Full Judgment Text
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PETITIONER:
NATIONAL INSURANCE COMPANY LTD.
Vs.
RESPONDENT:
BEHARI LAL & ORS.
DATE OF JUDGMENT: 28/08/2000
BENCH:
S.S.M.Quadri, Y.K.Sabharwa
JUDGMENT:
Syed Shah Mohammed Quadri, J.
Leave is granted.
This appeal is from the judgment and order of the High
Court of Rajasthan at Jaipur dated May 29, 1997 allowing
Civil Misc. Appeal No.682 of 1996 filed by respondents 1
and 2 herein. The point that arises for consideration is
the scope and import of the proviso to sub-section (2) of
Section 147 of the Motor Vehicles Act, 1988 (for short, the
New Act). The appellant (hereinafter referred to as, the
Insurance Company) issued a policy in favour of the first
respondent (Behari Lal), owner of the bus bearing
registration No.R.J.P. 4719. The policy of insurance,
issued under the provisions of the Motor Vehicles Act, 1939
(for short, the Old Act), was valid for one year - from
October 28, 1988 to October 27, 1989. The said bus, while
being driven by respondent No.2, met with an accident which
resulted in the death of one passenger - Shiv Bhagwan and
injuries to the other passengers travelling therein.
Respondent Nos.3 to 8, heirs of the said Shiv Bhagwan, filed
a petition before the court of Additional District Judge,
Khetri, Rajasthan - the Motor Accident Claims Tribunal (for
short, the Tribunal), claiming compensation of
Rs.14,14,000/- from respondent Nos.1 and 2 (being the owner
and the driver of the bus) and the Insurance Company as the
insurer. The Insurance Company contested the claim, inter
alia, on the ground that its liability under the terms of
the policy issued under the Old Act and the provisions of
the New Act, was limited to only Rs.15,000/- per passenger
travelling in the bus. On June 1, 1996, the Tribunal held
that respondent Nos.3 to 8 were entitled to compensation of
Rs.1,50,000/- from respondent Nos.1 & 2 and that the
liability of the Insurance Company was limited only to
Rs.15,000/-. Respondent Nos.1 & 2 filed appeal before the
High Court challenging that part of the order of the
Tribunal, which limited the liability of the Insurance
Company. On May 29, 1997 a learned Single Judge of the High
Court allowed the appeal holding that the liability of the
Insurance Company is co-extensive with that of respondent
Nos.1 & 2 herein and thus modified the Award of the
Tribunal. It is from that order of the High Court, the
Insurance Company is in appeal before us. Mr.Jitendra
Sharma, learned senior counsel appearing for the Insurance
Company, contended that in view of the proviso to
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sub-section (2) of Section 147 of the New Act, the liability
of the Insurance Company is limited only to Rs.15,000/- per
passenger as the existing policy was issued under Section
95(2) of the Old Act, therefore, the High Court erred in law
in modifying the Award of the Tribunal. Dr.Sushil Balwada,
learned counsel appearing for the respondents, has submitted
that under the New Act the liability of the Insurance
Company is unlimited; the existing policy which was issued
under the Old Act and was valid beyond the period of four
months from coming into force of the New Act was kept alive
within that period by the proviso but it did not limit the
liability of the Insurance Company to the amount mentioned
in the policy in accordance with the terms of Section 95(2)
of the Old Act. In the light of the above contentions and
the relevant provisions of the New Act, we shall examine the
scope of the proviso to sub-section (2) of Section 147 of
the New Act. Insofar as the provisions of the Section 147
are relevant for purposes of the present discussion, they
are set out hereunder :
CHAPTER XI
147. Requirements of policies and limits of
liability.
(1) In order to comply with the requirements of this
Chapter, a policy of insurance must be a policy which
(a) is issued by a person who is an authorised
insurer; and
(b) insures the person or classes of persons specified
in the policy to the extent specified in sub- section (2)
(i) against any liability which may be incurred by him
in respect of the death of or bodily [injury to any person,
including owner of the goods or his authorised
representative carried in the vehicle] or damage to any
property of a third party caused by or arising out of the
use of the vehicle in a public place;
(ii) against the death of 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 :
Provided that a policy shall not be required-
(i) to cover liability in respect of the death,
arising out of and in the course of his employment, of the
employee of a person insured by the policy or in respect of
bodily injury sustained by such an employee arising out of
and in the course of his employment other than a liability
arising under the Workmens Compensation Act, 1923 (8 of
1923) in respect of the death of, or bodily injury to, any
such employee
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as
conductor of the vehicle or in examining tickets on the
vehicle, or
(c) if it is a goods carriage, being carried in the
vehicle, or
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(ii) to cover any contractual liability.
