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  • sec. 110-D of the Motor Vehicles Act, 1939 (for short the Act).2.
  • provisions contained in Section 95 and 96
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citation codes
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  • sec. 110-D of the Motor Vehicles Act, 1939 (for short the Act).2.
  • provisions contained in Section 95 and 96
Smart Summary

Factual and Procedural Background

This special appeal under section 18 of the Rajasthan High Court Ordinance, 1949 was filed against the judgment dated February 7, 1985 of the learned single Judge, which he passed in an appeal under section 110-D of the Motor Vehicles Act, 1939 ("the Act").

Respondents no. 2 and 3 originally filed a claim against appellants no. 1 and 2 and Oriental Fire and General Insurance Company Limited, Udaipur (identified in the opinion as "respondent no. ???") under section 110-A of the Act for Rs. 1,22,000/-. The Motor Accidents Claims Tribunal, Udaipur (the "Tribunal") by its award dated March 10, 1978 allowed the claim to the extent of Rs. 4,000/- each set of the claimants with proportionate costs.

The claimants appealed under section 110-D. The learned single Judge allowed that appeal and ordered that Prakash Chandra and Mathura Lal (the appellants) and the Oriental Fire and General Insurance Company Limited (the "Insurance Company") should pay Rs. 31,500/- as compensation to the claimants. The learned single Judge fixed the liability of the Insurance Company at Rs. 5,000/- as statutory liability and directed that the amount would carry interest at 6% per annum from March 10, 1978 (the date of the Tribunal's award) until payment. The single Judge's judgment was rendered on February 7, 1985.

Prakash Chandra and Mathura Lal filed the present special appeal challenging the learned single Judge's holding that the Insurance Company's liability was limited to Rs. 5,000/-. The appellants relied on the decision in Motor Owner's Insurance Co. Ltd. v. J.K. Modi ((1981) 4 SCC 660 : A.I.R. 1981 S.C. 2059). The respondent (respondent no. 1) supported the judgment of the learned single Judge for the reasons stated by him.

Legal Issues Presented

  1. Whether, under section 95(2)(b)(ii)(4) of the Motor Vehicles Act (as applicable), the statutory liability of the insurer in respect of passengers carried in a passenger vehicle is limited to Rs. 5,000/- per passenger (and thereby limited overall), or whether a larger liability arises such that the insurer's liability would extend beyond Rs. 5,000/- in the facts of this case.
  2. Whether the decision in Motor Owner's Insurance Co. Ltd. v. J.K. Modi (1981) is applicable and authoritative for interpreting the insurer's liability in respect of accidents involving passenger buses (as opposed to goods vehicles).

Arguments of the Parties

Appellants' Arguments

  • The learned counsel for the appellants contended that the learned single Judge committed an error in holding that the liability of the Insurance Company was only to the extent of Rs. 5,000/-. The appellants relied on Motor Owner's Insurance Co. Ltd. v. J.K. Modi ((1981) 4 SCC 660 : A.I.R. 1981 S.C. 2059) to support a broader view of insurer liability.

