1995 (2) TMI 434 - SC - Indian Laws

Whether the appellant is liable to pay compensation to the tune of ₹ 1,10,000/- together with interest thereon at the rate of 12% from the date of the presentation of the petition to respondents 1 to 3? Held that - In the present case, the premium which has been paid is at the rate of ₹ 12/- per passenger and is clearly referable to the statutory liability of fifteen thousand rupees per passenger under Section 95 (2)(b)(ii) of the Motor Vehicles Act, 1939. In the present case, there is no special con- tract between the appellant-company and respondent No. 4 to cover unlimited liability in respect of an accident to a passenger. In the absence of such an express agreement, the policy covers only the statutory liability. The mere fact that the insurance policy is a comprehensive policy will not help the respondents in any manner. It does not mean that the limit of liability with regard to third party risk becomes unlimited or higher than the statutory liability. For this purpose, a specific agreement is necessary which is absent in the present case.The appellant-company is, therefore, entitled to succeed to the extent that it has been directed to pay to respondents 1 to 3 any amount in excess of ₹ 15,000/-. The, appeal is, therefore, allowed to this extent. The liability of the appellant and respondents 4 and 5 to pay the amount of the award was joint and several.

Summary

Issues:
Interpretation of insurance policy coverage for compensation in a motor vehicle accident.

Analysis:
The case involves an appeal by the New India Assurance Company Ltd. against a judgment awarding compensation to the legal heirs of a deceased individual who died in a bus accident. The accident occurred while the deceased was on the roof of the bus, and the insurance policy in question was a comprehensive one covering the bus owner's liability. The main issue is the extent of the appellant's liability for compensation, contested to be limited to Rs. 15,000.

The insurance policy in question was a comprehensive one taken out by the bus owner, with an estimated vehicle value of Rs. 2,50,000 and an additional premium for passengers. The policy was subject to the Motor Vehicles Act, specifically Section 95, which outlines the limits of liability for insurance coverage. The Act mandates coverage for passengers in public service vehicles, with a limit of Rs. 15,000 per individual passenger.

The appellant argued that the premium charged per passenger was based on the statutory liability under the Motor Vehicles Act, amounting to Rs. 12 per passenger. There was no separate agreement for unlimited liability coverage for passengers, and the comprehensive policy did not automatically increase the liability beyond the statutory limit. The Court referenced previous cases to support the interpretation that comprehensive insurance does not extend the liability beyond statutory limits without a specific agreement.

It was clarified that the premium paid per passenger was in line with the statutory liability of Rs. 15,000 per passenger under the Motor Vehicles Act. As there was no explicit agreement for unlimited liability coverage, the insurance policy covered only the statutory liability. Therefore, the appellant was held liable only up to Rs. 15,000 per passenger, as per the statutory limit.

The appeal was allowed to the extent that the appellant's liability was limited to Rs. 15,000, and the joint and several liability of the appellant and other respondents to pay the compensation amount was maintained. The judgment emphasized that the appellant's liability limit did not affect the responsibility of the other parties involved in the accident.