The Manager The National Insurance Co. Ltd., J.N.Street, Pondicherry v. Vedavalli @ Vedanayagi & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 03.07.2008C O R A MTHE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR C.M.A.No.1371 of 2002The ManagerThe National Insurance Co. Ltd.,J.N.Street, Pondicherry...Appellant/3rd RespondentVs.1.Vedavalli @ Vedanayagi...1st Respondent/1st Petitioner2.Thirunavookkarasu (late minor...2nd Respondent/2nd Petitioner now attained majority)3.Raniammal...3rd Respondent/1st Respondent This Civil Miscellaneous Appeal has been filed under Section 173of the Motor Vehicles Act, 1988 as against the Judgment and award ofthe Motor Accidents Claims Tribunal (III Additional District Judge),Pondicherry dated 30.08.2001 made in M.C.O.P.No.167/2008.For Appellant: Mr.K.S.NarasimhanFor Respondents: Mr.R.Sathiyakumar (for R1&R2)Respondent 3 : No appearance.J U D G M E N TThe National Insurance Co. Ltd., which figured as the 2ndrespondent before the Motor Accidents Claims Tribunal (III AdditionalDistrict Judge), Pondicherry has brought-forth this CivilMiscellaneous Appeal under Section 173 of the Motor Vehicles Act, 1988against the judgment and award of the said Tribunal dated 30.08.2001made in M.C.O.P.No.167 of 1988 on the file of the said Tribunal.2. The first and second respondents herein claiming to be thelegal heirs and dependents of deceased Thirugnanam @Thirugnanasambandam had preferred a claim on the file of the MotorAccidents Claims Tribunal, Pondicherry in M.A.C.T.O.P.No.167 of 1988under section 110-A of the Motor Vehicles Act, 1939 (old Act) prayingfor an award directing the respondents 3 and 4 and the appellantherein to pay a sum of Rs.1,00,000/- as compensation for the death ofthe above said Thirugnanam @ Thirugnanasambandam due to the injuriessustained by him in an accident that took place on 13.06.1988 at about9.00 p.m on the Cuddalore-Pondicherry Main Road at Kattukuppam https://hcservices.ecourts.gov.in/hcservices/ opposite to industrial estate. 3. According to the petition averments, while the above saidThirugnanam @ Thirugnanasambandam was proceeding in his bicycle fromKannikovil to Kattukuppam riding the same on the extreme left side ofthe road, the car belonged to the third respondent (first respondentin the MCOP) bearing Regn.No.PYX 933 hit him and caused the accidentas the said vehicle was driven by its driver at high speed withrashness and negligence. The rash and negligent driving of the car byits driver was the sole cause of the accident and hence the thirdrespondent, being the owner of the said vehicle is liable to paycompensation to the first and second respondents who are respectivelythe mother and son of the deceased. Soon after the accident, thedeceased Thirugnanam @ Thirugnanasambandam was taken to the hospitaland there he was given treatment as an in-patient for two days whichproved ineffective and ultimately deceased Thirugnanam @Thirugnanasambandam succumbed to the injuries on 15.06.1988. 4. Contending further that the deceased, at the time of hisdeath, was aged about 34 years and was having a monthly income of notless than Rs.700/- per month in his profession as a tractor driver,the respondents 1 and 2 herein (petitioners in the MCOP) at the firstinstance had claimed a sum ofRs.1,00,000/- as compensation for theloss suffered by them due to the untimely death of the saidThirugnanam @ Thirugnanasambandam and subsequently amended the prayerclaiming a sum of Rs.3,00,000/- with future interest at the rate of 9%from the date of petition till the date of realisation and litigationcosts against the third respondent herein and the appellant herein intheir capacities as the owner and insurer of the said vehiclerespectively. 5. Though, the third respondent herein/the first respondent inthe MCOP, who was admittedly the owner of the above said car involvedin the accident at the time of accident, had entered appearancethrough a counsel, he did not file a counter statement and theappellant insurance company which figured as the second respondentbefore the Tribunal above contested the claim by filing a counterstatement denying the petition averments and contending that theaccident occurred due to the negligence of the deceased who was ridingthe bicycle in a zig-zag manner as he was under the influence ofalcohol. The further contention raised in the counter statement of theappellant herein was that the liability of the insurance companynamely (the appellant herein/second respondent in the MCOP) waslimited to Rs.50,000/- only per accident and that the compensationclaimed by the respondents 1 and 2 herein/claimants was highlyexcessive and exorbitant. 