Respondent's Arguments

  • The learned counsel for respondent no. 1 supported the judgment of the learned single Judge and his reasoning that the Insurance Company's statutory liability was limited to Rs. 5,000/- under the relevant provision of section 95(2)(b)(ii)(4).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Motor Owner's Insurance Co. Ltd. v. J.K. Modi ((1981) 4 SCC 660 : A.I.R. 1981 S.C. 2059) Interpreted insurer's liability under section 95(2) in the context of a goods vehicle; discussed limits per passenger and the phrase "any one accident". The court determined this case was distinguishable because it related to death caused by a goods vehicle and did not decide the issue concerning passenger buses under clause (b) as amended. Therefore it cannot be treated as an authority for interpreting section 95(2)(b)(ii)(4) in the present passenger-bus context.
Shekhupura Transport Co. Ltd. v. Northern Indian Transport Co. ((1971) 1 SCC 785 : A.I.R. 1971 S.C. 1624) Held that in absence of any contract to the contrary, the statutory liability of the insurer is as prescribed in section 95(2)(b) (as it stood then); discussed maximum per-passenger and overall liability. The court applied the principle from Shekhupura to hold that the statutory liability under section 95(2)(b)(ii)(4) (unamended) limits the insurer to Rs. 5,000/- in respect of passengers in vehicles other than motor cabs; the court found Shekhupura's principle attracted to the present case.
Automobile Transport v. De???lal (1976 W.L.N. 783) Applied the interpretation of section 95(2)(b)(ii)(4) limiting insurer's statutory liability in passenger cases. Referenced as supporting the view that under section 95(2)(b)(ii)(4) the insurer's statutory liability is limited to Rs. 5,000/-.
Sampat Lal v. Smt. Geeta Devi (1985 R.L.R. 1052) Considered multiple authorities and interpreted section 95(2)(b)(ii)(4) as imposing a Rs. 5,000/- statutory liability on insurers in relevant passenger cases. Referenced for the proposition (authoritatively applied by one of the judges in that case) that the statutory liability under section 95(2)(b)(ii)(4) is limited to Rs. 5,000/- and not beyond.
Suraj Narain v. Sneh Lata Jain (1965 A.C.J 581) Interpreted unamended section 95(2)(b)(ii)(4) as imposing a ceiling of Rs. 5,000/- for passengers in vehicles other than motor cabs; insurer liable to pay Rs. 5,000/- for each passenger covered. Referenced to reinforce the proposition of a Rs. 5,000/- ceiling per passenger under the relevant sub-clause.
Madras Motor and Genl. Ins. Co. Ltd. v. V.P. Balakrishanan (1982 A.C.J 460) Kerala High Court decision that, after considering Motor Owners' Insurance Co. Ltd., took the view that insurer's liability in passenger cases is subject to the statutory limit applicable (supporting the Rs. 5,000/- ceiling in the relevant context). Cited as an additional authority where a court reached a like conclusion, supporting the limit on insurer liability for passengers under the relevant provision.

Court's Reasoning and Analysis

The court's analysis proceeded by examining the authorities relied upon and the statutory text of section 95(2) as it stood at the relevant time. The key steps in its reasoning were:

  1. Statutory text: The court noted section 95(2) (as amended) and described clause (b) (substituted by the 1969 Amendment) which altered the scheme of insurer liability for passenger vehicles. The opinion cites the exact statutory language setting out limits depending on vehicle type and passengers.
  2. Distinguishing the appellants' authority: The court carefully considered Motor Owners' Insurance Co. Ltd. v. J.K. Modi, relied upon by the appellants, and observed that that decision dealt with a goods vehicle and did not decide the question of insurer liability in respect of passenger buses under clause (b). The Motor Owners' decision itself recognized that "different considerations may arise under clause (b), as amended by Act 56 of 1969" and therefore expressly did not rule on that aspect.
  3. Applying Shekhupura and subsequent cases: The court referred to Shekhupura Transport Co. Ltd. v. Northern Indian Transport Co., which held that in the absence of any contrary contract the statutory liability is as prescribed by section 95(2)(b) (as it stood then). The court concluded that the principle in Shekhupura applies to the present case.
  4. Confirmatory authorities: The court cited earlier decisions (Automobile Transport v. De???lal; Sampat Lal v. Smt. Geeta Devi; Suraj Narain v. Sneh Lata Jain; Madras Motor & General Insurance Co. Ltd. v. V.P. Balakrishanan) where courts construed the relevant sub-clause to limit insurer liability to Rs. 5,000/- in passenger-vehicle cases. These authorities were used to support the conclusion that the insurer's statutory liability under section 95(2)(b)(ii)(4) is limited to Rs. 5,000/- per the statutory scheme.
  5. Conclusion on applicability: Having determined Motor Owners' case was distinguishable and that Shekhupura and the other cited authorities were applicable, the court held that the learned single Judge was right to limit the Insurance Company's statutory liability to Rs. 5,000/- under section 95(2)(b)(ii)(4).

Holding and Implications

Holding: The appeal is DISMISSED.

Immediate implications and effects on the parties:

  • The judgment of the learned single Judge (dated February 7, 1985) is affirmed in the respect challenged: the Insurance Company's statutory liability under section 95(2)(b)(ii)(4) of the Motor Vehicles Act is limited to Rs. 5,000/-. The single Judge's view limiting liability to Rs. 5,000/- is held to be correct and no interference was called for.
  • The order of the learned single Judge that the appellants and the Insurance Company should pay Rs. 31,500/- as compensation (with the Insurance Company's statutory liability fixed at Rs. 5,000/-) stands as affirmed by this court's dismissal of the appeal. The single Judge had also directed interest at 6% per annum from March 10, 1978 until payment; the appellate court did not disturb the result reached by the learned single Judge.
  • The parties are directed to bear their own costs of this appeal.

