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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 97 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. 98 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. 99

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