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United India Fire and General Insurance Company Ltd. Vs. Kalsum Begum and ors. - Court Judgment

LegalCrystal Citation
Subject;Motor Vehicles
CourtGuwahati High Court
Decided On
Case NumberM.A. (C.) No. 48 of 1976
Judge
ActsMotor Vehicles Act, 1939 - Sections 94, 95 and 96; Evidence Act, 1872 - Sections 102, 106 and 164
AppellantUnited India Fire and General Insurance Company Ltd.
RespondentKalsum Begum and ors.
Appellant AdvocateS.S. Sharma and N.C. Das, Advs.
Respondent AdvocateB.C. Barua and B.P. Bora, Advs. respondent No. 1, K.Sarma, C.K. Sarma Barua and B.N. Sarma, Advs. respondents Nos. 2 and 3
DispositionAppeal dismissed
Excerpt:
.....necessary to know precisely what is the implication of a comprehensive policy in so far as the insurer's liability against third party risk is concerned. insurance is a contract uberrimae fidei (of the utmost good faith) and of indemnity only, except in case of life and accident insurance, when an agreed sum is payable. this provision clearly limits the liability of the insurer to that covered by the terms of the policy, in other words, to the sum assured either equal to or in excess of the statutory limit. under section 102 of the indian evidence act, the burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side. the onus probandi in this sense rests upon the party who would fail if no evidence at all, or no more..........injury, or death to third parties within the limited categories laid down by the act. a third party liability policy may provide cover against legal liability for bodily injury to, or death of, any third party, even if he is not within the limited categories laid down by the act, for example, where liability to passengers is excluded by the act, and to employees carried pursuant to a contract of employment is covered. the widest form of third party liability also is one which covers, not only bodily injury to, or death of, any third party but also damage to or destruction of a third party's property, his loss of profit in his business and loss of services of his wife or servant. it may also be coupled with an insurance on the vehicle itself (including accessories) against fire or.....
Judgment:

Saikia, J.

1. This insurer's miscellaneous first appeal is from the judgment and award of the Motor Accidents Claims Tribunal, Kamrup, Gauhati, awarding compensation of Rs. 50,000 to the claimant-respondent with simple interest at 6% per annum from the date of petition till realisation payable by the appellant-insurer.

2. When the claimant-respondent's husband, Safat Ali, was standing at the southern side of the Ghograpar-Dhamdhama P.W.D. road at Khatikuchi Chowk with a few others on February 2, 1969, the truck No. ASZ 2554 owned by the respondent-opposite party, Sarat Chandra Deka, coming from Nilpur side at a very high speed while negotiating the turning at Khatikushi Chowk went off the road and knocked Safat Ali down causing severe injuries as a result of which he died on the way to the Medical College Hospital the same afternoon. The vehicle after knocking Safat Ali down knocked and damaged a pan shop on the southern side of the road and also injured some other persons.

3. To the claim application the insurer and the owner filed separate

objections. The owner admitted the occurrence but stated that the

deceased himself was negligent and knocked against the truck while he

was moving from the middle to the right side of the road. The insurer

admitted that the truck was insured with them at the relevant time but

their liability in terms of the policy was limited to Rs. 20,000 only.

On the pleadings the Tribunal settled four issues on cause of action,

on rashness and negligence in driving the vehicle, on quantum of the claim

and on limitation. The claimant examined 9 witnesses including the

claimant herself while the owner examined 3 witnesses including himself.

The Tribunal held that there was cause of action ; that there was no

negligence and rashness in driving the vehicle by its driver ; that the

claimant was not entitled to the full claim of Rs. 3,00,000 but only to

Rs. 50,000 as a lump sum payment with simple interest at 6% per annum

from the date of the application till realisation and the claim was not

barred by limitation. Hence, this appeal.

4. Mr. S.S. Sharma, for the appellant-insurer, submits, that their liability having been statutorily arid by the policy limited to Rs. 20,000 only, the Tribunal erred in law in making the entire awarded amount of Rs. 50,000 payable by the insurer. Though the policy, submits Mr. Sharma, was a 'comprehensive' one, the third party risk therein was limited only to the statutory liability of Rs. 20,000,

5. Mr. K. Sarma for the owner submits that the policy having been a 'comprehensive' one, the insurer's liability is to pay the entire awarded amount; and the insurer despite the owner's application failed to produce the policy, which was not delivered to him, before the Tribunal, and as such, there is no material to show that the liability as to third party risk was not comprehensive but limited to the statutory liability of Rs. 20,000.

