1. The legal heirs of deceased Naranbhai Rambhai Mayanna preferred claim petition being M.A.C.P. No.180/1989 before the Motor Accident Claims Tribunal (Aux.), Kachchh at Bhuj [for short, “the Tribunal”] claiming total compensation of Rs.5.00 Lacs for the death, which was caused in the vehicular accident that took place on 05.05.1989. The claim petition was allowed in part by judgment and award dated 09.10.1995 whereby, the original claimants were awarded total compensation of Rs.3,21,000/- along with interest at the rate of 15% per annum from the date of application till its realization with proportionate costs.
2. The present First Appeal has been preferred against the direction of the Tribunal of holding the appellant-Insurance Company jointly and severally liable to satisfy the award though a specific case was put forward before the Tribunal that its overall liability was limited to Rs.1.50 Lacs only. The Cross-objection has been preferred by the original claimants for enhancement of compensation under different heads.
3. Mr. Sunil Parikh learned counsel appearing for Mr.
R.H. Mehta for the appellant-Insurance Company mainly contended that though the liability of the Insurance Company was limited to Rs.1.50 Lacs only, the Tribunal erred in holding the appellant-Insurance Company jointly and severally liable to satisfy the award. Such direction is contrary to the statutory provisions of Sections 95 & 96 of the Motor Vehicles Act, 1939. He drew attention of the Court to the Insurance Policy (Exhibit-14) and submitted a specific contention to that effect was also raised before the Tribunal but, the same was not appreciated in its proper perspective. In context of the above submission, learned counsel has placed reliance upon a decision of the Apex Court in the case of United India Insurance Company Ltd. v.
A.N. Subbulakshmi and others, (2008) 9 SCC 354.
3.1 In respect of the cross-objection filed by the original claimants, learned counsel Mr. Parikh submitted that the Tribunal has adopted the multiplier of 20 and awarded interest at the rate of 15%, which are on the higher side. He submitted that both the multiplier and rate of interest deserve to be reduced. He placed reliance upon the decision of the Apex Court in the case of Sarla Verma v. Delhi Road Transport Corporation, (2009) 6 SCC 121.
4. Per contra, Mr. Mehul Shah learned counsel appearing on behalf of original claimants submitted that the Tribunal has rightly held the appellant-Insurance Company jointly and severally liable to satisfy the award. Under the Motor Vehicles Act, which is a welfare legislation, the Insurance Company is liable to satisfy the award and if the Insurance Company believes its liability to be limited, then, firstly, it could satisfy the award and thereafter, recover the amount from the owner of the vehicle.
4.1 In support of the submission, reliance has been placed by Mr. Shah on a decision of the Apex Court in the case of United India Insurance Co. Ltd. v. KM Poonam and others, 2011 (2) SCALE 568 wherein, in para-24 of the judgment, it has been held that though the liability of the insurer is confined to the number of persons covered by the insurance policy and not beyond it but, the liability continues under the provisions of sub-section (1) of Section 149 of the Act as it would be entitled to recover the same from the insured-owner if it could prove that one of the conditions of the policy had been breached by the owner of the vehicle.
4.2 In respect of the cross-objection, Mr. Shah submitted that the Tribunal erred in not considering the prospective income of the deceased while calculating loss of dependency benefit. Hence, the amount awarded under the head of loss of dependency deserves to be enhanced.
