United India Insurance Co. Ltd. - Appellant Versus Dhali And Ors. - Respondent

Core ratio / Key holding

Headnote

Motor Vehicles Act, 1939 — S.96(2) — Insurance Company — Liability — Transfer of vehicle —

Motor Vehicles Act, 1939 — Compensation — Quantum — Challenge by Insurance Company —

Civil Procedure Code, 1908 — O.41 R.33 — Appellate Court — Powers — Motor Accident Claims Tribunal — Award —

Motor Vehicles Act, 1939 — S.95(2)(a) — Insurance Company — Limit of Liability — Motor Vehicles (Amendment) Act, 1982 —

Issues for determination

• Whether the insurance company can deny liability on the ground that the insured vehicle was transferred before the accident.
• Whether the insurance company can challenge the quantum of compensation awarded to the claimants.
• Whether the Tribunal erred in not passing the award against the owner and driver, and if the High Court can correct this error under Order 41 Rule 33 CPC.
• Whether the maximum liability of the insurance company was limited to Rs. 50,000/-.

Ratio decidendi

• An insurance company cannot contend that the offending vehicle stood transferred to some third person before the accident to avoid liability to pay compensation, especially when the insurance policy was again taken in the name of the original owner for the period covering the accident.
• It is not open to the insurance company to challenge the quantum of compensation awarded to the claimants.
• An appellate court can invoke the provisions of Order 41 Rule 33 of the Civil Procedure Code to pass a decree against the owner and driver of an offending vehicle, even if no cross-objections or appeal were filed by the claimants, if the lower court committed an error in not making them liable.
• By the Motor Vehicles (Amendment) Act, 1982, the words 'Fifty thousand rupees' were substituted by 'One lakh fifty thousand rupees' in Section 95(2)(a) of the Motor Vehicles Act, 1939, effective from October 1, 1982, thus increasing the insurance company's liability limit for accidents occurring after this date.

Important points

• Appeal filed by the United India Insurance Co. Ltd. against the award of the Motor Accidents Claims Tribunal is dismissed.
• The award is modified to make the owner Babulal and driver Tej Singh also liable to pay the compensation amount with interest.
• The insurance company's liability for an accident after October 1, 1982, is not limited to Rs. 50,000/-, but extends up to Rs. 1,50,000/- as per the Motor Vehicles (Amendment) Act, 1982.
• The insurance company cannot deny liability on the ground that the insured vehicle was transferred before the accident if the policy was in the original owner's name.

Keywords