Explanation - For the removal of doubts, it is hereby
declared that the death of or bodily injury to any person or
damage to any property of a third party shall be deemed to
have been caused by or to have arisen out of, the use of a
vehicle in a public place notwithstanding that the person
who is dead or injured or the property which is damaged was
not in a public place at the time of the accident, if the
act or omission which led to the accident occurred in a
public place.
(2) Subject to the proviso to sub-section (1), a
policy of insurance referred to in sub-section (1), shall
cover any liability incurred in respect of any accident, up
to the following limits, namely :-
(a) save as provided in clause (b), the amount of
liability incurred;
(b) in respect of damage to any property of a third
party, a limit of rupees six thousand:
Provided that any policy of insurance issued with any
limited liability and in force, immediately before the
commencement of this Act, shall continue to be effective for
a period of four months after such commencement or till the
date of expiry of such policy whichever is earlier.
(3) to (5) *
A plain reading of sub-section (1) of Section 147 of
the New Act shows that to comply with the requirements of
Chapter XI, it enjoins that a policy of insurance must be a
policy which is issued by an authorised insurer and insures
the person or classes of persons specified in the policy to
the extent specified in sub-section (2), referred to in this
judgment as a statutory policy. A statutory policy covers
any liability which the insured person may incur in respect
of the death of or bodily injury to any person, including
owner of the goods or his authorised representative carried
in the vehicle or damage to any property of a third party
caused by or arising out of the use of the vehicle in a
public place and also against the death of 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.
The proviso thereto enumerates the liabilities which are not
required to be covered by a statutory policy. It is quite
clear that sub-section (2) of Section 147 of the New Act
directs that subject to proviso to sub-section (1), a
statutory policy shall cover the amount of liability
incurred except in respect of damage to any property of a
third party for which a limit of rupees six thousand is
specified. A careful reading of the proviso to sub-section
(2) discloses that any policy of insurance, issued with any
limited liability and in force immediately before the
commencement of the New Act, shall continue to be effective
for a period of four months after such commencement or till
the date of expiry of such policy whichever is earlier.
Now, a policy of insurance may be a contract policy or a
statutory policy. The proviso does not deal with unlimited
liability which an insurer may undertake under a contract
policy. It deals with a statutory policy with limited
liability. The question, which, arises here is : what is
the import of the phrase, with any limited liability and in
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force? To understand the meaning of this phrase, it
becomes necessary to refer to Section 95 of the Old Act
which deals with requirements of policies and limits of
liability. Under sub-section (2) of Section 95 a policy of
insurance (a statutory policy) was required to cover any
liability incurred in respect of any one accident, in the
case of a vehicle in which passengers are carried for hire
or reward or by reason of or in pursuance of a contract of
employment : (1) in respect of persons other than
passengers carried for hire or reward, a limit of one lakh
and fifty thousand rupees in all; and (2) in respect of
passengers a limit of fifteen thousand rupees for each
individual passenger. Therefore, the phrase means a
statutory policy under the Old Act with the limit prescribed
therein which was valid immediately before the commencement
of the New Act. The words are not employed to limit the
liability of an insurance company to the amount specified in
the policy by virtue of the provisions of Section 95(2) of
the Old Act either for a period of four months or for a
lesser period during which the policy is valid. It is
argued by Mr.Sharma that by the proviso the liability of the
Insurance Company is limited to the amount mentioned in the
existing statutory policy issued under the Old Act. We are
afraid, we cannot accede to this contention and he can
derive no benefit by relying on the following observation of
this Court in New India Assurance Company Vs. Satpal Singh
& Ors. [2000 (1) SCC 237] : The legislature has also
taken care of even the policies which were in force on the
date of commencement of the Act by specifically providing
that any policy of insurance containing any limit regarding
the insurers liability shall continue to be effective for a
period of four months from commencement of the Act or till
the date of expiry of such policy, whichever is earlier.
This means, after the said period of four months, a new
insurance policy consistent with the new Act is required to
be obtained.
