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The Oriental Fire And General Insurance Company Limited. v. Shakuntala Garg And Others
Structured Summary of the Legal Opinion
Factual and Procedural Background
The deceased, Sh. G.D. Garg, died in a road accident caused by truck No. DLL-5127 on 8 October 1971 at about 2.15 P.M. on the Ring Road near Defence Colony. Respondent Nos. 1 to 4 (the legal heirs) filed a claim petition before the Motor Accident Claims Tribunal (the Tribunal). The Tribunal found that the driver of the truck had driven rashly and negligently and awarded Rs. 60,868/- to respondent Nos. 1 to 4, with costs and interest at 6% per annum.
The claimants (respondents) appealed the Tribunal's award in FAO No. 352/1980, and the insurance company filed FAO No. 353/1980. Both appeals were disposed of by the learned single Judge on 24 February 2000. The learned single Judge enhanced the compensation to Rs. 3,84,000/-, awarded interest at 12% from the date of filing of the claim petition until payment, and awarded Rs. 50,000/- for the marriage expenses of the deceased's eldest daughter. The insurer was directed to pay the entire compensation. The insurance company challenged that order by way of a Letters Patent Appeal.
Legal Issues Presented
- Whether the insurance company can limit its liability to the amount specified in the insurance policy when the policy has not been legally proved on the record.
- Whether, in the light of Supreme Court decisions referred to in the opinion, the insurer must pay the entire compensation awarded to the claimants first and thereafter seek recovery of any amount paid in excess of its policy liability from the insured.
- Whether the learned single Judge was justified in enhancing the compensation (by fixing monthly dependency at Rs. 2,000 and adopting a multiplier of 16) and in awarding interest at 12% from the date of filing until payment.
Arguments of the Parties
Appellant (Insurance Company)
- The insurance company's counsel, Mr. Chaudhary, conceded that the insurer could not question the quantum of compensation awarded by the learned single Judge because of Section 96(2) of the Motor Vehicles Act, 1988.
- The sole substantive contention advanced by the insurance company was that its liability was limited by the terms of the insurance policy; Mr. Chaudhary relied upon the certified copy of the policy to contend that the insurer's liability to third parties was limited by the policy terms.
- Counsel relied on Supreme Court jurisprudence (including New India Assurance Co. Ltd. v. C.M. Java and a later decision, Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu) in support of arguments regarding the insurer's obligations and rights relating to payment and subsequent recovery.
Respondents (Claimants)
The opinion does not contain a detailed account of the parties' legal arguments on behalf of the respondents beyond the procedural and evidentiary findings recorded by the Tribunal and the orders of the learned single Judge.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 1977 A.C.J. 501 (as cited by the Tribunal) | Held that where a certified copy is filed but the original is not produced, no presumption as to genuineness of the certified copy can be raised, particularly in relation to an Insurance Company as a statutory person. | The Tribunal applied this principle to conclude that the alleged certified copy of the insurance policy could not be treated as duly proved; the Court relied on the Tribunal's finding that "no Insurance Policy has been filed on the record to indicate the liability of the Insurance Company." |
| 1979 A.C.J. 208 — Shyam Lal and others v. The New India Assurance Co. Ltd. and another | Where the policy is not produced, the insurer may be held liable for the full amount awarded; Section 96 lays down statutory requirements about the policy but does not prohibit covering a higher amount. | The Tribunal and the court treated a non-produced or unproved policy as amounting to non-production, meaning the insurer could not rely on unproved limitations in the policy to restrict liability. The court referred to this precedent to support the proposition that the insurer is liable for the full compensation when the policy is not properly produced. |
| New India Assurance Company Limited v. C.M. Java and others, 1999 (2) SCC 47 | Noted a conflict between two earlier Supreme Court judgments on whether an insurer must pay the full award to a third party where the policy does not undertake higher liability beyond the statutory limit; the Supreme Court referred the question to a Larger Bench. | The opinion records this decision as part of the jurisprudential background relevant to the insurer's contention about limiting liability; it shows there was judicial uncertainty at the Supreme Court level prior to later authoritative clarification. |
| New India Assurance Co. Ltd. v. Shanti Bai, 1995 (2) SCC 539 (cited as one of the conflicting decisions) | One of two conflicting Supreme Court decisions concerning insurer liability where policy limits allegedly restrict payment to third parties (specific holding summarized in the opinion only as part of the conflict). | Referenced in the opinion as part of the conflict noted in C.M. Java; the court did not extract a separate application beyond recording that a conflict existed between this and another decision. |
| Amrit Lal Sood v. Kaushalya Devi Thapar, 1998 (3) SCC 744 (cited as one of the conflicting decisions) | The other Supreme Court decision in conflict with Shanti Bai on the insurer's liability to third parties when policy limits are asserted. | Referenced as part of the conflict leading to the Larger Bench reference in C.M. Java; the opinion uses this to explain the procedural posture of Supreme Court authority. |
| Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu and others, 2001 ACJ (1) | The Supreme Court required that the insurance company, in the first instance, should pay the compensation awarded to the heirs of the victim and permitted the insurer to recover any amount paid in excess of its liability under Section 95(2) of the Motor Vehicles Act from the insured subsequently. | The court applied this principle directly to hold that the insurer must first comply with the judgment by paying the amount determined by the learned single Judge (Rs. 3,84,000/- plus interest) and may then, if so advised, file proceedings to recover any excess from the owner/driver. |
Court's Reasoning and Analysis
The court's analysis proceeded along the following lines, based strictly on the material recorded in the opinion:
- Procedural posture and concessions: The insurance company's senior counsel conceded that the insurer could not challenge the quantum of compensation awarded by the learned single Judge because of Section 96(2) of the Motor Vehicles Act, 1988; the insurer's sole remaining contention was that its liability was limited by the insurance policy.
