LIMITED LIABILITY OF INSURANCE COMPANY UNDER SEC.147[2] OF M.V.ACT

THE HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY           
M.A.C.M.A.No.286 of 2007  


18-02-2010 


United India Insurance Company Limited 


A. Lingam and another 


Counsel for the Appellant: MR. R.Briz Mohan Singh 


Counsel for the Respondents: None appeared  


:ORDER:  


In this Motor Accident Civil Miscellaneous Appeal, the short issue that arises
for consideration is whether the liability of the appellant - insurance company
is limited to Rs.6,000/- in respect of the damage caused to the vehicle owned by
respondent No.1. 


I have heard Sri R. Briz Mohan Singh, learned counsel for the appellant.
Despite publication of notice in two newspapers through substituted service,
respondent No.1 has not entered appearance and consequently there is no 
representation on his behalf at the hearing.


Respondent No.1 is the registered owner of lorry bearing No.
AP 16U/4312.  While the said lorry was used for transportation of coal, another
lorry bearing No.AP 36T/5888 belonging to respondent No.2 and insured with the
appellant hit the lorry owned by respondent No.1 in the process of overtaking
and caused damage to the said vehicle.  Respondent No.1 filed O.P.No.344 of 2005
on the file of the Chairman, Motor Accident Claims Tribunal-cum-II Additional
District Judge, Warangal (for short 'Tribunal) claiming compensation of
Rs.2,00,000/- under different heads, which includes a sum of Rs.1,00,000/-
towards compensation for damage to the vehicle after deducting salvage value.
The Tribunal through award impugned in this appeal partly decreed the O.P. by
awarding Rs.80,000/- as compensation comprising Rs.70,000/- towards loss 
sustained by respondent No.1 on account of damage to the lorry and Rs.10,000/-
towards loss of earnings.  The Tribunal fixed joint and several liability on
respondent No.2, owner of the offending vehicle, and also the appellant.


In this appeal, the learned counsel for the appellant submitted that under
Section 147(2) of the Motor Vehicles Act, 1988 (for short 'the Act'), the
liability of the insurer in respect of damage to any property of a third party
is limited to Rs.6,000/-. I have carefully considered the said submission of the
learned counsel for the appellant and I find force therein.


Section 147 of the Act deals with the requirements of policies and limits of
liability of the insurer.  Sub-Section (1) of Section 147 of the Act provides
that in order to comply with the requirements of Chapter XI, which deals with
insurance of motor vehicles against third party risks, a policy of insurance
must, inter alia, cover persons or classes of persons specified in the policy in
respect of death or bodily injury to any person including owner of the goods or
his authorized representative carried in the vehicle or damage to any property
of a third party caused by or arising out of use of the vehicle in a public
place.  The extent of liability is, however, made subject to Sub-Section (2) of
Section 147 of the Act.  Section 147(2) of the Act provides that subject to
provisions of
Sub-Section (1) of Section 147, the policy of insurance shall cover any
liability incurred in respect of any accident.  Under Clause (a) of Sub-Section
(2) of Section 147, the amount of liability incurred should be paid by the
insurer subject to Sub-Clause (b) thereof.  Sub-Clause (b) of Section 147(2)
deals with the damage to any property of a third party, in respect of which a
limit of Rs.6,000/- is fixed.


The above discussed statutory provisions thus envisage that if death or bodily
injury takes place when a motor vehicle which is insured by an insurer was put
to use, the liability of the insurer is unlimited.
The statute placed limit on the liability of the insurer in respect of damage
caused to the property of a third party. The said limit, as already noted, is
fixed at Rs.6,000/- irrespective of the extent of damage caused to the third
party's property.


A perusal of the award shows that while dealing with this plea raised on behalf
of the insurance company, the Tribunal observed that there is no material filed
by the appellant to prove that its liability is limited to Rs.6,000/-.   In my
opinion, the Tribunal fell into a serious error in not taking into account the
limit prescribed by the statute itself.  While, the Act liability on the
insurance company is limited to Rs.6,000/-, the claimant is not entitled to
claim more than the liability fixed under the Act unless he is able to establish
that the owner of the offending vehicle has insured his vehicle for higher sum
than what is fixed under the Act in respect of the damage to goods of third
party.  This is not the plea raised by respondent No.1 nor any finding in this
regard has been rendered by the Tribunal.  In this view of the matter, the award
of the Tribunal to the extent that it has made the appellant jointly and
severally liable for compensation in excess of Rs.6,000/- cannot be sustained in
law.  The award to that extent is set aside.  It is made clear that the
appellant is jointly and severally liable to pay compensation to respondent No.1
to the extent of Rs.6,000/- only and respondent No.1 is entitled to recover
balance compensation from respondent No.2.  


It is represented by the learned counsel for the appellant that during the
pendency of this appeal, the appellant has deposited 75% of the compensation.
The appellant is entitled to withdraw the said amount except to the extent of
Rs.6,000/-.


Accordingly, the M.A.C.M.A. is allowed to the extent indicated above.