Kerala High Court
United India Insurance Company Limited vs Hashim Rahiman on 30 July, 2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE C.S. SUDHA
WEDNESDAY, THE 30TH DAY OF JULY 2025 / 8TH SRAVANA, 1947
MACA NO. 290 OF 2020
AGAINST THE AWARD DATED 02.05.2019 IN OPMV NO.140 OF
2016 ON THE FILE OF THE MOTOR ACCIDENT CLAIMS TRIBUNAL-
II, VADAKARA.
APPELLANT/3RD RESPONDENT:
UNITED INDIA INSURANCE COMPANY LIMITED,
REP. BY ITS MANAGER,
REGIONAL OFFICE, KOZHIKKODE 06.
BY ADV SMT.RAJI T.BHASKAR
RESPONDENTS/PETITIONER & RESPONDENTS 1 & 2 RESPECTIVELY:
1 HASHIM RAHIMAN,
AGED 52 YEARS
S/O. ABDU RAHIMAN,
BAB AL SHAMS, CHERUNNANDY HOUSE,
POST MUCHUKUNNU, KOYILANDY TALUK,
KOZHIKKODE DISTRICT, PIN- 673 307.
2 M.H. NOUFAL,
AGED 43 YEARS,
S/O. HAMZA, MURINGAKODAN HOUSE,
P.O. VAKERI, SULTHAN BATHERY,
WAYANAD DISTRICT, PIN- 673 592.
3 M.K. CHANDRAN,
AGED 39 YEARS,
S/O. KESAVAN, MANODE HOUSE,
P.O. NOOLPUZHA, WAYANAD DISTRICT,
PIN- 673 592.
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BY ADVS.
SHRI.P.A.AJITH KUMAR
SMT.CELINE JOSEPH
SMT. MANEESHA JOY
SMT.K.MEKHA DINESH
THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY
HEARD ON 23/07/2025, THE COURT ON 29/07/2025 AND
30/07/2025 DELIVERED THE FOLLOWING:
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C.S.SUDHA, J.
----------------------------------------------------
M.A.C.A.No.290 of 2020
----------------------------------------------------
Dated this the 29th day of July 2025
JUDGMENT
This appeal has been filed under Section 173 of the
Motor Vehicles Act, 1988 (the Act) by the third
respondent/insurer in O.P.(MV) No.140/2016 on the file of the
Motor Accidents Claims Tribunal, Vatakara (the Tribunal),
aggrieved by Award dated 02/05/2019. The respondents herein
are the claim petitioner and respondents 1 and 2 respectively in
the petition. In this appeal, the parties and the documents will be
referred to as described in the original petition.
2. The claim petitioner is the owner of BMW car
bearing registration no.KL-14-N-777. According to the claim
petitioner, on 23/07/2015 at about 03:00 a.m., near Kanjipura at
Valacherry, lorry bearing registration no.KL-57-A-3960 driven
by the second respondent in a rash and negligent manner collided
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with his car, whereby his vehicle sustained extensive damages.
Hence, he claimed ₹31,00,000/- as compensation.
3. The second respondent-driver of the offending
vehicle remained ex-parte.
4. The first respondent-owner of the offending
vehicle filed written statement denying negligence on the part of
the second respondent. The accident occurred due to the
negligence of the driver of the car. The amount claimed was
contended to be exorbitant.
5. The third respondent-insurer filed written
statement admitting the policy and denying the factum of the
accident. The amount claimed was contended to be exorbitant.
6. Before the Tribunal, PWs.1 and 2 were
examined and Exts.A1 to A5 were marked on the side of the
claim petitioner. Exts.B1 to B4 were marked on the side of the
third respondent.
7. The Tribunal on consideration of the oral and
documentary evidence and after hearing both sides, found
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negligence on the part of the second respondent-driver of the
offending vehicle resulting in the incident and hence awarded an
amount of ₹27,21,700/- together with interest @ 8% per annum
from the date of the petition till realisation along with
proportionate costs. Aggrieved by the Award, the third
respondent/insurer has come up in appeal.
