http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: NATIONAL INSURANCE CO. LTD., NEW DELHI

       Vs.

RESPONDENT: JUGAL KISHORE & OTHERS

DATE OF JUDGMENT09/02/1988

BENCH: OJHA, N.D. (J) BENCH: OJHA, N.D. (J) VENKATARAMIAH, E.S. (J)

CITATION:  1988 AIR  719            1988 SCC  (1) 626  JT 1988 (1)   265        1988 SCALE  (1)268  CITATOR INFO :  D          1989 SC1074  (13)

ACT:      Motor Vehicles Act, 1939-Sections 95(2)(b) and 96-Motor accidents-Comprehensive claim-Insurance  company filing copy of   Insurance   policy-Necessity   of-Third   party   risk- Comprehensive insurance  of Vehicle  and payment  of  higher premium liability not in excess of statutory liability.      Practice  and  Procedure-Motor  Accidents  Compensation case-Filing of insurance policy copy-Necessity for.

HEADNOTE: %      Respondent No.  1, Jugal Kishore, while driving a three wheeler scooter, met with an accident with bus No. DLP-3699, driven by  Rai Singh,  respondent No. 2, owned by M/s. Delhi Janata Co-operative Transport Policy Limited, respondent No. 3, and insured with the appellant. The Motor Accident Claims Tribunal, Delhi awarded compensation in the sum of Rs.10,000 to respondent  No.1. On  appeal, the High Court enhanced the Compensation to Rs.1,00,000.      This Court,  while granting  special leave required the appellant to  deposit the  amount of compensation awarded by the High  Court and permitted the respondent to withdraw the same, making  it clear  that it shall not be refunded by him in the event of reversal of the decision of the High Court.      The appellant  contends that  in view  of the statutory provision contained  in this  behalf in  clause (b)  of sub- section (2)  of section  95 of  the Act,  as it stood on the date of  accident, no  award  in  excess  of  the  statutory liability of  Rs.20,000 could  have been  made  against  the appellant.      The  respondent,   on  the  other  hand,  contends  (1) Notwithstanding the  provision contained  in this  behalf in clause (b)  aforesaid, it  was open to the insurer to take a policy covering  a higher  risk than  contemplated by clause (b) and  consequently the said clause had to be read subject to  the  terms  of  the  policy.  In  this  connection,  the respondent  relies   on  the   words   "Commercial   Vehicle comprehensive" printed on the policy, 911 and on  the circumstance  that the  premium paid  was higher

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

than the premium of an "Act only" policy, and urges that the liability of the appellant was unlimited.      (2) In view of sub-section (6) of section 96 of the Act no Insurer to whom the notice referred to in sub-section (2) thereof has been given, is entitled "to avoid his liability" to any  person entitled  to the benefit of any such judgment as is  referred to in sub-section (1) thereof otherwise than in the manner provided for in sub-section (2). On this basis it is  urged that  the appellant  was not entitled to assert that its  liability was  confined to Rs.20,000 only inasmuch as this  is not one of the defences specified in sub-section (2) of section 96 of the Act.      Allowing the appeal, this Court, ^      HELD: (1)  It is  not obligatory  for the  owner  of  a vehicle to get it comprehensively insured for which a higher premium than  for an  "act only"  policy  is  payable.  Such comprehensive  insurance   entitles  the   owner  to   claim reimbursement  of  the  entire  amount  of  loss  or  damage suffered up  to the  estimated value of the vehicle insured. Comprehensive insurance of the vehicle and payment of higher premium on  this score,  as was  done in the instant case 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 additional premium paid. [915C-E]      (2)  A   perusal  of  the  policy  indicates  that  the liability undertaken  with regard  to the  death  or  bodily injury to  any person caused by or arising out of the use of the  vehicle  has  been  confined  to  "such  amount  as  is necessary to meet the requirements of the Motor Vehicle Act, 1939", which  was at  the relevant  time Rs.20,000  only. An award against  the appellant could not, therefore, have been made in excess of the said statutory liability. [916F-G]      (3) It  is  apparent  from  the  words  "to  avoid  his liability" used  in sub-section  (6) of  section 96 that the restrictions placed with regard to defences available to the insurer specified  in sub-section  (2)  of  section  96  are applicable to  a case  where the  insurer wants to avoid his liability. In  the instant case the appellant is not seeking to avoid  its liability  but wants  a determination  of  the extent of  its liability  in accordance  with the  statutory provisions contained  in this  behalf in  clause (b) of sub- section (2) of section 95 of the Act. [917E-F] 912      (4) This  Court has  consistently emphasized that it is the duty  of the  party which is in possession of a document which would  be helpful  in doing  justice in  the cause  to produce the  said document  and such  party  should  not  be permitted to  take shelter  behind the  abstract doctrine of burden of  proof. This  duty  is  greater  in  the  case  of instrumentalities of  the State,  such as the appellant, who are under an obligation to act fairly. The obligation on the part of the State or its instrumentalities to act fairly can never be over-emphasized. [918C-D]      (5)  The   attitude  often  adopted  by  the  Insurance Companies, as  was adopted  in this  case, is  not to file a copy of  the policy  before the Tribunal and before the High Court  in   appeal.  The   claimants  for  compensation  are invariably not  possessed of  either the  policy or  a  copy thereof. In  all cases where the Insurance Company concerned wishes to  take a  defence in  a  claim  petition  that  its liability is  not in  excess of  the statutory  liability it