The opinion does not purport to set a broader new precedent beyond affirming the interpretation applied in this case; it applies and relies upon existing authorities to conclude that under the statutory provision in question the insurer's liability is limited to Rs. 5,000/- in the passenger-vehicle context presented.

    Prakash Chandra & Ors. v. The Oriental Fire & General Insurance Co. Ltd. & Ors.(120)

    The Judgment of the Court was delivered by

    S.K Mal Lodha, J.:— This special appeal under sec. 18 of the Rajasthan High Court Ordinance, 1949, has been filed against the judgment dated February 7, 1985 of the learned single Judge, which he passed in an appeal under sec. 110-D of the Motor Vehicles Act, 1939 (for short ‘the Act’).

    2. It is not necessary to re-state the facts in detail, for, they have elaborately been stated in the judgment under appeal. Suffice it to state that respondents no. 2 and 3 filed a claim against appellants no. 1 and 2 and Oriental F re and General Insurance Company Limited, Udaipur (respondent no. ???) under sec 110-A of the Act. Their claim was for Rs. 1,22,000/-. The Motor Accidents Claims Tribunal, Udaipur (the Tribunal’) by its award dated March 10, 1978 allowed the claim to the extent of Rs. 4000/- each set of the claimants with proport???onate costs. Aggrieved, the claimants filed an appeal under sec. 110-D against the respondents. The learned single Judge allowed the appeal and ordered that Prakash Chandra, Mathuralal (appellants) and the Oriental Fire and General Insurance Company Limited, Udaipur (the Insurance Company’ herein) should pay a sum of Rs. 31,500/- as compensation to them. The liability of the Insurance Company for the payment of compensation was fixed at Rs. 5000/- being statutory liability It was further ordered by the learned single Judge that the aforesaid amount will carry interest at the rate of 6% per annum from the date of the award of the Tribunal, i.e, March 10, 1978, until it is paid. This judgment, as stated above was rendered on February 7, 1985. Prakash Chandra and Mathura Lal (appellants) have filed this special appeal against the Insurance Company and the claimants. It was urged by the learned counsel for the appellants that the learned single Judge committed an error when he held that the liability of the Insurance Company will only be to the extent of Rs. 5000/-. Thi view taken by the learned single Judge was assailed on the basis of the decision reported in (1) Motor Owner's Insurance Co. Ltd. v. J.K Modi, (1981) 4 SCC 660 : A.I.R 1981 S.C 2059. On the other hand learned counsel appearing for respondent no. 1 supported the judgment of the learned single Judge for the reasons given by him.

    3. Sec. 95(2) of the Act, as it stood at the relevant time was as follows:—

    “(2). Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident upto the following limits, namely:—

    (a) where the vehicle is a vehicle used or adopted to be used for the carriage of goods, a limit of twenty thousand rupees;

    (b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment in respect of persons other than passengers carried for hire or reward a limit of twenty thousand rupees; and in respect of passengers a limit of twenty thousand rupees in all, and four thousand rupees in respect of an individual passenger, if the vehicle is registered to carry not mode than six passengers excluding the driver or two thousand rupees in respect of an individual passenger, if the vehicle is registered to carry a more than six passengers excluding the driver;

    (c) where the vehicle is a vehicle of any other class the amount of the liability incurred.”

    4. Cl. (b) was substituted for the original by the Amendment Act (No. LVI of 1969) w.e.f March 2, 1970. Prior to this, overall liability of the Insurance Company was upto Rs. 20000/- and Rs. 2000/- per passenger if the vehicle was registered to carry more than six passengers. This overall liability was intended by the aforesaid Amendment upto Rs. 10,000/- depending upon the number of passengers the bus/vehicle is registered to carry and Rs. 5000/- per passenger depending upon the nature of the vehicle. The amendment is, thus, regarding compensation to be paid by the Insurance Company.

    5. We have carefully considered Motor Owner's Insurance Co.'s case (1), which has been relied on by the learned counsel for the appellants. The learned single Judge has stated that Motor Owners' Insurance Co.'s case (1) related to the death caused in an accident by a goods vehicles and no occasion arose in that case for their Lordships to decide the liability of insurer in respect of an accident resulting from a passenger bus. We may usefully refer to para, 26 of the report, in which reference has been made to (2) Shekhupura Transport Co. Ltd. v. Northern Indian Transport Co., (1971) 1 SCC 785 : A.I.R 1971 S.C 1624. It was stated in para 26 that Shekhupura Transport Co. Ltd.'s case (2) is not an authority on the interpretation of clause (a) of sec. 95(2). In support of that, observations made at page 1627 in Shekhupura Transport Co. Ltd.'s case (2) by Hedge, J., speaking for himself and Jaganmohan Reddy J. have been quoted, which are as under:—

    “In the present case we are dealing with a vehicle in which more than six passengers were allowed to be carried. Hence the maximum liability imposed under sec. 95(2) on the insurer is Rs. 2000/- per passenger though, the total liability may go upto Rs. 20000/-.”

