NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5681  OF 2008 [Arising out of SLP (C) No. 26255/04]

United India Insurance Company Ltd. … Appellant

Versus

A. N. Subbulakshmi & Ors. … Respondents

W I T H

CIVIL APPEAL NO. 5684  OF 2008 [Arising out of SLP (C) No. 26258/04]

United India Insurance Company Ltd. … Appellant

Versus

C. T. Meenakshi & Ors. … Respondents

J U D G M E N T

AFTAB ALAM,J.

1. Leave granted.

2. These  appeals  by  the  Insurance  Company  are  on  a  limited  issue

insofar as in the order of the High Court coming under appeal the appellant

is directed to make payment of the compensation amounts to the claimants

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and then to recover from the owner of the vehicle involved in the accident

excess amounts paid over and above its liability under the insurance policy

by instituting appropriate actions against them.

3. The matter  arises  from an unfortunate accident  in  which  two lives

were  lost.   On  14  May,  1981  at  about  6.30  in  the  morning  a  head-on

collision between an Ambassador car bearing Registration No. MDO 7789

and a lorry bearing Registration No. MDR 3106 took place on the Trichy -

Chennai  highway  near  Thozhuthur.   As  a  result  of  the  collision  the

Ambassador  Car  was  badly  smashed  and  turned  turtle.   Its  owner,

Annamalai, who was on the driver’s seat died on the spot.  Another person,

namely, Sigappi, aged about 24 years who worked as Annamalai’s Secretary

and who was sitting on the rear seat along with the latter’s son was thrown

out of the car and she too died on the spot.  However, Annamalai’s wife and

daughter  sitting  on  the  front  seat  and  his  son  sitting  on  the  rear  seat

survived.  In the accident the truck also suffered substantial damage.     

4. In regard to the accident three claim cases came to be filed before the

Motor Accidents  Claims Tribunal,  Cuddalore. MACTOP No.198 of 1982

was filed by the owner of the lorry, M/s. Aruppukottai Sri Jaya Vilas Pvt.

Ltd. claiming compensation of Rs.58, 300/- for the damage caused to the

lorry  MDR  3106  in  the  accident,  allegedly  resulting  from the  rash  and

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negligent driving of the car MDO 7789. The claim of the lorry’s owner was

resisted  by the legal  representatives  of  the deceased Annamalai.  Another

claim petition, MACTOP no.625 of 1981 was filed by the heirs and legal

representatives of the deceased Sigappi against the owner of the lorry and

its insurer claiming damages for her death. A third claim petition, MACTOP

No.627  of  1981  was  filed  by  the  wife  and  children  of  the  deceased

Annamalai,   the owner of the car,  against  the owner of the lorry and its

insurer claiming a sum of Rs.10,04,600/- as compensation for his death.

5. The Tribunal by order dated 22 January, 1986 found and held that the

accident was caused entirely due to the rash and negligent driving of the car

driver,  Annamalai.  There was no mistake, rashness  or negligence on the

part of the driver of the lorry.  He accordingly rejected the claims instituted

by  the  heirs  of  the  deceased  Annamalai  and  the  heirs  and  legal

representatives  of  the  deceased  Siggapi.  Further,  in  accordance  with  its

finding, the Tribunal allowed the claim of the owner of the lorry but instead

of Rs.58, 300/- as claimed in the petition, awarded the smaller amount of

Rs.14,100/-  with 7% interest  to  be  recovered from the assets  left  by the

deceased Annamalai in the hands of his heirs, impleaded as respondents in

the claim petition.

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6. Against the order passed by the Tribunal three separate appeals came

to be filed in the Madras High Court. These appeals were disposed of by a

common judgment and order  dated 12 December,  2003.  The High Court

reversed the finding of the Tribunal as to the cause of the accident and on a

detailed examination of all the evidences on record came to hold and find as

follows:

“As seen from the file, B.7, B.8 as well as B.1 and A.1, on a consideration of the oral evidence, this court holds that the accident has not been caused exclusively by the rash and negligent driving of the ambassador car, but the accident  has  been  caused  by  the  rash  and  negligent driving of both the vehicles, namely, ambassador car and the lorry driver.  This court  holds that the contributory negligence on the part of the lorry driver could be fixed at 50% and that of the ambassador car at 50% as seen from the place of impact, damages caused to the vehicles as  well  as  Exs.B.7  and  B.8.   The  points  1  and  2  are answered above.”