6. Based on the rival pleadings, the Tribunal framed necessaryissues and conducted trial. In the trial, two witnesses were examinedas P.W.1 and P.W.2 and eight documents were marked as Ex.A1 to Ex.A8on the side of the Respondents 1 and 2 herein/petitioners in the MCOP.Except marking Ex.B1 with the consent of the parties no other evidencewas adduced by the appellant herein/2nd respondent in the MCOP. Atthe conclusion of trial, after hearing the arguments advanced on https://hcservices.ecourts.gov.in/hcservices/ either side and upon considering the evidence adduced on either sidein the light of the arguments advanced, the learned Tribunal came tothe conclusion that the accident occurred solely due to the rash andnegligent driving of the Ambassador car belonging to the thirdrespondent herein by its driver. 7. The appellant insurance company had also contended in itscounter statement that the respondents 1 and 2/claimants should provethat the driver of the car involved in the accident was having aproper license to drive the same and that the car was covered withproper documents as contemplated under the Motor Vehicles Act, 1988.The Tribunal also held that it was the duty of the insurance companyto plead and prove any violation of any policy condition includingabsence of driving license for the driver to drive the vehicleinvolved in the accident, but the appellant herein failed to prove thesame by adducing evidence. 8. The Tribunal assessed the compensation to which respondents 1and 2 are entitled as Rs.1,55,000/-. Even though the Tribunal acceptedthe contention of the appellant (insurer) that the liability of theinsurer under the policy was restricted to Rs.50,000/-, it held theappellant and the third respondent herein, as the insurer and theowner respectively of the vehicle involved in the accident, jointlyand severally liable to the entire extent of the compensation anddirected the third respondent herein and the appellant herein tojointly and severally pay the said amount of Rs.1,55,000/- togetherwith an interest at the rate of 9% per annum from the date of petitiontill realisation and with costs. The Tribunal also directed that inthe event of the appellant paying full amount of compensation to therespondents 1 and 2 (petitioners in the MCOP), the appellant shall beentitled to recover from the third respondent herein the excess amountpaid over and above Rs.50,000/-. The appellant (insurer) hasbroughtforth this Civil Miscellaneous Appeal. 9. Aggrieved by and challenging the said award holding theappellant (insurer) liable to the entire extent of damages arrived atby the Tribunal, incorporating a condition that in the event of theappellant paying the full award amount to the respondents 1 and2/claimants, the appellant shall be entitled to recover from thethird respondent the excess amount paid over and above the sum ofRs.50,000/-. Since the Motor Vehicles Act, 1939 was repealed andreplaced by Motor Vehicles Act, 1988 during the pendency of the MCOP,the present appeal has been filed under Section 173 of the MotorVehicles Act, 1988 challenging the award of the Tribunal in so far asit directs payment at the first instance and recovery from the thirdrespondent of the excess amount paid over and above Rs.50,000/-. 10. The point that arises for consideration in this civilmiscellaneous appeal is as follows:-"Whether the Tribunal has committed an error indirecting the appellant to pay the entire award amount at thefirst instance and recover the excess amount paid over andabove Rs.50,000/- from the third respondent (owner of the https://hcservices.ecourts.gov.in/hcservices/ vehicle), even after holding that the liability of theappellant insurer was limited to Rs.50,000/-?."11. The arguments advanced by Mr.K.S.Narasimhan, learned counselfor the appellant and Mr.R.Sathiyakumar, learned counsel for therespondents 1 and 2 were heard and the materials available on recordwere perused.12. There is no controversy regarding the fact that oneThirugnanam @ Thirugnanasambandam, the son of the first respondentherein and the father of the second respondent herein/claimants metwith an accident