NEW INDIA ASSURANCE CO LTD Vs. K SAIMMA

JUDGEMENT

(1.) All the four appeals at the instance of the insurance company are directed against a common award passed in different claim cases and have been heard together. Since a common question of law is involved, all the appeals are being disposed of by one common judgment.

(2.) The only question raised in these appeals relates to the limit of liability of the insurance company. The relevant facts necessary for considering the question of law are as stated below. The accident occurred on 21.7.89. The vehicle in question was admittedly insured with the present appellant. The victims of the accident were admittedly passengers in the vehicle, a bus. The insurance policy was effective from 21.6.1989 to 20.6.1990. The contention of the counsel for the appellant is that the insurance policy had been issued at a time when the liability of the insurance company in respect of a passenger of a bus was only Rs. 15,000. It is, therefore, contended that since the insurance policy had been issued with limited liability of Rs. 15,000 in respect of each passenger, any amount of compensation in excess of Rs. 15,000 payable to a claimant is to be paid by the owner of the vehicle and the insurance company is liable only to pay a sum of Rs. 15,000 in respect of each victim passenger. The learned counsel appearing for the claimants-respondents and the owner have supported the finding of the Tribunal to the effect that the liability of the insurance company was unlimited as the accident occurred on 21.7.1989, after the new Act came into force with effect from 1.7.1989. It has been contended that irrespective of the date of issuance of an insurance policy, the minimum statutory liability of the insurance company to indemnify the liability of the owner is to be decided on the basis of the law applicable on the date of the accident and not on the basis of the date of issuance of the insurance policy. In support of such contention, the learned counsel have placed reliance upon the decision of the Supreme Court in Padma Srinivasan v. Premier Insurance Co. Ltd., 1982 ACJ 191 (SC).

(3.) In the aforesaid decision of the Apex Court, the insurance policy had been issued at a time when the statutory liability of the insurance company was a lesser amount. However, by the date of accident, while the policy issued was still in force, the limit of statutory liability had been enhanced by way of amendment. It was contended before the Supreme Court that the liability of the insurance company was limited to the amount indicated in the provision of section 95 of the Motor Vehicles Act, 1939 (hereinafter referred to as 'the old Act') applicable on the date of issuance of the policy which had been issued keeping in view such limit of liability. Such a contention was repelled by the Supreme Court and it was held that though the policy had been issued at a time when the limit of liability was lesser, the limit of liability of an insurance company has to be decided on the basis of the provision of law available on the date of the accident and not on the date of issuance of the insurance policy. The aforesaid Apex Court decision squarely supports the contention of the counsel for the claimants and the owner to the effect that the limit of liability of insurance company has to be determined on the basis of provision of law applicable on the date of accident and not on the basis of date of issuance of the insurance policy.