NATIONAL INSURANCE CO LTD Vs. HASTIMAL LODHA

JUDGEMENT

(1.) ALL these appeals raise common question of law as to whether Insurance Companies, the appellants herein, are liable only to the extent of statutory liability fixed under the Motor Vehicles Act, 1939 (for short the Act of 1939) or their liability is unlimited.

(2.) IT is contended by the learned counsel for the appellants that in the Schedule of premium under the Heading "liability to public risk", it was indicated to be Rs. 240/ -. The stand in essence, therefore, is that when any extra premium is not paid for any enhanced liability, the statutorily liability fixed for Rs. 50,000/- or Rs. 1,50,000/- was maximum that could have been awarded, and nothing beyond it. Reliance is placed on National Insurance Co. Ltd. vs. Keshav Bahadur & Ors. [jt 2004 (2) SC 282] = (RLW 2004 (1) SC 149), New India Assurance Co. Ltd. vs. C. M. Jaya & Ors. [2002 (2) SCC 278] = (RLW 2002 (2) SC 193), National Insurance Co. Ltd. vs. Nathilal & Ors. [1999 (1) SCC 552], New India Assurance Co. Ltd. vs. N. M. Annakutty & Ors. [1997 (2) ACJ 1121], United India Insurance Co. Ltd. vs. Daddi Suryakanthanam & Ors. , [1999 (1) TAC 763 (AP)] and Oriental Insurance Co. Ltd. vs. Sreenivasan, [1999 (2) TAC 113 (Ker.)].

(3.) IN National INsurance Company Ltd. vs. Laxmi (supra), the Tribunal awarded sum of Rs. 1,04,000/- as compensation to the claimants and the insurance company was held liable to indemnify the owner of the vehicle for the entire sum under the policy. The insurance company appealed before the High Court for limiting its liability to Rs. 50,000/-, the statutory liability fixed under 1939 Act. After the High Court dismissed the appeal, the matter was taken to Supreme Court from where the matter was remanded to the Tribunal with the direction to hold an inquiry as regards the liability of the insurance company. After framing additional issue and considering the material the Tribunal found that premium for the `act only policy' was Rs. 200/- and the premium charged from the vehicle owner was Rs. 240/- which was captioned `liability to public risk Act only' which under the insurance jargon considered as `third party risk policy' by charging higher than the `act only policy' and on that premise, it came to the conclusion that the insurance company has charged additional premium for public risk and its liability towards `third party risk' was unlimited and the insurance company was liable for the entire claim. The award of the Tribunal was assailed in appeal before the Single Bench of the High Court which was dismissed. The Division Bench considered the terms of policy and held as under:- " Therefore, in our opinion, under policy the appellant specifically undertook unlimited liability to indemnify the insured towards the Third-party by not excluding the liability if the insured in respect of claims arising out of death or bodily injury caused to the third party. Therefore the Motor Accident Claims Tribunal and learned Single Judge were right in their conclusion. "