National Insurance Co. Ltd. Vs. Kumudini Das and ors. - Court Judgment

D.P. Mohapatra, J.

1. The short question that falls for determination in these appeals is whether the Motor Accidents Claims Tribunal, in the facts and circumstances of the case, erred in directing the appellant insurance company to pay the entire sum awarded as compensation to the claimants.

2. On 26.4.1986 at about 3 p.m. while plying between Berhampur and Ramgiri Road the bus bearing No. ORG 4851 met with an accident at Chandipur village in which some of the passengers died and some others were injured. The claim cases giving rise to the present appeals relate to death of the passengers concerned. Misc. Appeal No. 132 of 1988 arises from M.A.C. No. 120 of 1986 (76 of 1986) filed by respondent No. 1, Chandramma Beharani, wife of late Arjun Behera, Misc. Appeal No. 123 of 1988 arises from M.A.C. No. 68 of 1987 (64 of 1986) filed by the respondent Nos. 1 and 2, Kumudini Das and Danardan Das, wife and son of late Abhimanyu Das. Similarly Misc. Appeal No. 124 of 1988 arises from M.A.C. No. 22 of 1987 (124 of 1986) filed by Subasini Sahu, wife of late Jabaharlal Sahu. Gopinath Sahu, owner of the ill-fated vehicle and National Insurance Co. Ltd. as insurer of the vehicle were the common opposite parties cited in all the cases. In the first case aforementioned, the Second Motor Accidents Claims Tribunal (S.D.), Berhampur, determined the compensation payable to the claimant at Rs. 40,000/- and in the second and third cases the Claims Tribunal assessed the compensation at Rs. 50,000/-. The insurance company was directed to pay the entire compensation amount. Though the claim petitions were registered as separate cases, since they arose from the same accident and involve similar questions of fact and law, the cases were taken up together and disposed of by a common judgment. The claimants have not challenged the decision of the Tribunal. The insurance company has assailed the decision on the ground formulated earlier.

3. The findings relating to rash and negligent driving of the bus by its driver, the entitlement of the claimants for compensation on account of death of the passengers concerned were not disputed before me. The main thrust of the arguments of Mr. R. Samantaray, learned counsel for the appellant, was that in view of the provision in Section 95(2)(b) of the Motor Vehicles Act, 1939, prescribing limit of liability of insurance company in a case of this nature, it is not open to the Tribunal to saddle the insurance company with the liability for the entire sum awarded.

4. Section 95(2)(b) provides, inter alia, that subject to the proviso to Sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the limit stated in the provision. Clause (b) lays down that 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, a limit of fifteen thousand rupees for each individual passenger is prescribed under clause (ii).

The question of the extent of liability of the insurance company has engaged the attention of the Apex Court, this court and other High Courts from time to time. There are umpteen cases laying down the principle that in the absence of a special contract to that effect the insurance company cannot be saddled with liability in excess of the statutory limit irrespective of the nature of the policy in the case, that is, the third party or comprehensive. I may notice here some of the decisions on the question.

The Apex Court in the case of Sheikhu-pura Transport Co. Ltd. v. Northern India Transporters' Insurance Co. Ltd. 1971 ACJ 206 (SC), ruled that the maximum liability imposed under Section 95(2) (as it stood then) on the insurer was Rs. 2,000/- per passenger and the limit of the insurance prescribed under Section 95(2)(b) of the Act could be enhanced by any contract to the contrary.

This position was reiterated by the Apex Court in the case of National Insurance Co. Ltd, v. Jugal Kishore 1988 ACJ 270 (SC), in which it was laid down that comprehensive insurance of the vehicle and payment of higher premium on this score, however, do not mean that the limit of the liability with regard to third party risk becomes unlimited or higher than the statutory liability fixed under Sub-section (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. Elucidating the point, the court held that the comprehensive insurance of the vehicle entitles the owner to claim reimbursement of damage suffered by 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.

The Apex Court in the case of M.K. Kunhimohammad v. P.A. Ahmedkutty 1987 ACJ 372 (SC), construing the provisions in Section 95(2)(b)(ii)(4) negatived the contention that the limit prescribed in Section 95(2)(b)(ii)(4) was only the minimum liability prescribed by law and held that the amount mentioned in that provision provides the maximum amount payable by an insurer in respect of each passenger who has suffered on account of the accident.

This position was reiterated in the case of Divisional Manager, Oriental Insurance Co. Ltd. v. Gunur Bibi, 34 (1992) OJD 26 (Civil), in which I had occasion to consider the provision in Section 95(2)(b)(i) of the Act and also the question of drawing adverse inference against the insurance company for non-production of policy in court. Considering the relevant provisions of the Motor Vehicles Act and the Apex Court's decision in National Insurance Co. Ltd. v. Jugal Kishore 1988 ACJ 270 (SC), I had held that the question of drawing adverse inference against the insurer would depend on the facts and circumstances of the case, the defence taken by the owner and the insurer, whether the owner has asserted that he has taken an insurance policy with higher risk and in terms of the policy the insurer is liable to indemnify him for any amount beyond the limit prescribed under the statute.

A similar view was also taken by another learned single Judge of this court in the case of Udayanath Pani v. Basanti Dalai I (1992) ACC 578 (Orissa).

5. From the conspectus of the views taken in the aforementioned decisions, the position is manifest that in the absence of a special contract specifically entered into between owner of the vehicle and the insurer in which the insurer agreed to bear the liability in excess of the statutory liability, its liability has to be limited to the limit prescribed under the statute. In the cases in hand, as evident from the discussions in the judgment of the Tribunal, neither is such a case pleaded by the parties concerned nor any attempt has been made in course of hearing of the cases before me to show that a special contract as indicated above was entered into between the parties concerned. In that view of the matter, the position is inescapable that the Tribunal erred in requiring the insurance company to bear the liability to the entire sum awarded. It ought to have limited the liability of the insurance company to the statutory limit of Rs. 15,000 in each case and directed the owner to bear the liability for the balance amount.

6. Accordingly, the appeals are allowed in part. The liability of the appellant insurance company is limited to Rs. 15,000/- in each case and the balance amount as per the award shall be borne by the respondent owner of the vehicle. The awards passed by the Tribunal are modified to this extent only. Parties will bear their respective costs of these appeals.