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Mrs. Kela Devi And Others v. Shri Ram Chand And Others
Factual and Procedural Background
The case involves an appeal concerning liability for compensation of Rs. 1,25,000/- related to a bus accident. The court had earlier held M/s. New India Assurance Company Ltd. liable for the compensation, noting that the bus was comprehensively insured with the Insurance Company (Respondent No. 3). The Insurance Company took responsibility to contest the claim on behalf of all respondents and filed a written statement accordingly. Subsequently, the Insurance Company appealed against this order to the Division Bench, which directed that the issue of the Insurance Company's liability be re-argued before the single judge. The matter was re-listed specifically to address this point.
Legal Issues Presented
- Whether the Insurance Company can be held liable beyond the limits of the ‘Act Only’ policy without production of the insurance policy or evidence limiting their liability.
- Whether the burden was on the claimant or the Insurance Company to produce or prove the terms and limits of the insurance policy.
- Whether a presumption of unlimited liability can be drawn against the Insurance Company in the absence of the policy or evidence restricting liability.
Arguments of the Parties
Insurance Company's Arguments
- The liability to produce the insurance policy rested on the vehicle owner, which was not done.
- The claimants should have compelled the Insurance Company to produce the policy.
- The Tribunal could have ordered production of the policy under Order 11 Rules 14 & 16 of the Civil Procedure Code.
- Without such compliance, no presumption can be drawn against the Insurance Company beyond the liability fixed by the ‘Act Only’ policy.
- Reliance on a Madras High Court judgment (1970 ACJ 451) supporting the limitation of liability to the ‘Act Only’ policy amount.
Claimant's Arguments
- The Insurance Company did not plead before the Tribunal that its liability was limited to the ‘Act Only’ policy amount.
- All motor insurance policies under the Act are statutory and governed by fixed tariffs, preventing higher premiums.
- Courts currently take the position that in absence of the policy, the Insurance Company’s liability should be considered unlimited.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 1970 ACJ 451 (Madras High Court) | Limitation of insurance liability to the ‘Act Only’ policy amount where policy is produced or admitted. | The Court distinguished this judgment as inapplicable because in the present case no policy was produced and no plea limiting liability was taken by the Insurance Company. |
| 1977 ACJ 501 | View that in absence of production of policy or proof limiting liability, Insurance Company’s liability is unlimited. | The Court referred to this judgment to support the consistent view taken by judges handling accident claims. |
| 1984 ACJ 255 (Punjab & Haryana High Court Division Bench) | Support for the proposition that without production of policy or proof of limited liability, Insurance Company’s liability is unlimited. | The Court relied on this Division Bench judgment as authoritative support for its position. |
Court's Reasoning and Analysis
The Court analyzed the pleadings and evidence concerning the Insurance Company's liability. It noted that the Insurance Company accepted the vehicle was insured with it but did not plead any limitation of liability to the ‘Act Only’ policy. The written statement was silent on limiting liability and instead denied the accident itself. The Court emphasized the principle that the party asserting a limitation of liability must prove it. Since neither the Insurance Company nor the vehicle owner produced the insurance policy or evidence of limited liability, the Court held that the liability must be considered unlimited.
The Court rejected the Insurance Company's argument that the claimant or Tribunal should have compelled production of the policy, stating no such legal obligation existed given the pleadings. It distinguished the Madras High Court precedent relied upon by the Insurance Company on the ground that it was decided on the basis that the parties proceeded on the assumption of an ‘Act Only’ policy, whereas here no policy was produced and the claimant asserted a comprehensive policy with unlimited liability.
Thus, the Court confirmed its earlier order holding the Insurance Company liable for the full compensation amount.
Holding and Implications
The Court confirmed the earlier order holding M/s. New India Assurance Company Ltd. liable to pay Rs. 1,25,000/- as compensation with unlimited liability.
The direct effect of this decision is that the Insurance Company must satisfy the compensation awarded. The Court did not set any new precedent but reaffirmed the established legal principle that in the absence of production of the insurance policy or proof limiting liability, the Insurance Company's liability is unlimited. This places the burden on the Insurance Company to prove any limitation of liability.
S.B Wad, J.:— On May 9, 1985 I pronounced an order in this appeal, holding M/s. New India Assurance Company Ltd., liable to pay Rs. 1,25,000/- towards compensation. In this order I had observed that the bus was comprehensively insured with Respondent No. 3, the Insurance Company. The Insurance Company took the liability on itself to contest the claim on behalf of all the respondents and it filed a written statement on behalf of all the respondents. The liability for the payment of compensation is, therefore, of Respondent No. 3.
2. The counsel for the Insurance Company appeared before me and stated that the Insurance Company have preferred an appeal against the said order to the Division Bench and that the Division Bench desired that he should re-agitate the point of the liability of the Insurance Company before me. The appeal was, therefore, re-listed for arguments on this short point.