on 13.06.1988 at about 9.00 p.m on the Cuddalore-Pondicherry Main Road at Kattukuppam, opposite to industrial estate inwhich he was hit by the Ambassador car bearing Registration No.PYX933; that the said accident resulted in grievous injuries which provedto be fatal after two days as the said Thirugnanam @Thirugnanasambandam succumbed to the injuries on 15.06.1988 despitetreatment given to him as an in-patient and that the said Ambassadorcar at the time of accident belonged to the third respondent hereinand stood insured with the appellant herein. The finding of theTribunal based on the oral and documentary evidence adduced on theside of the respondents 1 and 2 herein that the accident was theresult of rash and negligent driving of the said car by its driver hasnot been challenged in this civil miscellaneous appeal. As there isno challenge to the said finding on the question of negligence, thesame has got to be confirmed. 13. The deceased Thirugnanam @ Thirugnanasambandam, according tothe averments made in the claim petition, at the time of accident wasaged about 34 years and was having a monthly income of Rs.700/- as atractor driver. Relying on the judgment of the Hon'ble Supreme Courtin Susamma Thomas case reported in AIR 1994 SC 1, the average monthlyincome of the deceased was assessed by the Tribunal at Rs.1,200/-.The Tribunal deducted 2/5th from the said amount towards expenses ofthe deceased for maintaining himself had he been alive and assessedthe dependency at Rs.700/- per month, which is equivalent toRs.8,400/- per annum. Relying on Ex.A5 - Birth Certificate, theTribunal found the age of the deceased at the time of death to be 33years, selected '17' as the appropriate multiplier and calculated thedamages for the loss of dependency at Rs.1,42,800/-. A sum ofRs.2,000/- towards funeral expenses and a sum of Rs.10,000/- towardsloss of consortium and loss of love and affection were also awarded.The total amount of compensation was, thus arrived at Rs.1,54,800/-and rounded to Rs.1,55,000/- by the Tribunal. No challenge has beenmade either by the appellant herein or by the respondents herein tothe assessment of damages to which the respondents 1 and 2 wereentitled. Therefore, the question of quantum of damages is a non-issue in this appeal. The only challenge made to the award of theTribunal is that the appellant insurance company's liability under thepolicy of insurance having been fixed at Rs.50,000/-, the Tribunalshould not have held the appellant jointly and severally liable alongwith the third respondent to pay Rs.1,55,000/- along with interest andcosts. https://hcservices.ecourts.gov.in/hcservices/

14. It is the contention of the learned counsel for the appellantthat the method of payment first and recovery next should not beadopted in a case wherein the liability of the insurer is proved to belimited to a certain extent alone. According to the contention of thelearned counsel for the appellant, only in case of avoidance ofcontract of insurance on the ground of violation of policy conditions,in order to safeguard the interest of the victim against the avoidanceof such liability towards the third party victims, the method ofdirecting payment and recovery should be adopted and application ofthe said method to a case wherein there is no coverage of insuranceand to a case of limited liability beyond the monetary ceiling shallvirtually result in injustice. 15. In support of his contention, the learned counsel for theappellant relied on the judgment of a full bench of this court inJayalakshmi and others V. The Ruby General Ins. Co. Ltd. Madras, andanother reported in 1970 ACJ 451, a judgment of the Hon'ble SupremeCourt in New India Assurance Co. Ltd., V. Krishan Pal Singh and othersreported in 2000 ACJ 522. It is the contention of the appellant thatas per the old Act - Motor Vehicles Act, 1939 as it stood on the dateof the accident, vehicles had been classified into three categoriesnamely, goods vehicles, vehicles carrying passengers for hire orreward and vehicle of any other class; that the vehicle concerned inthis appeal fell in Sub-clause 2(b) of Section 95 of the old Act; thatas per the said provision, it was mandated that a policy should coveratleast the risk involved to any person other than passengers carriedfor hire are rewarded to an extent of Rs.50,000/-; that the minimumrequirement of the statutory provision alone was sought to be compliedwith in taking an insurance policy for the vehicle involved in theaccident, a copy of which has been marked as Ex.B1 and that hence theliability towards the respondents 1 and 2, the legal heirs anddependents of deceased Thirugnanam @ Thirugnanasambandam (a thirdparty victim) was only to the extent of Rs.50,000/-. 