United India Fire and General Insurance Co. Vs. Azeerunnisa and ors. - Court Judgment

Sabhahit, J.

1. These appeals by the Insurance Company are directed against the order passed in F. C. No. 77 of 1977-78 on 30-4-1979 on the file of the Commissioner for Workmen's Compensation, Bangalore Urban District, Bangalore, and awards made in M. V. C. 143 of 1976, M. V, C 191 of 1979 and M. V. C. 160 of 1976, on the file of the Motor Accidents Claims Tribunal, Bangalore City on 4-12-1979.

2. The points raised before us in these appeals are that the Tribunal was not justified in saddling the entire liability on the Insurance Company as the Insurance Company is liable to discharge the liability only to the maximum extent of Rupees 50,000/- The second point raised by the learned counsel for the appellant is that the maximum limit of Rs. 50,000/- includes the liability arising the Workmen's Compensation Act also.

3. As against this, the learned counsel for the claimants submitted that the policy was comprehensive policy and as such the Insurance Company was legally bound to indemnify the owner of the entire amount of compensation that was awarded against him by the Tribunal as there is no limit of liability in a comprehensive policy. He further submitted alternatively, that assuming that the third party liability under Motor Vehicles Act was limited to Rs. 50,000/-, the said liability was confined only to the compensation arising from Motor Vehicles Act but not under Workmen's Compensation Act. It may be mentioned in this context that the total liability in M. F. As. 722, 723 and 724 of 1979 would amount to Rupees 98,700/- which is more than Rupees 50,000/- and the liability under the Workmen's Compensation Act amounts to Rs. 21,000/-.

4. The points, therefore, that arise for our consideration in these appeals are :

(1) Whether the Tribunal was justified in saddling the entire liability against the Insurance Company?

(2) Whether the liability of Rs. 50.000/limited under S. 95 of the Motor Vehicles Act is confined to damages contemplated under Motor Vehicles Act or whether it includes damages arising out of the provisions of the Workmen's Compensation Act awarded by the Commissioner?

5. In order to find out the liability of the Insurance Company, it would be necessary to read the policy and the terms of contract entered into between the parties. It is no doubt held by the Supreme Court that it is open to the Insurance Company to settle the terms of the contract and to cover liability more extensively than is contemplated under Section 95 of the Motor Vehicles Act, 1939 Vide : AIR1971SC1624 . Hence it would be necessary to resolve the dispute by looking into the terms of the policy. Ini the instant cases, the policy is termed as 'Commercial Comprehensive Policy. It is issued by the United India Fire & General Insurance Company. It is issued according to the Rules contained in India Motor Tariffs issued under S. 64-U of Insurance Act, 1938, which reads :

'64-U: Establishment of Tariff Advisory Committee.- (1) With effect from the commencement of the Insurance (Amendment) Act, 1968, there shall be established a Committee to be called the Tariff Advisory Committee (hereinafter in this Part referred to as the Advisory Committee) to control and regulate the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business.

(2) The Advisory Committee shall be a body corporate having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immoveable, and to contract, and may, by the said name, sue and be sued.'

Further S. 64-UC provides for power of the Advisory Committee to regulate rates, advantages etc. Sub-section (1) of that section reads:-

'The Advisory Committee may from time to time and to the extent it deems expedient, control and regulate the rates, advantages, terms and conditions that may be offered by insurers in respect of any risk or of any class or category of risks, the rates, advantages, terms and conditions of which in its opinion, it is proper to control and regulate, and any such rates, advantages, terms and conditions shall be binding on all insurers: Provided that the Controller may be with the previous approval of the Central Government, permit any insurer to offer, during such period (being not more than two years but which may be extended by periods of not more than two years at a time) and subject to such conditions as may be specified by him, rates, advantages, terms or conditions different from those fixed by the Advisory Committee in respect of any particular category of risks, if he is satisfied that such insurer generally issues policies only to a restricted class of the public or under a restricted category of risks.'

Sub-section (2) of section speaks of fixing, amending or advantages, term to any risk. Thus, rates fixed by the Advisory Committee and binding on all the insurers to the extent mentioned in the Section.