7. The  High  Court  then  proceeded  to  determine  the  amounts  of

compensation payable for the death of Siggapi and Annamalai and directed

the owner and insurer of the lorry to pay half the amount of compensation

fixed by it in each case to the respective claimants (since the responsibility

for the accident lay equally on the two sides). In case of Siggapi the amount

payable to  the claimants  by the  owner  and insurer  of  the lorry is  Rs.25,

000/- with 6% interest from the date of the claim petition and in case of

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Annamalai the amount payable to the claimants by the owner and the insurer

of the lorry worked out to Rs.3,25,000/- with 6% interest from the date of

claim petition to the claimants. Finally, in paragraph 36 of the judgment, the

High Court made the following direction:

“We make it clear in both claims that the insurer of the lorry shall pay the compensation and thereafter it is for the  insurer  to  institute  appropriate  action  against  the owner of the lorry thereafter for amount if any paid over and above the liability covered by the insurance policy, the two appeals are to be allowed in part.”

8. It  is  this  direction  making it  the  liability of  the  insurer  to  pay the

amounts of compensation to the two claimants that causes grievance to the

appellant and these appeals are preferred on the limited question about the

validity of the High Court’s direction.

9. Mr. P. K. Seth, learned counsel appearing on behalf of the appellant,

submitted that the accident took place on 14 May, 1981, when the Motor

Vehicles  Act,  1939 was in  operation  and the liability of  the insurer  was

governed by Section 95(2)(a)  of the Act. Learned counsel  submitted that

under Section 95(2)(a), the insurer’s liability could not exceed the sum of

Rs.50, 000/- and the direction of the High Court asking the appellant to pay

the entire amounts of Rs.25, 000/- and Rs.3, 25,000/- to the claimants and

then  to  recover  it  from the  insurer  was  without  any sanction  of  law.  In

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support of the submission he relied upon a Constitution Bench decision in

New Indian Assurance Co. Ltd.  vs.  C .M. Jaya & Ors., (2002) 2 SCC 78.

In  that  case  the  same  question  came  up  for  consideration  before  the

Constitution Bench of this Court and it was held that under Section 95(2)(a)

of the Act even in case of a comprehensively insured vehicle the liability of

the insurer was limited to Rs.50, 000/- (raised to Rs.1,50,000=00 with effect

from 1 October 1982). An unlimited or a higher liability than the statutory

liability of the insurer would arise only in case there is a separate contract

and  payment  of  additional  premium  by  the  owner  of  the  vehicle.  In

paragraph 17 of the decision it was held as follows:

“In the circumstances,  we hold that  the liability of the appellant-Insurance Company is limited to Rs.50, 000/-, as held by the Tribunal.  In the view we have taken, it is unnecessary  to  go  into  the  question  relating  to  either maintainability of cross-objections before the High Court against the appellant alone or as to the enhancement of compensation when the owner and driver have not filed appeal against the impugned judgment.”

10. The Constitution Bench decision applies to the facts of this case with

full force.  We accordingly hold and find that the impugned direction of the

High Court is unsustainable in law.  The direction as contained in paragraph

36 of the High Court judgment is therefore set aside.

11. In terms of an interim order passed in this appeal, the appellant had

deposited a sum of Rs.50, 000/- before the Trial Court it will be open to the

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claimants  to  withdraw that  amount.  The  balance  amount  in  terms of  the

High Court judgment would be payable by the owner of the lorry, namely,

M/s. Aruppukottai Sri Jaya Vilas Pvt. Ltd., unless the judgment of the High

Court is modified in any appeal preferred by the lorry’s owner.

12. In the result, the appeals are allowed but with no order as to costs.

…………………………….J.

[Tarun Chatterjee]

…………………………….J.

[Aftab Alam]

New Delhi,

September 16, 2008.

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