Holding

The insurer's liability under a comprehensive policy is confined to the statutory limit of Rs 20,000 as prescribed by Section 95(2)(b) of the Motor Vehicles Act, 1939.

Summary

Jugal Kishore was injured in a collision between his three‑wheeler and a bus owned by Delhi Janata Co‑operative Transport Society and insured by National Insurance Co. The Motor Accident Claims Tribunal awarded Rs 10,000, which the Delhi High Court enhanced to Rs 1,00,000. The insurer appealed, contending that under Section 95(2)(b) of the Motor Vehicles Act, 1939 its liability could not exceed the statutory limit of Rs 20,000, despite the vehicle being covered by a comprehensive policy and a higher premium. The respondents argued that comprehensive insurance removed the statutory ceiling and that Section 96(6) allowed the insurer to avoid liability. The Supreme Court held that comprehensive insurance does not override the statutory limit; the policy itself limited liability to “such amount as is necessary to meet the requirements of the Motor Vehicle Act,” i.e., Rs 20,000, and Section 96(6) applies only when an insurer seeks to avoid liability. The Court also emphasized the insurer’s duty to produce the policy copy. Consequently, the appeal was allowed, fixing the insurer’s liability at Rs 20,000 with interest, while the High Court’s decree against the driver and owner was upheld.

Issues considered

Whether a comprehensive insurance policy and higher premium can raise the insurer's liability above the statutory limit of Rs 20,000 under Section 95(2)(b) of the Motor Vehicles Act, 1939.
Whether Section 96(6) of the Act permits the insurer to avoid liability when the statutory limit is contested.
Whether the insurer is obligated to produce a copy of the insurance policy in motor accident compensation proceedings.

Legislation cited

Motor Vehicles Act, 1939s. 95(2)(b), s. 96(2), s. 96(6)

Subjects

Motor Vehicles Actinsurance liabilitystatutory limitcomprehensive insurancethird‑party riskSection 95Section 96compensationpolicy copyburden of proof

Judgment

NATIONAL INSURANCE CO. LTD., NEW DELHI
A
v.
JUGAL KISHORE & OTHERS
' .,r
FEBRUARY 9, 1988

B [E.S. VENKATARAMIAH AND N.D. OJHA, JJ.]

Motor Vehicles Act, 1939-Sections 95(2)(b) and 96-Motor
accidents-Comprehensive claim-Insurance company filing copy of
Insurance policy-Necessity of-Third party risk-Comprehensive insur-
ance of Vehicle and payment of higher premium liability not in excess of
C statutory liability.

Practice and Procedure-Motor Accidents Compensa-~
tion case-Filing of insurance policy copy-Necessity for.

Respondent No. 1, Jugal Kishore, while driving a three wheeler
D scooter, met with an accident with bus No. DLP-3699, driven by Rai
Singh, respondent No. 2, owned by M/s. Delhi Janata Co-operative ~· .,,_
Transport Policy Limited, respondent No. 3, and insured with the
appellant. The Motor Accident Claims Tribunal, Delhi awarded com-
pensation in the sum of Rs. l0,000 to respondent No. 1. On appeal, the
High Court enhanced the Compensation to Rs. l,00,000.
E y
This Court, while granting special leave required the appellant to
deposit the amount of compensation awarded by the High Court and .,,._
permitted the respondent to withdraw the same, making it clear that it
shall not be refunded by him in the event of reversal of the decision of
the High Court.
F
The appellant contends that in view of the statutory provision V
contained in this behalf in clause (b) of sub-section (2) of section 95 of /'-
the Act, as it stood on the date of accident, no a'Vard in excess of the
statutory liability of Rs.20,000 could have been made against the
appellant.
G
The respondent, on the other hand, contends (l) Notwithstanding
the provision contained in this behalf in clause (b) aforesaid, it was open +.
to the insurer to take a policy covering a higher risk than contemplated
by clause (b) and consequently the said clause had to be read subject to
the terms of the policy. In this connection, the respondent relies on the
H words "Commercial Vehicle comprehensive" printed on the policy,
910
NATIONAL INSURANCE CO. v. JUGAL KISHORE 911

and on the circumstance that the premium paid was higher than the A
I··~ premium of an "Act only" policy, and urges that the liability of the
; appellant was unlimited.