8. The only point that arises for consideration in
this appeal is whether there is any infirmity in the findings of the
Tribunal calling for an interference by this Court.
9. Heard both sides.
10. It was submitted by the learned counsel for the
third respondent/insurer that the Tribunal erred in holding that the
third respondent/insurer is liable to indemnify the first
respondent/the owner of the offending lorry, of the entire amount
awarded by the Tribunal. As per Ext.B1, the liability of the
insurer is limited to ₹7.5 lakhs. Hence, if at all the third
respondent is liable, the liability is limited to ₹7.5 lakhs and for
the balance amount, it is the first respondent/owner who has to be
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held liable. Per contra, it was submitted by the learned counsel
for the first respondent/owner that Ext.B1 is not an “Act only
policy” but a comprehensive/package policy. The first
respondent-owner/ insured has paid an additional premium of
₹1,000/- and hence the liability is unlimited. In support of the
argument, reference was made to the dictums in Namit Sharma
v. Union of India, 2013 (1) SCC 745 and the judgment of the
High Court of Delhi in Sanjay Sharma v. New India Assurance
Company Ltd., 2023 SCC OnLine Del 3404.
11. Here it would be apposite to refer to a
Constitution Bench judgment of the Apex Court in New India
Assurance Company Ltd. v. C.M.Jaya, 2002 ACJ 271 : AIR
2002 SC 651. The question that was referred for consideration of
the Bench was – “whether in a case of insurance policy not taking
any higher liability by accepting a higher premium, in case of
payment of compensation to a third party, the insurer would be
liable to the extent limited under Section 95(2) or the insurer
would be liable to pay the entire amount and he may ultimately
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recover from the insured? ” After considering various earlier
decisions of the Apex Court it has been held that the liability of
the insurer is limited as indicated in Section 95(2) of the Motor
Vehicles Act, 1939, but it is open to the insured to make payment
of additional higher premium and get higher risk covered in
respect of third party also. But in the absence of any such clause
in the insurance policy, the liability of the insurer cannot be
unlimited in respect of a third party and it is limited only to the
statutory liability. In the said case, reference was also made to
the dictum in The New India Assurance Co. Ltd., v. Shanti
Bai, (1995) 1 SCR 871 (SC), wherein it was held that (i)
comprehensive policy which has been issued on the basis of the
estimated value of the vehicle does not automatically result in
covering the liability with regard to third party risk for an amount
higher than the statutory limit, (ii) that even though it is not
permissible to use a vehicle unless it is covered at least under an
“Act only policy”, it is not obligatory for the owner of the vehicle
to get it comprehensively insured and (iii) that the limit of
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liability with regard to third party risk does not become unlimited
or higher than the statutory limit in the absence of specific
agreement to make the insurer’s liability unlimited or higher than
the statutory liability.
12. Now coming to the case on hand. The accident
took place on 23/07/2015. Sub-sections (1) and (2) of Section
147 of the present Act as it then stood before the amendment of
the year 2019 came into effect from 01/04/2022 reads –
“147. Requirements of policies and limits of
liability.–(1) In order to comply with the
requirements of this Chapter, a policy of
insurance must be a policy which –
(a) is issued by a person who is an authorised
insurer; and
(b) insures the person or classes of persons
specified in the policy to the extent specified in
sub-section (2) –
(i) against any liability which
may be incurred by him in respect of
the death of or bodily injury to any
person, including owner of the goods or
his authorized representative carried in
the vehicle or damage to any property
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of a third party caused by or arising
out of the use of the vehicle in a public
place;
(ii) against the death of or bodily
injury to any passenger of a public
service vehicle caused by or arising out
of the use of the vehicle in a public
place:
Provided that a policy shall not be required –
(i) to cover liability in respect of the death,
arising out of and in the course of his
employment, of the employee of a person
insured by the policy or in respect of bodily
injury sustained by such an employee arising
out of and in the course of his employment
other than a liability arising under the
Workmen’s Compensation Act, 1923 (8 of
1923) in respect of the death of, or bodily
injury to, any such employee-
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as a
conductor of the vehicle or in examining tickets
on the vehicle, or
(c) if it is a goods carriage, being carried in
the vehicle, or
(ii) to cover any contractual liability.