- Evidentiary finding on the policy: The Tribunal had found that the insurance policy (a certified copy marked 'X') was not legally proved because the original policy or the official record was not produced. The Tribunal relied on the principle in 1977 A.C.J. 501 that no presumption as to the genuineness of a certified copy can be raised in such circumstances.
- Specific defects in the tendered policy copy: The Tribunal noted an "absurdity" in the copy marked 'X' where the policy showed a liability of Rs. 20,000 by scoring a printed figure of Rs. 50,000. Given the statutory amendment effective 2 March 1970 which enhanced statutory liability to Rs. 50,000, the Tribunal took this as further reason to ignore the alleged policy copy.
- Precedential context: The court reviewed the conflict of Supreme Court decisions on the insurer's obligation where the policy allegedly limits payment to third parties and noted that the Supreme Court had referred the question to a Larger Bench (C.M. Java). The court then relied on a subsequent Supreme Court decision (Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu) which directed that insurers should pay the award first and recover any excess subsequently from their insured.
- Practical and equitable considerations: The court observed the extreme delay—an accident in 1971 with disputes still unresolved decades later—and criticized the insurer for prolonging litigation when it could have paid the award and pursued recovery thereafter.
- Conclusion from law and facts: In view of (a) the non-production/unproved status of the policy on the record as found by the Tribunal, (b) the Supreme Court's direction in Oriental Insurance, and (c) the insurer's concession on quantum, the court concluded the insurer must pay the entire sum awarded (Rs. 3,84,000/-) along with interest at 12% as directed by the learned single Judge. The court also noted the insurer's remedy to seek recovery from the owner/driver under Section 174 of the Motor Vehicles Act if it considered its liability limited under the policy.
Holding and Implications
Holding: The Letters Patent Appeal by the insurance company is DISMISSED. The court upheld the learned single Judge's direction that the insurer must pay Rs. 3,84,000/- as compensation to respondent Nos. 1 to 4, with interest at 12% from the date of filing of the claim petition until payment. The insurer was also ordered to pay costs quantified at Rs. 10,000/-.
Implications:
- Immediate effect: The insurer is required to make payment of the amount determined by the learned single Judge (Rs. 3,84,000/-) together with interest at 12% to the claimants and pay costs of Rs. 10,000/-. This is the direct and operative consequence of the decision for the parties.
- Post-payment remedy available to insurer: The court expressly permitted the insurer, if so advised, to file proceedings under Section 174 of the Motor Vehicles Act against the owner and driver of the offending vehicle to recover any excess amount paid beyond the insurer's contractual or statutory liability.
- Precedential impact: The court applied existing Supreme Court authority (Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu) to require first payment by the insurer and subsequent recovery, but the opinion does not state that it is creating any new legal precedent beyond applying the cited authorities. No broader or novel legal principle beyond those discussed in the opinion is announced.
This summary is limited strictly to the information contained in the provided opinion and does not include any information or inference not expressly stated therein.