There the question before this Court was with regard
to liability of the Insurance Company in case of death of a
gratuitous passenger in the truck which met with an accident
resulting in his death. We cannot read the observation,
quoted above, as laying down the law that the amount
specified in the policy in force on the date of the
commencement of the New Act will be payable for a period of
four months after such commencement or till the date of
expiry of such policy, whichever is earlier. In our view,
the proviso cannot be so interpreted as to subject the
insurance companies to different maximum liabilities under
statutory policies in respect of accidents occurring during
the same period. We do not think that this could be the
intention of the Parliament. Having fixed a date for
enforcement of the New Act incorporating the requirement of
a statutory policy under Section 147(1) thereof, the effect
of the provision could not have been whittled down during
the period which may vary from one day to four months
depending upon when the existing policy expires within the
said period of four months. It merely indicates the span of
validity of existing policy. Here, it is pertinent to
notice the provisions of Section 217(2) of the New Act which
deal with the effect of repeal of the Old Act (under which a
statutory policy was taken) on coming into force of the New
Act. Sub-section (1) of Section 217 repeals, inter alia,
the Old Act. Clause (c) of sub-section (2), which is
relevant, provides that notwithstanding the repeal under
sub-section (1) of the Old Act any document, referring to
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any of the repealed enactments or the provisions thereof,
shall be construed as referring to the New Act or the
corresponding provisions thereof. In this context, it will
be useful to refer to the decision of this Court in Padma
Srinivasan Vs. Premier Insurance Company Ltd. [1982 (1)
SCC 613 = 1982 ACJ 191 (SC)]. In that case after the policy
was taken under Section 95(2)(a) of the Old Act, it was
amended in 1969 so as to increase the liability of the
insurer from Rs.15,000/- to Rs.50,000/-. The accident which
gave rise to the appeal occurred after the amended provision
came into force. Chandrachud, C.J. speaking for a
three-Judge Bench observed : Since the liability of the
insurer to pay a claim under a motor accident policy arises
on the occurrence of the accident and not until then, one
must necessarily have regard to the state of the law
obtaining at the time of the accident for determining the
extent of the insurers liability under a statutory policy.
In this behalf, the governing factor for determining the
application of the appropriate law is not the date on which
the policy of insurance came into force but the date on
which the cause of action accrued for enforcing liability
arising under the terms of the policy. That we consider to
be a reasonable manner in which to understand and interpret
the contract of insurance entered into by the insured and
the insurer in this case.
We are not persuaded to accept the contention of Mr.
Sharma that the proviso in question is incorporated to
nullify the effect of that judgment. The proviso to
sub-section (2) of Section 147 cannot be read as a proviso
to Section 217(2)(c) of the New Act and it does not, in case
of the existing policy being in force on the date of the
occurrence of the accident, limit the liability of the
Insurance Company to the amount mentioned in Section 95(2)
of the Old Act. From the above discussion, it follows that
the proviso to sub-section (2) of Section 147 does not limit
the liability of Insurance Companies to payment of
compensation to the extent specified in the policy of
insurance in terms of Section 95(2) of the Old Act which is
in force before the commencement of the New Act for a period
of four months after commencement of the New Act or till the
date of expiry of such a policy, whichever is earlier. In
this view of the matter, we endorse the view taken by the
Division Bench of the High Court of Gujarat in Kacharabhai
L. Limbachia Vs. Ratansinh J.Rathod-Patelia & Ors. [1998
(1) A.C.J. 326] and by the Division Bench of the Punjab &
Haryana High Court in National Insurance Company Ltd. Vs.
Puja Roller Flour Mills (Pvt.) Ltd. & Ors. [1997 (2)
Vol.116 P.L.R. 199]. It is, however, submitted that a
Division Bench of the Kerala High Court took a contrary view
in New India Assurance Co. Ltd. Vs. Paramu [1990 (2)
K.L.T. 645]. Inasmuch as in that case the policy under
which the Insurance Company was held liable, was issued on
May 11, 1983 and was noted to have expired on March 10, 1984
long prior to coming into force of the New Act and the
question with which we are concerned here, neither arose nor
was it dealt with in that case, so it has no bearing on the
issue. In the instant case, the policy was issued on
October 28, 1988 and it was valid up to October 27, 1989.
The New Act came into force on July 1, 1989 and the accident
occurred on September 4, 1989, after the New Act came into
force but before the expiry of the policy in force. On
these facts the liability of the Insurance Company will be
governed by sub-section (2)(a) of Section 147 of the New
Act, namely, the amount of liability incurred but not under
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Section 95(2) of the Old Act. The High Court is, therefore,
right in allowing the appeal of the respondents claiming the
whole amount of compensation awarded by the Tribunal from
the Insurance Company. We find no merits in this appeal.
It is, accordingly, dismissed with costs.