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

should file  a copy  of the  insurance policy  alongwith its defence. [917G-H; 918B-C]      Pushpabai  Purshottam  Udeshi  v.  Ranjit  Ginning  and Pressing Co.,  [1977] A.C.J.  343 and  British India General Insurance Co. v. Captain Itbar Singh, AIR 1959 Supreme Court 1331, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 3677 of 1984.      From the  Judgment and  Order dated  17.5.1982  of  the Delhi High Court in F.A. No. 30 of 1975.      P.P. Malhotra and N.K. Sharma for the Appellant.      O.P. Goyal,  Ms. Sunita Vasudeva and R.C. Verma for the Respondents.      The Judgment of the Court was delivered by      OJHA, J. This appeal by special leave has been filed by the National  Insurance Company  Ltd., New  Delhi, against a judgment of  the Delhi High Court in an appeal under Section 110-D of  the Motor Vehicles Act, 1939 (hereinafter referred to as the ’Act’).      Necessary facts  may be  stated herein  in a  nutshell. Shri Jugal  Kishore, Respondent  No. 1  was, on  15th  June, 1969, driving  a threewheeler  scooter when  he met  with an accident with bus No. DLP- 913 3699, driven  by Shri  Rai Singh, Respondent No. 2 and owned by M/s. Delhi Janata Co-operative Transport Society Limited, Respondent No.  3, He  sustained  injuries  consequent  upon which he  made a  claim for  compensation before  the  Motor Accident Claims  Tribunal, Delhi  against Respondent  Nos. 2 and 3  and the  appellant which  was the  insurer of the bus aforesaid. The  claim of  Respondent No.  1 was contested by the appellant  and also by Respondent No. 3 but proceeded ex parte  against   Respondent  No.  2.  The  Tribunal  awarded compensation in the sum of Rs.10.000 recoverable jointly and severally from the appellant and Respondent No. 3. Aggrieved by the  award of  the Tribunal Respondent No. 1 preferred an appeal before  the High Court of Delhi and asserted that the amount  of   compensation  awarded   by  the   Tribunal  was inadequate. His appeal was allowed by the High Court and the award was  modified. The  High Court  awarded a  sum of  Rs. 1,00,000 as  compensation to  Respondent No. 1 with interest at 9  per cent per annum from the date of institution of the claim till realisation with costs against the driver as well as the  owner of  the bus  as also  against  the  appellant, Insurance Company.      Before granting  special leave  this Court required the appellant to  deposit Rs.  1,00,000  namely  the  amount  of compensation  awarded   by  the  High  Court  and  permitted Respondent No.  1 to  withdraw the  same. Special  leave was granted on  14th September,  1984 by  the following order of this Court.           "Under the  orders of this Court the appellant has           deposited Rs.  One lac,  which is  the  amount  of           compensation  awarded   to  the   claimants.   The           claimants  have   withdrawn  the   amount  without           furnishing security.                Special leave  granted on  condition that  in           the event  of reversal of the decision of the High           Court, the  said amount  shall not  be refunded by           the claimants.  Stay of  further execution  of the           award confirmed."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