    6. We may here refer to the observations made in this connection in Motor Owners' Insurance Co. Ltd.'s case (1), which are as under:—

    “Towards the end of the Judgment, it was observed that reading the provisions contained in Section 95 and 96 together.”

    “…. ….it is clear that the statutory liability of the insurer to indemnify the insured is as prescribed in Section 95(2). Hence the High Court was right in its conclusion that the liability of the insurer in the present case only extends upto Rs. 2000/- each, in the case of Bachan Singh and Narinder Nath.” In view of the limit on the insurer's liability in respect of each passenger, the argument on the construction of the words, “any one accident” had no relevance and was, therefore, neither made nor considered by the Court. Different considerations may arise under clause (b), as amended by Act 56 of 1969, but we do not propose to make any observations on that aspect of the matter, since it does not directly arise before us”

    7. A perusal of para 2 of the report will show that that case related to sec. 95(2) of the Act. For the aforesaid reasons, Motor Owners' Co. Ltd.'s case (1) cannot be taken to be an authority for the purpose of interpreting sec. 95(2)(b)(ii)(4) of the Act. It was held in Shekhupura Transport Co. Ltd.'s case (2) that in the absence of any contract to the contrary the statutory liability of the insurer to indemnify the insured is as prescribed in sec 95(2)(b) of the Act as it stood then. This case was of course distinguished, as stated above, in paras 25 and 26 in Motor Owners' Insurance Co. Ltd.'s case (1). The principle laid down in Shekhupura Transport Co. Ltd.'s case (2) wherein sec. 95(2)(b) of the Act as it stood prior to the amendment is applicable, to the case on hand and according to that the Insurance Company is liable to indemnify the claims upto Rs. 5000/- only, under sec. 95(2)(b)(ii)(4) of the Act. This view was taken by this Court in (3) Automobile Transport v. De???lal, 1976 W.L.N 783, and (4) Sampat Lal v. Smt. Geeta Devi, 1985 R.L.R 1052, 1 where, one of us (P.C Jain, J.) after considering a number of cases, including Automobile Transport's case (3) and Shekhupura Transport' Co. Ltd's case (2) held that under sec. 95(2)(b)(ii)(4) the statutory liability of the Insurance Co. is only upto Rs. 5000/- and not beyond that. The unamended sec. 95(2)(b)(ii)(4) of the Act came up for consideration before G.M Lodha J., in (5) Suraj Narain v. Sneh Lata Jain, 1965 A.C.J 581. It was held that there is a ceiling of Rs. 5000/- in case of passengers in vehicle other than motor cab as enshrined in sub-clause (4), and the insurance company would be liable to pay Rs. 5000/- for each individual passenger travelling in a bus as is covered by section 95(2)(b)(ii)(4) of the Act. We may mention that this view was also taken by the Kerala High Court in (6) Madras Motor and Genl. Ins. Co. Ltd. v. V.P Balakrishanan, 1982 A.C.J 460, in which, after considering Motor Owners' Insurance Co. Ltd.'s case (1), it was observed as under:—

    8. The learned single Judge has rightly held that the principles laid down in Shekhupura Transport Co. Ltd.'s case (2) are attracted in this case and according to that the liability of the Insurance Company is limited to Rs. 5000/- only u/s. 95(2)(b)(ii)(4) of the Act. Motor Owners' Insurance Co. Ltd.'s case (1) on which reliance is placed by the learned counsel for the appellants is clearly distinguishable.

    9. The view taken by the learned single Judge limiting the liability of the Insurance Co. to the extent of Rs. 5000/- is correct and no interference is called for in the appeal.

    10. No other point was pressed by the learned counsel for the appellants in support of the appeal. The result is that this appeal fails and it is, hereby, dismissed.

    11. In the circumstances of the case, the parties are left to bear their own costs of this appeal.

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    Comments

    Prakash Chandra & Ors. v. The Oriental Fire & General Insurance Co. Ltd. & Ors.(120)
    (Mar 7, 1986)