6. The precise question to be decided, therefore, is whether in the case of a comprehensive policy, which is not produced, the insurer would be liable to pay the entire awarded amount though it is in excess of the statutory liability prescribed under Section 95(2) of the Motor Vehicles Act, (shortly 'the Act')? The parties have proceeded on the basis that the statutory liability at the relevant time was Rs. 20,000 as the truck was a goods vehicle. Admittedly, the policy was comprehensive. Considering that a perusal of the policy would assist adjudication, we allowed Mr. S.S. Sharma's prayer for time to file an application under Order 41, Rule 27, Civil Procedure Code, on March 18, 1980. Mr. Sharma states at

the Bar that as the policy was not available, no such application was

made. We had, therefore, to decide the appeal without perusing, the

policy. It is, therefore, necessary to know precisely what is the implication of a comprehensive policy in so far as the insurer's liability against

third party risk is concerned. In other words, must the insurer pay the

entire awarded amount to the claimant when it is in excess of the statutory liability.

7. It is common knowledge that insurance is a contract whereby a person called the insurer agrees in consideration of money paid to him, called the premium, by another person, called the assured, to indemnify the latter against loss resulting to him on the happening of certain events. The insurance policy is the document in which is contained the terms of the contract. Insurance is a contract uberrimae fidei (of the utmost good faith) and of indemnity only, except in case of life and accident insurance, when an agreed sum is payable. While in insurance there is privity, of contract between the insurer and the assured, in the case of a motor vehicle insurance in India, a statutory element has entered, firstly, making such insurance against third party risk compulsory and, secondly, prescribing a statutory limit to compensation which we find in Section 95(2) of the Act. In any of its various forms, a motor insurance policy is a compo-site insurance unless it is limited to the risks which are compulsorily insurable by statute. Such insurance always starts by referring to a particular vehicle, whether it is a specified vehicle or vehicle of a specified class or one of a fleet of vehicles which may be individually declared, if so required from time to time, and is normally limited in essence to user of this vehicle. It may, therefore, contain either a bare minimum cover without which a vehicle cannot lawfully be used on a road at all, or anyone or more of a number of variations in addition to the bare minimum cover. It is, therefore, necessary to ascertain the scope of the insurance under a particular type of insurance which a policy may contain. Thus, various types of risks may be covered by a motor insurance policy. Between the bare minimum of insurance required by statute and the most comprehensive insurance which may be obtained under a motor policy; there is a wide difference, both in the scope of cover afforded and in the premium which is required. A Motor Vehicles Act policy is one which contains the bare minimum requirements of cover if a vehicle is to be legally usable on the public road at all, namely, cover against legal liability in respect of bodily injury, or death to third parties within the limited categories laid down by the Act. A third party liability policy may provide cover against legal liability for bodily injury to, or death of, any third party, even if he is not within the limited categories laid down by the Act, for example, where liability to passengers is excluded by the Act, and to employees carried pursuant to a contract of employment is covered. The widest form of third party liability also is one which covers, not only bodily injury to, or death of, any third party but also damage to or destruction of a third party's property, his loss of profit in his business and loss of services of his wife or servant. It may also be coupled with an insurance on the vehicle itself (including accessories) against fire or theft or even against loss or damage however caused. Where unlimited third party cover is afforded together with full cover of the vehicle against any sort of loss or damage, the policy is usually described as fully comprehensive. Further clauses may contain a degree of personal accident insurance, by affording compensation for injuries or death sustained by the assured himself by reason of his use of the vehicle ; a 'permitted driver clause' by which cover against third party liability (limited or general) is afforded to any person driving the insured vehicle with the permission of the assured ; and a clause affording cover to the assured, within the scope of the policy while driving any other vehicle. Without perusing the insurance policy in the instant case, it is not possible to ascertain the nature and extent of comprehension in the comprehensive policy. Neither the insurer nor the insured is in a position to enlighten us in this regard.

8. It is common knowledge that in its main features a motor insurance contract is a contract of indemnity. In so far as motor insurance is concerned, for the insurance of the vehicle as a specie of property insurance, or the insurance of third party liability (whether limited or general) as an example of public liability insurance, the ordinary principles of these classes of insurance are applicable. However, in so far as clauses providing for insurance cover not in the nature of indemnity, for example, for the death or disablement of the assured himself are concerned, a general principle of life insurance or personal accident insurance will apply.

