PADMA SRINLVASAN versus PREMIER INSURANCE CO. LTD.

Citation: [1982] 3 S.C.R. 244 · Decided: 16-02-1982 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Appeal(s) allowed

Judgment (excerpt)

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244 
PADMA SRINlVASAN 
v. 
PREMIER INSURANCE CO. LTD. 
February 16, 1982. 
(Y.V. CHANDRACHUD, C.J., S. MURTAZA FAZAL ALI AND 
D.A. DESAI, JJ.] 
Motor Vehicles Act 1939, s. 95(2)(a) as amended by Motor Vehicles ( Amtnd-
ment) Act 56 of 1969-Applicability of. 
Accident claim_:_Liabilily of insurer-Material date for ascertainment of 
exten.t of liability- Whether date of accident or date of insurance policy. 
Contract-Contract in accordance with a particular. statute law but not identi-
fying the provision of law-Breach of contract-Determination of quantum of 
damages-Law in force on date breach of contract committ~d or law in force on 
date contract made. 
Section 95 of the Motor Vehicles Act 1939 prescribes the requirements of an 
insU.rance policy and the "limits of liability" thereunder. Section 95(2) (a) was 
amended by the Motor Vehicles (Amendment) Act 56 of 1969 to provide that the 
insurer's liability under a policy of insurance be increased from the existing 
"twenty·thousand rupees" to "fifty-thousand rupees". The amendtnent came into 
force on March 2, 1970. 
The appellant's husband, who was driving a scooter was knocked down 
dead by a truck on April 5~ 1970. The owner of the truck bad taken a statutory 
insurance policy with the respondent which was operative from June 30, 1969 to 
June 29, 1970. 
The appellant. filed an application before the Motor Accident's Claims 
Tribunal under section 1 lO·A of the Act seeking compensation for her husband's 
death. The respondent denied its liability and contested the application 
The 
Tribunal passed an award holding that the appellant was entitled to recover 
compensation in the sum of Rs. 60,000 for self and her children, but limited the 
liability of the respondent-insurer to a sum of Rs. 50,000. 
The respondent in its appeal to the High Court contended that on the date 
on which the insurance policy was issued, its statutory liability was limited to a 
H 
sum Rs, 20,000 only, and therefore the Tribunal was in error in passing an award 
against it for a sum of Rs. 50,000. This contention was accepted, and the appeal 
was allowed. 
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PADMA V. PREMIER INSURANCE CO. 
245 
In the claimant •s appeal to this Court on the question whether the insurer~s 
liability for third party risks under the statutory. policy must be held to be limi-
ted to Rs. 20,000 according to the relevant legal provision as it existed on the 
date on which the policy came into force, or wheiher that liability can be extend-
ed to Rs. 50,000 in accordance with f:he legal provision as it stood on the date of 
the accident, the accident having occurred during the currency of the policy. 
Allowing the appeal, 
HELD : 1. The material date for ascertaining the extent of liability of the 
insurer is the date of the accrual of the cause of action for a claim arising out of 
an accident, which in general would be the ~ate of the accident and therefore, 
the insurer's Jiability arising out of an accident which happens after March 2, 
1970 has to be determined on the basis of the amended provisions of section 95(2) 
(a) of the Act, even though the policy of insurance may have been issued prior 
to th~ date of the amendment, that is, prior to March 2, 1970. [249 G-H; 250A·Bl 
2. The governing factor for determiniD.g the application of the appropriate 
law is not the da.te on which the policy of insurance came into force, but the 
date on which the cause of action accrued foi; enforciD.g liability arising under 
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the terms of tho policy. [248 G] 
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3. The application of a Jaw to facts which came into existence after that 
law has come into force does not involve giving retrospective operation to the 
law, merely because _the f~cts to which the law is being applied are relatable to 
a contract or an instrument whfoh had com~ into ·operation prior to the date on 
which the law itself had come into force. [249 E-F) 
· 
4. If the parties to a contract agree that one shall pay to the oiher damages 
for breach of contract in accordance ·with the law contained in any particular 
· l'tatute without identifying the law as the provision Which is in force on the date 
of the contract, the Jaw which will apply for determining the quantum of damages 
is the one which is in force on which the breach of contract is committed, that 
being 'the date on which the caus~ of action arises, and not the law which was 
in force on the d~te on which tbe contract was n1ade. (249 B-C] 
In. the instant case

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