Anil Dev Singh, J.— This is an appeal by the insurance company against the judgment and order of the learned single Judge dated 24th February, 2000 whereby the compensation in the sum of Rs. 60,868/- awarded by the Motor Accident Claims Tribunal, (for short the ‘Tribunal’), Delhi by its order dated 30th April, 1980 in favour of the heirs of the deceased respondent Nos. 1 to 4 was enhanced to a sum of Rs. 3,84,000/-. The learned single Judge also directed payment of interest on the aforesaid sum at the rate of 12% from the date of the filing of the claim petition till the date of payment of the compensation instead of payment of interest at the rate of 6% awarded by the Tribunal. The facts giving rise to the instant appeal are as follows:—
The respondents are the legal heirs of the deceased, Sh. G.D Garg, who died in an accident caused by truck No. DLL-5127. The accident took place on 8th October, 1971 at about 2.15 P.M on the Ring Road near Defence Colony. Respondent Nos. 1 to 4 filed a claim petition before the Tribunal. The Tribunal came to the conclusion that the accident resulted from rash and negligent driving of the driver of truck No. DLL 5127. The Tribunal awarded a sum of Rs. 60,868/- to respondent Nos. 1 to 4 as compensation with costs of the proceedings as also interest at the rate of 6% per annum in favour of respondents 1 to 4. The claimants finding the compensation awarded by the Tribunal to be inadequate filed an appeal, being FAO No. 352/1980. The insurance company not lagging behind also filed an appeal being FAO No. 353/1980. Both the appeals were disposed of by the learned single Judge on 24th February, 2000.
The learned single Judge was of the opinion that the dependency of the claimants on the deceased which was fixed at Rs. 682/- per month was not rightly determined. The learned single Judge was of the view that the dependency of the claimants ought to have been fixed at Rs. 2,000/- per month. The learned single Judge adopted a multiplier of 16 keeping in view the various factors including the age of the deceased, who was 35 years old at the time of his death. Thus on the aforesaid basis the learned single Judge awarded an amount of Rs. 3,84,000/- as the compensation in favour of the claimants. The learned single Judge also awarded a sum of Rs. 50,000/- to the claimants on account of the marriage expenses of the eldest daughter of the deceased and directed the insurer to pay the entire compensation to the claimants. The insurance company feeling aggrieved by the order of the learned single Judge has come up before us by way of the instant Letters Patent Appeal.
Mr. Chaudhary, learned senior counsel appearing for the insurance company has fairly conceded that the insurance company is not entitled to question the quantum of compensation awarded by the learned single Judge in view of Section 96(2) of the Motor Vehicles Act, 1988 (for short the ‘Act’). The only argument advanced by Mr. Chaudhary is that the liability of the insurance company was limited by the policy of insurance. He has invited our attention to the certified copy of the policy. It may be noted that the Tribunal found that the policy was not proved by the insurance company. In this regard the Tribunal observed as follows:—
“31. Insofar as the liability of respondent No. 3 Insurance Company is concerned, it was contended on their behalf that the maximum liability of the Insurance Co. was limited as per provisions of the Motor Vehicles Act and Insurance Policy, and they have placed on the record the alleged certified copy of the Insurance policy of the vehicle in question being marked ‘X’. The same has not been got proved legally by producing the original policy or the official record. My attention has been drawn to 1977 A.C.J 501 in which it was held as under:
Section 79—Presumption Genuineness of certified copies—Original copy not produced but a certified copy of it was filed in the court- Held no presumption as to genuineness of certified copy can be raised because Insurance Company is a statutory person.
In view of the ratio of the above ruling I hold that no Insurance Policy has been filed on the record to indicate the liability of the Insurance Company.
33. The learned counsel for the petitioners has drawn my attention to 1979 A.C.J 208 Shyam Lal and others v. The New India Assurance Co. Ltd. and another in which it was held as under:
Section 96 of the Motor Vehicles Act only lays down the statutory requirements about the policy and it does not prohibit covering of risk of a higher amount. The respondent No. 1 admitted in its written statement that the said bus H.P.B 6250 was insured with it on the date of the accident. It was also alleged in the written statement by the respondent No. 1 that according to the terms and conditions of the policy the limit of passengers to be carried by the bus was only 44 while it was carrying 63 passengers at the time of the accident and, therefore, the insurance Company was not liable for any compensation. It was also stated as if it was a question of law that the liability of an insurance company is only limited to Rs. 2,000/- in respect of each passenger. It was not pleaded that accordingly to the terms of conditions of the policy by which the bus was insured the liability of the insurance company was limited to Rs. 2,000/- per passenger. The policy has not been produced. In the circumstances the insurance company is also liable for the full amount awarded for compensation to the claimants.
34. Applying the ratio of the above ruling, as I have held above that the Insurance Policy which has been tendered on the record and marked ‘X’ has not been got proved either on the basis of the original record in possession of the Insurance Co. or on the basis of the original policy in the possession of the owner, the same cannot be read in evidence which amounts to non-production of the policy.