Explanation.–For the removal of doubts, it is hereby
declared that the death of or bodily injury to any person or
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damage to any property of a third party shall be deemed to have
been caused by or to have arisen out of, the use of a vehicle in a
public place notwithstanding that the person who is dead or
injured or the property which is damaged was not in a public
place at the time of the accident, if the act or omission which
led to the accident occurred in a public place.
(2) Subject to the proviso to sub-section (1), a policy
of insurance referred to in sub-section (1) shall cover any
liability incurred in respect of any accident, up to the following
limits, namely:–
(a) save as provided in clause (b), the amount of
liability incurred;
(b) in respect of damage to any property of a third
party, a limit of rupees six thousand:
Provided that any policy of insurance issued with any
limited liability and in force, immediately before the
commencement of this Act, shall continue to be effective for a
period of four months after such commencement or till the date
of expiry of such policy whichever is earlier.”
(Emphasis supplied)
13. Therefore, as per Section 147(2)(b), the limit is
₹6,000/-. I also refer to the relevant portions in page nos. 2 and 3
in Ext.B1 policy, which reads –
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”
Limits of Liability
Under Section II-I(i) Death or bodily injury in respect of
any one accident; As per Motor Vehicles Act 1988
Under Section II-I (ii) Damage to third party property in
respect of any one claim or series of claims arising out
of one event: 750000/-
Personal accident covers for Owner-Driver CSI:₹200000
This policy is subject to terms and conditions and IMT
Endorsement Nos.printed herein/attached hereto 21,23,28.
Imposed Excess 0
Voluntary Excess 0
Compulsory 1000
Excess
"
According to the learned counsel for the claim petitioners, the
payment of ₹1,000/- made under the head compulsory excess, is
the additional premium that was paid by the first
respondent/owner-insurer and hence the liability of the third
respondent/insurer has become unlimited. Per contra, it was
submitted by the learned counsel for the third respondent/insurer
that the said amount has been paid in the light of IMT
endorsements 21, 23 and 28 and that this does not make the
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liability of the insurer unlimited.
14. As noticed earlier, going by Section 147(2)(b),
the liability is limited to ₹6,000/-. However, that does not prevent
the parties from entering into a contract by which the insurer can
take up a higher liability. In such cases, the liability would be to
the said extent alone and the same would not make the liability of
the insurer unlimited in respect of the third party. In the light of
Ext.B1, I find that the liability of the third respondent/insurer is
limited to ₹7.5 lakhs only with proportionate interest and costs.
The claim petitioner is entitled to recover the remaining amount
from the first respondent/owner-insured and second
respondent/driver of the offending vehicle.
In the result, the appeal is allowed as above.
Interlocutory applications, if any pending, shall stand
closed.
Sd/-
C.S.SUDHA
JUDGEJms
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30/07/2025
15. After the judgment was signed and pronounced
by this Court, it is submitted by the learned counsel for the third
respondent/insurer that though an argument was advanced that the
offending vehicle did not have a valid permit at the time of the
accident, this Court has not considered the same and hence the
said argument may also be considered. In the light of the
submission made, the matter was posted to this day and heard.
16. Heard both sides.
17. It is submitted by the learned counsel for the
first respondent-owner that along with the written statement filed
before the Tribunal, a copy of the permit had also been produced,
which would show that the vehicle did have a valid permit as on
the date of the accident.
18. The copy of the permit that has been produced
along with the written statement shall stand marked as Ext.B5. As
per the said certificate, permit was valid from 2013 to
09/07/2018. The accident took place on 23/07/2015, which makes
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it clear that the vehicle did have a valid permit at the relevant
time. Hence, the argument that there was no valid permit and so
there is a fundamental breach which will exonerate the third
respondent is liable to be rejected.
Ext.B3 is the registration particulars of the offending
vehicle. Therefore, the contention in the written statement that
there was no valid registration certificate for the vehicle is also
not tenable.
Sd/-
C.S.SUDHA
JUDGEJms