January 17, 2022

Case Brief: National Insurance Co. Ltd. v. Jugal Kishore & Others

Case Name: National Insurance Co. Ltd. v. Jugal Kishore & Others

Court: Supreme Court of India

Citation: 1988 AIR 719, 1988 SCC (1) 626[1]

Coram: Hon’ble Justice E. S. Venkataramiah And Hon’ble Justice N. D. Ojha

Theme: Insurance of vehicle

Subject: Banking Law

Judgement: India


This appeal by special leave has been filed by the National Insurance Company Ltd., New Delhi, against a judgment of the Delhi High Court in an appeal under Section 110-D of the Motor Vehicles Act, 1939.

In the very instant case the respondent no.1, Jugal Kishore, while driving a three wheeler scooter, which met with an accident with bus No. DLP-3699, driven by Rai Singh, and respondent No. 2, owned by M/s. Delhi Janata Co-operative Transport Policy Limited, respondent No.3, and insured with the appellant. The Motor Accident Claims Tribunal, Delhi awarded compensation in the sum of Rs. 10,000 to respondent no.1. On the appeal of, the honourable High Court enhanced the Compensation to Rs.1, 00,000.

The Honourable Supreme Court, while granting special leave required the appellant to deposit the amount of compensation awarded by the High Court and permitted the respondent to withdraw the same, making it clear that it shall not be refunded by him in the event of reversal of the decision of the High Court. The appellant contends that in view of the statutory provision contained in this behalf in clause (b) of sub-section (2) of section 95 of the Act, as it stood on the date of accident, no award in excess of the statutory liability of Rs.20,000 could have been made against the appellant.


(A.) Appellant’s submission:

Issue raised by appellant was to get view on the topic that provision contained in this behalf in Clause (b) of sub section (2) of Section 95 of the Act as it stood on the date of the accident, which happens to be prior the date of commencement of Amending Act 56 of 1969, no award in excess of Rs. 20,000/- could have been made against the appellant. The aforesaid Clause (b), which applies to the instant that the liability that of the appellant could not be in excess of Rs. 20,000/-.

The appellant urged on relying on the decision of this Court in British India General Insurance Co. Ltd. v. Captain Itbar Singh and Ors.[2] Sub-section (6) of Section 96 of the Act no insurer to whom the notice referred to in Sub-section (2) thereof has been given, is entitled “to avoid his liability” to any person entitled to the benefit of any such judgment as is referred to in Sub-section (1) thereof otherwise than in the manner provided for in Sub-section (2). On this basis it was urged that the appellant was not entitled to assert that its liability was confined to Rs. 20,000/-only inasmuch as this is not one of the defences specified in Sub-section (2) of Section 96 of the Act.

(B) Respondent’s submission:

The Respondent’s submit in this instant case is that it is notwithstanding the provision contained in this behalf in Clause (b) aforesaid it was open to the insurer to take a policy covering a higher risk than contemplated by the aforesaid Clause (b) and consequently the said clause had to be read subject to the terms of the policy which was taken in the instant case.

The honourable court have accordingly pursued the Photostat copy of the policy to ascertain whether risk for any amount higher than the amount of Rs. 20,000/-contemplated by Clause (b) aforesaid was covered. The attention of the court invited by the Respondents to the circumstance that at the right hand corner on the top of page 1 of the policy the words “COMMERCIAL VEHICLE COMPREHENSIVE” were printed. On this basis and on the basis that the premium paid was higher than the premium of an “act only” policy it was urged by the Respondents that the liability of the appellant was unlimited and not confined to Rs. 20,000/- only.


Counsel of the appellant before the court has argued that the finding of learned single judge that since the policy covered third party risk, it would be with unlimited liability, was not correct, Counsel submitted that the payment of premium of Rs. 256.00 comprising Rs. 240.00 as the liability for the third party risk and Rs. 16.00 covering the risk for driver and cleaner, was not in dispute. The above premium under the tariff covered only statutory liability in respect of personal injury to third party and if the insurance was to extend to an unlimited amount, additional premium of Rs. 150.00 was liable to be paid. It argued that the learned single Judge should not have ignored the proposal form, cover note and the standard terms and conditions of the policy on the ground that these related to earlier period. In doing so, it is submitted that the learned single judge did not appreciate that the policy was being renewed on the same standard terms and conditions as before and that the original cover note and policy were relevant to indicate the nature of the policy and the limits of the liability of the company.


