National Insurance Co. Ltd. vs Pawan Kumar and Others

B.A. Khan, J.—Respondent Pawan Kumar, a Second Year T.D.C. student at M.M. College, Jammu, sustained serious injuries after being

hit by bus No. JKN 9581 near Bari Brahmana on 1.9.1981. He filed a claim petition and M.A.C.T., Jammu, awarded a compensation of Rs.

56,000/- to him along with interest at the rate of 12 per cent per annum. Out of this an amount of Rs. 50,000/- was made payable by appellant

insurance company. Appellant is aggrieved of this and pleads that its liability was limited to only Rs. 5,000/-. Therefore, the extent of company's

liability is the sole question which requires determination in this appeal.

While fastening a liability of Rs. 50,000/- on the company, Tribunal has gone by relevant clause of insurance policy under heading IMT 13 and

has held as under:

In the present case, the insurer's contract specifically speaks that insurer's liability per passenger shall be Rs. 50,000/-. As this liability is under the

contract itself, there is no question of holding the insurer liable to the limit provided by the statute. There is nothing to prevent the insurer to enter in

each contract to indemnify for a higher amount than the amount prescribed by the statute. Here in the present case, only one passenger was

involved in the accident and for one accident insurer's liability is Rs. 50,000/-.

For proper appreciation and to remove any more doubts relevant clause of insurance policy requires to be reproduced and reads thus:

In consideration of an additional premium of Rs. 68/- and notwithstanding anything to the contrary contained in Section 11-1(c) but subject

otherwise to the terms, exceptions, conditions and limitations of this policy will indemnify the insured against liability at law for compensation

(including law costs of any claimant) for the death of or bodily injury to any person other than a person excluded u/s 11-1(b) being carried in or

upon or entering or mounting or alighting from the motor vehicle but indemnity is limited to the sum of Rs. 50,000/- in respect of any one person

and subject to the aforesaid limit in respect of any one person to Rs. 5,000/-in respect of any number of claims in connection with the motor

vehicle arising out of one cause.

Provided always that in the event of an accident occurring whilst the motor vehicle is carrying more than the number of persons mentioned in the

Schedule hereto as being the licensed carrying capacity of that vehicle in addition to the conductor, if any, then the insured shall repay to the

company a rateable proportion of the total amount which would be payable by the company by reason of this endorsement if not more than the

said number of persons were carried in the motor vehicle.

Provided further that in computing the number of persons for the purpose of this endorsement any three children not exceeding 15 years of age will

be reckoned as two persons and any children in arms not exceeding 3 years of age will be disregarded.

Provided also that the provisions of condition 3 of the policy are also applicable to a claim or series of claims under this endorsement.

Provided further that in the event of the policy being cancelled at the request of the insured no refund of premium paid in respect of this

endorsement will be allowed. Subject otherwise to the terms, exceptions, conditions and limitations of this policy.

I have examined the record. In the written statement, appellant company has only stated that its liability is limited, without specifying to what

extent. Nor has it adduced any evidence or furnished any proof to show that its liability was limited to Rs. 5,000/-. Therefore, policy of insurance

placed on record before the Claims Tribunal is the only guide to indicate the extent of company's liability. In the relevant clause extracted

hereinabove the following lines have attracted conflicting interpretation:

but indemnity is limited to the sum of Rs. 50,000/- in respect of any one person and subject to the aforesaid limit in respect of any one person to

Rs. 5,000/-in respect of any number of claims in connection with the motor vehicle arising out of one cause.

(Emphasis supplied)

According to appellant, this clause should be interpreted to limit company's liability to Rs. 5,000/- only because along with claimant, some other

passengers were also injured in the accident. In the alternative it is submitted that company was liable to indemnify only to the extent of the limit

contained in Section 95(2)(b) of the Motor Vehicles Act.

I am afraid that interpretation placed on the terms of relevant clause of policy is not fair. The mere assertion that some other passengers were

also injured in the accident would not be any factor to limit company's liability to Rs. 5,000/-.

In my opinion, the clause is capable of only one interpretation and it does not admit of any doubt or ambiguity whatever. As per its terms,

company binds itself to indemnify up to Rs. 50,000/- in respect of any one person involved in the accident and subject to this limit to Rs. 5,000/- in

respect of any one person in case number of claims arise thereof. In other words, where more than one passenger is involved in the accident and a

number of claims arise therefrom, company's liability for one individual passenger would be Rs. 5,000/-. But in a case where only one claim is

preferred in respect of any one person though other passengers are also injured and no claim is filed and all this is not proved before Tribunal,

liability in such a case would be Rs. 50,000/- per passenger. This is the only plausible and reasonable interpretation that can be placed on the

relevant clause.

Mr. Kohli, the learned counsel for respondent No. 1, contended that in a case where company pleaded limited liability of Rs. 5,000/- onus

would be on it to show that more than one passenger was involved in the accident and that claims were pending on their behalf. I see much merit in

the contention, more so in the face of settled legal position that plea of limited liability by an insurance company demands proof. In the present

case, appellant company has not taken any such plea in its written statement, not to speak of furnishing any proof thereof.

The second contention raised by appellant company is also misconceived. The company cannot invoke the aid of Section 95(2)(b) in the face of

the contract stipulating more liability than the one prescribed by the statute. It is well settled that nothing prevents an insurer to contract for a higher

liability, notwithstanding limits set out in the statute.

Mr. Johl has cited Padmanabhan Nair Vs. Narayanikutty and Another, , Venkataswami Motor Service P.N. Palayam Vs. C.K. Chinnaswamy

and Others, and Oriental, Fire & Genl. Ins. Co. Ltd. v. Chitra Gupta 1984 ACJ 628. I find these decisions distinguishable and of no avail to

appellant.

In the light of aforesaid discussion, I see no reason to disturb the conclusion recorded by Tribunal. This appeal, therefore, fails and is

dismissed. Record be returned to the Tribunal concerned.