(2) In view of sub-section (6) of section 96 of the Act no Insurer to
whom the notice referred to in sub-section (2) thereof has been given, is

,
entitled "to avoid his liability" to any person entitled to the benefit of B
any such judgment as is referred to in sub-section (1) thereof otherwise
than in the manner provided for in sub-section (2). On this basis it is
urged that the appellant was not entitled to assert that its liability was
confined to Rs.20,000 only inasmuch as this is not one of the defences
specified in sub-section (2) of section 96 of the Act.

Allowing the appeal, this Court,
c
HELD: (1) It is not obligatory for the owner of a vehicle to get it
comprehensively insured for which a higher premium than for an "act
only" policy is payable. ~uch comprehensive insurance entitles the
owner to claim reimbursement of the entire amount of loss or damage D
suffered up to the estimated value of the vehicle insured. CompreJten-
sive insurance of the vehicle and payment of higher premium on this
score, as was done in the instant case do not mean that the limit of the
liability with regard to third party risk becomes unlimited or higher
than the statutory liability fixed under sub-section (2) of section 95 of
the Act. For this purpose a specific agreement has to be arrived at E

-
between the owner and the insurance company and additional premium
paid. i9I5C-E]

(2) A perusal of the policy indicates that the liability undertaken
with regard to the death or bodily injury to any person caused by or
arising out of the use of the vehicle has been confined to "such amount F
as is necessary to meet the requirements of the Motor Vehicle Act,
1939", which was at the relevant time Rs.20,000 only. An award
against the appellant could not, therefore, have been made in excess of
the said statutory liability. [9HiF -G I

(3) It is apparent from the words "to avoid his liability" used in
sub-section (6) of section 96 that the restrictions placed with regard to G
defences available to the insurer specified in sub-section (2) of section
96 are applicable to a case where the insurer wants to avoid his liability.
In the instant case the appellant is not seeking to avoid its liability but
wants a determination of the extent of its liability in accor!Jance with the
statutory provisions contained in this behalf in clause (b) of sub-section
(2) ofsection 95 of the Act. [917E-F] H
912 SUPREME COURT REPORTS [1988] 2 S.C.R.

A (4) This Court has consistently emphasized that it is the duty of the
party which is in possession of a document which would be helpful in
doing justice in the cause to produce the said document and such party
should not be permitted to take shelter behind the abstract doctrine of
burden of proof. This duty is greater in the case of instrumentalities of
the State, such as the appellant, who are under an obligation to act
B fairly. The obligation on the part of the State or its instrumentalities to
act fairly can never be over....,mphasized. [918C-D I

(5) The attitude often adopted by the Insurance Companies, as
was adopted in this case, is not to file a copy of the policy before the
Tribunal and before the High Court in appeal. The claimants for com-
e pensation are invariably not possessed of either the policy or a copy
thereof. In all cases where the Insurance Company concerned wishes to
take a defence in a claim petition that its liability is not in excess of the
statutory liability it should file a copy of the insurance policy alongwith
its defence. [917G-H; 918B-C]

D Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing
Co., [1977] A.C.J. 343 and British India General Insurance Co. v. ·;--..;...
Captain Itbar Singh, AIR 1959 Supreme Court 1331, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3677
of 1984.
E y,
From the Judgment and Order dated 17.5.1982 of the Delhi High
Court in F.A. No. 30 of 1975.

P .P. Malhotra and N .K. Sharma for the Appellant.
-
F 0.P. Goyal, Ms. Sunita Vasudeva and R.C. Verma for the
Respondents.

The Judgment of the Court was delivered by

OJHA, J. This appeal by special leave has been filed by the
G National Insurance Company Ltd., New Delhi, against a judgment of
t.he Delhi High Court in an appeal under Section 110-D of the Motor
Vehicles Act, 1939 (hereinafter referred to as the 'Act').

