1987 (9) TMI 435 - SC - Indian Laws

Insurer's Liability Capped at Rs. 5,000 Per Passenger Under Motor Vehicles Act, Court Urges Legislative Amendments for Inflation

M.K. Kunhimohammed Versus P.A. Ahmedkutty and Ors.

The Court held that the insurer's liability is capped at Rs. 5,000 per passenger under Section 95(2)(b)(ii)(4) of the Motor Vehicles Act, 1939, with an ... - ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment revolve around the interpretation of Section 95(2)(b)(ii) of the Motor Vehicles Act, 1939, particularly concerning the limits of liability for insurers in cases involving passenger vehicles. The primary questions include:Whether the insurer's liability is limited to Rs. 5,000 per passenger under Section 95(2)(b)(ii)(4) of the Act.Whether the aggregate liability limits specified in Section 95(2)(b)(ii)(1)-(3) apply independently or in conjunction with the per passenger limit in Section 95(2)(b)(ii)(4).The applicability of precedents in interpreting the limits of liability under the Motor Vehicles Act.The adequacy of statutory limits on compensation in light of societal needs and inflation.ISSUE-WISE DETAILED ANALYSIS1. Interpretation of Section 95(2)(b)(ii) of the Motor Vehicles Act, 1939The relevant legal framework involves Section 95 of the Motor Vehicles Act, 1939, which outlines the insurance requirements and liability limits for motor vehicle owners. The Court analyzed the statutory language and the legislative intent behind these provisions.The Court interpreted the provisions of Section 95(2)(b)(ii) to mean that there are two distinct limits on the insurer's liability: an aggregate liability limit for any one accident and a per passenger limit. The aggregate limits vary based on the number of passengers the vehicle is registered to carry, while the per passenger limit is Rs. 5,000 for vehicles other than motor cabs.In applying the law to the facts, the Court noted that the vehicle involved was registered to carry more than thirty but not more than sixty passengers, thus setting the aggregate liability limit at Rs. 75,000. However, the liability for each individual passenger was capped at Rs. 5,000.The Court treated competing arguments by referencing precedents such as Sheikhupura Transport Co. Ltd. v. Northern India Transport Insurance Co. and Motor Owners Insurance Co. Ltd. v. Jadavji Keshavji Modi, which supported the interpretation that the per passenger limit was not merely a minimum but a maximum liability.The conclusion reached was that the insurer's liability was indeed limited to Rs. 5,000 per passenger, in line with the statutory provisions and judicial precedents.2. Adequacy of Statutory Limits on CompensationThe judgment also addressed the adequacy of the statutory limits on compensation, considering the inflationary pressures and the changing societal context. The Court expressed concern that the limits set by the statute were outdated and insufficient to meet the needs of accident victims and their families.The Court suggested that the legislature should consider revising these limits to reflect the true value of human life and provide adequate compensation, particularly through insurance companies. The Court highlighted the disparity between compensation for air travel accidents and motor vehicle accidents, urging legislative action to address this inconsistency.SIGNIFICANT HOLDINGSThe Court held that the insurer's liability was limited to Rs. 5,000 per passenger under Section 95(2)(b)(ii)(4) of the Motor Vehicles Act, 1939. This interpretation was based on the statutory language and supported by previous judicial decisions.A key principle established by the Court is that both the aggregate and per passenger liability limits must be considered together, and neither can be ignored. The judgment emphasized that the per passenger limit represents the maximum liability of the insurer.The Court dismissed the petition, affirming the judgment of the Kerala High Court, which had followed the same interpretation of the statutory provisions.In its observations, the Court suggested legislative amendments to increase the compensation limits and address the inadequacies in the existing statutory framework. The Court's reasoning reflects a broader concern for social justice and the need for the law to evolve with societal changes.