NATIONAL INSURANCE CO LTD Vs. ANNAMMA ABRAHAM

JUDGEMENT

(1.) Heard both sides. The appeal is directed against the award of the Motor Accident Claims Tribunal, Alleppey dated 25.10.1989 in O.P. (MV) No. 192/85 on its file. The Insurance Company is the appellant. There is no dispute with regard to the accident occurred and the insurance policy taken. Before the Tribunal it was argued by the Insurance company that their liability is clear from the policy terms and that the limits of liability has been clearly mentioned in the policy itself that is such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939. Therefore, it was argued that the liability of the Insurance Company in respect of third party personal injury is limited to statutory provisions of Motor Vehicles Act, 1939. Further in respect of third party damage where an enhanced limit was agreed to in the contract of insurance ie., Rs. 50,000/- as against the statutory requirement of Rs. 6,000/-. The enhanced limit was also clearly indicated on the face of the policy itself.

(2.) The Tribunal however interpreted the phrase "such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939" as any amount that may be awarded by the Tribunal. By interpreting so, the Tribunal held that the insurance company is liable for payment of the entire compensation of Rs. 1,49,675/- with interest at 9% and cost of Rs. 500/- awarded in the O.P. Aggrieved by the said award the Insurance company has preferred the above appeal.

(3.) We have perused the award of the Tribunal and heard the arguments of the respective counsel appearing on either side. On the other hand, similar contention was raised before us by the counsel for the Insurance Company. S.95(2)(b) provides that the policy of Insurance shall cover any liability incurred in respect of any one accident upto the limits mentioned in sub clause (a), (b) and sub clause (i) and (ii) of (b). S.95 sub clause (2)(b) deals with the vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. Sub cl. (b)(i) of S.95(2) fixes the liability limit of the insurance company at Rs. 50,000/- in respect of persons other than passengers carried for hire or reward. In the instant case, there is no dispute that the deceased is only third party. Therefore as rightly contended by the counsel for the appellant the liability of the Insurance company is limited to the statutory requirement of Rs. 50,000/- only. As pointed out by him the Tribunal has also failed to appreciate the fact that the premium charged is only Rs. 240/- ie. only the basic premium. We are of the view that the Tribunal has not taken note of the terms as per the contract of insurance which only provides that the Insurance Company is liable to pay such amount as is necessary to meet the requirement of Motor Vehicles Act, 1939. The interpretation made by the Tribunal is not correct and such an interpretation is contrary to the terms of the statutory provisions. A similar view was taken by Division Bench of this Court reported in Oriental Insurance Co. Ltd. v. Saji ( 1997 (2) KLT 695 ) relying on the decision of the apex court reported in 1988 ACJ 270 and also reported in National Insurance Co. Ltd. New Delhi v. Jugal Kishore and Others ( AIR 1988 SC 719 ). In that case, the Supreme Court had occasion to interpret the meaning of the clause "such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939", as contained in the section as it stood then. In this case, the accident has occurred on 4.3.1985. Therefore, the provisions as it stood then alone is applicable. The Supreme Court after referring to the relevant provisions of the Act and also the provisions contained in the insurance policy has observed as follows: -