NANJAPPAN Vs. ORIENTAL INSURANCE COMPANY LIMITED

JUDGEMENT

(1.) The appellant was travelling in a goods vehicle on 15.9.1990 when on account of the rash and negligent driving of that vehicle by its driver the vehicle dashed against another goods vehicle. Appellant sustained injuries in that accident. The Tribunal awarded a compensation in the sum of Rs. 2,95,000 with interest at 15 per cent. The insurer appealed contending that in terms of the policy that had been issued on 5.12.1989, though that policy was issued after the date on which the Motor Vehicles Act, 1988 had come into force, its liability was limited only to Rs. 10,000 as that was the figure mentioned in that policy. Learned single Judge acceded to that argument of the insurer and limited its liability to Rs. 10,000. He took the view that the liability does not arise under the statute, but under the contract of the insurance and, therefore, the limitation provided in the contract would bind the insurer as also the claimant.

(2.) Section 147 of the Motor Vehicles Act, 1988 sets out the requirements of the policy for complying with Chapter XI of the Act. Section 146 sets out the necessity for the insurance against a third party risk. Section 147 (1) (b) (i) stipulates that the policy of insurance must be a policy which insures the person or persons specified in the policy against any liability which may be incurred by the insured in respect of death or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place. That provision was amended by Act 54 of 1994 with effect from 14.11.1994 and the words

(3.) Section 149 of the Act deals with the duty of the insurers to satisfy judgments and awards against persons insured in respect of the third party risks. Sub-section (4) thereof provides as under: