1988 (2) TMI 474 - SC - Indian Laws

Summary

Issues Involved:

1. Liability of the insurer under Section 95(2)(b) of the Motor Vehicles Act, 1939.
2. Interpretation of comprehensive insurance policy and its limits.
3. Duty of the insurance company to produce the insurance policy in court.
4. Determination of the extent of insurer's liability.

Issue-wise Detailed Analysis:

1. Liability of the insurer under Section 95(2)(b) of the Motor Vehicles Act, 1939:
The appellant, National Insurance Company Ltd., contested that under Section 95(2)(b) of the Motor Vehicles Act, 1939, as it stood on the date of the accident (15th June, 1969), their liability was capped at Rs. 20,000. The Supreme Court agreed, stating that "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." The Court emphasized that the statutory liability fixed under Section 95(2)(b) was Rs. 20,000, and an award against the appellant could not exceed this amount.

2. Interpretation of comprehensive insurance policy and its limits:
The respondents argued that the comprehensive insurance policy indicated unlimited liability due to the higher premium paid and the words "COMMERCIAL VEHICLE COMPREHENSIVE" printed on the policy. However, the Court found this argument unconvincing, stating 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." The Court clarified that for higher liability to be covered, a specific agreement and separate premium were required, which were absent in this case.

3. Duty of the insurance company to produce the insurance policy in court:
The Court criticized the insurance company's failure to produce the policy before the Tribunal and the High Court, noting that "the claimants for compensation under the Act are invariably not possessed of either the policy or a copy thereof." The Court emphasized that it is the duty of the insurance company to produce the policy to facilitate justice and prevent unnecessary litigation. The Court stated, "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."

4. Determination of the extent of insurer's liability:
The Court held that the insurer's liability was limited to Rs. 20,000 as per the statutory provisions. The Court noted that the insurer was not avoiding liability but seeking a determination of its extent, which must be in accordance with statutory provisions. The Court concluded, "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."

Final Judgment:
The Supreme Court allowed the appeal to the extent that the insurer's liability was limited to Rs. 20,000 with interest as allowed by the High Court. However, the Court held that the insurer would not be entitled to any refund from the Rs. 1,00,000 already deposited and withdrawn by the claimant. The decree of the High Court against the driver and the owner of the vehicle was maintained, and any sums in excess of Rs. 1,00,000 would be recoverable from them. The Court made no order as to costs.