6. Our attention was invited to India Motor Tariffs issued by the Tariff Advisory Committee in 1973 thereunder regulating the terms and conditions as also the rates and advantages. Commercial Vehicles Tariff Regulations are contained at page 65 of the book and at page 69 we get limits of liability which fixes the maximum liability at Rs. 50.000/- in the case of Goods or passenger carrying vehicles. At p. 120 of the book liabilities to the public risks are mentioned. It is stated therein thus:

'The indemnity granted to the insured may be increased in respect of the under noted vehicles by payment of an additional premium on the following scale, In cases where the limits of indemnity provided under the standard policy exceed Rs. 50,000/- such limits may be increased in accordance with the scale at an additional premium equivalent to the difference between the scale rates for such standard policy limits and those for the required increased limits.

(a) All Commercial Vehicles except those retable under Class A (2) and Class 'E',Unlimited personal Injury: Rs 1,50000/- property damageUnlimited personal injury: Rs. 3,000,000/_ property damage.Unlimited personal Injury: Rs. 4,00,0OO/- property damage.Unlimited personal injury: Rs. 5,00.000/-property damage.VehiclesAdditional Premium Rs. 4/-Additional Premium Rs. 12/-Additional Premium Rs. 16/-Additional Re. 9/2P Premium Rs. 20/.TrailersRs. 2/.Rs. 5/-.Rs. 7/-Rs.9/-

Similarly, provision is made up to Rs. 10 lakhs of property damages with unlimited personal injury for an additional premium of Rs. 40/- and Rs. 19/- for vehicles and trailers respectively.

7. The excluded category of vehicles are Class A (2) and W. They are goods carrying vehicles. Thus, it becomes clear, that the normal limit of a Commercial Comprehensive Policy so far as personal' injury is concerned is Rs. 50,000/- which can be got increased by paying premium, of Rs. 4/- more, in which case it would, turn into unlimited personal injury liability. In the instant cases, the proposal form itself on the reverse makes the poser aware of the different categories of policy. It is stated therein thus:

'Commercial Vehicles Insurance:--The company issues certificate of insurance to comply with the provisions of Motor Vehicles Act. Three types of covers are offered in respect of the vehicles.

(i) Act; only liability limited to cover the requirements of the Motor Vehicles Act, 1939.

(ii) Liability to public risks only which in addition to cover under No. (i) covers insured's legal liability to property of third parties as a result of the use of vehicle.

(iii) Comprehensive, which in addition to cover under item No. (ii) also covers loss of or damage to vehicle caused by accidental external means fire, external explosion, self-ignition, lightning, burglary, housebreaking (theft of accessories is not covered unless such motor vehicle is stolen at the same time) malicious act and whilst in transit by road, rail, inland waterways, lift or elevator. The rates are tariffied.'

Thus it becomes clear that the term commercial comprehensive policy, without more would not cover unlimited personal injury liability unless Rs. 4/additional tariff is paid by the person who insures the vehicle. Otherwise, normal limit would be Rs. 50,000/- as contemplated in the Tariff Rules quoted above.

8. In the policy itself it is made clear that the limit of liability would be the limit of the amount of the Company's liability under Section II-1 (ii) and Section 2 (1) (b) would be Rs. 50,000/-. In respect, of any one claim or series of claims arising out of any one event would be Rs. 50.000/-. Such amount as is necessary to meet the required requirements of S. 95 of the Motor Vehicles Act would be Rs. 50,000/-. Thus, there is no scope for ambiguity as the policy makes it very clear that the total liability in so far as public personal injuries (third parties) are concerned in any one accident is Rupees 50,000/- and not unlimited.

9. The learned counsel for the owner of the vehicle, however, invited our attention to the additional premium taken as basic premium at Rs. 426/-. That is no doubt the basic premium for any comprehensive policy as contemplated under commercial vehicles tariff at page 80 in column No. 1 and item No. 5 of 'India Motor Tariff' which reads: 'Exceeding 36 licensed comprehensive passenger carrying capacity - Tariff would be Rs. 426/-' and as stated above it gives the maximum cover for the third party personal injury or death risks at Rs. 50,000/- because the policy does not mention that any additional premium at Rs. 4/- was taken to make the liability unlimited. The other extra premiums paid as seen in the policy are half per cent I. E. V. which means insurer's estimated value of the vehicle would be Rs. 500/- and R. S. (riots and strikes) at Rs. 250/- passengers cover Rs. 750/- i e., for increasing passenger liability which under the Act is limited to Rs. 5,000/- per passenger. Thus, we are satisfied that the policy does not provide for unlimited liability of the Company to indemnify the owner in case he has to pay for personal injuries or death of third parties.

