provisions contained in the insurance policy, has observed as follows (page 852) :
"A perusal of the policy, therefore, indicates that the liability undertaken with regard to the death of, or bodily injury to, any person caused by or arising out of the use (including the loading and/or unloading) of the motor vehicle falling under Section 11(1)(i) has been confined to 'such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939'. This liability, as is apparent from clause (b) of Sub-section (2) of section 95 of the Act, was at the relevant time Rs. 20,000 only. The details of the premium also indicate that no additional premium with regard to a case falling under Section 11(1)(i) was paid by the owner of the vehicle to the insurance company."
4. In this case, as pointed out by counsel for the appellant, no additional premium was paid by the insured to the insurer so as to make the liability unlimited. Further, there was no special contract between the parties so as to make the liability different from what is enshrined in section 95(2)(b)(i) of the Act. We have also perused the policy marked as exhibit R-1. As the liability of the insurance company as provided under Section 95(2)(b) is limited only up to Rs. 50,000, the insurance company is liable to pay only Rs. 50,000 together with interest at 12 per cent. from the date of the accident till the payment is made. It is represented by counsel for the insurance company that the sum of Rs. 50,000 together with interest at 9 per cent. has already been deposited. In our opinion, the interest awarded by the Tribunal at 9 per cent. is too low. Taking into consideration the tragic death of the deceased we modify the interest at 12 per cent. instead of 9 per cent. as ordered by the Tribunal. The difference in interest shall be deposited by the insurance company with the Tribunal within two months from today. The modified interest at 12 per cent. is payable from the date of the petition till payment. The respondents/claimants are at liberty to proceed against the driver, owner and the de facto owner who are respondents Nos. 6 to 8 in this appeal to recover the balance compensation awarded by the lower court. The compensation awarded by the Tribunal is confirmed with the above modification. C.M.P. No. 5157 of 1992 stands dismissed.