ROAD TRANSPORT COMPANY versus BHAN SINGH AND ANR.

Citation: [1998] 3 S.C.R. 873 · Decided: 22-07-1998 · Supreme Court of India · Bench: G.T. NANAVATI · Disposal: Dismissed
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Judgment (excerpt)

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ROAD TRANSPORT COMPANY 
A 
"" 
v. 
BHAN SINGH AND ANR. 
JULY 22, 1998 
[G.T. NANAVATI AND S.S.M. QUADRI, JJ.] 
B 
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Motor Vehicles Act, 1939 : Section 95 (2) (b) (ii) 
Passenger bus-Insurance Policy--'Act onzy' policy-Basic premium 
paid for comprehensive risk to cover loss or damage to the bus only- c 
Additional premium of Rs. 300 paid to cover risk of passenger-Held : 
Liability of insurance company limited to Rs. 5,000 per passenger and Rs. 
7 5, 000 in all. 
The appellant's passenger bus met with an accident because of rash 
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and negligent driving by its driver. 35 passengers travelling in that bus died. 
In all nine claim cases were filed before the Tribunal. Two cases were 
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dismissed and in the remaining seven cases the Tribunal awarded different 
sums of money by way of compensation and ordered that in each case out of 
the total amount payable to the claimants Rs. 5,000 shall be paid by the 
insurance company and the rest shall be paid by the appellant. 
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The appellant feeling aggrieved by the amount of compensation and the 
finding that the insurance company was liable to pay only Rs. 5.000 per 
passenger and Rs. 75,000 in all preferred appeals before the High Court. 
Two contentions were raised before the High Court. It was contended that the 
""t. 
insurance policy was comprehensive policy and, therefore, the insurance F 
company was legally liable to pay the whole amount of compensation and 
limiting its liability to Rs. 5,000 per passenger and Rs. 75000 in all was 
contrary to Motor Vehicles Act, 1939. The second contention was that the 
appellant had paid additional premium of Rs. 300 and therefore, limiting the 
liability of the insurance company to Rs. 75000 in all was not justified. The G 
High Court rejected both these contentions. Being aggrieved by the High 
Court's juogment the appellant prr,ferred the present appeal . 
.A 
Dismissing the appeal, this Court 
HELD : 1.1. The liability of the insurance company will have to be H 
873 
874 
SUPREME COURT REPORTS 
[1998) 3 S.C.R. 
A determined in terms of Section 95(2) (b) (ii) of the Motor Vehicles Act, 1939. 
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It is indisputable that at the relevant time Section 95(2) (b) (ii) limited the 
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liability of the insurance company to Rs. 5000 for each passenger and Rs. 
75,000 in all, where the vehicle was registered to carry more than 30 but 
not more then 60 passengers. (879-DI 
B 
1.2. A reading of the insurance policy discloses that the basic premium 
of Rs. 626 though paid for comprehensive risk was not intended to cover all 
the statutory liabilities but it was really intended to cover the entire loss or 
damage to the vehicle. The insurance company had charged a premium of Rs. 
... 
300 towards passenger's risk. It works out at Rs. 6 per passenger. As per 
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c 
the Indian Motor Tariff applicable on the date of accident by charging a 
premium of Rs. 6 per passenger the liability of the company per passen~er 
was Rs. 5,000 only. The Indian Motor Tariff which regulates premium and 
liability of insurance company is framed by the Tariff Advisory Committee, 
a statutory body set up under the Insurance Act, 1938. The additional 
premium of Rs. 300 was thus paid to cover the statutory liability for 50 
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passengers as the vehicle insured was a passenger bus having a registered 
capacity of carrying 50 passengers. The endorsement which was attached to 
and formed part of the policy makes it clear that it was in consideration of 
an additional premium of Rs. 300 that the insurance company had undertaken 
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to indemnify the insured against his liability in respect of passengers to the 
extent of Rs. 5,000 for each passenger and Rs. 75,000 in all. It is, therefore, 
E not possible to accept the contention raised on behalf of the appellant that 
the additional premium of Rs. 300 was paid for covering higher than the 
statutory liability. There was no special contract to cover unlimited liability 
in respect of the passengers. (880-A, D-F] 
National Insurance Co. Ltd. v. Jugal Kishore, (19881 1 SCC 626, 
relied on. 
F 
:yi 
New India Assurance Co. Ltd. v. Shanti Bai, (199512 SCC 539, referred 
to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3421-27 of 
1998. 
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From the Judgment and Order dated 5.8.97 of the Patna High Court in 
C.R. No. 4/97(R) with C.R. Nos. 5 to 10of1997. 
Ranjit Kumar and Mrs. Nandini Gore for the Appellant. 
,..._ 
Kishore Rawat, M.K. Dua and L.R. Singh for the Respondents. 
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The: Judgment of the Court was del
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