9. Mr. Sarma for the owner states that he served a notice to the insurer to produce the policy before the Tribunal but the insurer produced a duplicate copy of the policy without its first page explaining that the policy was sent to the financier and was not traceable and the duplicate was without its first page. In the duplicate, two figures appear, one Rs. 54,000 which, according to Mr. S.S. Sharma, was the value of the vehicle and another Rs. 20,000 which, according to him, was the statutory limit of liability. This is, however, denied by Mr. K. Sarma. We cannot, therefore, decide the question on the basis of the incomplete duplicate copy of the policy.

10. Under the above circumstances, Mr. S.S. Sharma contends that the insurer's liability cannot exceed the statutory liability and relies on Automobiles Transport (Rajasthan) P. Ltd. v. Dewalal [1977] ACJ 150; AIR 1977 Raj 121. In Automobiles Transport, in paragraph 24, it has been held that the liability of the insurer cannot exceed the one that is provided in the statute, unless there is a contract to the contrary. In that case, the insurer had specifically taken that plea and the Tribunal was held to have fallen into an error by fixing the liability of the insurer at an amount in excess thereof.

11. In Automobiles Transport's case [1977] ACJ 150; AIR 1977 Raj 121, it is not clear what was the type of the policy and whether it was not produced in court as in this case. The liability of the insurer was reduced to the statutory figure of Rs. 20,000.

12. The contention of the owner is that when the insurer fails to produce the policy, it is liable to pay the entire amount awarded. We are not inclined to accept the contention in this form. In a motor insurance policy under the Act, its contractual element should not be lost sight of. Basically it is a contract and the two minds were 'ad idem' oh the liability undertaken. Statute has intervened to make the insurance against third party liability compulsory and to prescribe the statutory limits. Subject to these, the contractual element remains. Section 96(1) provides that if, after a certificate of insurance has been issued under Sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he was the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. This provision clearly limits the liability of the insurer to that covered by the terms of the policy, in other words, to the sum assured either equal to or in excess of the statutory limit. We accordingly hold that the appellant is not liable to pay anything in excess of the sum assured, or liability covered by the policy.

13. Then comes the question, whose burden it is to prove the amount assured or liability undertaken The contract of insurance being a contract uberrimae fidei, both the minds had been 'ad idem' on the liability and both must be presumed to be aware of it. The original policy is expected, as a matter of practice, to be with the assured. The award in the instant case has been made payable by the insurer alone and it has appealed.

14. In Sheikhupura Transport Co. Ltd. v. Northern India Transporters Insurance Co. Ltd., AIR 1971 SC 1624 ; [1971] ACJ 206, it has been held in para 5 of the report that the measure of liability of the insurer has to be ascertained with reference to Section 95(2) of the Act. Section 94 of the Act requires that no person shall use a goods vehicle, unless there is in force in relation to the use of the vehicle, a policy of insurance complying with the requirements of Chapter VIII of the Act. Sub-section (2) of Section 95 prescribes the limits of liability an insurance policy is to cover, subject to the proviso to Sub-section (1). The limit of liability of the insurer under Section 95(2)(a) can be enhanced by any contract to the contrary. Therefore, we have to see whether the contract of insurance entered into between the appellant-insurer and the respondent-owner provided for payment of enhanced amount in case the owner of the vehicle involved in an accident is required by the award to pay any higher amount as compensation. It is, as we have seen, open to the insurer to cover the risk up to a higher extent than the statutory limit, and if he does, the liability would be determined in terms of the risk so covered.

15. The question on whom as between the assured and the insurer, the burden lies to prove the terms of the policy will depend on the facts and pleadings of each case. Under Section 102 of the Indian Evidence Act, the burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.

16. The burden of proof in any particular case depends on the circumstances in which the claim arises. The rule is ei qui affirmat, non ei qui negat, incumbil probatio. It is just that he who invokes, the aid of law should be the first to prove his case ; and in the nature of things, a negative is more difficult to be established than an affirmative. However, as applied to judicial proceedings, the phrase 'burden of proof' has two and frequently confused meanings. (1) The burden of proof as a matter of law and pleading and the burden, of establishing a case whether by preponderance of evidence or beyond reasonable doubt ; and (2) the burden of proof in the sense of introducing evidence. The burden of proof on the pleading, i.e., of establishing a case, rests upon the party, whether plaintiff or defendant, who substantially asserts the affirmative of the issue. It remains unchanged throughout the trial where the pleadings place it. The burden of adducing evidence may shift constantly, according as one scale of evidence or the other preponderates. The onus probandi in this sense rests upon the party who would fail if no evidence at all, or no more evidence, as the case may be, were given on either side. In other words, it rests, before evidence is gone into, upon the party asserting the affirmative of the issue ; and it rests, after the evidence is gone into, upon the party against whom the Tribunal, at the time the question arises, would give judgment if no further evidence is adduced.