3. Mr. Sabharwal, appearing for the Insurance Company, submits that it was the liability of the owner of the vehicle to produce the Insurance policy. That not having been done, the claiments should have called upon the Insurance Company to produce the copy of the policy, which too was not done. The Tribunal also could have passed an order for the production of the policy under order 11 rule 14 & 16 c.p.c His arguments is that without compliance with these requirements of law no presumption can be drawn against the Insurance Company beyond the liability fixed by the ‘Act Only’ policy. In other words, his submission is that on this presumption, the Insurance Company cannot be held liable for unlimited amount. He has relied upon the judgment of the Madras High Court reported at 1970 ACJ Page 451.
4. The counsel for the claimant in reply submits that there is no, pleading by the Insurance Company before the Tribunal that their liability, was limited to only the liability under the ‘Act Only’ Policy. He then submits that all policies under the act, such as Act Only Policy, Third Party Policy and Comprehensive Policy are statutory policies in the sense that no Insurance Company can charge higher premium than the one laid down by the Tarrff Committee described as India Motor Tarrifs. He than submits, that the view which is currently being taken by all Courts is that in the absence of the policy the liability of the Insurance Company can be taken to, be unlimited liability.
5. The short paragraph quoted from my order needs some explanation. I have been dealing with the accident claim matters for a long time and I have taken a consisten view all along that where the policy is not produced and the Insurance Company does not prove that the liability was restricted only to the amount under the ‘Act Only’ Policy, the liability of the Insurance Company is unlimited. This view was also being taken by Sultan Singh, J. who was earlier hearing the accident claim matters. One such judgment can be referred to as 1977 ACJ Page 501. The Division Bench of the Punjab & Haryana High Court in 1984 ACJ Page 255 has also taken this view. There is, thus, a Division Bench judgment supporting the proposition stated above.
6. In the present case the claimants in para 17 of their claim petition stated that the vehicle was insurenced with respondent No. 3, the Insurance Company. A common written statement was filed on behalf of the respondents and particularly the owner of the vehicle and the Insurance Company. In reply to para 17 it was stated that the fact urged in para 17 of the claim petition was not denied. Thus, the position is that the respondents including the Insurance Company, accept that the vehicle was in fact registered with respondent No. 3. Apart from the written statement the defence in the matter was fully taken over by respondent No. 3 on behalf of all the respondents. It is intersting to note that in para 8 of the written statement, it was asserted by the respondents that no accident took place with they vehicle belonging to the respondent. Para 14 it was asserted that the vehicle mentioned was never involved in any accident. Although the question of liability is elaborately denied even to the extent of the accident taking place or the vehicle being involved in the accident, the written statement is blissful silent as regards the liability of the Insurance Company. It is not stated in the written statement that the liability of the Insurance Company was limited only to the amount on the ‘Act Only’ Policy. Even in this Court the Insurance Company has not taken any plea that their liability is limited to the amount against the ‘Act Only’ Policy, No effort was made in this Court either to produce the policy or any evidence in support of that assertion. With this state of preadings the question as regards the unlimited liability of the Insurance company would itself stand admitted. No policy has been produced either by the owner or by the Insurance Company. If the Insurance Company wanted its liability to be limited to ‘Act Only’ Policy apart from the specific averment in the written statement, it was incumbent on them to produce some evidence in support of their plea which is now being raised before me. The evidence as regard the premium paid or copy of the insurance policy could have been produced by the Insurance Company. As the present argument goes, the Insurance Company is asserting that its policy was limited only to the amount of the ‘Act Only’ policy. If the Insurance Company was to assert that its liability was not an unlimited liability but limited only to the ‘Act Only’ Policy, the duty and the burdent to prove the same was on the Insurance Company. One who asserts must prove. Was it necessary for the claimant or for the Tribunal to issue notice to the Insurance Company to produce the insurance policy or the evidence in support of their claims? Neither in law nor on the state of pleadings in this case it was necessary to do so. Therefore, there is no substance in the submission of the counsel for the Insurance Company that the Court cannot draw presumption of liability higher than the one prescribed by the Act, namely the amount of ‘Act Only’ Policy, 1970 ACJ 451 is the judgment of the full Bench of the Madras High Court. That judgement is of no avail to the Insurance Company and is clearly distinguishable on facts. In paragraph 16 it is made clear that the Court was proceeding on the footing that the policy in force was an ‘Act policy’ because both the parties had proceeded to argue the case on that footing. In the present case no policy had been produced and the assertion of the claimant was that it was a comprehensive third party policy with unlimited liability for the Insurance Company.
7. There is no substance in the submission of the counsel for the insurance Company. With this clarificatory note, the order passed by me on May 9, 1985 is confirmed.
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