Pleading-Based Limitation of Liability:
Manjusha v. United India Assurance Co. Ltd. (2025) and the New Rule on Insurer Defences

1. Introduction

Background: The case arises from a tragic single-vehicle accident in which the driver, the brother of the vehicle owner, died when a rear tyre burst, causing the car to topple. His widow, minor children and parents (the “claimants”) sought compensation before the Motor Accident Claims Tribunal (MACT) under the Motor Vehicles Act, 1988 (“MV Act”). The Tribunal awarded ₹25,82,000 with interest at 8% p.a.

Insurance Company’s Challenge: United India Assurance Co. Ltd. appealed, arguing that (a) the deceased was the driver and therefore “steps into the shoes of the owner,” making him the tort-feasor, and (b) the comprehensive policy limited the insurer's liability for an owner/driver’s death to ₹2,00,000.

High Court’s Ruling: Accepting the insurer’s argument, the High Court reduced liability to ₹2,00,000, purportedly based on the policy and Indian Motor Tariff (IMT) guidelines.

Issue before the Supreme Court: Whether, in the absence of pleadings or proof of a policy limit, the insurer could rely on an alleged limitation contained in the policy/IMT to restrict its liability towards the deceased owner-driver.

2. Summary of the Judgment

• The Supreme Court (per Vinod Chandran & Sudhanshu Dhulia, JJ.) allowed the appeal and reinstated the MACT award in full.
• The Court held that an insurer cannot rely on a defence of “limited liability” unless that defence is specifically pleaded in the written statement and supported by production of the policy in evidence.
• IMT guidelines or tariff provisions, though binding on insurers internally, do not override the terms actually embodied in the policy or cure the absence of pleadings.
• Because United India neither pleaded nor proved the limit before the Tribunal or in its memorandum of appeal, the High Court erred in raising and accepting the defence suo motu.
• Full compensation of ₹25,82,000 with 8% interest was ordered to be paid within two months, subject to deduction of amounts already paid.

3. Analysis

3.1 Precedents Cited and Distinguished

Key thread: All precedents relied upon by the insurer dealt with statutory third-party liability under §§147, 163-A or owner’s fault, not with a contractual personal-accident cover where limitation was un-pleaded.

1. Oriental Ins. Co. v. Rajni Devi (2008) 5 SCC 736
   – Concerned statutory liability under §163-A; held pillion rider not covered when owner paid extra premium only for self.
   – Distinction: here, claim is on a separate contractual personal-accident (PA) cover, not an extension of third-party cover.
2. Oriental Ins. Co. v. Jhuma Saha (2007) 9 SCC 263
   – Owner at fault cannot claim indemnity under §166.
   – Distinction: No negligence alleged; tyre burst = no fault; moreover, Court is dealing with contractual PA cover.
3. Dhanraj v. New India Assurance (2004) 8 SCC 553
   – Held that unless PA cover is specifically taken, owner not covered.
   – Applied positively: Supreme Court noted that a PA cover was admittedly taken in Manjusha.
4. National Ins. Co. v. Laxmi Narain Dhut (2007) 3 SCC 700 & Ramkhiladi v. UIIC (2020) 2 SCC 550
   – Clarified that vehicle damage or own-damage disputes belong to consumer fora & that driver “steps into the shoes of owner.”
   – Distinction: These cases concern statutory claims; Manjusha turns on pleading and proof of a contractual PA cover.
5. Ningamma v. UIIC (2009) 13 SCC 710 and New India v. Sadanand Mukhi (2009) 2 SCC 417
   – Denied §163-A claims where borrower/driver was tort-feasor.
   – Distinction: Again, no discussion of PA cover pleading requirements.

3.2 Legal Reasoning of the Supreme Court

The reasoning unfolds along three pillars:

1. Pleading & Proof Principle
   – Litigation is adversarial; each party must plead specific facts/defences.
   – Without a pleading, no evidence may be adduced; without evidence, no finding can be rendered (cf. Ramkhiladi para 9.3).
   – United India’s written statement (not produced) and High-Court memorandum (Annex P-2) contained no ground of limited liability.
2. Nature of Personal-Accident Cover
   – Unlike §147 statutory third-party coverage, PA cover is a contractual benefit purchased by paying additional premium.
   – Liability is determined not by statute but by the policy’s terms.
   – If the insurer wished to rely on a ceiling (e.g., ₹2,00,000 under IMT-16), it had to (a) produce the policy with the “Capital Sum Insured” inserted, and (b) plead the ceiling.
3. Role of IMT / Tariff Advisory Committee (TAC)
   – IMT frameworks guide insurers but do not, by themselves, modify an issued policy vis-à-vis the insured.
   – Absent incorporation into the policy or pleading, an IMT limit cannot be unilaterally invoked to defeat a claim.

3.3 Potential Impact on Future Litigation

• Heightened Burden on Insurers: Insurers must now scrupulously plead any limitation or exclusion, annex the policy, and lead evidence; failure invites full liability.
• Judicial Discipline for Appellate Courts: High Courts should refrain from raising un-pleaded defences suo motu—a reminder of appellate restraint.
• Clarity on PA Cover Jurisprudence: The decision demarcates statutory liability (third-party) from contractual PA cover (first-party) and affirms that contractual benefits stand unless expressly limited.
• Consumer-Protection Overlap: The Court obliquely re-endorses that own-damage disputes (including PA cover if contested) can also be canvassed before consumer fora, but only if policy terms support the defence.
• Practical Insurance Drafting: Insurers may revise policy documentation to ensure conspicuous caps and obtain explicit acknowledgments to avoid similar exposure.

4. Complex Concepts Simplified

Statutory Liability vs. Contractual Liability

Statutory liability arises automatically under the MV Act for third-party risks; contractual liability flows from additional covers voluntarily purchased (e.g., personal-accident cover).

“Steps into the Shoes of the Owner”

A legal fiction used when the driver is himself the owner or in the owner’s position; he cannot claim third-party compensation from himself.

Pleadings

The written assertions (plaint, written statement, appeal grounds) that frame the dispute. Courts decide only on pleaded issues unless public policy dictates otherwise.

Indian Motor Tariff (IMT)

A set of standardised policy wordings and premium rates issued by the Tariff Advisory Committee; while binding on insurers, it is not automatically binding on insureds unless incorporated in the policy.

Personal Accident (PA) Cover

An optional add-on cover that pays a fixed “Capital Sum Insured” on death or specified injuries to the owner/driver and, sometimes, unnamed passengers.

5. Conclusion

Manjusha v. United India Assurance crystallises a crucial procedural-substantive rule: an insurer cannot retrospectively rely on policy limitations that were neither pleaded nor proved. This reaffirms basic civil-procedure tenets, clarifies the distinction between statutory and contractual coverage, and safeguards claimants from post-hoc insurer defences. Going forward, insurers must litigate with meticulous pleadings and documentary support, while courts must resist the temptation to supply un-pleaded arguments. The decision thus fortifies fairness and predictability in motor-insurance jurisprudence.