Necessary facts may be stated herein in a nutshell. Shri Jugal .•
Kishore, Respondent No. 1 was, on 15th June, 1969, driving a three-
H wheeler scooter when he met with an accident with bus No. DLP-
NATIONAL INSURANCE CO. v. JUGAL KISHORE (OJHA, J.( 913

3699, driven by Shri Rai Singh, Respondent No. 2 and owned by M/s.
{'Ur A
Delhi Janata Co-operative Transport Society Limited, Respondent
...,. • No .. 3, He sustained injuries consequent upon which he made a claim
for compensation before the Motor Accident Claims Tribunal, Delhi
against Respondent Nos. 2 and 3 and the appellant which was the
" insurer of the bus aforesaid. The claim of Respondent No. 1 was
contested by the appellant and also by Respondent No. 3 but pro- B

---r ceeded ex parte against Respondent No. 2. The Tribunal awarded
compensation in the sum of Rs. 10,000 recoverable jointly and sever-
ally from the appellant and Respondent No. 3. Aggrieved by the
....' .., award of the Tribunal Respondent No. 1 preferred an appeal before
the High Court of Delhi and asserted that the amount of compensation
awarded by the Tribunal was inadequate. His appeal was allowed by
c
r the High Court and the award was modified. The High Court awarded
a sum of Rs.1,00,000 as compensation to Respondent No. 1 with in-
terest at 9 per cent per annum from the date of institution of the claim
till realisation with costs against the driver as well as the owner of the
bus as also against the appellant, Insurance Company.
D
- 'T Before granting special leave this Court required the appellant to
deposit Rs.1,00,000 namely the amount of compensation awarded by
the High Court and permitted Respondent No. 1 to withdraw the
same. Special leave was granted on 14th September, 1984 by the fol-
lowing order of this Court.
' "( E
"Under the orders of this Court the appellant has depo-

-· sited Rs. one lac, which is the amount of compensation
awarded to the claimants. The claimants have withdrawn
the amount without furnishing security.
• ).

Special leave granted on condition that in the event of F
reversal of the decision of the High Court, the said amount
·~- shall not be refunded by the claimants. Stay of further
execution of the award confirmed."

It has been urged by the learned counsel for the appellant that in
• ' view of the statutory provision contained in this behalf in clause (b) of G
sub-section (2) of Section 95 of the Act as it stood on the date of
~ accident namely 15th June, 1969 which happens to be prior to 2nd
--+ March, 1970, the date of commencement of Amending Act 56of1969,
no award in excess of Rs.20,000 could have been made against the
appellant. Before dealing with the submission we may point out that
the policy under which the bus aforesaid was insured had not been H
914 SUPREME COURT REPORTS I1988) 2 S.C.R.
A filed either before the Tribunal or before the High Court. A photostat l'L·"l
copy of the policy has, however, been filed in this Court and learned
counsel for the respondents did not have objection in the same being
admitted in evidence. Clause (b) of sub-section (2) of Section 95 of the
Act as it stood at the relevant time reads as under :
~ .
~

B "95. (1) " ....... ".

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

(b) Where the vehicle is a vehicle in which passen-
gers are carried for hire or reward or by reason of
or in pursuance of a contract of employment, in
D 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 more than six
E passengers excluding the driver or two thousand y- .
rupees in respect of an individual passenger, if
the vehicle is registered to carry more than six
passengers excluding the driver; ·-
(c) ............... " •
F
On the plain language of the aforesaid clause (b) which applies to (/.
the instant case it is apparent that the liability of the appellant could A.
not be in excess of Rs.20,000. Learned counsel for the respondents,
however, urged that notwithstanding the provision contained in this
behalf in clause (b) aforesaid it was open to the insurer to take a policy
G covering a higher risk than contemplated by the aforesaid clause (b) " ~.
and consequently the said clause had to be read subject to the terms of
the policy which was taken in the instant case. We find substance in +
this submission in view of the decision of this Court in Pushpabai
Purshottam Udeshi and others v. M/s Ranjit Ginning and Pressing Co.
and another, 11977) A.C.J. 343 where it was held that the insurer can
H always take policies covering risks which are not covered by the re;.
NATIONAL INSURANCE CO. v. JUGAL KISHORE [OJHA, J.J 915