16. It is the further contention of the learned counsel for theappellant that though the statute required minimum coverage there wasno impediment for the owner of such a vehicle to get a policy for alarger coverage and that such a choice given to the owner of thevehicle (insured) was not exercised for getting a policy with widercoverage than the minimum requirement of the statute. The learnedcounsel for the appellant also contended no doubt Ex.B1 would revealthat the policy issued to the vehicle was a comprehensive policy, butthe term "comprehensive policy" would not necessarily mean thecoverage of the third party to an unlimited extent; that whenever apolicy is obtained with more coverage than what was required as aminimum under the Act, the same would be called comprehensive policy;that a policy which covers the minimum requirement of the statutetowards third party and the persons carried in the vehicle plus theowner's risk shall also be called a "comprehensive policy" and thathence, the mere term comprehensive policy will not indicate that thecoverage of third party risk had been made unlimited. 17. The learned counsel for the appellant pointed out the factthat though premium for the owner's risk towards the damage that may https://hcservices.ecourts.gov.in/hcservices/ be caused to the vehicle had been paid on a certain percentage ofinsured's estimated value of the vehicle, additional premium had notbeen paid to enhance the liability towards third party and the furtherfact that the policy itself contained a specific clause that theliability of the insurer under Section 11(1) in respect of any oneaccident shall be limited to the amount as is necessary to meet therequirements of Motor Vehicles Act, 1939 and that the amount of thecompany's liability under Section 11-1(ii) in respect of any one claimor series of claim arising out of one event shall be Rs.50,000/-. Ithas also been pointed out that for increasing the liability towardsthird party either to an unlimited extent or upto a particular limit,no additional premium had been collected. 18. In this regard the learned counsel for the appellant hasrelied on the judgment of a full bench of this court in Jayalakshmiand others V. The Ruby General Ins. Co. Ltd. Madras, and anotherreported in 1970 ACJ 451, a judgment of the Hon'ble Supreme Court inNew India Assurance Co. Ltd., V. Krishan Pal Singh and others reportedin 2000 ACJ 522 cited supra. A full bench of this court in the firstof the above cited cases and the Hon'ble Apex court in the second ofthe above cited cases, have taken a view that the liability of theinsurance company in case of a policy which has been taken to coverthe Act liability towards third party shall be limited to the extentprescribed in Section 95(2)(b)(i) of the Motor Vehicles Act, 1939. 19. In New India Assurance Co. Ltd., V. C.M.Jaya and Othersreported in 2002 AIR SCW 259, a constitutional bench of the Hon'bleSupreme court has taken a view that in case of the insurance companynot taking any higher liability by accepting a higher premium forpayment of compensation to a third party, the insurer would be liableto the extent limited under Section 95(2) of the Act (1939 Act) andwould not be liable to pay the entire amount of compensation. It hasalso been observed that there was nothing in Section 95 of the Actprohibiting the parties from contracting to create unlimited or higherliability to cover wider risk; that in such an event the insurer wasbound by the terms of contract as specified in the policy creatinghigher or unlimited liability as the case may be; that in the absenceof such a clause in the contract of insurance, the limited statutoryliability could not be expanded to make it unlimited or higher andthat if it was so done it would amount to rewriting the statute or thecontract of insurance, which was not permissible. 