Counsel for the respondents argued that the appellant had failed to prove the insurance policy and relied on the decision in Mahender Singh v. Manju Sahni[3] to support the view that liability of Insurance Company was unlimited.

Learned Counsel for respodents also relied on the judgment in Oriental Fire and General Insurance Company v. Chhoti Bai[4]


(1) In view of the decision of this Court in Pushpabai Purshottam Udeshi & Ors vs Ranjit Ginning & Pressing Co.[5] Where it was held that the insurer can always take policies covering risks which are not covered by the requirements of Section 95 of the Act.

(2) 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 a vehicle to get it comprehensively insured. In case, however, it is got comprehensively insured a higher premium than for an “act only” policy is payable depending on the estimated value of the vehicle. Such insurance entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle calculated according to the rules and regulations framed in this behalf. Comprehensive insurance of the vehicle and payment of higher premium on this score, however, do not mean that the limit of the liability with regard to third party risk becomes unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act. For this purpose, a specific agreement has to be arrived at between the owner and the insurance company and separate premium has to be paid on the amount of liability undertaken by the insurance company in this behalf.

(3) Secondly, from the words “to avoid his liability” as submitted by appellant used in Sub-section (6) of Section 96 it is apparent that the restrictions placed with regard to defences available to the insurer specified in Sub-section (2) of Section 96 are applicable to a case where the insurer wants to avoid his liability.

(4) In the very instant case the appellant is not seeking to avoid its liability but wants a determination of the extent of its liability which is to be determined, in the absence of any contract to the contrary, in accordance with the statutory provision contained in this behalf in Clause (b) of Sub-section (2) of Section 95 of the Act. In the instant case since as seen above the appellant did not undertake in the policy any liability in excess of the statutory liability the award against it could be only in accordance with the said statutory liability.


Granules India ltd v. Union of India and Others[6]

This is the latest case in which National Insurance Co. Ltd. V. Jugal Kishore[7], was cited as observing as follows:-

Court consider it necessary to refer to the attitude often adopted by the Insurance Companies, as was adopted even in jugal kishore case, of not filing a copy of the policy before the Tribunal and even before the High Court in appeal. In this connection what is of significance is that the claimants for compensation under the Act are invariably not possessed of either the policy or a copy thereof. This Court has consistently emphasised that it is the duty of the party which is in possession of a document which would be helpful in doing justice in the cause to produce the said document and such party should not be permitted to take shelter behind the abstract doctrine of burden of proof.

In many cases even the owner of the vehicle for reasons known to him does not choose to produce the policy or a copy thereof. We accordingly wish to emphasise that in all such cases where the Insurance Company concerned wishes to take a defence in a claim petition that its liability is not in excess of the statutory liability it should file a copy of the insurance policy along with its defence. Even in the instant case had it been done so at the appropriate stage necessity of approaching this Court in civil appeal would in all probability have been avoided. Filing a copy of the policy, therefore, not only cuts short avoidable litigation but also helps the court in doing justice between the parties. The obligation on the part of the State or its instrumentalities to act fairly can never be over-emphasised.


In the very instant case, the appeal succeeds and is allowed to this extent that the liability of the appellant is fixed at Rs.20, 000 together with interest as allowed by the High Court. It is also shall not be entitled to any refund out of the sum of Rs.1,00,000 which was deposited by it and withdrawn by the claimant-respondent in pursuance of the said order. Appeal allowed.

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[1]1988 AIR 719, 1988 SCC (1) 626

[2] AIR 1959 SC 1331

[3] (1986 ACJ 446)

[4] 1995 ACJ 962

[5] 1977 AIR 1735

[6] 2020 SCC OnLine SC 71

[7] (1988) 1 SCC 626

Contributed by: Honey Verma (Amity University, Rajasthan)

The views of the author are personal only. (if any)

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