;;; '...)( quirements of Section 95 of the Act.
• A
We have accordingly perused the photostat copy of the policy to
ascertain whether risk for any amount higher than the amount. of
Rs.20,000 contemplated by clause (b) aforesaid was covered. Our
attention was invited by learned counsel for the respondents to the
circumstance that at the right hand corner on the top of page 1 of the B
-°"t policy the words "COMMERCIAL VEHICLE COMPREHENSIVE"
· were printed. On this basis and on the basis that the premium paid wa~
~ "'' t higher than the premium of an "act only" policy it was urged by the
lParned counsel for the respondents that the liability of the appellant
was unlimited and not confined to Rs.20,000 only. We find it difficult
. to accept this submission. Even though it is not permissible to use a
't--' vehicle unless it is covered at least under an "act only" policy it is not C
1 obligatory for the owner of a vehicle to get it comprehensively insured.
In case, however, it is got comprehensively insured a higher premium
than for an "act only" policy is payable depending on the estimated
value of the vehicle. Such insurance entitles the owner to claim
reimbursement of the entire amount of loss or damage suffered up to D
the estimated value of the vehicle calculated according to the rules and
regulations framed in this behalf. Comprehensive insurance of the
vehicle and payment of higher premium on this score, however, do not
mean that the limit of the liability with regard to third party risk
. "( becomes unlimited or higher than the statutory liability fixed under
sub-section (2) of Section 95 of the Act. For this purpose a specific E
' agreement has to be arrived at between the owner and the insurance
company and separate premium has to be paid on the amount of liabi-
lity undertaken by the insurance company in this behalf. Likewise, if
• risk of any other nature for instance, with regard to the driver or
passengers etc. in excess of statutory liability, if any, is sought to be
covered it has to be clearly specified in the policy and separate pre- F
'-J. mium paid therefor. This is the requirement of the tariff regulations
''-.. framed for the purpose. Coming to the photostat copy of the policy in
the instant case it would be seen that Section II thereof deals with
liability to third parties. Sub-section (1) minus the proviso thereto
reads as hereunder:
G
"1. Subject to the Limits of Liability the Company will
indemnify the insured against all sums including claimant's
cost and expenses which the insured shall become legally
liable to pay in respect of

(i) death or bodily injury to any person caused by or H
916 SUPREME COURT REPORTS [19881 2 S.C.R.

arising out of the use (including the loading and/or ,.......;,
..
A
unloading) of the Motor Vehicle.

(ii) damage to property caused by the use (including the
loading and/or unloading) of the Motor Vehicle)".

B The Schedule to the policy indicates the limits of liability and the
amount of premium paid. The limits of liability are indicated as -t-;-
hereinbelow:

"Limits of Liability:

Limit of the amount of the Company's Such amount as is necessary
c liability under Section II-1(1) in to meet the requirements of ---t''
respect of any one accident the Motor Vehicle Act, 1939 l-

Limit of the amount of the Company's
liability under Section II-1(11) in
D respect of any one claim or series of
claims arising out of one event Rs.20,000/-

The premium paid on the other hand is shown as below:

''Pr.emium Rs.415.00
y.
E Add 1/2% Rs.200.00
on LE. V.
Add for 53 Pass, 9 of Rs.2.50 Rs. 132.50
Add for Driver & Conductor
10.00 • !"
Rs 757.50" ff
l"'

\',",
F A perusal of the policy, therefore, indicates 1hat the liability ... \ /
undertaken with regard to the death or bodily injury to any person A
caused by or arising out of the use (including the loading and or un-
loading) of the motor vehicle falling under Section II(l)(i) has been
confined to "such amount as is necessary to meet the requirements of
the Motor Vehicle Act, 1939." This liability, as is apparent from clause >
G (b) of sub-section (2) of Section 95 of the Act, was at the relevant time
Rs.20,000 only. The details of the premium also indicate that no addi- +
tional premium with regard to a case falling under Section II(l)(i) was
paid by the owner of the vehicle to the insurance company. It is only
the vehicle which was.comprehensively insured, the insured's estimate
of value including accessories (LE.V.) thereof having been shown as
H Rs.40,000. In this view of the matter the submission made by learned
NATIONAL INSURANCE CO. v. JUGAL KISHORE [OIBA, J.] 917

counsel for the respondents that the appellant had in the instant case
A
undertaken an unlimited liability does not obviously have any sub-
stance. The liability under the policy in the instant case was the same
as the statutory liability contemplated by clause (b) of sub-section (2)
of Section 95 of the Act namely Rs.20,000. An award against the
appellant could not, therefore, have been made in excess of the said
statutory liability. B