20. Similar view was expressed in National Insurance Co. Ltd. V.Keshav Bahadur & Others reported in 2004(1) TN MAC 184(SC). It wasalso observed therein that simply because higher premium was paid,liability with regard to the third party risk did not become unlimitedor higher than the statutory liability and that for the higher risk inrespect of third party, a specific agreement had to be made betweenthe insured and the insurer and separate premium had to be paid inrespect of additional amount of liability undertaken by the insured inthat regard.21. The learned Motor Accidents Claims Tribunal relying on thejudgment of the Apex court came to a correct conclusion that the https://hcservices.ecourts.gov.in/hcservices/ liability of the insurer (appellant) under the policy, a copy of whichhas been marked as Ex.B1, was limited to the extent of Rs.50,000/-.However, the learned Motor Accidents Claims Tribunal has transgressedthe limit without any basis and on an erroneous assumption that in allcases, the liability of the insurer towards the third party shall beunlimited, held that the liability of the insurer (appellant) towardsthe respondents 1 and 2 (third parties) to be a co-extensive with thatof the third respondent (owner of the vehicle), with a qualificationthat any excess amount which the insurer (appellant) was obliged topay under the award over and above the liability fixed by contractcould be recovered from the insured (3rd respondent). The saidapproach made by the learned Motor Accidents Claims Tribunal is quiteerroneous. Courts have so far gone to the rescue of the poor victimsby directing the insurer to pay the compensation payable by theinsured not withstanding the fact that there had been violation ofpolicy conditions giving a rise to a right to the insurer to rescindand repudiate the contract. Only in cases of coverage of risk and tothe extent of coverage alone, the method of directing payment firstand recovery next has been adopted. In no case the insurer has beendirected to satisfy the claim in case of no coverage at all or overand above the limit when the coverage is limited. In theauthoritative pronouncement made by the Hon'ble Supreme Court in thejudgments cited supra, it has been observed that it would be unethicalto mulct the liability on the insurer to satisfy the claim of thethird party against insured if there is no coverage at all or todirect the insurer to incur liability over and above the limit fixedas per the contract of insurance of course with a rider to getreimbursed from the insured in the absence of a statutory provisionmaking the liability unlimited as the minimum requirement of policy inrespect of a particular category of persons. 22. In this case, as per Section 95(2) of the Motor Vehicles Act,1939 which was in force on the date of accident, the minimum limit ofcoverage in respect of third party risk was Rs.50,000/- and the policyitself had been issued with a specific clause that the liability ofthe insurer towards the third party would be only to the extent ofRs.50,000/-. It is also abundantly clear from the policy that noextra premium for making the liability unlimited or higher than thestatutory minimum was received by the insurer. Under suchcircumstances, the award of the Tribunal holding the liability of theinsurer (appellant) co-extensive with that of the insured has got tobe set aside and modified. 23. In the result, the civil miscellaneous appeal succeeds andthe award of the Tribunal is modified by limiting the liability of theappellant insurance company to Rs.50,000/- plus proportionate interestand cost. As it is represented that the entire award amount wasdeposited by the appellant to the credit of the MCOP, the excessamount deposited by the appellant insurance company shall be refundedto the appellant. The respondents 1 and 2/ claimants shall beentitled to payment out of the above said sum of Rs.50,000/- plusproportionate interest and proportionate cost out of the amountdeposited by the appellant insurance company, if not alreadywithdrawn. The respondents 1 and 2/claimants shall recover the https://hcservices.ecourts.gov.in/hcservices/ balance amount from the third respondent herein (first respondent inthe MCOP). In all other respects, the award of the Tribunal shallstand confirmed. There shall be no order as to cost.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.asrTo1) The Motor Accidents Claims Tribunal (III Additional District Judge), Pondicherry1 cc to Mr.K.S.Narasimhan,Advocate, SR.35022Copy to The Record Keeper, V.R.Section, High Court, Madras.C.M.A.No.1371/2002SSN(CO)EM/8.12.08