35. There is one more patent absurdity in the alleged copy of the Insurance Company marked ‘X’. In it the liability of the Insurance Company has been shown to Rs. 20,000/- by scoring the printed figure of Rs. 50,000/-. In the face of the admission of respondent No. 3 in their written statement it cannot be disputed that the vehicle in question was insured with respondent No. 3 on the material date i.e 8.10.71 The statutory liability of the Insurance Company as a result of the amendment which came into force on 2nd March, 1970, the liability was enhanced from Rs. 20,000/- to Rs. 50,000/-. it is not disputed that the deceased met the tryst with destiny on 8.10.71 It is thus obvious that the respondent Insurance Company could not by any stretch of reasoning insure the vehicle in question for an amount lesser than what has been statutorily fixed under the Motor Vehicles Act. This is yet another reason to ignore the alleged Insurance Policy on record.
36. On 28.4.1980 an application was moved on behalf of respondent No. 3. bringing to the notice of the court that no orders were passed on their application dated 12.11.76 for directing respondents 1 and 2 to produce the original Policy of Insurance. Apart from, it will be pertinent to note here that initially Shri S.M Suri was representing as counsel for all the respondents as is evident from the written statements filed by all the respondents. Thus there should not have been any difficultly on the part of the learned counsel for the respondents to have placed on the record the original Insurance Policy of the vehicle in question. The record further reveals that by a detailed order dated 27.9.76 my learned predecessor in office had closed the evidence of respondents 1 and 2 and had fixed the case for arguments for 29.10.76 By the same order respondent No. 3, Insurance company was allowed to produce the Insurance Policy pertaining to the offending vehicle. Accordingly on 29.10.76, RW-3 Sh. Brij Mohan Kumar, Superintendent of the Insurance Co. produced the certified true copy of the Policy of Insurance and the same was marked as ‘X’ for the obvious reason that the original official record inclusive of proposal form which was the basis of the contract was not produced and as such the said document could not have been legally exhibited.”
Even though the policy of insurance was not proved, Mr. Chaudhary, learned senior counsel, banked upon the same and submitted that the liability of the insurance company towards third party was limited. He drew our attention to the orders of the Supreme Court in New India Assurance Company Limited v. CM. Java and others, 1999 (2) SCC 47. In that case the Supreme Court noticed that there was a conflict between two judgments of the Supreme Court namely, New India Assurance Co. Ltd. v. Shanti Bai, 1995 (2) SCC 539 and Amrit Lal Sood v. Kaushalya Devi Thapar, 1998 (3) SCC 744 with regard to the question whether or not in a case of insurance policy not undertaking any higher liability to pay compensation to a third party beyond the limit provided by Section 95(2) of the Act, the insurer would be liable to pay the entire sum awarded as compensation to the claimant even when the sum is in excess of the limit provided in the said Section. In view of the conflict, the Supreme Court referred the aforesaid question relating to the liability of the insurance company to a Larger Bench.
In a subsequent decision, in the case of Oriental Insurance Company Limited v. Cheruvakkara Nafeessu and others, 2001 ACJ (1), the Supreme Court while taking note of the aforesaid two conflicting decisions required the insurance company, in the first instance to pay the compensation awarded to the heirs of the victim and permitted it to recover the amount paid by it in excess of its liability provided for in Section 95(2) of the Act from the insured. It seems to us that in the first instance, in view of the decision of the Supreme Court in Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu (supra), the insurance company will be liable to pay the entire sum of compensation to the heirs of the victim.
It is pertinent to note that the accident took place as far back as in the year 1971. About three decades have gone by and the amount of compensation awarded in favour of the legal heirs of the victim are still locked up in the legal battle which is being waged by the insurance company. The fight has been prolonged by the appeals filed by the insurance company. The insurance company in the first instance ought to have paid the entire compensation awarded in favour of the heirs of the victim and in case it thought its liability was limited to the extent provided by Section 95(2) of the Act it could file proceedings under Section 174 of the Act against the owner and driver of the offending vehicle to recover the excess amount paid, if any, to the heirs. The insurance company, therefore, must first comply with the judgment of the learned single Judge by paying the amount determined by the learned single Judge as compensation to respondents 1 to 4 and subsequently, in case it is so advised, file proceedings against the owner and driver for recovery of the excess amount, if any, paid by it.
In the fact and circumstances of the case, we are of the opinion that the learned single Judge was entirely right in directing the insurer to pay the entire sum of Rs. 3,84,000/-, as compensation, along with interest at the rate of 12% to respondent Nos. 1 to 4. The appeal, therefore, fails and is hereby dismissed with costs which are quantified at Rs. 10,000/-.
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