NEW INDIA ASSURANCE COMPANY LIMITED Vs. MURTI DEVI

JUDGEMENT

(1.) A very interesting point has been raised regarding the applicability of the amendment brought about on 2nd March, 1970 to the Motor Vehicle Act (hereinafter called the Act) on enhancing the statutory liability of the Insurance Company, from Rs.20,000.00 to Rs.50,000.00 . The question for consideration is whether this amendment would apply retrospectively to the insurance policy which was issued prior to 2.3.70.

(2.) Admitted facts on record are that the vehicle in question was insured with the appellant on 24th September, 1969 for one year. The amendment was brought about on 2.3.70. The accident in question took place or 4.5.70. The insurance policy was placed on record and exhibited as Ex.R-1. The liability of the insurance company as per the Ex.R-1 was Rs.20,000.00 . The Motor Accident Claim Tribunal (hereinafter called the Tribunal) fixed the liability of the appellant Insurance Company atRs.50,000.00 and awarded the amount of compensation to the tune ofRs.38,400.00 , holding that there was a negligence on the part of the driver of the offending vehicle and consequently the owner of the vehicle was liable.

(3.) The appellant/insurance company has not challenged the decision of the Tribunal with regard to negligence, even otherwise also it could not have challenged the same because appellant is to satisfy the judgement against persons insured in respect of third party risks as is required to be covered by the policy any sum not exceeding the sum assured. The owner of the vehicle has not challenged the decision with regard to negligence, hence the appellant has rightly not challenged the same. Mr. Sabharwal appearing for the appellant restricted his arguments only to the limit of liability of the Insurance Company. Mr. Sabharwal contended that the limit of liability does not increase or extend because of the amended Act dated 2nd March, 1970. Insurance policy is a contract. The liability arises out of this contract, when the contract limits the liability, then by mere amendment of the statute will not modify or alter the terms of the contract for that a special agreement is required. Owner of the vehicle has to prove that he paid extra premium. When he does not pay extra premium or enter into special agreement then the amendment to the statutory liability clause will not have any bearing on the limit of liability mentioned in the policy. He further contended that since the liability of the Isurance Company was limited, the appellant was not required to produce and prove the original insurance policy. It was in fact for the claimants to prove that there was an enhanced liability after the amendment of the Act.