5. Heard learned counsel for the respective parties. The accident in question took place on 05.05.1989, when the Motor Vehicles Act, 1939 was in operation. There is no dispute that on the date on which the accident took place, the insurance policy was in force, which is also evident from the Insurance Policy (Exhibit- 14). It appears from the insurance policy that the liability of the insurer is limited to Rs.50,000/- only (raised to Rs.1,50,000/- with effect from 01.10.1982). It is well-known that an unlimited or a higher liability than the statutory liability of the insurer would arise only in case there is a separate contract and payment of additional premium by the owner of the vehicle. It does not appear from the insurance policy (Exhibit-14) that the owner of the vehicle has paid any additional premium to cover higher liability. Under the provisions of Section 95(2)(a) of the Act of 1939, even in case of a comprehensively insured vehicle, the liability of the insurer was limited to Rs.1,50,000/-. Similar issue came up for consideration of the Apex Court in A.N. Subbulakshmi's case (supra). By following the principle laid down by the Constitution Bench of the Apex Court in the case of New India Assurance Co. Ltd. v. C.M. Jaya, (2002) 3 SCC 278, it was held that u/s.95(2)(a) of the Act of 1939 the liability of insurer is limited to the prescribed statutory limit and that compensation awarded in excess of the prescribed statutory limit followed by the direction to insurer to pay compensation directly to the claimant and to recover the same from the owner was unsustainable in law. Considering the facts of the case and the principle laid down in A.N. Subbulakshmi's case (supra), I am of the considered opinion that the Tribunal seriously erred in law and also on facts in directing the appellant-insurer to pay compensation in excess of the prescribed statutory limit of Rs.1,50,000/-.
6. If the provisions of Section 96 of the Act of 1939 are interpreted such that the insurer has to make payment of compensation in excess of the prescribed statutory limit and thereafter, to recover the same from the owner, then the provision pertaining to “limited liability” will become nugatory. Such an interpretation which frustrates the very object of the Act cannot be done. No doubt, the principle laid down by the Apex Court in KM Poonam's case (supra) is a good law but, the same would not apply to the facts of the present case since the provision of “limited liability” would become nugatory if the liability of the insurer is held to be unlimited. In view of the above, the liability of the appellant-Insurance Company shall be limited to Rs.1,50,000/- only and not beyond it.
7. As regards the cross-objections filed by the original claimants is concerned, I find substance in the submission made by learned counsel Mr. Shah that the Tribunal has not taken into consideration the prospective income while computing dependency benefit. If the monthly income is assessed at Rs.1,500/-, then the prospective income of the deceased would come to Rs.2,250/- as per the principle rendered in Sarla Verma's case (supra). If we deducted 1/3rd amount towards personal living expenses of the deceased, then the monthly loss of dependency would come to Rs.1,500/- and annual dependency at Rs.18,000/-. The appropriate multiplier would be 17 considering the age of the deceased and hence, the total amount under the head of loss of dependency benefit would come to Rs.3,06,000/-. The claimants shall also be entitled to another Rs.25,000/-, viz. Rs.10,000/- towards loss of estate, Rs.10,000/- towards loss of consortium and Rs.5,000/- towards funeral expenses. Thus, in all, the claimants shall be entitled for total compensation of Rs.3,31,000/-. The Tribunal has awarded total compensation of Rs.3,21,000/- and hence, the claimants shall be entitled for additional compensation of Rs.10,000/- with interest.
8. In view of the above discussion, the following order is passed;
[A] The First Appeal is allowed. The impugned judgment and award dated 09.10.1995 is modified to the extent that the liability of the appellant- insurer is limited to Rs.1,50,000/- only [Rupees One lac fifty thousand only] along with interest at the rate of 12% per annum, as awarded by the Tribunal. The balance amount of Rs.1,81,000/- along with interest at the rate of 12% per annum calculated from the date of application till its realization will be recovered from the owner of the vehicle. The impugned award stands modified to the above extent so far as the present appeal is concerned. The appeal stands disposed of accordingly. No order as to costs.
[B] The Cross Objection is partly allowed. The impugned judgment and award dated 09.10.1995 is modified to the extent that the original claimants shall be entitled for additional compensation of Rs.10,000/- [Rupees Ten thousand only] along with interest at the rate of 7.5% per annum calculated from the date of application till its realization over and above the compensation awarded by the Tribunal. The impugned award stands modified to the above extent. The cross objection stands disposed of accordingly.
[K. S. JHAVERI, J.] Pravin/*