Learned counsel for the appellant then urged relying on the deci-
sion of this Court in British India General Insurance Co. Ltd. v.
Captain Itbar Singh and Others, AIR 1959 Supreme Court 1331 that in
view of the sub-section (6) of Section 96 of the Act no insurer to whom
the notice referred to in sub-section (2) thereof has been given°, is C
entitled "to avoid his liability" to any person entitled to thP, benefit of
any such judgment as is referred to in sub-section (1) thereof other-
wise than in the manner provided for in sub-section (2). On this basis
it was urged that the appellant was not entitled to assert that its liabi-
lity was confined to Rs.20,000 only inasmuch as this is not one of the
defences specified in sub-section (2) of Section 96 of the Act. We find D
it difficult to agree with this submission either. Firstly, in paragraph 12
of the report of this very case it has been held that sub-section (2) of
Section 96 in fact deals with defences other than those based on the
conditions of a policy. Secondly, from the words "to avoid his liabi-
lity" used in sub-section (6) of Section 96 it is apparent that the restric-
tions placed with regard to defences available to the insurer specified E
in sub-section (2) of Section 96 are applicable to a case where the
insurer wants to avoid his liability. In the instant case the appellant is
not seeking to avoid its liability but wants a determination of the
extent of its liability which is to be determined, in the absence of any
contract to the contrary, in accordance with the statutory provisions
contained in this bahalf in clause (b) of sub-section (2) of Sction 95 of F
the Act. In the instant case since as seen above the aJlllellant did not
undertake in the policy any liability in excess of the statutory liability
the award against it could be only in accordance with the said statutory
liability.

.•
Before parting with the case, we consider it necessary to refer to G
the attitude often adopted by the Insurance Companies, as was
+ adopted even in this case, of not filing a copy of the policy before the
Tribunal and even before the High Court in appeal. In this connection
what is of significance is that the claimants for compensation under the
Act are invariably not possessed of either the policy or a copy thereof.
This Court has consistently emphasised that it is the duty of the party H
918 SUPREME COURT REPORTS 11988] 2 S.C.R.

A which is in possession of a document which would be helpful in doing f...
justice in· the cause to produce the said document and such party
should not be permitted to take shelter behind the abstract doctrine of •
burden of proof. This duty is greater in the case of instrumentalities of
the State such as the appellant who are under an obligation to act
'
fairly. In many cases even the owner of the vehicle for reasons known
B
to him does not choose to produce the policy or a copy thereof. We ,,
accordingly wish to emphasise that in all such cases where the Insu-
ranee Company concerned wishes to take a defence in a claim petition +-
that its liability is not in excess of the statutory liability it should file a
copy of the insurance policy along with its defence. Even in the instant
case had it been done so at the appropriate stage necessity of
~

...
~

c approaching this Court in Civil Appeal would in all probability have
been avoided. Filing a copy of the policy, therefore, not only cuts short
avoidable litigation but also helps the Court in doing justice between
the parties. The obligation on the part of the State or its instrumen-
~
talities to act fairly can never be over-emphasised.
D
In the result, this appeal succeeds and is allowed to this extent
that the liability of the appellant is fixed at Rs.20,000 together with r' ..,
interest as allowed by the High Court. In view of the order of this
Court dated 14th September, 1984 quoted above, however, it is held
that even if the total liability of the appellant falls short of Rs.1,00,000, '
it shall not be entitled to any rnfund out of the sum of Rs.1,00,000
E y •
which was deposited by it and withdrawn by the claimant-respondent
in pursuance of the said order. The decree of the High Court as against
the driver and the owner of the vehicle namely Respondents 2 and '•
3 is, however, maintained and all sums in excess of Rs.1,00,000 which
has already been withdrawn by the claimant-respondent as aforesaid •
shall be recoverable by him from Respondents 2 and 3 only. There
F
shall be no order as to costs.

R.S.S. Appeal allowed. x
' ..
+