United India Insurance Company Limited vs Smt. Nirmala Rani and Others

Sat Pal, J.—This appeal has been filed by United India Insurance Co. Ltd. (hereinafter referred to as the Insurance Company) against the award dated 19th October, 1989, passed by the Motor Accident Claims Tribunal,Ludhiana.

Briefly staled, that facts of the case are that deceased Sudarshan Kumar Prabhakar, who was working as a Civilian Assistant Fire Master was coming back to his home after doing his duty on 23rd December, 1987 and was hit by a bus bearing Registration No. PAB 7190 belonging to Nankana Sahib Transport Co. Pvt. Limited, Ludhiana (respondent No. 6) which was being driven by Driver Mohan Singh (respondent No. 7). As a result of this accident, the deceased died on the spot. Thereafter, an application under Section 110A of the Motor Vehicles Act (in short, the Act) was filed on behalf of the legal heirs of the deceased in the court of Motor Accident Claims Tribunal, Ludhiana, in the year 1988. The Motor Accident Claims Tribunal vide his award, dated 29th October, 1989, held that Nankana Sahib Transport Co. Pvt. Limited was the owner of the bus which hit the deceased and Mohan Singh, respondent No. 7 was the driver of the bus. It further held that the accident was caused due to the rash and negligent driving of the said bus being driven by respondent Mohan Singh, resulting in the death of deceased Sudershan Kumar Prabhakar. The learned Tribunal also gave the finding that the said bus was insured with the Insurance Company and the total liability was got enhanced by the owner of the bus by making an extra payment through cheque dated 22.12.1987, which was received on the same date by the Insurance Company and as such the total third-party liability was enhanced to Rs. 3 lacs by the Insurance Company and as such the total third-party liability was enhanced to Rs. 3 lacs by the Insurance Company. Keeping in view these facts, the learned Tribunal awarded compensation to the tune of Rs. 2,16,000/- to the claimants with costs. Aggrieved by the aforesaid award, the present appeal has been filed by the Insurance Company.

This appeal was admitted by a Division Bench of this Court on 28th March, 1990 and the recovery of amount beyond Rs. 50,000/- was stayed. Thereafter the case came to for final arguments before a learned Single Judge of this Court on 22nd October, 1992, on which date the learned Single Judge directed that the papers of the case be laid before Hon''ble the Acting Chief Justice for constitution of a larger Bench as the point "whether the liability of the Insurance Company is limited to Rs. 50,000/- in view of the provisions of the policy read with Section 95(1)(b) of the Act" involved in this case was of considerable importance. It is in these circumstances that this appeal was listed before this Bench.

Mr. Munishwar Puri, learned counsel appearing on behalf of the Insurance Company drew our attention to the statement of AW 7, and submitted that the said witness had clearly proved that cheque dated 22.12.1987 with regard to the enhanced liability, was received by the Insurance Company on 24th December, 1987 and the endorsement was effective from 24th December, 1987. He, therefore, contended that the enhanced liability on the policy could become effective only from the date when the acceptance of the cheque was communicated by the authorised officer of the Insurance Company on 24th December, 1987. He submitted that in the present case, the enhanced liability could, therefore, he effective earliest with effect from 24th December, 1987. He submitted that admittedly the deceased as a result of the accident died on 23rd December, 1987 and as such the claimants were not entitled to any amount on the basis of the enhanced liability. He, therefore, contended that the Insurance Company was not liable to pay any amount beyond Rs. 50,000/- which has already been paid to the claimants. In support of his contention, the learned counsel placed reliance on a judgment of the Supreme court in Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba and Ors. 1984 SC 1014.

The learned counsel further submitted that as per evidence on record, the age of the deceased at the time of accident was 53 years and the learned Tribunal was not correct in applying multiplier of 12 in the present case. In support of his submission, the learned counsel placed reliance on a judgment of the Supreme Court in Janta Travels Pvt. Ltd. Vs. Punjab Chemi-plants Ltd., and two judgments of this Court in Jupiter General Ins. Co. Ltd. and Ors. v. Balkishan and Anr. 1985 ACJ 77 and Smt. Bhagwani Devi v. Krishan Kumar Saini and Ors. (1986) 90 P.L.R. 378.

Mr. Gupta, learned counsel appearing on behalf of the respondents/claimants, however, submitted that the learned Tribunal had given a clear finding of fact that the cheque with regard to enhanced liability was delivered in the office of the Insurance Company on 22.12.1987, i.e. a day before the date of accident. He, therefore, contended that the Insurance Company was liable, to pay the entire amount awarded by the learned Tribunal.

We have given our thoughtful consideration to the submissions made by the learned counsel for the parties and have perused the records. From the evidence of N.S. Bindra (AW7) we find that the acceptance of the cheque dated 22.12.1987 with regard to the enhanced liability was communicated by the Insurance Company vide Exhibit AW7/3 which is dated 24.12.1987. Along with this letter, the Insurance Company had enclosed the endorsement enhancing third parts liability to 3 lacs and the endorsement which is Exhibit AW 7/4 is again dated 24.12.1987. In view of these facts, the finding of the learned Tribunal that the enhanced third party limit of Rs. 3 lacs was effective from 22nd December, 1987, cannot be sustained. The finding of the learned Tribunal to the effect that Exhibit AW 7/3 which was made effective from 24.12.1987 was made later on, on receipt of information about the accident, is again based on no legal evidence. The evidence on record clearly shows that the acceptance of the cheque regarding enhanced liability was communicated to respondent No. 6 on 24.12.1987. We, therefore, hold that the Insurance Company was liable to pay only Rs. 50,000/- and not any further amount on account of enhanced liability. The view we have taken finds full support from the judgment of Hon''ble Supreme Court in the case of Raja Vasireddy Komalavalli Kamba (supra), wherein the Hon''ble Supreme Court observed as follows:-

"The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed." 8. Since we have held that the Insurance Company is not liable to pay any amount beyond Rs. 50,000/- and the owner and the driver of the bus have not filed any appeal against the impugned award, we do not deem it necessary to go into the question of multiplier raised by the learned counsel for the Insurance Company.

For the reasons recorded herein above, the appeal is allowed and it is held that the liability of the Insurance Company is Rs. 50,000/- only and the Insurance Company is not liable to pay any further amount on account of enhanced liability. We may, however, make it clear that the claimants are at liberty to recover the balance amount of the award from the owner of the bus (respondent No. 6) and the driver of the bus (respondent No. 7). The parties are, however, left to bear their own costs.