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2005 DIGILAW 388 (MP)

Raman Asthana v. Mahila Siyabai

2005-03-15

A.K.GOHIL, S.S.JHA

body2005
JUDGMENT This appeal is filed by the owner of the vehicle challenging the portion of the award passed by the Claims Tribunal whereby the insurance company is exonerated from indemnifying the owner of the vehicle. Sughar Singh died in a motor accident on 20.5.1985 involving Bus No. MPW 8306 which was driven from Narwar towards Dabra. Sughar Singh died on the spot. Owner Suman Asthana was impleaded as party and after his death, his brother appellant Raman Asthana is substituted in his place. Counsel for the appellant submitted that the Claims Tribunal has committed an error in holding that the vehicle was not insured. He invited attention of the Court to the policy Ex. P-2. Effective date of commencement of the insurance is 5.12.1984 for the period upto 4.12.1985. Counsel for the appellant submitted that during the subsistence of the insurance policy, vehicle was insured on the date of accident i.e. on 20.5.1985. Counsel for the appellant further submitted that the Claims Tribunal has wrongly interpreted the provisions of 64~ VB of the Insurance Act, 1938. Counsel for the respondent insurance company submitted that actually premium was received by the company on 23.5.1985, therefore, insurance company is not liable. This question has been considered by the apex Court in the case of Oriental Insurance Co. Ltd. v. Inderjit Kaur and others [1998 (1) MPWN 164 = AIR 1998 SC 588 ]. In this case, it is held that Chapter 11 of the Motor Vehicles Act, 1988 provides for the insurance of motor vehicle against third party risk and while interpreting section 64- VB of the Insurance Act, 1938, it is held that the insurance company, being an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium there for. By reason of the provisions of sections 147 (5) and 149 (1) of the Motor Vehicles Act, the insurance company became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof, notwithstanding its entitlement to avoid or cancel the policy for the reason that the cheque in payment of the premium thereon had not been honoured. Apart from the aforesaid judgment, it may further be mentioned that the insurance policy was issued in pursuance of the cover note whereby the vehicle was insured for the period between 5.12.1984 to 4.12.1985. Apart from the aforesaid judgment, it may further be mentioned that the insurance policy was issued in pursuance of the cover note whereby the vehicle was insured for the period between 5.12.1984 to 4.12.1985. Said policy was not cancelled for non-receipt of the premium. Therefore, insurance company cannot be absolved of its liability. Finding of the Claims Tribunal that the insurance company is not liable to indemnify the insured is set aside. Next question involved in the case is as to what extent the insurance company is liable to indemnify the insured. We have perused the insurance policy Ex. D-2. From perusal of the policy, it is apparent that the vehicle was insured for limited liability of Rs. 50,000/-. Additional premium to increase the third party risk has not been paid by the owner of the vehicle. Therefore, liability of the insurance company is limited to Rs. 50,000/-. This question is also considered by the apex Court in the judgment in the case of New India Assurance Co. Ltd. v. C.M. Jaya and others [2003 (2) BLJ 51 = 2002 ACJ 271]. Para 5 of the judgment is reproduced below: "Thus, a careful reading of these decisions clearly shows that the liability of the insurer is limited, as indicated in section 95 of the Act, but it is open to the insured to make payment of additional higher premium and set higher risk covered in respect of third party also. But in the absence of any such clause in the insurance policy, the liability of the insurer cannot be unlimited in respect of third party and it is limited only to the statutory liability. This view has been consistently taken in the other decisions of this Court." It is further held that the liability of the insurer depends upon the terms of contract between the insured and insurer as contained in the policy. We have perused the policy and we have found that no additional premium or higher premium was paid to cover the unlimited or additional liability than the statutory liability as found in the terms of the policy. In the policy, limits of liability is provided which is reproduced below: "Limits of Liability. Limit of the amount of the Company's liability under section 11-1 (i) in respect of anyone accident: Such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939. In the policy, limits of liability is provided which is reproduced below: "Limits of Liability. Limit of the amount of the Company's liability under section 11-1 (i) in respect of anyone accident: Such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939. Limits of the amount of the Company's liability under section 11-1 (ii) in respect of anyone claim or series of claims arising out of one event Rs. 50,000/-." Thus, in this case, no additional or higher premium was paid to cover the unlimited or higher liability than the statutory liability. Therefore, we hold that the liability of the insurance company is limited to Rs. 50,000/- (Rs. fifty thousand only). Remaining amount shall be paid by the appellant before the Claims Tribunal within two months. Amount already deposited by the insurance company shall be adjusted towards the liability of the Insurance company. There is no challenge to the quantum of compensation, therefore, we refrain from modifying the order as regards quantum of compensation. Appeal succeeds in part as indicated above. There shall be no order as to costs.