17. The burden of proof may be effected by statutory provision and this frequently is the case as to matters within the knowledge of a party. In the case on hand, in so far as the statutory liability is concerned, the court will rather easily decide the insurer's liability. Beyond that, the insurance assumes contractual character and the normal rules will apply.

18. Under Section 106 of the Indian Evidence Act, 'when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.' The insurance liability is within the knowledge of both the assured and the insurer. Here the assured got a notice issued to the insurer to produce the policy but the latter could not produce the complete policy. Under Section 164 of the Evidence Act, 'when a party refuses to produce a document which he has had notice to produce, he cannot afterwards use the document as evidence without the consent of the other party or the order of the court.' The Tribunal has directed the entire amount to be paid by the insurer. The policy being comprehensive, there is no material to show that it did not cover any enhanced liability. We allowed' the insurer opportunity to adduce additional evidence by producing the policy, but they could not produce the same. We consider it risky to draw any conclusion from the incomplete duplicate of the policy.

19. In Satya Wati Pathak v. Hari Ram [1983] ACJ 12 ; AIR 1984 Delhi 106, relying on National Insurance Co. Ltd. v. Narendra Kumar, AIR 1980 All 397 ; [1981] ACJ 93, Shyam Lal v. New India Assurance Co. Ltd. [1979] ACJ 208 (MP) and Oriental Fire and General Insurance Co. Ltd. v. Mrs. Leelavati R. Adayanthaya, [1976] 12 DLT 163, it was held that if the insurance company failed to prove the contract of insurance, it must bear the consequences and it was held liable for the full amount observing that Section 95(2) of the Act no doubt prescribes the minimum requirement of the insurance policy, but it is open to the insurer to cover risk to a larger extent and the company did not prove the insurance policy. In the instant case also, the comprehensive policy was not produced.

20. In Oriental Fire and General Insurance Co. v. V. Ganapathi Ramalingam, AIR 1981 Mad 299, where also the policy was comprehensive, the insurer did not dispute the proposition put forward by the other side that the limitation provided in Section 95(2) would not apply to vehicles which had been comprehensively insured to cover all risks. This was also the view taken in Commonwealth Assurance Co. Ltd. v. Smt. Nilima Sarkar, AIR 1986 Cal 254 ; [1987] 62 Comp Cas 5 (Cal).

21. In Jayalakhmi v. Ruby General Insurance Co. [1971] 41 Comp Cas 194 ; AIR 1971 Mad 143 [FB], it has been held that where an insurance company insures the owner of a goods vehicle under Section 95(2) against the liability which the owner may incur in respect of the death of a third party caused by the use of the vehicle in a public place, the policy being simply one conforming to the requirement of the Act, the liability of the insurance company is limited to Rs. 20,000 under Section 95(2)(a). In Padma Srinivasan v. Premier Insurance Co. Ltd., AIR 1982 SC 836 ; [1983] 53 Comp Cas 333 (SC), where the insurer undertook liability under Chapter VIII of the Act and an accident occurred during the currency of policy, the liability of the insurer, it was held, arose on the occurrence of the accident and not until then and the liability was to be determined with reference to the legal provision as it existed on the date on which the accident took place, and not as on the date of the policy came into force ; and in that case it would be extended to Rs. 50,000 in accordance with the legal provision as it stood on the date of the accident when the accident occurred during the currency of the policy. The liability must mean liability as determinable under Chapter VIII at the relevant time, that is to say, at the time when the liability arises. In Mehta Madan Lal v. National Insurance Co. Ltd., AIR 1983 SC 1136, where the compensation did not exceed Rs. 50,000, the liability of the insurance company not being divisible and the owner and company being jointly and severally liable, apportionment of compensation was held to be invalid. In Narcinva V. Kamat v. Alfredo Antonio Doe Marlino [1985] 58 Comp Cas 383 ; AIR 1985 SC 1281, where the question was whether the insurance company under the contract of insurance was liable to satisfy the award and the insurance company complained that there had been a breach of one of the important terms of the contract of insurance as evidenced by the policy of insurance, the whole of which was not shown to the Supreme Court, the burden to prove that there was breach of the contract of insurance was squarely placed on the shoulders of the insurance company and it having failed to prove any breach, its liability under the contract of insurance, it was held, remained intact and unhampered and that it was bound to satisfy the award under the comprehensive policy of insurance. In the case on hand also, the complete and comprehensive policy has not been produced. The certificate of insurance which has been produced shows the policy to be comprehensive, but other terms of the policy have not been shown. It is settled law that an insurer can cover a higher risk than the statutory limit. As was held in United India Fire and General Insurance Co. Ltd. v. Minaxiben Harishchandra Joshi, AIR 1978 Guj 108, Sub-section (2) of Section 95 prescribes the minimum requirement of the insurance policy but it is open to the insurer to cover risk to a larger extent, and if he does, the liability will be determined in terms of the risk covered. In Assam Corporation v. Binu Ram, AIR 1975 Gau 3, where the policy covered a wider risk than under Section 95(2), the Tribunal was held competent to make an award directing the insurer to pay such compensation to the claimant for which the insured was found liable.

