THE NEW INDIA ASSURANCE CO. LTD. versus SMT. SHANTI BAI AND ORS.

Citation: [1995] 1 S.C.R. 871 · Decided: 06-02-1995 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

THE NEW INDIA ASSURANCE CO. LTD. 
v. 
SMT. SHANTI BAI AND ORS. 
FEBRUARY 6, 1995 
[A.M. AHMADI, CJ, S.P. BHARUCHA AND 
SUJATA V. MANOHAR, JJ.] 
A 
B 
Motor Vehicles Act, 1939-S. 95-Liability of /11surer--Comprehe11sive 
policy issued by Insurer-Accident-Death of a passenger-Third party 
risk-Payment of compensation-Held, does not automatically cover the c 
liability to the value of the Vehicle in the absence of express 9greement-Other-
wise liability not to exceed the statutory limit. 
· 
The appellant issued a comprehensive insurance policy in respect of 
a bus which was used for carrying passengers and owned by respondent 
No. 4. While the insurance policy was in force the bus met with an accident D 
due to rash and negligent driving of its driver respondent no. 5, resulting 
in the death of one L, who was sitting on the roof top of the bus with the 
permission of the driver. The legal heir of L filed a claim for compensation 
amounting to Rs. 7,81,000 before the Motor Accident Claims Tribunal, 
which awarded a compensation of lb. 1,10,000 with int~rest @12% p.a. E 
from the date of presentation of the petition, and directed the respondents 
4 and 5 to pay the same. 
The High Court dismissed the appeal. 
In this appeal, the question that arose for consideration was whether 
the appellant was liable to pay the entire compensation with interest or its 
liability is limited to the statutory liability of Rs. 15,000. 
Allowing the appeal, this Court 
F 
HELD : 1.l. In the present case, a comprehensive policy which has G 
been issued on the basis of the estimated value of the vehicle of Rs. 2,50,000 
does not automatically result in covering the liability with regard to third 
party risk for an amount higher than the statutory limit. [875-A] 
1.2. The premium which has been paid is at the rate of Rs. 12 per 
passenger and is clearly referable to the statutory liability of fifteen H 
871 
872 
SUPREME COURT REPORTS 
[1995) 1 S.C.R. 
A thousand rupees per passenger under Section 95(2)(b)(ii) of the Motor 
Vehicles Act, 1~39. In the present case, there is no special contract between 
the appellant-company and respondent No. 4 to cover unlimited liability 
in respect 1Jf an accident to a passenger. In the absence of such an express 
agreement, the policy covers only the statutory liability. The mere fact that 
B the insurance policy is a comprehensive policy will not help the respon-
dents in any manner. [875-E-FJ 
c 
2. Though, the liability of the appellant is limited to Rs. 15,000 it 
does not affect in any manner the liability of respondents 4 and 5 to pay 
the amount of the award. [876-B] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1312 of 
1995. 
From the Judgment and Order dated 11.2.94 of the Madhya Pradesh 
""' 
High Court in Misc. A. No. 444 of 1991. 
D 
Man Mohan Sarin and Pramod Dayal for the Appellant. 
S.S. Tiwari and B.S. Banthiya for the Respondent. 
A.K. Sanghi for the Respondent Nos. 4-5. 
E 
The Judgment of the Court was delivered by 
SUJATA V. MANOHAR, J. Leave granted. 
This appeal by special leave arises from a judgment and order dated 
F 11th of February, 1994 passed by the High Court of Madhya Pradesh in 
Misc. Appeal No. 444 of 1991. The appellant before us is the New India 
Assurance Company Ltd. 'it had issued a comprehensive insurance policy 
in respect of a bus which was used for carrying passengers for hire and 
. bearing Registration No. CIK-8108, owned by respondent No. 4. This 
G insurance policy was in force at the material time. 
On 3rd of January, 1989, this bus, while it was being driven by 
respondent No. 5, met with an accident. The deceased, Laxman Singh, who 
was sitting on the roof top of the bus with the permission of the bus driver, 
respondent No. 5, hit a tree on account of the alleged rash and negligent 
H driving- of the said bus by respon<:lent No. 5. He was admitted to hospital 
r 
NEW INDIA ASSURANCE CO. v. SHANTI BAI [SUJATA V. MANO HAR, J.) 873 
and died on 7.1.1989 on account of the injuries received in the accident. A 
The legal heirs of Laxman Singh, who are respondents 1 to 3 before us, 
filed a claim for compensation amounting to Rs. 7,81,000 before the Motor 
Accident Claims Tribunal, Narsinghpur. The Motor Accident Claims 
Tribunal, by its order dated 10.4.1991, awarded to respondents 1 to 3 
compensation of Rs. 1,10,000 together with interest at the rate of 12% per B 
annum from the date of the presentation of the petition and directed the 
appellant and respcn

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