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PETITIONER:

THE NEW INDIA ASSURANCE CO. LTD.

Vs.

RESPONDENT:

SMT. SHANTI BAI & ORS.

DATE OF JUDGMENT06/02/1995

BENCH:

MANOHAR SUJATA V. (J)

BENCH:

MANOHAR SUJATA V. (J)

AHMADI A.M. (CJ)

BHARUCHA S.P. (J)

CITATION:

1995 AIR 1113 1995 SCC (2) 539

JT 1995 (2) 95 1995 SCALE (1)472

ACT:

HEADNOTE:

JUDGMENT:

1. Leave granted.

2. This appeal by special leave arises from a judgment and

order dated 11th of February, 1994 passed by the High Court

of Madhya Pradesh in Misc. Appeal No. 444 of 1991. The

appellant before us is the New India Assurance Company Ltd.

It had issued a comprehensive insurance policy in respect of

a bus which was used for carrying passengers for hire and

bearing Registration No. CIK-8108, owned by respondent No.

4. This insurance policy was in force at the material time.

3. On 3rd of January, 1989, this bus, while it was

being driven by respondent No. 5,met with an accident. The

deceased, Laxman Singh, who was sitting on the roof top of

the bus with the permission of the bus driver, respondent

No. 5, hit a tree on account of the alleged rash and

negligent driving of the said bus by respondent No.5.He was

admitted to hospital and died on 7.1.1989 on account of the

injuries received in the accident. The legal heirs of

Laxman Singh, who are respondents 1 to 3 before us, filed a

claim for compensation amounting to Rs. 7,81,000/-before the

Motor Accident Claims Tribunal, Narsinghpur. The Motor

Accident Claims Tribunal, by its order dated 10.4.1991,

awarded to respondents 1 to 3 compensation of Rs. 1,10,000/-

together with interest at the rate of 12% per annum from the

date of the presentation of the petition and directed the

appellant and respondents 4 and 5 to pay the same.

4. Being aggrieved by this order, the appellant filed

Misc. Appeal No. 444 of 1991 before the High Court of

Madhya Pradesh. The High Court, by its order dated 11th

February, 1994, dismissed the appeal of the appellant and

confirmed the findings of the Tribunal. The present appeal

arises from this order of the Madhya Pradesh.

5. The short question that we have to consider is whether

the appellant is liable to pay compensation to the tune of

Rs. 1,10,000/- together with interest thereon at the rate of

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12% from the date of the presentation of the petition to

respondents 1 to 3. The appellant contends that its

liability in this regard is limited to Rs. 15,000/-.

6. The insurance policy taken out by the owner of the

said bus i.e. respondent No. 4 herein, and which was in

force at the relevant time, was a comprehensive policy.

This policy has been produced before us. It shows that the

insured estimated value of the vehicle is Rs. 2,50,000/ --

in the Schedule of Premium, there in an additional payment

of Rs. 600/- in respect of 50 passengers. The claim against

this amount states : "for L L to passengers as per Ednt.

No. I.M.T. 12". The -appellant-company has contended that

it has charged premium at the rate of Rs. 12/ per passenger

in respect of 50 passengers to cover its limited liability

under Section 50 of the Motor Vehicles Act, 1939 which was

then in force.

7. Section 95 forms part of Chapter VIII of the Motor

Vehicles Act, 1939 which deals with insurance of motor ve-

hicles against third party risks. Under Section 95, in

order to comply with the requirements of this Chapter, a

policy of

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insurance must be a policy which, inter alia, insures the

person or classes of persons specified in the policy to the

extent specified in sub-section (2). Under Section 95

(1)(b)(ii), the insurance policy must cover the death or

bodily injury to any passenger of a public service vehicle,

caused by or arising out of the use of the vehicle in a

public place. Sub-section (2)(b) provides as follows:-

"Section 95(1) : x x x xx

(2) Subject to the proviso to sub-section

(1), a policy of insurance shall cover any

liability incurred in respect of any one

accident tip to the following limits, namely -

(a) x x x x

(b) Where the vehicle is a vehicle in which

passengers are carried for hire or reward or

by reason of or in pursuance of a contract of

employment.

(i) in respect of persons other than

passengers carried for hire or reward, a limit

of fifty thousand rupees in all;

(ii) in respect of passengers, a limit of

fifteen thousand rupees for each individual

passenger;"

There were the provisions at the relevant time, These

provisions were interpreted by this Court in the case of

National Insurance Co.Ltd., New Delhi v. Jugal Kishore &

Ors. (1988 (1) SCC 626). This Court observed that even

though it is not permissible to use a vehicle unless it is

covered at least under an 'act only' policy, it is not

obligatory for the owner of a vehicle to get it

comprehensively insured. In case, however, it is got

comprehensively insured, a higher premium is payable de-

pending on the estimated value of the vehicle. Such

insurance entitles the owner to claim reimbursement of the

entire amount of loss or damage suffered up to the estimated

value of the vehicle calculated according to the rules and

regulations framed in this behalf It has further observed as

under:-

"Comprehensive insurance of the vehicle and

payment of higher premium on this score,

however, does not mean that the limit of the

liability with regard to third party risk

becomes unlimited or higher than the statutory

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liability fixed under subsection (2) of

Section 95 of the Act. For this purpose a

specific agreement has to be arrived at

between the owner and the insurance company

and separate premium has to be paid on the

amount of liability undertaken by the

insurance company in this behalf

In the present case, therefore, a comprehensive policy which

has been issued on the basis of the estimated value of the

vehicle of Rs. 2,50,000/- does not automatically result in

covering the liability with regard to third party risk for

an amount higher than the statutory limit.

8. It was contended before the High Court that a separate

premium has been paid for the passengers. This shows that

there was a special contract to cover unlimited liability in

respect of passengers between the appellant-company and re-

spondent No. 4. The Tribunal as well as the High Court seem

to have proceeded on the basis that the appellant-company

had charged an extra premium of 0.50 paise per passenger to

cover the risk of unlimited liability towards passengers.

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This seems to be an error. The premium of Rs. 600/- has

been paid in respect of 50 passengers. The policy clearly

shows this. It is not 0.50 paise per passenger. It is

pointed out by the appellant-company with reference to its

tariff in respect of "Legal Liability for Accidents to

Passengers" that if the limit of liability for any one

passenger is fifteen thousand rupees, the rate -of annual

premium per passenger is Rs. 12/-. If the limit is twenty

thousand rupees, the rate of premium per passengers is Rs.

23/per annum and so on. In respect of unlimited liability,

the premium payable per passenger is Rs. 50/-.

9.In the present case, the premium which has been paid is at

the rate of Rs. 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. As pointed. out by this

Court in the case of National Insurance Co. Ltd. v. Jugal

Kishore & Ors., (supra) comprehensive policy only entitles

the owner to claim reimbursement of the entire amount of

loss or damage suffered up to the estimated value of the

vehicle. 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.

Reference in this connection may also be made to the case of

M.K. Kunhimohammed v. P.A. Ahmedkutty & Ors., (1987 (3) SCR

1149). 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 Rs. 15,000/-.

10.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. We make it

clear that the fact that the appeal is allowed and the

liability of the appellant is limited to Rs. 15,000/- does

not affect in and manner the liability of' respondents 4 and

5 to pay the amount of the award. There will be no order as

to costs.

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