10. The learned counsel for the owner produced a receipt for Rs. 150/- issued by the Insurance Company and stated that in all probability that covers the additional premium of Rs. 4/-. But the argument was met successfully by the learned counsel for the Insurance Company by producing the letter for the purpose for which Rs. 150/- was recovered. It is stated therein that 'it is further declared and agreed that the insurer's estimated value of the vehicle covered under the policy stands increased to Rs. 1,20,000/- in consequence of the above sum of Rs. 150/- is hereby charged to the insured' and the future annual premium computation should be as follows:-

'Basic premium Rupees 426/- at half per cent on I. E. V. Rs. 600/- and R. S. Rs. 300/-. Thus, there is no substance in the submission of the learned counsel for the owner that Rs. 150/- recovered as additional premium covers also the unlimited risk of third party. In the result therefore, we are constrained to hold that the Tribunal was not justified in saddling the ' entire liability of Rs. 98,700/- on the Insurance Company. We hold and clarify j by modifying the award that the liability of the Insurance Company is limited to Rs 50,000/- and the same shall be apportioned among the claimants in the three cases pro rata. The view that we are taking is supported by a Division Bench decision of this Court in the case of Sundaram Finance Ltd., Madras v. D. G. Nanjappa (1980 Acc 'CJ 377).

11. Adverting to the next point Section 95 (2) (b) (i) limits the liability in respect of persons other than passengers carried for hire or reward to a limit of Rs. 50,0001- in all. It does not speak of any liability arising from Workmen's Compensation Act. In this context it is necessary to read S. 95 (2) (a) which isi as follows:-

'Where the vehicle is a goods vehicle. a limit of fifty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923. in respect of the death of, or bodily, injury to employees (other than the driver), not exceeding six in number, being carried in the vehicle.'

Thus a distinction is specifically made in clauses (a) and (b) of sub-see. (2) of S. 95 of the M. V. Act; whereas it is specifically stated in clause (a) of subsection (2) that the liability of Rupees 50,000/- includes the liability arising out of the Workmen's Compensation Act, it is not so mentioned so far as sub-s. (2) (b) (i) is concerned. It merely confines the limit of liability to persons other than passengers to a limit of Rs. 50,000/-. Therefore. It is obvious that the maximum limit of Rs. 50,000/- contemplated does not include the liability arising out of the Workmen's Compensation Act - say in the case of the passengers travelling in the goods vehicle pursuant to a contract of employment etc. Hence, we are constrained to hold that there is no substance in the point raised before us by the learned counsel for the appellant that the limit of Rs. 50,000/- shall include even the liability arising out of the Workmen's Compensation Act.

12. In the result, therefore, the appeals are liable to be partly allowed. The liabilities saddled on the Insurance Company by the Tribunal for the payment of compensation to the three claimants in M.V. C. Nos. 143. 160 and 191 of 1976 are hereby limited to Rs. 50,000/- and the Insurance Company shall pay pro rata the compensation in these three cases, namely, at Rs. 11,224- in M. V. C. 143 of 1976, Rs. 13,245/- in M. V. C. 160 of 1976 and Rs. 25,531/- in V. C. 191 of 1976 along with interest at 6% per annum from the date of petition till payment in each case as also he costs of the claimants before the Tribunal in each case. The rest of the amount awarded along with interest at 6% per annum from the date of petition till payment shall be paid in each case by the owner of the vehicle in question.

13. Accordingly, M. F. As. 722, 723 and 724 of 1979 are partly allowed and M. F. A. 1039 of 1979 is hereby dismissed. No costs in these appeals.

14. At this stage, the learned counsel for the owner of the vehicle in question in M. F. As. 722. 723 and 724 of 1979 sought for leave for appeal to the Supreme Court of India. As there is no substantial question of law of general importance involved in these cases except the interpretation of the policy, we refuse the leave so sought.

15. Appeals partly allowed.