    It has  been urged  by  the  learned  counsel  for  the appellant that  in view of the statutory provision contained in this  behalf in  clause (b) of sub-section (2) of Section 95 of  the Act  as it  stood on  the date of accident namely 15th June,  1969 which  happens to  be prior  to 2nd  March, 1970, the  date of  commencement of Amending Act 56 of 1969, no award in excess of Rs.20,000 could have been made against the appellant.  Before dealing  with the  submission we  may point out  that the policy under which the bus aforesaid was insured had not been 914 filed either before the Tribunal or before the High Court. A photostat copy  of the  policy has,  however, been  filed in this Court  and learned  counsel for the respondents did not have objection  in the  same  being  admitted  in  evidence. Clause (b) of sub-section (2) of Section 95 of the Act as it stood at the relevant time reads as under:           "95. (1) ..............           (2)  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 following limits, namely:           (a)  ...................           (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, in  respect of persons other than                passengers carried  for  hire  or  reward,  a                limit  of  twenty  thousand  rupees;  and  in                respect  of  passengers  a  limit  of  twenty                thousand rupees  in all,  and  four  thousand                rupees in respect of an individual passenger,                if the  vehicle is  registered to  carry  not                more than six passengers excluding the driver                or two  thousand  rupees  in  respect  of  an                individual  passenger,   if  the  vehicle  is                registered to  carry more than six passengers                excluding the driver;           (c)  ..................      On the plain language of the aforesaid clause (b) which applies  to  the  instant  case  it  is  apparent  that  the liability of  the  appellant  could  not  be  in  excess  of Rs.20,000. Learned  counsel for  the  respondents,  however, urged that  notwithstanding the  provision contained in this behalf in clause (b) aforesaid it was open to the insurer to take a  policy covering  a higher  risk than contemplated by the aforesaid  clause (b)  and consequently  the said clause had to  be read subject to the terms of the policy which was taken in  the  instant  case.  We  find  substance  in  this submission  in  view  of  the  decision  of  this  Court  in Pushpabai Purshottam Udeshi and others v. M/s Ranjit Ginning and Pressing Co. and another, [1977] A.C.J. 343 where it was held that  the insurer  can always  take  policies  covering risks which are not covered by the re- 915 quirements of Section 95 of the Act.      We have  accordingly perused  the photostat copy of the policy to  ascertain whether risk for any amount higher than the amount of Rs.20,000 contemplated by clause (b) aforesaid was covered.  Our attention  was invited  by learned counsel for the  respondents to  the circumstance  that at the right hand corner  on the  top of  page 1  of the policy the words "COMMERCIAL VEHICLE  COMPREHENSIVE" were  printed.  On  this basis and on the basis that the premium paid was higher than the premium  of an  "act only"  policy it  was urged  by the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

learned counsel  for the  respondents that  the liability of the appellant  was unlimited  and not  confined to Rs.20,000 only. We  find it  difficult to accept this submission. 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 than  for an "act only" policy  is payable depending 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. 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. Likewise, if risk of any  other nature for instance, with regard to the driver or passengers etc. in excess of statutory liability, if any, is sought  to be  covered it  has to be clearly specified in the policy  and separate  premium paid therefor. This is the requirement  of   the  tariff  regulations  framed  for  the purpose. Coming  to the  photostat copy of the policy in the instant case  it would be seen that Section II thereof deals with liability  to third  parties. Sub-section (1) minus the proviso thereto reads as hereunder:           "1. Subject to the Limits of Liability the Company           will  indemnify   the  insured  against  all  sums           including claimant’s  cost and  expenses which the           insured shall  become legally  liable  to  pay  in           respect of           (i)  death or  bodily injury  to any person caused                by or 916                arising out of the use (including the loading                and/or unloading) of the Motor Vehicle.           (ii) damage  to   property  caused   by  the   use                (including the  loading and/or  unloading) of                the Motor Vehicle)".      The Schedule  to the  policy indicates  the  limits  of liability and  the amount  of premium  paid. The  limits  of liability are indicated as hereinbelow: "Limits of Liability: Limit of the amount of the Company’s    Such amount as is necessary liability under Section II-1(1) in      to meet the requirements of respect of any one accidentthe Motor Vehicle Act, 1939 Limit of the amount of the Company’s liability under Section II-1(11) in respect of any one claim or series of claims arising out of one event          Rs.20,000/- The premium paid on the other hand is shown as below: "Premium                      Rs.415.00 Add 1/2% on I.E.V.                      Rs.200.00 Add for 53 Pass, 9 of Rs.2.50           Rs.132.50 Add for Driver & Conductor              Rs.10.00                               ---------                           757.50"                         ---------      A perusal  of the policy, therefore, indicates that the liability undertaken  with regard  to the  death  or  bodily

