NATIONAL INSURANCE CO. LTD., NEW DELHI versus JUGAL KISHORE & OTHERS

Citation: [1988] 2 S.C.R. 910 · Decided: 09-02-1988 · Supreme Court of India · Bench: E.S. VENKATARAMIAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

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B 
NATIONAL INSURANCE CO. LTD., NEW DELHI 
v. 
JUGAL KISHORE & OTHERS 
FEBRUARY 9, 1988 
[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 
' .,r 
C statutory liability. 
Practice 
and 
Procedure-Motor 
Accidents 
tion case-Filing of insurance policy copy-Necessity for. 
Compensa-~ 
Respondent No. 1, Jugal Kishore, while driving a three wheeler 
D scooter, met with an accident with bus No. D LP-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. 
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y 
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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. 
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. 
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 
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NATIONAL INSURANCE CO. v. JUGAL KISHORE 
911 
and on the circumstance that the premium paid was higher than the 
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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, 
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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 
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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 seek

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