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2012 DIGILAW 1314 (PNJ)

National Insurance Company Limited v. Vijay Laxmi

2012-09-26

K.KANNAN

body2012
JUDGMENT Mr. K. Kannan, J.: (Oral) - The appeal is by the Insurance Company pleading for a restriction of liability under the Motor Vehicles Act of 1939 since the accident had taken place on 07.05.1989 that is before 01.07.1989 when the Act of 1988 came into force. This was a case of collision between a car and a taxi and the claimants were legal representatives of the deceased who was travelling in the car. The insurer was to cover the liability of the taxi and the plea of the Insurance Company therefore was that the liability was only to a tune of Rs.50,000/- in terms of Section 95(2) of the Motor Vehicles Act of 1939. The extent of liability of the Insurance Company under the 1939 Act fell for consideration before a Constitution Bench of the Supreme Court in New India Assurance Co. Ltd. Versus C.M. Jaya-(2002) 2 SCC 278 where the Court held that when the insured did not take any extra premium for enlargement of liability, it shall be restricted only to the extent provided under Section 95(2) and the insurer will not be liable to pay the entire amount of compensation, even for pending claims after the commencement of the Motor Vehicles Act of 1988. The case was considered to resolve the controversy that existed between to earlier decisions of the Supreme Court on this aspect in The New India Assurance Company Limited Versus Smt. Shanti Bai and others-1995(2) SCC 539 and Amrit Lal Sood Versus Smt. Kaushalya Devi Thapar and others-1998(3) SCC 744. The Court found that there was indeed no conflict between the decisions and where there was no additional premium paid, there was no liability for the insurer to make it liable for an unlimited extent to the claim that was still subsisting with the coming into force of 1988 Act. 2. In a case where the Court found that both the vehicles were negligent and apportioned the liability 50:50, the compensation assessed as payable to the claimants being Rs.1,50,000/-, Rs.75,000/- with interest was liable to be paid by the taxi owner and the insurer. Out of this amount again in terms of the Act, the liability was only to the extent of Rs.50,000/- and the additional amount of Rs.25,000/- was liable to be paid only by the insured. Out of this amount again in terms of the Act, the liability was only to the extent of Rs.50,000/- and the additional amount of Rs.25,000/- was liable to be paid only by the insured. The award in so far as it is in excess of Rs.50,000/- would become therefore recoverable only from the owner of the taxi, namely, the insured and not from the insurer. 3. The award stands modified and the liability is recast in the manner referred to above. The appeal is allowed to that extent.