22. In case the insurer is made to pay in excess of the liability it covered, it would be entitled to sue the insured for the money it had to pay. In New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani [1964] 34 Comp Cas 693; AIR 1964 SC 1736, it was held that the contract between the insured and the company might not provide for all the liabilities which the company had to undertake vis-a-vis third parties in view of the provisions, of the Act ; and that once the company had undertaken liability to third parties incurred by the persons specified in the policy, the third parties' right to recover any amount under or by virtue of the provisions of the Act was not affected by any condition in the policy in so far as third party risk was concerned. If, for a condition, the insurer repudiated a liability but was made to pay on the basis of the claim, it would be entitled to sue the insured for the money it had to pay. This followed from Section 96(4) which says : 'If the amount which the insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would, apart from the provisions of this section, be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person'. This provision does not make the insurer liable to pay any amount beyond or in excess of what it undertook to pay, but enables him to recover anything which he would not be liable to pay by reason of the policy but had to pay under Section 96, Indeed, subsection (5) of Section 95 clearly provides : 'Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons'. In Manjula Devi Bhuta v. Manjusri Raha [1968] ACJ 1 (MP) also, it was held that though under Section 95(1) the insurer would be liable to pay the amount of compensation as prescribed under Section 95(2), there may be an agreement between the assured and the insurer under which the insurer's liability is fixed, any amount which the insurer is required to pay under Section 95(1) in excess of the liability fixed under the agreement would be recoverable by the insurer under Sub-section (4). We respectfully agree. It is settled law that the insurers have certain rights against the insured. If insurers, by virtue of any provision of the Act, become liable to pay to a third party a sum in excess of what, under the policy, they would be liable to pay to their assured in respect of the relevant accident, they are entitled to recover the excess from the assured. In British India General Insurance Co. Lid. v. Captain Itbar Singh [1959] 29 Cornp Cas (Ins) 60; AIR 1959 SC 1331, para 16, it has been similarly held that if the insurer has been made to pay something which under the contract of the policy he was not bound to pay, he can under the proviso to Sub-section (3) and under Sub-section (4) of Section 96 recover it from the assured. Where the insurers would not be liable to pay anything under their policy by reason of misrepresentation or non-disclosure giving them a right to repudiate, they are entitled to recover from the assured anything which they are compelled by the statutory provisions to pay, whether or not they seek to obtain the relief which the provisions afforded them.

23. Applying the law as discussed above, we hold that in this case where the policy was comprehensive and the accident occurred when the policy was in force, and the insurer did not hand over the policy to the insured and also failed to produce the policy before the Motor Accidents Claims Tribunal in spite of the insured's notice to produce the policy ; and there was also no evidence to show that the liability covered by the policy in respect of third party was only up to the statutory limit, and not in excess thereof, the insurer was rightly held liable to satisfy the entire compensation of Rs. 50,000 with interest as awarded by the Tribunal to the claimant. The insurer having failed to produce the policy or any other material before the High Court in appeal to show that it covered only up to the statutory limit, the award cannot be interfered with. If the insurer is, by the award, made to pay any amount in excess of the liability covered by the policy, it shall have right to recover the excess from the insured.

24. In the result, this appeal must fail and it is dismissed with costs.

B.L. Hansaria, J.

25. I agree.


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