NEW INDIA ASSURANCE CO Vs. HURMAT BEGUM

JUDGEMENT

(1.) What is the extent of Insurance Company' liability in a case where it fails to plead limited liability, but places on record the original Insurance Policy indicating the limit of its liability. Can the Company be burdened with liability in excess of the limit contained in the policy. In other words should the liability of Company be treated as unlimited merely because it had failed to take the plea of limited liability in its written statement ? This interesting question falls for determination in this appeal.

(2.) The controversy arises out of a claim petition filed by claimants of one Molvi Abdul Ghani, who was killed in a road accident at Pul Doda of Aug. 7, 1980. In reply to the claim petition, appellant company did not plead limited liability in its written-statement. It, however, placed on record original Insurance Policy which indicated that its liability was limited to Rs. 50,000.00. MACT, Jammu awarded a compensation of Rs. 92,000.00 to the claimants and fastened the entire liability on the company on the ground that it had failed to specifically plead its limited liability. The Tribunal ignored the original Insurance Policy from consideration and relying upon a single Judge judgment of Punjab and Haryana High Court, reported in 1987 ACC LJ 203, concluded that company' liability was unlimited. Hence, the appeal on the sole ground that Tribunal had erred in excluding the policy from consideration and by disregarding its terms which limited the company' liability to Rs. 50,000.00.

(3.) It is a beaten law that a policy of Insurance can cover a greater risk in excess of limit set out in S. 95(2). It is also settled that in case on Insurance Company wants its liability to be held limited, it must specifically plead so and substantiate it by proof particularly by bringing the policy on record. If it fails to raise a specific plea in this regard and holds back the policy record, its liability will be regarded unlimited. This position has been consistently affirmed by various High Courts and I feel no necessity of citing any decision in support.