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

injury to  any person  caused by  or arising  out of the use (including the  loading and  or un  loading)  of  the  motor vehicle falling  under Section II(1)(i) has been confined to "such amount as is necessary to meet the requirements of the Motor Vehicle  Act, 1939."  This liability,  as is  apparent from clause (b) of sub-section (2) of Section 95 of the Act, was at  the relevant time Rs.20,000 only. The details of the premium also indicate that no additional premium with regard to a  case falling  under Section  II(1)(i) was  paid by the owner of  the vehicle  to the  insurance company. It is only the vehicle which was comprehensively insured, the insured’s estimate of  value including  accessories  (I.E.V.)  thereof having been  shown as  Rs.40,000. In this view of the matter the submission made by learned 917 counsel for  the respondents  that the  appellant had in the instant case  undertaken an  unlimited  liability  does  not obviously have any substance. The liability under the policy in the  instant case was the same as the statutory liability contemplated by  clause (b) of sub-section (2) of Section 95 of the  Act namely Rs.20,000. An award against the appellant could not,  therefore, have  been made in excess of the said statutory liability.      Learned counsel for the appellant then urged relying on the  decision   of  this  Court  in  British  India  General Insurance Co.  Ltd. v.  Captain Itbar  Singh and Others, AIR 1959 Supreme  Court 1331 that in view of the sub-section (6) of Section  96 of  the Act  no insurer  to whom  the  notice referred to  in sub-section  (2) thereof  has been given, is entitled "to  avoid his liability" to any person entitled to the benefit  of any  such judgment as is referred to in sub- section (1)  thereof otherwise  than in  the manner provided for in  sub-section (2). On this basis it was urged that the appellant was  not entitled to assert that its liability was confined to  Rs.20,000 only  inasmuch as  this is not one of the defences  specified in  sub-section (2) of Section 96 of the Act.  We find it difficult to agree with this submission either. Firstly,  in paragraph 12 of the report of this very case it  has been held that sub-section (2) of Section 96 in fact deals  with defences  other than  those  based  on  the conditions of  a policy.  Secondly, from the words "to avoid his liability"  used in  sub-section (6) of Section 96 it is apparent  that   the  restrictions  placed  with  regard  to defences available  to the  insurer specified in sub-section (2) of Section 96 are applicable to a case where the insurer wants to  avoid his  liability.  In  the  instant  case  the appellant is  not seeking to avoid its liability but wants a determination of  the extent of its liability which is to be determined, in  the absence of any contract to the contrary, in accordance  with the  statutory provisions  contained  in this bahalf  in clause  (b) of sub-section (2) of Section 95 of the  Act. In  the instant  case since  as seen  above the appellant did  not undertake  in the policy any liability in excess of the statutory liability the award against it could be only in accordance with the said statutory liability.      Before parting  with the case, we consider it necessary to refer  to the  attitude often  adopted by  the  Insurance Companies, as was adopted even in this case, of not filing a copy of  the policy  before the Tribunal and even before the High  Court  in  appeal.  In  this  connection  what  is  of significance is  that the  claimants for  compensation under the Act are invariably not possessed of either the policy or a copy  thereof. This Court has consistently emphasised that it is the duty of the party 918

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

which is  in possession of a document which would be helpful in doing  justice in  the cause to produce the said document and such  party should  not be  permitted  to  take  shelter behind the  abstract doctrine  of burden of proof. This duty is greater  in the  case of  instrumentalities of  the State such as  the appellant  who are  under an  obligation to act fairly. In  many cases  even the  owner of  the vehicle  for reasons known  to him  does not choose to produce the policy or a  copy thereof. We accordingly wish to emphasise that in all such  cases where the Insurance Company concerned wishes to take  a defence in a claim petition that its liability is not in  excess of  the statutory  liability it should file a copy of the insurance policy along with its defence. Even in the instant  case had  it been  done so  at the  appropriate stage necessity  of approaching  this Court  in Civil Appeal would in all probability have been avoided. Filing a copy of the  policy,   therefore,  not  only  cuts  short  avoidable litigation but also helps the Court in doing justice between the parties.  The obligation on the part of the State or its instrumentalities  to   act  fairly   can  never   be  over- emphasised.      In the  result, this  appeal succeeds and is allowed to this extent  that the liability of the appellant is fixed at Rs.20,000 together  with interest  as allowed  by  the  High Court. In  view of  the  order  of  this  Court  dated  14th September, 1984  quoted above, however, it is held that even if the  total liability  of the  appellant  falls  short  of Rs.1,00,000, it  shall not  be entitled to any refund out of the sum  of  Rs.1,00,000  which  was  deposited  by  it  and withdrawn by  the claimant-respondent  in pursuance  of  the said order.  The decree  of the  High Court  as against  the driver and the owner of the vehicle namely Respondents 2 and 3  is,  however,  maintained  and  all  sums  in  excess  of Rs.1,00,000  which   has  already   been  withdrawn  by  the claimant-respondent as aforesaid shall be recoverable by him from Respondents 2 and 3 only. There shall be no order as to costs. R.S.S.                                       Appeal allowed. 919